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Monday, August 22, 2016

Tunepro: Quarterly Earnings at a New High

Results Update

For QE30/6/2016, Tunepro's net profit rose by 17% q-o-q or 64% y-o-y to RM26.5 million while revenue was mixed- down 3% q-o-q but rose 9% y-o-y to RM126 million. Revenue dropped by RM4.0 million q-o-q due to decrease of RM6.9 million in GEP which was partially offset by increase in investment income of RM2.9 million. PBT increased by RM9.2 million q-o-q mainly due to an increase of RM12.8 million in pre-tax profits in general insurance, which was partially offset by decreases of RM2.1 million in pre-tax profits in general reinsurance and RM0.7 million in share of profits of associates in Thailand.


Table: Tunepro's last 8 quarterly results

From the chart below, we can see that PBT was able to surpass the previous high of RM27 million convincingly. Is Tunepro's earnings due for takeoff?


Chart 1: Tunepro's last 19 quarterly results
 
Valuation

Tunepro (closed at RM1.64 last Friday) is now trading at a PER of 14.4 times (based on last 4 quarters' EPS of 11.36 sen). Tunepro's earning grew by 19.7% in the past 4 quarters- giving the stock a PEG ratio of 0.7 time. As the PEG ratio is less than 1 time, Tunepro is deemed attarctive.

Technical Outlook

Tunepro broke above its downtrend line, RR at RM1.25 in late February. Tunepro is now in an uptrend line, SS with support at RM1.50. Its immediate resistance is from its overhead horizontal line at RM1.80.


Chart 2: Tunepro's weekly chart as at Aug 19, 2016 (Source: ShareInvestor.com) 

Conclusion

Based on improved financial performance, reasonable valuation & bullish technical outlook, Tunepro remains a good stock for long-term investment. 

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision

Friday, August 19, 2016

Crude Oil & CPO poised to rise

Last year we bemoaned the collapse of crude oil prices as well as the depressed CPO prices. Well, things are changing for better. In Chart 1, you will see WTIC is clearly on an uptrend after it broke above its long-term downtrend line, RR at USD40 in April this year.


Chart 1: WTIC's weekly chart as at Aug 18, 2016 (Source: Stockchart.com)

The real surprise is the sharp rally in CPO in the past 4 weeks. CPO rose from a low of RM2270 to touch a high of RM2950. The rally was so sharp that it went above the upper line (AC) at RM2830 of the "expanding triangle" (ABCD). Such sharp rallies must consolidate before they can go higher. If CPO can consolidate at RM2830, it can continue its uptrend from there.


Chart 2: CPO's weekly chart as at Aug 18, 2016 (Source: ifs.marketcenter.com)  
 
Based on the recovery in crude oil & CPO prices, our O&G stocks and plantation stocks can recover further.

PetronM: Earnings Recovered

Results Update

For QE30/6/2016, PetronM's net profit rose 270% q-o-q to RM61 million on the back of a 10%-increase in revenue to RM1.83 billion. Net profit dropped 16% y-o-y on the back of lower revenue, which dropped 19% y-o-y due to lower crude oil (which declined from USD58 to USD40 per barrel) and finished product prices. The lower selling prices had more than offset the volume increase to 8.8 from 7.7 million barrels. PBT was lower y-o-y due to lower profit margin as a result of weaker price differentials between finished products and crude oil. 


Table: PetronM's last 8 quarterly results


Chart 1: PetronM's last 16 quarterly results

Valuation

PetronM (closed at RM4.24 yesterday) is now trading at a PER of 6.8 times (based on annualized EPS of 62.75 sen). At this PER, PetronM is deemed fairly attractive.

Technical Outlook

PetronM broke above its downtrend line, RR at RM3.80 last week. It rallied to test the horizontal line at RM4.50 before correcting. Its immediate support is at RM4.20 and immediate resistance is at RM4.50.


Chart 2: PetronM's daily chart as at Aug 18, 2016(Source: ShareInvestor,com)

Conclusion

Based on imporved financial performance, fairly attractive valuation  & positive technical outlook, PetronM could be a good stock for a medium-term investment. Rating revised from SELL to BUY.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision

ULICORP: Painful Fall!

Technical Update

To say that Ulicorp had a tough week is an understatement. The stock started the week at above RM6.00. And, over the past 4 days, it had broken through 4 supports: the psychological RM6.00 support and the horizontal support levels at RM5.50, RM5.00 & RM4.50. Until the stock has found a base, the safest course of action is to avoid the stock.

The drop in the share price has prompted BURSA to issue an UMA query to the company which elicited the standard reply (here). To me, the stranger thing is that the exchange did not issue an UMA query for the steady rise in the share price over the past 2 years.


Chart 1: Ulicorp's weekly chart as at Aug 18, 2016 (Source: ShareInvestor)


Chart 2: Ulicorp's monthly chart as at Aug 18, 2016 (Source: ShareInvestor)

Background

United U-Li Corporation Bhd ('Ulicorp') is involved in the manufacture and trading of cable support systems, integrated ceiling systems, steel roof battens and building materials.

Historical Financial Performance

From the 9-year P&L below, we can see that Ulicorp's revenue has risen from RM140 million to RM180 million. Its PBT rose from RM22 million in FY2012 to RM35 million in FY2015. While the increase is commendable, it is by no way outstanding.


Chart 3: Ulicorp's last 9 yearly results

Recent Financial Results

The last 10-quarter P&L can clearly shows the steady improvement in earnings in the past 2 years.


Chart 4: Ulicorp's last 10 quarterly results


Table: Ulicorp's last 10 quarterly results

Valuation

Ulicorp (closed at RM4.40 yesterday) is now trading at a trailing PER of 23x (based on last 4 quarters' EPS of 19.36 sen). This elevated PER is not justified by high growth; its earnings grew by 16% last 4 quarters- giving it a PEG ratio of 1.4x. Thus the stock is richly valued even after its sharp drop!

Conclusion

Based on the demanding valuation & bearish technical outlook, Ulicorp is rated a SELL.

Note: After the sharp plunge in the past 2 days, I was quite surprised that I had posted on this stock before (here & here). Regrettably I did not make a TAKE PROFIT call earlier.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Magnum: Earnings Plunged due to High Prize Payout

Background

Magnum Bhd ('Magnum') is involved in the gaming or numbers forecasting lottery business. I have recently mentioned that this stock is a good income stock as it pays a decent dividend with yield about 6% previously. Today I like to post a quick take on it in view of its 'bad' result for the latest quarter.

Results Update

In QE30/6/2016, Magnum's net profit dropped 62% q-o-q or 64% y-o-y to RM21.8 million while revenue dropped 17% q-o-q or 5% y-o-y to RM626 million. The drop in profits was due to an exceptional higher prizes payout, coupled with lower revenue (due to three less draws). In addition, the PBT in the preceding quarter was boosted by favorable movement of fair value gain on quoted investment (of RM5.5 million) & lower operating expenses.


Table: Magnum's last 13 quarters' P&L


Chart 1: Magnum's last 13 quarters' P&L

Valuation

Magnum (closed at RM2.47 yesterday) is now trading at a trailing PER of  21x (based on last 4 quarters' EPS of 11.73 sen). Its dividend yield has dropped to 5.3% from 8.1% previously as its dividend for the past 4 quarters has declined to 13 sen as compared to 20 sen in the preceding 4 quarters.

On the other hand, BJToto (closed at RM3.29 yesterday) is now trading at a trailing PER of 14.5x (based on last 4 quarters' EPS of 22.76 sen). Its dividend yield is at 5.8% (based on last 4 quarters' DPS totaling 19 sen). As such, BJToto is preferred to Magnum.

Technical Outlook

Magnum's share price is declining along a downtrend line, RR with resistance at RM2.50.


Chart 2: Magnum's monthly cjart as at Aug 18, 2016 (Source: Shareinvestors)

Conclusion

Based on poor financial performance and negative technical outlook, Magnum is a stock to be avoided at this moment. If you are looking for income stock, BJToto is preferable due to slightly more attractive valuation and slightly better technical outlook (with sign of bottom formed for BJToto).

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Thursday, August 18, 2016

Market Outlook as at August 18, 2016

Our market looks poised to go higher. FBMKLCI is on the verge of breaking above the downtrend line, RR at 1695. At the time of writing, FBMKLCI is at 1693.


Chart 1: FBMKLCI's weekly chart as at Aug 18, 2016_11.00am (Source: ShareInvestors)

The small-cap stocks have rebounded off their lows. Now many have broken above their downtrend lines. If we look at FBMSCAP, FBMACE and FBMFLG, we can see that all three indices have broken above their respective downtrend lines.

 
Chart 2: FBMSCAP's weekly chart as at Aug 18, 2016_11.00am (Source: ShareInvestors)

 
Chart 3: FBMACE's weekly chart as at Aug 18, 2016_11.00am (Source: ShareInvestors)


Chart 4: FBMFLG's weekly chart as at Aug 18, 2016_11.00am (Source: ShareInvestors)

Based on the above, I think the market is likely to continue the gradual recovery in the next few weeks. However, you need to watch out for the upcoming holidays on August 31, September 12 & September 16.  I believe trading could be tricky in mid-September as two of these holidays will fall in the same week. Good luck!!

A half-day seminar on investing in the stock market (UPDATED)

I will be conducting a joint seminar with ShareInvestor entitled "Introduction to Investing in the Stock Market". The seminar will cover:
  • Fundamental Analysis
  • Technical Analysis
The early bird price is RM299, includes a 6-month access to ShareInvestor Webpro (worth RM200). You can register using this link.

The morning session will be an introduction to ShareInvestor Webpro and my seminar will be in the afternoon session. (UPDATE)

Date:  
27 August 2016 (Saturday)  
Time: 
9:30am to 5:00pm
Venue:
SI Academy Training Room, 
No. 9-1, 3rd Mile Square, 151, 
Batu 3 ½, Jalan Klang Lama,  
58100 Kuala Lumpur.
 

Wednesday, August 17, 2016

WTHorse: Earnings Plummeted

Result Update

For QE30/6/2016, WTHorse's net profit dropped 77% q-o-q or 75% y-o-y to RM4.0 million while revenue was up 9% q-o-q or 0.5% y-o-y to RM186 million. Profits dropped q-o-q mainly due to the higher production and operating costs coupled with the weakening of Ringgit Malaysia against the foreign currencies.


Table: WTHorse's last 8 quarterly results


 Chart 1: WTHorse's last 44 quarterly results

Valuation

WTHorse (closed at RM2.16 yesterday) is trading at a PE of 20 times (based on last 4 quarters' EPS of 11 sen). At this PER, WTHorse is deemed overvalued.

Technical Outlook

WTHorse broke below its long-term uptrend line at RM2.20. The share price is likely to move sideways or downwards with immediate support at RM2.00.


Chart 2: WTHorse's monthly chart as at Aug 16, 2016 (Source: ShareInvestor)

Conclusion

Based on poorer financial performance, demanding valuation and negative technical outlook, I would rate WTHorse as REDUCE or SELL.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

PMetal: Earnings Boosted by Increased Capacity

Results Update

For QE30/6/2016, PMetal's net profit increased by 54% q-o-q or 491% y-o-y to RM146 million while revenue rose 23% q-o-q or 67% y-o-y to RM1.585 billion. Revenue rose q-o-q due to progressive commissioning of the new second phase facility which achieved full capacity in June 2016. PBT increased q-o-q in line with higher revenue and despite lower insurance claim of RM45 million as compared to RM50 million recognized in QE31/3/2016.


Table 1: PMetal's last 8 quarterly results


Chart 1: PMetal's 35 quarterly results

Aluminium Outlook


Aluminium is in a long-term gradual uptrend that stretches back to early 1994. The support of this uptrend line is at USD1450 per ton. In the recent decline, it tested that uptrend line and rebounded. However aluminium, upside is capped by an intermediate downtrend line, RR at USD1700.


Chart 2: Aluminium's monthly chart from 1989 to Aug 2016 (Source: Infomine.com) 
 
Valuation

PMetal (closed at RM4.30 yesterday) is now trading at a PER of 18 times (based on last 4 quarters' EPS of 23.78 sen). Going forward, PMetal's EPS would be higher due to increased capacity. To arrive at forward EPS, I annualized the EPS for QE30/6/2016 (excluding the insurance claim). The annualized EPS would be about 31 sen and forward PER would be 14 times. Based on earnings growth of 30% for the past 4 quarters, PMetal's PEG ratio is less than 0.5 times; making it an attractive stock. In addition, it pays a decent dividend, with a yield of 2.1%.

Technical Outlook

PMetal broke above the downtrend line, AB at RM3.00 in April. It is rising in an intermediate uptrend line, SS with support at RM3.90-4.00.


Chart 3: PMetal's weekly chart as at Aug 16, 2016 (Source: ShareInvestor.com)

PMetal is rising in a long-term upward channel, with the upper line at RM5.00. This may serve as a resistance for the current upleg of the stock.


Chart 4: PMetal's monthly chart as at Aug 16, 2016 (Source: ShareInvestor.com)

Conclusion

Based on strong financial performance, attractive valuation and bullish technical outlook, PMetal is a good stock for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Tuesday, August 16, 2016

Presbhd: Poised for Next Upleg

Presbhd is an information and communication technology (ICT) company. It provides software licensing distribution and management as well as ICT training and certification courses in Malaysia.

Presbhd is currently working on revamping the IT infrastructure of our 20 years  old National Immigration Control System. The total revamp is expected to be a concession project. Currently, it is working on another public private partnership (PPP) project – to provide IT infrastructure and technical support for two polytechnics. Total capex is more than RM200mil for these two polytechnics and the concession is over 15 years. For more, go here.
 
Technical Outlook

Presbhd looks poised for its next upleg. Over the past 2 years, Presbhd had two nice upswing; in early 2015 & late 2015. The pattern looks set to repeat itself. What we look for are in the weekly chart are:
1. Prices had surpassed the 10-week SMA line and poised to challenge the 20 & 30-week EMA line
2. MACD had crossed above the MACD signal line and poised to go above the zero line
Will the follow-thru actions happen?


Chart 1: Presbhd's weekly chart as at Aug 16, 2016_10.00am (Source: ShareInvestor.com)

Let's look at the daily chart. We can see the following:
1. Share prices are above the 10-day SMA line and 20 & 30-day EMA lines
2. MACD, which crossed above the MACD signal line earlier, has gone above the zero line
3. +DMI is above the -DMI and ADX is hooking up
All the above are flagging the likelihood of the start of an uptrend. ADX hooking up is a possible prelude to it going above the 20-mark, which indicates momentum for the uptrend.  


Chart 2: Presbhd's daily chart as at Aug 16, 2016_10.00am (Source: ShareInvestor.com)

If Presbhd's upleg can take off, we may see the repeat of the last two rallies where it put in a gain of RM1.00 after it broke above the 30-week EMA line. For the current set-up, that breakout trigger will be at RM2.30.

Conclusion

Based on technical consideration, Presbhd looks like a good stock for a trading BUY.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Annjoo: Earnings Soared

Results Update

For QE30/6/2016, Annjoo's net profit rose 16-fold q-o-q to RM92.4 million on the back of a 19.4%-increase in revenue to RM585 million. The increase in revenue is mainly attributable to recovery in selling prices of various steel products. Higher profitability was mainly attributable  to volatility in selling prices and an improved cost structure derived from its investment in the hybrid BF-EAF technology. Annjoo expects its financial performance to "remain satisfactory for the remaining period of 2016. However, the Group’s profitability is still largely dependent on the effectiveness of the Chinese government (effort) to eliminate steel overcapacity as well as Malaysian government (effort) to curb the imports of steel products into Malaysia."


Table 1: Annjoo's last 8 quarterly results

Annjoo could be coming into a sweet spot in term of its financial performance. In the past 10 years, there was one brief period of abnormal profit, that was in 2008. In that year. it chalked up big profit for 3 quarters. That was also the time when its share price went skyrocket to about RM4.00.


Chart 1: Annjoo's last 42 quarterly results

Valuation

Annjoo (closed at RM1.64 yesterday) is now trading at a Price/Book Value of 0.88X (based on NTA of RM1.86 p.s.). Despite the oversized earning, Annjoo is still sitting on losses per share of 6.4 sen for the past 4 quarters.Thus, we cannot compute a meaningful PER for the stock.

Industrial Outlook

In the last report, I highlighted that iron ore prices had tumbled after the rally in March/April. I thought the recovery in the steel sector had stalled. Looking at the chart below, we can see that the iron ore price chart is still climbing higher again. This means that iron ore prices could have bottomed in January 2016 and we could be in for a long but gradual recovery in the prices of iron ore and steel products. Let's wait and see.


Chart 2: Iron Ore 6-year price chart as at July 2016 (via Vale.com

Technical Outlook

Annjoo rallied after it broke above the long-term downtrend line, RR at RM1.20 in July. It has just surpassed the horizontal line at RM1.45. Its next resistance will be at the psychological RM2.00 mark and then the horizontal line at RM2.20.


Chart 3: Annjoo's monthly chart as at Aug 15, 2016 (Source: ShareInvestor.com)

Conclusion

Based on improved financial performance, potential bottom in steel product prices & bullish technical outlook, I have revised my rating for Annjoo from TAKE PROFIT to a long-term BUY.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Thursday, August 11, 2016

RCECAP: Earnings Soared

Result Update

For QE30/6/2016, RCECap's net profit soared 153% q-o-q or 86% y-o-y to RM17.5 million. Its revenue rose 17% q-o-q or 39% y-o-y to RM52 million. Profits increased q-o-q mainly due to higher fee-based income by RM5.9 million and lower loan impairment by RM4.8 million.


Table: RCECap's last 8 quarterly results

Looking at the Chart 1, we can see that RCECap's financial performance continued to crawl up after bottoming in last 2013.


Chart 1: RCECap's last 37 quarterly results

Valuation

RCECap (traded at RM1.02 as at 9.30am) has a trailing PE of 7.0 times (based on last 4 quarters' EPS of 14.76 sen). However, its last 4 quarters' EPS includes exceptional gain on disposal of investment property and fee-based income totaling RM10.8 million. If we were to exclude these items, its EPS would be lowered to 11.42 sen while bumping up its PER to 8.8 times. This would put RCECAp nearly at par with AEONCR (closed at RM13.90 yesterday). AEONCR has a trailing PER of 9.2 times (based on its last 4 quarters' EPS of 152 sen). Thus, at the current price of about RM1.02, RCECAP is fairly valued.
(Note: RCECAP had a 4-to-1 share consolidation in April this year.)

Technical Outlook

RCECap is in an upward channel with support at the lower line at RM0.70 and resistance at the upper line at RM1.20.


Chart 2: RCECap's monthly chart as at Aug 10, 2016 (Powered by ShareInvestor.com)

Conclusion

Based on improved financial performance, fair valuation & positive technical outlook, RCECap is good stock for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Wednesday, August 10, 2016

KAREX: Uptrend to Resume?


Karex broke above its intermediate downtrend line, RR at RM2.35 in June. Then the share price consolidated in a "flag formation" ('ABCD'). Today, Karex broke above the flag formation at RM2.47-2.48 (see Chart 1). This breakout could be the continuation of the prior uptrend which started in late 2013 (see Chart 2).


Chart 1: Karex's daily chart as at Aug 9, 2016 (Source: ShareInvestor.com)


Chart 2: Karex's weekly chart as at Aug 9, 2016 (Source: ShareInvestor.com)

In the preceding quarter (QE31/3/2016), Karex's profits dropped sharply due to lower sales, lower profit margin and foreign exchange losses. At the current price of RM2.53, Karex is trading at a trailing PER of 35x. Based on its prior year earning growth of 32%, Karex has an acceptable PEG ratio of about 1x. It is crucial that its earning growth remains elevated at about 30%, failing which the PER of 35x will not be acceptable. In the next 3 weeks, Karex will announce the results for QE30/6/2016. Anything less than a strong recovery will not be acceptable.

Based on the bullish technical breakout, Karex is expected to continue to go higher. For now, let's treat this as a trading BUY while we await the next quarterly result to confirm the return of earnings growth for this stock.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

POS: Poised for Next Upleg

POS rose 14 sen to close at RM3.19 today. Today, it broke above the horizontal line RM3.10. See Chart 1 below.


Chart 1: POS's daily chart as at Aug 9, 2016 (Source: ShareInvestor.com)

POS broke below its long-term uptrend line, SS at RM3.50 in November 2015 - just before it announced that it would acquire two assets from its controlling shareholder, DRBHCOM, namely the entire stake in KL Airport Services Sdn Bhd ('KLAS') for RM766.16 million; and a piece of land measuring 9.9 acres in Pekan HICOM, Section 28, 40400 Shah Alam for RM69.0 million. The market does not view these related party transactions ('RPTs') favorably- leading to the sharp sell-down. For more on the RPTs, go here.


Chart 2: POS's monthly chart as at Aug 9, 2016_4.00pm (Source: ShareInvestor.com)

However, POS began to recover in March this year. The first rebound would not successful as it failed to break above the intermediate downtrend line, RR. In June, it managed to break above the intermediate downtrend line, RR at RM2.70. Today breakout of the horizontal line RM3.10 should signal the start of the uptrend for POS.


Chart 3: POS's weekly chart as at Aug 9, 2016_4.00pm (Source: ShareInvestor.com)

Notwithstanding my earlier stance on the RPTs, I believe that POS could be a good stock for long-term investment after today breakout of the horizontal line at RM3.10.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.