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Friday, October 20, 2017

Kenanga To Hold A Workshop On Cycle Analysis

Kenanga has organized a workshop entitled "Cycle Analysis: Trend In Global Market, Unbreaking the Wealth Code".


In this workshop, you will learn about Cycle Analysis (CA), how does Sovereign Debt Crisis (SDC) affect global market & what are the potential trading opportunities which can help investors to make better investing decisions.

Agenda

 

Trainer Profile

Derick Tan (Founder & Principal Trainer of the "Timing & You" program)

Date & Time

Aug 12, 2017 (Saturday), 9:30am to 12:30pm

Venue

Kenanga Training Centre,
Level 17, Kenanga Tower,
237, Jalan Tun Razak
50 400 Kuala Lumpur

Restriction & Fee Payable

The workshop is free for clients of Kenanga with 6 months or more trading history. Registration is compulsory.

For more detail, go here.

Thursday, October 19, 2017

Topglov: Planning A Huge Acquisition

Topglov was reported to be 99% sure that it has a deal in hand to acquire a glove producer that's based in Malaysia. The acquisition will cost about RM1 billion. For more, go here.

There are only 4 large glove producers in Malaysia: Topglov, Harta, Kossan & Supermx. I don't believe the major shareholders of Harta & Kossan would want to sell out. Two years ago, I would not believe Dato' Seri Stanley Thai, the chairman of Supermx would want to sell out either. However, Stanley - reportedly a former colleague of Topglov's chairman Tan Sri Lim in their early working career - is not doing too well. He has some legal problems of insider dealing and his group has some issues with the tax authority. If anyone of the big four glove producers has to sell out, it is most likely Stanley Thai.

Stanley Thai has direct & indirect shareholding of about 35% in Supermx. Supermx has a market capitalization of RM1.22 billion. That's pretty close to the figure quoted by Topglov's Lim. Assuming that Supermx is the acquiree company, what's the fair price of the company?

I have tabulated below the valuation of Supermx, Harta, Kossan & Topglov.



The average PER of Harta, Kossan & Topglov is 29.84x while Supermx's PER is only 17.70x. Assuming that Supermx deserves a PER of 80% of the average PER of Harta, Kossan & Topglov, then it shoudl command a PER of 23.88x. That means Supermx may command a fair value of RM2.47. That's 35% higher than its last done price of RM1.83.

Chartwise, Supermx has broken its long-term uptrend line, SS. The next support is will come from the horizontal line at RM1.60.


Chart: Supermx's monthly chart as at Oct 17, 2017 (Source: Shareinvestor.com)

The interesting question is Why did Lim shares this information in the public. A glove producer based in Malaysia, producing surgical gloves and valued at RM1 billion. Why? I think Topglov has the deal in the pocket and it wouldn't mind not having 100% ownership of Supermx. The higher the market price of Supermx, the lower is the chance of 100% acceptance of Topglov's MGO and the lower is its out-of-pocket expenditure.

I think Supermx could be a good trading BUY. Given the uncertainty in the market, you need to exercise careful discretion if you choose to trade in any stock.

Wednesday, October 18, 2017

Market Outlook as at October 17, 2017

Investopedia considers a formal downtrend occuring when each successive peak and trough is lower than the ones found earlier in the trend. Looking at Chart 1 below, the downtrend has just occurred. Unless we see a quick rebound in the next 1-2 days, our market is likely to go South.


Chart 1: FBMKLCI's daily chart as at Oct 17, 2017 (Source: Shareinvestor.com)

People will inevitably ask, "Where is the next support?" The answer is 1730. And, below that the next support is at 1700.


Chart 2: FBMKLCI's weekly chart as at Oct 17, 2017 (Source: Shareinvestor.com)

The next 1-2 days will be very critical for our market. This is not what I have expected in the light of US markets going into new high as well as regional markets making new highs. Let's hope the market will prove me correct in my earlier bullish forecast and stay the course for a new high in 2018. Until the quick rebound happens, be careful out there.

Tuesday, October 17, 2017

Happy Deepavali


I like to wish all my readers of the Hindu faith a HAPPY DEEPAVALI.

Asiafle: A Good Stock For Long-term Investment (UPDATED)

Results Update

For QE30/6/2017, Asiafle's net profit dropped by 12% q-o-q to RM14.2 million on the back of an unchanged revenue of RM91 million. Compared to the same quarter last year, net profit rose marginally by 1% while revenue was also unchanged.

Profit before tax dropped 9.4% q-o-q mainly due to a much lower share of profit of associate (June 2017: RM0.94 million cf. Mar 2017: RM 3.64 million) which was partially offset by improvement in investing results (June 2017: RM 2.0 million cf. Mar 2017: RM 1.4 million) and higher foreign exchange gain (June 2017: RM 1.4 million cf. Mar 2017: RM 368,000). (Note: Asiafle's QE30/6/2017 was announced on 29 August.)


Table: Asiafle's last 8 quarterly results


Graph: Asiafle's past 48 quarterly results
 
Financial Position

Asiafle's financial position is deemed satisfactory as at 30/6/2017, with current ratio at 5.0x and gearing ratio at 0.15x. It was sitting on a net cash balance of RM43 million.

New Business Venture

Asiafle’s existing core business is filing and stationery business. Asiafle is poised to add a second core business when its new venture into paper & plastic disposable food ware takes off in end 2017. Its new business will be based in a 3,200 sq m facility located in Simpang Ampat. For more on this new business, go here.

Valuation

Asiafle (closed at RM3.05 yesterday) is now trading at an attractive PER of 10.5 times (based on last 4 quarters' EPS of 29.08 sen). The stock pays a decent dividend yield of 5.2%. Based on attractive DY and fair PER, Asiafle is deemed to be an attractively priced.

Technical Outlook

From the monthly chart below, we can see that Asiafle is now testing its long-term uptrend line at RM3.00.


Chart 1: Asiafle's monthly chart as at Oct 16, 2017 (Source: Malaysiastock. biz)


Chart 2: Asiafle's weekly chart as at Oct 16, 2017 (Source: Malaysiastock. biz)

Conclusion

Based on satisfactory financial performance & position, fairly attractive valuation & positive long-term technical outlook, Asiafle could be 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.

Sunday, October 15, 2017

Topglov: Gangbuster Quarter!

Results Update

For QE31/8/2017, Topglov's net profit rose 27% q-o-q or 51% y-o-y to RM99 million while revenue rose 4% q-o-q or 25% y-o-y to RM902 million. Sales Volume (quantity sold) was exceptionally high with double-digit growth of 14.0% as compared to QE31/5/2017. This led to an all-round improvement on its profits. The improved performance was attributed to improvements in product quality and manufacturing efficiency, coupled with new capacity coming on-stream and strong demand growth.

 
Table: Topglov's last 8 quarterly results


Graph: Topglov's last 45 quarterly results

Valuation

Topglov (closed at RM6.01 last Friday) is now trading at a trailing PE of 22.6X (based on last 4 quarters' EPS of 26.55 sen). At this PER, Topglov is deemed fully valued.

Technical Outlook

Since it made a high of RM7.00 in December 2015, Topglov has not traded above the RM6.00. Last Thursday & Friday, it did just that. This may signal a re-test of the all-time high of RM7.00 in the next few months. 


Chart 1: Topglov's monthly chart as at Oct 13, 2017 (Source: Malaysiastock.biz)


Chart 2: Topglov's monthly chart as at Oct 13, 2017 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance and positive technical outlook, I think Topglov is poised to go higher. I hereby revise my rating from REDUCE to HOLD.

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, October 13, 2017

HoHup: An Easy Rally!


A few weeks back, I discussed with a client about the successful launch of Malton's The Park 2 Pavilion in Bukit Jalil. This is the project which Hohup is entitled to a 18% share of the gross development value. In addition, Hohup has an adjoining piece of land measuring 10 acres. Thus I rated Hohup as a cheap proxy to ride on growing demand for Bukit Jalil area. Unlike Malton which rose from RM0.90 to RM1.10, Hohup declined from RM0.80 to below RM0.70. Today Hohup announced that it will not go ahead with its Rights Issue to raise fund for its construction & property development business. Under normal circumstances, that would be a bad news. In the present market, it is not. Hohup rose from RM0.67 to RM0.71 as at 4.10pm.

Looking at  the charts below, Hohup can be a good stock to consider for a recovery play. It is trading at the long-term uptrend line, with support just below RM0.70 (see Chart 2). If it can recruit enough buying support, it may even put in a short rally to test the upper line of the downward channel at RM0.85 (see Chart 1).


Chart 1: Hohup's daily chart as at Oct 13, 2017_4.00pm (Source: Malaysiastock.biz)


Chart 2: Hohup's weekly chart as at Oct 13, 2017_4.00pm (Source: Malaysiastock.biz)

Thursday, October 12, 2017

Topglov & Harta: Upside Breakout

Topglov and Harta have both broken above their downtrend line. In both cases, the upside breakout was followed by strong rally on substantial volume. For Topglov, the breakout level was at RM5.70 and, for Harta, it was at RM7.00. Since Kossan and Supermx have not witnessed similar upside move, I suspect there is a joint development involving Topglov and Harta. Could it be a merger of these companies? Only time will tell...


Chart 1: Harta's daily chart as at Oct 12, 2017_4.00 (Source: Malaysaistock.biz)


Chart 1: Topglov's daily chart as at Oct 12, 2017_4.00 (Source: Malaysaistock.biz)

Based on the bullish breakout, Topglov and Harta are possible trading BUY. Good luck.

Market Outlook as at October 12, 2017


Our market is at a critical juncture. If it breaks below 1750, it could well be the end of the rally that began in January this year. Lower support levels at 1725 & 1700 are mere stops for a market in search of a bottom. What could possibly cause the rally in our market to end? Politics!


Chart 1: FBMKLCI's daily chart as at Oct 12, 2017_12.30 (Source: malaysiastock.biz)


Chart 2: FBMKLCI's weekly chart as at Oct 12, 2017_12.30 (Source: malaysiastock.biz)

Our rally has always been billed as an election rally. While the election has yet to be called, the ugliness of our politics has shaken the confidence of investors. In the past few days we saw incredulous reports of a huge corruption case in Sabah involving an opponent of the ruling party. How could RM1.5 billion of budget allocation be stolen? Of course, we know bigger sums went missing in a certain company but that's a company controlled by a few crooks. If corruption has reached a point where RM1.5 billion could be carted away from our government ministries, the end is near for Malaysia.

Next, we read about a personal attack on the Sultan of Johor who had earlier spoken out against certain extreme religious practices. What's surprising was the disquiet and inaction on the part of the authority to investigate the case. This has led to much unhappiness in Johor and possibly to the current round of wild talk about secession from the Federation.

Now is a good time to put a swift end to no-holds-barred politicking which we have seen in the past few years. The responsibility rests on our Prime Minister to do the needful and not merely keeping an elegant silence. He must decide what is more important; his political career or the fate of the nation. If he choose to put his survival ahead of the nation, he will not be judged kindly by future generations.