Tradewinds Corporation Berhad, the winds of change are blowing in the right way. Buy $1.10

Sell in May and Go Away......I am still right as the weakness continues. Told you guts so.

What a week of IPOs! We had the mega blockbuster IPO of Glencore, the much anticipated launch of LinkedIn and PRADA finally marketing their issue. After so many years of hiding in the dark, Glencore has finally decided to put themselves up for public scrutiny. The question is why? Some people are saying it could be the end of the commodity cycle and they newly crowned billionaires of Glencore decided to cash out. No matter, this is the commodity giant that is equivalent to the likes of Goldman in the investment banking industry. So keep this baby on your watchlist.

LinkedIn however is a very different proposition. The social network bubble continues with LinkedIn being the served up as the entre of the social network meal while investors eagerly await for the coming of Facebook. My sources tell me that Goldman Sachs have already started marketing the launch of Facebook's IPO to preferred clients. There is no doubt in my head that Facebook's IPO will fly and it will probably rival that of Google in terms of market cap eventually. But a word of caution. There is absolutely no fundamentals in these social network companies because they do not earn a cent. LinkedIn has been in the business for 9 years and the business has only broken even this year. Its IPO opened up with a 95% gain from its IPO price of $45. That is just ludicrous. This is somewhat reminiscent of the 2000 internet bubble. Sigh...stupidity always finds a way back into our hearts. Let me just emphasize...THIS TIME IS NOT DIFFERENT!

As my mum always told me, I have always been such an extreme person, its either my way or the highway. So if you are looking to invest in rubbish, please stop reading this blog. I will not be right all the time but at least you can be assured that the stocks I am picking have the best possible fundamentals I can find. If you want companies that trade at 100 times price to sales....I think its better that you read some research report from investment banks or maybe local brokerages. They are not going to go for boring businesses like Heng Long. Go check how many brokerages or research houses cover Heng Long. The answer is a very nice 0. Research houses will be able to come out with lame explanations on how the a company can be worth 50-100 times price earnings and how it is actually cheap in terms for forward earnings. Unless you have a crystal ball, there is no way anyone can be sure about how the company will grow at more than 30% per year over the next 2 years. That is one of the main reasons why I always take analyst reports with a pinch of salt.

So I promised a stock pick, I have just the one for you. This is a company which I have had experience with since a long time. My mum used them as a tour service provider many many moons back. The company is called Tradewinds Corporation Berhad.

Tradewinds Corporation Berhad (TCB) is a Malaysia-based company engaged in investment holding, provision of management services and commercial property investment. The Company, through its subsidiaries, is engaged in hotel ownership and management, property investment and development, sale of properties, manufacturing, trading, insurance broking, travel related services, providing integrated security services, leasing and hire purchase financing. It has 22 subsidiaries which gives you an idea on diversity of this company's operations. I just want to focus on the key businesses of the company.

Tradewinds Hotels and Resorts Sdn Bhd, a subsidiary of Tradewinds Corporation Berhad, is one of the largest hotel owners in the country with 10 hotels and resorts in its stable. The hotels in their stable include:

* Crowne Plaza Mutiara Kuala Lumpur
* Batang Ai Longhouse Resort, Managed by Hilton
* Hilton Kuching
* Hilton Petaling Jaya
* Hotel Istana Kuala Lumpur
* Meritus Pelangi Beach Resort & Spa, Langkawi
* The Danna Langkawi
* Mutiara Johor Bahru
* Mutiara Taman Negara, Pahang
* Mutiara Burau Bay Beach Resort, Langkawi (A resort owned by Langkawi Development Authority (LADA) and managed by Mutiara – TCB Hotel Management Sdn Bhd)

These are not small hotels, they are prominent and 5 star quality hotels which are worth a good chunk. The current net asset value of the company sits at $1.73 while the stock is trading at $1.10. Therefore the discount to its NAV is just too steep for a company that is trading at only 9 times p/e even though earnings were raised through some land sales. Operating results are going to be flattish and property rental income will fall in the short term through their refurbishment of Menara Tun Razak. Over the long term, the results will get stronger and be sustained due to the stable nature of their businesses especially in a strong economic backdrop.

Tradewinds Corporation Berhad is also involved in investment and development properties. Investment properties include two strategically located office buildings in the heart of Kuala Lumpur – Menara Tun Razak in the Central Business District and Kompleks Antarabangsa in the Golden Triangle.

Tradewinds’ involvement in insurance broking is amongst the largest in the country. Strategic assets protected by Tradewinds and its insurance affiliates involve numerous land and offshore oil and gas drilling platforms for both national and multinational oil companies.

Tradewinds Corporation Berhad announced that it has agreed to form a joint venture with Kelana Ventures Sdn Bhd and Oxbridge Height Sdn Bhd to develop approximately 704 acres of land located in Mukim Tebrau, Daerah Johor Bahru, Johor. This could turn out to be very promising as it is a huge project in their most promising city due to their proximity to us.

The company is also in the midst of restructuring itself to streamline their operations and to shed their dead weight businesses. This has started to show results because their quarter's earnings were their best for some time. Should this continue, the stock could easily trade back up to $2 dollars.

While writing about this stock, a favourite tune came up in my mind, an oldie buy goodie. "Wind of change" by the Scorpions. Going off to find that old CD of mine to enjoy the tune.

Till the next week. Have a great trading week ahead. Oh I got a feeling, it will not be a great week for the markets as the USD rebound is not over yet and you know what that all means don't you? Weakness.

Best,

SVI