Monday, 9 November 2015

Dataprep - Genting of China

Dataprep Holdings Berhad (Dataprp - 8338) is primarily involved in the ICT solutions which cover services such as Enterprise Content Mangement System, Cloud Computing, Data Center, Network Integration, IT Security Solutions as well as Payment Solutions and Services. With more than 40 years of experience in handling large scale ICT projects, the current biggest project that Dataprep is involved in will be none other than the Genting Secret Garden at Chong Li in Hebei, China.

The Secret Garden Resort is the brainchild of Datuk Lim Chee Wah since 1990s. The youngest son of the late Tan Sri Lim Goh Tong is looking to bring forth a USD 6 billion mega project which will eventually cover a 100 square kilometer area ranging from ski resort, out door and indoor theme park, 5 stars hotel and golf courses.

Currently, Secret Garden Resort had completed it's phase 1, and will be seeing another 4 phases commencing stage by stage. How would this transform Dataprep in the course of the projects?


Dataprep had saw a long consolidation that from the last highest volume traded day at 21st August 2014 which had saw more than 33 million of share changed hand in the open market. The consolidation had saw saturation recently when Dataprep latest price movement could suggest a break out on the long term down trend line. This would suggest Dataprep could be looking to revisit the resistant line at RM 0.25 in the near term. A breakout on RM 0.25 will then see Dataprep challenging RM 0.30 and beyond.


Game Changer - Genting Secret Garden Resort at China

Although Dataprep had a vast 43 years experience on handling large scale ICT implementation and projects, with major shareholder Datuk Lim Chee Wah on board, it will never go away from the traditional Lim's family business - Holiday, Leisure and Gaming sector.

Dataprep is closely held by Datuk Lim Chee Wah through his wholly owned vehicle, VXL Holdings Sdn Bhd. The recent closed market purchase had saw Datuk Lim Chee Wah owning 60.62% (232, 232, 168 shares) of Dataprep.

With the collaboration of the Chinese Government to bring China tourism industry to another level, Genting Secret Garden Resort is a detailed masterplan spanning 100km square meters massive tourism city that will bolster a new level of ski resort with more integrated facilities such as golf course, recreational area, as well as outdoor snow activities.


Currently, Dataprep is selected as the main ICT project delivery partner that will oversees the whole ICT implementation from Phase 1 to Phase 5 of the USD 6 billion in GDV mega resort. According to the agreement, Dataprep is entitled for 6% of the total value of the ICT contract, which will come in 20 packages. Dataprep will also see recurring income from the maintenance and upgrade after completion and handover, putting a firm cash flow for the company in the future.

Cashing the Slots and Casino

All successful entertainment city will never fail to comes with Gaming which will see high rollers from all around the world to the city. The Secret Garden Resort is housing 5 championship golf courses, a themed park, a 3,000 person capacity convention center, more than 3,000 hotel rooms with chairlifts and gondolas that can carry 18,000 guests a day.

Dataprep had recently announced that the group will diversify into new lines of business such as leisure, property development, gaming and entertainment. (Annual Report 2015). With VXL Capital Limited which is listed in HKSE being privatized in 2014, Dataprep is the only public listed entity that had direct linkage with the development of Genting Secret Garden Resort.

According to close sources familiar with the development of Genting Secret Garden Resort, there are plans for gaming facilities such as slot machines to be operated in the entertainment city, while not ruling out a possibility of casino as well. "If there is no gaming facilities in Genting operated entertainment resort, that is not Genting." quoted the sources that does not wish to be named.

Interestingly, the share price development of Dataprep and local slot machine manufacturer - RGB International Berhad (RGB - 0037) had saw similar interest in volume spikes that reflect on the same period of time

The Genting Secret Garden Resort will be tapping in the 30 million population of Beijing with the new high speed railway line from Beijing to far-western Urumqi, with the first station in Zhangjiakou City, where a 20 minute shuttle ride will be reaching the ski slopes. That means the whole journey will only take just over an hour.

The whole masterplan which is drawn out by Ecosign, Hornberger and Worstell of San Francisco will connect five valleys, three mountain peaks, linking 250 hectares of skiing area and 65 km of trails. The mega resort will also be the host of 2022 Winter Olympics.


Corporate Exercise

With much of the coming future development that we can envisage now, Dataprep currently being the only public listed company that can seek public funding will be undergoing massive corporate exercise in order to fuel the coming projects, which consist of a new business ventures in leisure, property development, gaming and entertainment. In such scenario, Dataprep will be looking to trade above the par value of RM 0.25 which will be the minimal price for any private placement issue.

This new business direction will also going to see Dataprep in a process of replicating another Genting Highlands, however, in a much larger scale in China.


Conclusion

Dataprep is a very interesting company to be vested for the long term based on:
- Technically broken above the long term downtrend line
- 60% owned by Datuk Lim Chee Wah, the brainchild of Genting Secret Garden Resort at China
- Dataprep realign focus to new business ventures on leisure, property development, gaming and entertainment, which is foreseeable to be implemented in Genting Secret Garden Resort at China.
- Dataprep having high correlative movement with local slot machine manufacturer - RGB International Berhad, further reinforcing the motion on the operation of slot machine in the entertainment city.
- Dataprep start to derive more revenue from ICT projects in the USD 6 billion mega entertainment resort city.
- Dataprep to be a future "Genting Highland of China"
- Dataprep being to only public listed entity to have linkage with Genting Secret Garden Resort will see future corporate exercise that will push share price trading above par value of RM 0.25 which is being the minimum price of private placement issues.

Dataprep will be a good company to be hold for a long term. Should Dataprep priced at RM 1.00, the market capitalization is just RM 383 million, which is considered small considering the opportunity and market that Dataprep is currently tapping into.

Roll on with future Genting of China? You Decide
Bone's TP : RM 0.50

Cheers and have a nice day

Regards,
Bone

1 comment:

  1. Hi Bone,

    Noticed that Dataprep currently proposing some exercises e.g. SharePar value and premium share reduction, and 10% private placement.

    Would you mind share your thoughts about this proposal? And correlation with your article?

    Thank you

    ReplyDelete