Malayan United Industries ....... Headwinds ahead

Among my holdings, MUI is one of my most controversial picks. Betting on turnaround is one of the most challenging way of investing but can also be rewarding. This is what I called buy and forget - just keep the share certifcate under the bed and hoping it worth a lot more when you open it 5 - 10 years later. But it can also expire worthless like call warrant.

MUI posted positive profit from operations of 8 million in Q4 '08 compared to 54 million a year ago. I have been anticipating headwinds - this is confirmed by softer revenue, YoY softened by 15%. This plus higher expenses lead to much lower profit.

Incurred 57 mln losses in Q4 '08 mainly coming from exceptional items and finance charges. Bulk of exceptional items are related to bad debts provision, exchange rate loss and write down of investment value.

There is seems like not much improvement, is my almost a year old investment thesis still hold?

http://turtleinvestor888.blogspot.com/2008/02/malayan-united-industriesmui.html

Earnings estimate is not meeting my original expectation, econmy has turned much worse compared to a year ago. Down cycle will have impact on retail and hotel business. My margin of safery is in their franchise. This is evident to me and a big relief to me when I saw Laura Ashley still posting positive results especially UK economy and British Pounds are crushing. MetroJaya has been differenting itself by focussing upper middle class segemnt - will have a good chance of not going into price war, but I still expect tough days ahead.

Debt has been cut to 668 mln from 900 mln, they show progress here. They still hold cash or equivalent of 703 mln, so they are in net cash position.

It could be tough to realize its property value due to very bad property market. So got to wait for a while to realize its worth close to about RM 0.57/share upon revaluation.

Laura Ashley market capitalization shed by almost 55% from a year ago. Ouuuuch!

With investors and speculators hiding under the rocks, share price will also be facing headwinds to climb upward. So what is my plan? With the share price cut by almost half over a year, I still have no plan to sell out my position yet. I still believe MUI worth more than my entry price of $ 0.28/share.

I have a small interest in this share, so beware of what I write, I can be bias.