Riding the Ombak!: July 2014

Essential No 1.

INNOVATIVELY REDIFINING AND INDENTIFYING SEGMENTS THAT PRESENTS GROWTH OPPORTUNITY

Periods of migration to E-Payments technology transition to the next growth market. I have to use a term zone to define the intersection of the value of this company can provide in order to capture the needs of the huge population in this region.

While I would be a fool if I were to sell this company while they are just beginning to show positive results for the past few quarters. I rather choose to slowly trailing up closely to this company, regardless of the price of the stock. I sincerely believe a rightly managed company and the e- payment industry growth will automatically be taken care of the rest by itself.

Essential No 2.

" I COULD NOT HEAR WHAT PEOPLE SAID, BUT I COULD SEE WHAT THE MANAGEMENT DID"

I notice that this company has adopted a very healthy cultural transition to actively integrating sustainable principles to their business model. Such as concern about their management reputation, employee motivation, developing recurring income strategy to help them create value and capture growth and capital return. This will make a positive contribution to the company in the short and long term value.

I like them because of their commitment to integrate and improve the social environment, returns on capital, human talent retention, consumers and business connectivities.

I believe the e-payment trend is clear, endorse by Asian Central Bankers, more businesses will have to take a long term strategic view of sustainability from a universal point of view.

Essential No 3.

THE IMPORTANCE OF UNFOLDING THE HISTORICAL EVENT ON
E-PAY ACQUISITION.

It is controversial that I have to say it need skills to make a wise investment. Every investment has different risks involved. To make a good decision we have to be able to evaluate both the information available as well as HOW WE THINK ABOUT IT. Thinking biases will cause investors to make costly mistakes. I still remember when Simon Loh makes a first moves few years ago to privatize E-Pay Asia Limited. I was thinking by that time, why he is taking E-Pay private? What is the real value of this small company commands? According to analyst report , at that particular year, E-Pay worth only £ 22 cts

Unfortunately the offer has been blocked by a Malaysian tycoon V. Tan . In just one week period he has acquired more than 5% to block off the proposed acquisition. He has counter offered to take over E-Pay at around £0.25¢ instead. Eventually the proposed privatization has been in a deadlock and eventually lapsed. By then I am beginning to question the analyst valuation. What is so good about this small and low profile company? I don't see any exceptions of financial figures that makes me excited about it. By 2013, Simon Loh again attempted to acquire E-Pay again. This is the importance of critical thinking at the right timing. This time the offered price at £0.42 ¢ is finally gone through.

Below the link

http://tmt-transactions.com/e-pay-asia-to-go-to-euronet-after-tobikiri-capital-fails-to-match-a12m-bid/

http://www.thestar.com.my/business/business-news/2013/10/12/ghl-back-on-growth-path-creador-sees-potential-in-shared-services-and-solutions-provider.aspx/

The M&A exercise eventually concluded in 2014 successfully. This is a NEW GHL. What is the impact of this new entity will unfold? Is there values that we can't see but is seen by professional money managers?

Essential No 4.

WHAT MEASURES WE USE TO GAUGE THE VALUE OF GHL SYSTEMS BHD

I have tried many ways to investigate which investors can conduct their investment strategy more effectively. One of the challenges I am being an investor, we are often on our own, struggling to comprehend a lot of market information. I am not interested in "safe" investment. I am interested in investment that offer the greatest returns. The risk is to be managed and not avoided. Returns correlate with knowledge which often means, the more specialized the activity, the lest people understand, the more money you can make.

Why Creador decided to invest in this company? Since I have invested earlier than them, it is an interesting myth to be explored further. What they see and what they want? When I critically think about it, it's becoming more complex than I can imagine. Private equity fund is numbers driven. The first thing they do when they invest in a company stock or business is to expand, cutting cost, cash flow and professionalization. Either they make it larger, create value or helps sell it to a much larger sophisticated investors or financial buyers.

I believe the first thing they will focus on is cash flow. They will closely boost the EBITDA. They will eventually sell their stakes or the whole far more than what they pay for. Secondly, they will focus on product to product where they can really make profits and generating cash. (E-PAY is a cash cow, generating machine) Following they will mitigate risk management on expense control.

I realize that Creador II has two key personel, Brahmal Vasudevan and Lim Sze Mei have appointed Non Executive Director into the board recently. Thirdly, I also notice that they begin to focus on industry specific metrics. I begin to feel that I have invested in a right company. Not because I am good at analyzing a stock. It is because somebody has done the homework for me. And Creador are already proven they are a value investor. Since they have actively involved, what else I need to do?

Below the link

http://www.creador.co/m/our-investment-team.php

With this team of best brainers professional money managers what else can I ask for.

Essential No 5.

GHL SYSTEMS BHD.THE HIDDENGEM DISCOVERED BY CREADOR II

In a very one morning, like usual, I was having my morning breakfast, suddenly my phone ring disrupted me that morning from a call from my best friend. She says, " Do you know who will be getting a private placement in GHL ? I was actually still half awake, and didn't answer that question, for a few seconds. She continues with," Ananda Krishnan is getting a piece of GHL do you know that! Omg ! When I heard that, I disbelieve what I heard. After a brief chat i come to understand it is not him that invested directly. It is a Private Equity firm by the name Cygas are confirming getting a stake from Ghl through a private placement of 20% stake of total paid up after the mergers of Ghlsys and E-Pay Limited Asia. They automatically becoming one of the major shareholders just behind Simon Loh that command a 36 % stake on total paid up in Ghlsys.

My first reaction is. What is there to be excited about? Who are they? Are they the same as other institutional fund or mutual fund that will sell when the value goes up.? Why they choose GHL? Is there no other company to spot or something that they know about that normal investor don't know? This is my first impression. But I was wrong. Instead of doing my check up on them, I belittle them. I later discovered that they have spent much time and money to make up this deal. If it is not a hiddengem, why are they so interested at Ghlsys? Out of 600 companies they research, they pick GHL as one of the targets portfolio. What is so good about this company? When the mergers successfully integrated on Feb 2014, Creador II has quietly increased their stakes to about 26% and the best part is there is a sudden big increase of the institutional and mutual fund investor listed on the list recently. What is the value that they see? In a short period of 4 months, there are numerous positive movement of big money moving into this company. Is there really something I can't figure out as at today?
What is the value they can create?
http://www.focusmalaysia.my/Markets/Creador-s-consumer-centred-investment-preference

Essential No 6.

GHL SYSTEMS BHD. IS IT A STOCK TO MAKE A QUICK MONEY?

I notice that some people generally perceive themselves are better decision maker and at times overestimate their skill that they actually are. When Ghlsys is uptrending every time, there are many traders got trapped and I felt deeply sad about it. Perhaps there are more skillful traders managed to make some handsome gain when they have bought it while the share prices retreated to an undervalue level.

As this company is still very young at this moment, there is much opportunity to trade and make a quick buck while the price taking a plunge like it did recently. We have to be confident while trading this stock and by the meantime giving sufficient time for Ghlsys to fundamentally prove itself. This will perhaps one of the biggest obstacles to investors successfully trade this company effectively.

If people are generally influenced psychologically, it will likely miss out the opportunity to make some quick bucks while the volatility is happening. This volatility happens due to the institutional involvement and it is not related to fundamental changes or whatever negative news. I choose to adopt a more conservative way to manage my trade in this company. I trust the professional money managers and the management will probably prove themselves soon. I wish all Ghl Systems Bhd investors and traders all the best in the future.

Essential No 7.

WHY GHL NEED CREADOR WHILE THEY ARE CASH RICH?

Ghlsys is considered in a very positive cash hoard in their coffers after the merging with E-Pay Limited Asia according to their latest quarterly report. When they know that their accounts have sufficient capitals and improving revenues, why are they placing out their valuable shares totaled to about 20% to Cygas (Creador)? Is there any benefits other than monetary issues? Cygas in the other hand, actively acquiring E-Pay at ASX end of Dec 2013 at a huge premium around £ O.65¢ to £ 0.75¢ much more than the capital return of £ 0.42¢.This is a mystery to me when I notice that Ghlsys doesn't need any monetary assistance or in any distress shown in any way I look at it. The other areas I have looked into is dividends. But Ghlsys doesn't propose any either. What makes Ghlsys accept them being their major shareholders and what makes Creador interested to join in the new structured company? Is there any synergies that beneficial to Ghlsys particularly to Simon Loh as he is the one running the show in the company.

In order to make this deal this company must have a comprehensive management plan, good financial projection, experienced management team and strong growth potential. Normally Equity Fund Manager does not involve on management and technical expertise. They mainly focus on funding and exit strategy. Ghlsys actually does not equivalent to another company they have invested as the base is not large enough compared to Bonia, Old Town and it just to name a few. What is there other than the core business that Ghl is focusing on: Electronic Payment Gateway in South East Asia. Since the money managers are connected to Maxis, Astro, Banks and some other connection that link to Usaha Tegas, I view it as a win win situation in a low profile way.

Since Ghlsys is actively expanding their business and customer base (B2C) (B2B) , maybe there are some affialation among both of them but in a low profile manner. Only from this point of view , I can explain why this joint effort is connected. Especially both of the key management team has appointed to the board of directors recently. Hopefully they successfully form a good partnership as the company is gradually maturing from a 100 million cap rises to almost 400 million cap recently.I believe with their experience and monetary muscle combined , another surprise of enlarging the business model and company size is in the making now. Other than that i do not see any reason why this synergies between Ghl and Creador is needed to be carried out in the first place. Hope I am not wrong.

Essential No 8.

GHL SYSTEMS BHD. HOW TO PROFIT FROM THIS BORING STOCK.

One of the reasons I found investing in Ghlsys is not exciting at all. If I were to make my investment exciting, it will have to make thing more difficult and cost me more money in the long run. In fact, it will be defeating my efforts to grow my wealth. Actually, I am not concerned much about the fluctuation as I am more focus on the different thing. This is one of the most boring stock that I have in my life. But I do not lose a single cent, while staying with it. I am sticking to my principle that eventually it will reward me when the time is ripe.
Instead, I have found out that this volatility is a great way to make additional nice profits when the market rebounded nicely. Slow and steady really works for this company. Instead of running away with fears, when it plunged and with steady approaches much profits will be generated when strategic technique is being practiced. I am contempt staying with this boring thing, because I have a sad experience seeing someone who has wasted a considerable amount of money trying to picking up stocks in an effort to win only end up in the losing end.
I am fortunate that I have invested in this boring stock. I have no regret in my decision. Although it is not exciting, but it rewarded me well. I sleep well and I am looking forward for another uptrend again. I can wait. I will wait. As far as I know, I know the trend too well. Only now I begin to understand what is " INVEST IN WHAT YOU KNOW AND UNDERSTAND WHAT YOU INVEST." As the price of this company beginning to show value, it is time for me to celebrate again.

Essential No 9.

GHL SYSTEMS BHD. NO RISK FACTOR NO REWARD.

When we must eliminate the risk, the reward will not present itself. I still remember when the new management started to take over from this mismanaged company in 2010, I was very excited about the new lease of life that someone like me to decide to invest in a technology company that monopolized the e-payment business in the region. Although it is not in good financial health, but the industry is striving. I believe risk is man created. It is not coming overnight without a reason. While the company is doing well, but we can't know how much damaged that one unethical team of management can do to a company.
Eventually, in early 2011, the new management has to write off around rm20 million onetime lost, not operating lost but the damaged already done. I was wondering at that time, how can a public listed company management can make it better or die easily? Yes, I can say it is very easy to do that. Integrity and ethical. The most important element to eliminate risk and reward. The price of this share plunge immediately, although it is not an operation lost, it is still negative news, thanks to the previous team. But then, when the value drops and people fear, risk is there but the larger reward is there too. The new management is doing a right thing. If I am not mistaken, they have made their promises. To revive it and make it a profitable result the next quarter. They make it. They have proven itself.

For a moment of fear and risk, the transition begins from that moment. With the integrity, determination and an ethical way of managing a company, they have delivered their results and promises. Risk is self created. At least we can see the future clearly with the management passion, transparent and ethical way in conducting a business. The rest is history. Now that they have grown to a medium size entity, what is the reward and risk in term of future earnings and revenues? The point is there to be explored. The history is available to be studied. The first positive accomplishment is Ghlsys beginning to attract genuine equity investors. I believe in this ever challenging and the uncertainty in stock market environment, well managed company is well sought after. At least it can see the future clearly. It is an important strategy and method to achieve their mission and move forward. Internet and e-payment has boomed in developing countries. THE RISK IS IN THE DEVEVOPING COUNTRIES, THE REWARD IS AT OUR UNDEVELOPED REGION. Nobody knows the real impact of this social technology will bring to this company. It's not only mean to make money; the money must be healthy money by contributing to the society. If their mission is to solve social and business lifestyle, I believe they will create a history again to me and my REWARD and NOT RISK.

Essential No 10.

CROSS BORDER JOINT SYNERGIES WITH INTERNET TITANS WILL MATERIALIZE SOON?

A leading Chinese internet payment titan ALIPAY has recently announced a couple of deals that raising eyebrows of e-payment followers. With South East Asia and China relationship has risen tremendously regarding in tourism and business volume, e- commerce and e-payment solution is expected to see a rapid growth from now onwards. The news has said that they have teamed up with e-Nets from Singapore to boost up cross border trades business between the two countries. Their outlook for Malaysia and South East Asia as a whole is very positive. And it is just the beginning. What is interesting is because of some financial regulations and jurisdiction, they have to partner or synergy their operation with local peers to link up the opportunity. Mr. Raj Lorenzo, CEO of Ghl has been working at e-Nets as the MD for ten years before,it is possible that he may have the experience to work things out that beneficial to Ghlsys. I wish with the sudden emergence of Alibaba Group will bring positive development of strategic partnership with local companies, the near future may present some interesting breakthrough to all companies related to this sector.

Another notable move from Alibaba is they have just beginning to acquire GDex. What is their next target? Who? Only time will tell.....

Please refer the link below for further study.

http://www.alizila.com/southeast-asia-e-payments-opportunities-abound-alipay

Tuesday, July 22, 2014

6068 PCCS

Friday, July 18, 2014

THE MYSTERY BEHIND GHL SYSTEMS BHD