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Tuesday, August 04, 2015

MISC: Earnings jumped

 Results Update

For QE30/6/2015, MISC's net profit increased by 53% q-o-q or 157% y-o-y to RM745 million while revenue rose 4% q-o-q or 2% y-o-y to RM2.6 billion. Revenue increased q-o-q due to improved freight rates in Petroleum business and revenue recognized from an EPC project contributed. Profits also increased q-o-q mainly due to higher revenue and cost savings from operating a smaller fleet of Chemical tankers.


 Table: MISC's last 8 quarterly results


Chart 1: MISC's last 37 quarterly results

Valuation

MISC (RM7.78 yesterday) is now trading at a PE of 13.times (based on last 4 quarterly EPS of 60 sen). At this PE, MISC is deemed attractively valued.

Technical Outlook

MISC has corrected back to its uptrend line at about RM7.80(see Chart 2).  The RM7.80 level is also the strong horizontal support for MISC. (see Chart 3). The overhead resistance posed by the line connecting recent peaks, AB should cap any near term upside for the stock at RM9.00.


Chart 2: MISC's weekly chart as at August 3, 2015 (Source: ShareInvestor.com)


Chart 3: MISC's monthly chart as at August 3, 2015 (Source: ShareInvestor.com)

Conclusion
 
Based on satisfactory financial performance, fairly attractive valuation & mildly positive technical outlook, MISC is a good stock for long-term investment. The rating is now revised back to a HOLD.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MISC.

Let's do the Splits



"Cut my pie into four pieces, I don't think I could eat eight." 
from the lovable and funny Yogi Berra.


Yesterday, The Edge Daily had an article on the growing number of Malaysian listed companies going for share split. It mentioned 4 companies: Liihen, Taliwork, Tasco & VS. The last 3 companies were covered by me in earlier posts.

1) VS

VS has a rolling 4-quarter EPS of 60 sen, which gives the stock a trailing PER of 10.6 times (at yesterday close of RM6.37). While this PER is not exorbitant, we must contend with the possibility of the stock trading at peak earning. For more on VS, go here.

The share price rallied by 30-40% before the announcement of the 1-to-5 share split. At this point of time, the upside for the stock is very minimal. I believe the rating should now be revised to SELL INTO STRENGTH.


Chart 1: VS's monthly chart as at Aug 3, 2015 (Source: ShareInvestor.com)

2) TALIWRK

Taliwrk's share price rallied 20-30% after the announcement of the 2-to-5 share split that come with a bonus warrant of 1-for-5 (after the split). At the close of RM3.87 yesterday, Taliwrk is now trading at a PER of 28 times (based on annualized EPS of 13.7 sen). Thus, the stock deserves a rating of SELL.


Table 1: Taliwrk's last 8 quarterly results


Chart 2: Taliwrk's monthly chart as at Aug 3, 2015 (Source: ShareInvestor.com)

3) TASCO

Tasco's share price rallied 20-30% after the announcement of its 1-to-2 share split. At the close of RM4.30 yesterday, Tasco is trading at a PER of 14 times (based on last 4 quarters' EPS of 30.7 sen). At this PER, Tasco is deemed fairly valued. I would maintain my HOLD rating for TASCO as its business prospect is still good.


Table 2: Tasco's last 8 quarterly results


Chart 3: Tasco's monthly chart as at Aug 3, 2015 (Source: ShareInvestor.com)

Based on the above, we must be careful jumping into stocks with pending share split exercise. If the share price has run up, there is nothing to gain from investing in this type of stocks. The one having the big laugh is the major shareholders.
 
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Liihen, Tasco, Taliwrk & VS.

DJIA: Bearish Signs Present

DJIA has bumped thru its long-term uptrend line. While this isn't the best way to flag a breakdown, the index is turning negative when viewed in junction with technical indicators. Firstly, you may note that its MACD- long since cut below the MACD signal line, is now poised to enter the negative territory. Secondly, the rising -DMI is now joined by rising ADX- which signal the possible start of downtrend with momentum gathering.


Chart 1: DJIA's weekly chart as at August 3, 2015 (Source: Stockcharts)

DJIA is catching up with DJ Transport index. Much has been said about the weakness of the Transport index over the past 3-4 months. While that index has broken below its accelerated uptrend line, S1-S1, it is still above the longer term uptrend line, SS. In fact, it has rebounded off the SS line just 2 weeks ago. Looking into the Transport index chart, we can see the recent fall coincided with its MACD entering the negative territory and the rise in its ADX.


Chart 2: Transport's weekly chart as at August 3, 2015 (Source: Stockcharts)

The broader S&P500 index is testing its uptrend line. MACD is comfortably above the zero line while ADX is starting to inch up.


Chart 3: S&P500's weekly chart as at August 3, 2015 (Source: Stockcharts)

Finally, the party in Nasdaq is still going strong. Despite the rising prices, we note that both +DMI & ADX are now flat line. This means that share prices are rising on its own steam. Once the steam is exhausted, the share prices will start to drift down.


Chart 4: Nasdaq's weekly chart as at August 3, 2015 (Source: Stockcharts)

Overall, we can say that the US markets are a mix bag. The weakness in the main barometer DJIA is a surprise as compared to the other indices, except Nasdaq. The latter is probably driven by changes in technology and a delayed replacement cycle. Nonetheless, this weakness could be a harbinger of bad news to come. Thus, we need to monitor DJIA closely for the next few weeks.

CPO: Breaking its horizontal support at RM2075

At the close yesterday, CPO broke below the horizontal support of RM2075. A quick rebound is possible, with or without a visit to the psychological RM2000 mark. A breakdown of the RM2000 level would send CPO to its next strong support at RM1750.

With MACD deep into negative territory and downtrend gathering momentum, the technical outlook for CPO is rather bearish.


Chart 1: CPO's daily chart as at Aug 3, 2015 (Source: ifs.marketcenter

The weakness of CPO reflects the overall weakness in the commodity complex. Who would have thought crude oil (WTIC) would revisit its low again! The double bottom reversal in April failed to blossom into the start of an uptrend. We can only hope that the support at USD45 will hold- setting the stage for a triple bottom reversal.


Chart 2: WTIC's weekly chart as at Aug 3, 2015 (Source: Stockcharts)

Monday, August 03, 2015

Tenaga: Profit dropped

Results Update

For QE30/6/2015, Tenaga's net profit dropped 63% q-o-q or 54% y-o-y to RM789 million while revenue dropped 6.6% q-o-q or 13.9% y-o-y to RM9.9 billion. The sharp drop in profit was mainly due to reversal of Cost Pass-Thru adjustment. For more on this, see CIMB's comment in its July 31 report:
Tenaga’s reported net profit in 3Q15 was 51% lower yoy, at only RM789m. The group booked in a RM1.8bn Imbalance Cost Pass Through (ICPT) over-recovery amount from Jan 2014 to May 2015 in the quarter. By stripping out this one-off impact and other non-core items, we estimate its core net profit in 3Q15 at RM1.8bn, 23% higher than last year. The stronger performance was due mainly to taxation as it recognized a tax credit of RM32m in the quarter compared to a tax expense of RM231m in 3Q14. On top of that, the higher generation from coal plants in 3Q15 also lowered Tenaga’s expenses against the corresponding quarter last year. Although changes in fuel costs should not affect Tenaga’s bottom line under the ICPT, the amount under-recovered in 3Q14 was not recognized as the ICPT was only implemented on 1 Mar 2015.

Table 1: Tenaga's last 8 quarterly results


Chart 1: Tenaga's last 29 quarterly results

Recent Corporate Development

Since March this year, Tenaga's share prices had declined from around RM14.50 to RM12.20 on 31/7/2015. The drop was prompted by concern surrounding Tenaga's acquisition of a 70%-stake in Project 3B from EDRA ( a subsidiary of 1MDB) and recently its possible acquisition of 13 power assets from  EDRA. While the sum paid for the stake in Project 3B was fairly reasonable, the price for the 13 power assets could be above the market rate since EDRA purchased at high prices previously and it is unlikely to sell at a loss. Would Tenaga still purchase these power assets if their price tags are above their fair value? Can Tenaga say "NO" to 1MDB?

You can see the timeline of the various announcement and the subsequent price decline.


Chart 2: Tenaga's daily chart from Jan to Jul 2015 (Source: CIMB)

Valuation

Tenaga (closed at RM12.20 last Friday) is now trading at a trailing PER of 10.3 times (based on last 4 quarters' EPS of 117.9 sen). CIMB assigned Tenaga a Fair Value of RM16.38 based on FY17 PER of 12.7 times (FY17 EPS of 129 sen). This means that Tenaga is now trading at an undemanding PER of only 9.5 times its FY17 EPS.

Technical Outlook

From Chart 2 below, we can see that Tenaga has pulled back to its tentative uptrend line, SS support at RM12.00-12.20.


Chart 3: Tenaga's monthly chart as at July 31, 2015 (Source: ShareInvestor.com)

However, a look at the 20-year chart shows that Tenaga's 10-month EMA line has already curved downward. In the past, this negative signal - coming after a long rally - has signaled a top for the stock. These happened in 2000 & 2007. Will Tenaga escape the third time?


Chart 4: Tenaga's monthly chart as at July 31, 2015 (Source: ShareInvestor.com)

Another thing to consider is the correlation between Tenaga's price movement and the election cycle. We have seen Tenaga rallied after each of the past 4 elections in 1999, 2004, 2008 & 2013. This is likely due to market re-rating the stock higher on prospects of tariff adjustments. On the other hand, prior to each election, Tenaga's share price would decline because tariff adjustment would be deferred and earnings would suffer.

Under the cost pass-thru regime, this cycle should be a thing of the past. However, the recent political crackdown shows that the government has no hesitant to bend rules or laws to achieve its objectives. I suspect that the cost pass-thru regime would not stop this Government if it wishes to undertake populist actions (like suspending tariff adjustment) in order to gain support from the populace. While the market may not have to worry about this point today because raw material costs are trending lower, this could all change if the price of gas & coal prices reverse. Thus, I believe the election cycle may remain in force for Tenaga. And, this could well put downward pressure on the share price as 2018 election approaches.

Conclusion

Based on satisfactory financial performance, attractive valuation and mildly positive technical outlook, Tenaga should be a good stock to consider for long-term investment. However, if Tenaga breaks below the RM12 mark, the stock's technical outlook would turn decidedly negative. The political pressure to pay a "good price" for the 13 power assets to be acquired from EDRA could be the trigger. Going forward, the market may have to wrestle with renewed "national service" heaped onto Tenaga - notwithstanding the cost pass-thru regime in place.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Tenaga.

Friday, July 31, 2015

HLInd: A Strong Rally

HLInd broke above its ascending triangle (ABC) at RM5.00 and flew to RM5.30 as at 4:30pm. All in one day. Its next resistance levels are RM5.40, RM5.70 & RM6.00.

The strong rally on a Friday suggests something "big" is about to be announced. Since it has gone up so much, it is hard to recommend a BUY on this stock. You may consider it if the stock corrects back on weakness towards RM5.00.

 
Chart 1: HLInd's daily chart as at July 30, 2015 (Powered by Tradesignum)

 
Chart 2; HLInd's weekly chart as at July 30, 2015 (Powered by Tradesignum)
Note: 
I used the chart from Tradesignum because it most accurately captured the adjustment in price after the spin-off of Narra Industries.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, HLInd

Supermx: Joining the Party

Supermx is a laggard in the world of rubber glove. Yesterday it broke above the resistance line, AB joining the previous peaks since March last year. With this breakout, Supermx is finally joining the rubber glove rally. Its next resistance is the horizontal lines of RM2.40-2.50.


Chart 1; Supermx's weekly chart as at July 30, 2015 (Powered by ShareInvestor.com)

If you look at the monthly chart, we can see that the stock is in a long-term uptrend line (revised from previous post). Resistance is at RM3.00.


Chart 2; Supermx's monthly chart as at July 30, 2015 (Powered by ShareInvestor.com)

Based on technical consideration, Supermx could be a good trading BUY. Its next financial result (QE30/6/2015) should be announced soon. A good set of numbers could sustain the developing rally.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Supermx.

Spritzr: Bottom-line continued to climb

Result Update

For QE31/5/2015, Spritzr's net profit increased 35% q-o-q & 7% y-o-y to RM7.3 million while revenue increased 16% q-o-q or 5% y-o-y to RM72 million. Bottom-line improved q-o-q due to higher sales volume and reduction in packaging material costs.


Table: Spritzr's last 8 quarterly results


Chart 1: Spritzr's last 36 quarterly results

Valuation

Spritzr (closed at RM1.75 yesterday) is now trading at a PE of 10.6 times (based on last 4 quarters' EPS of 16.5 sen). At this PE multiple, Spritzr is still deemed attractive for a consumer stock.

Technical Outlook

Spritzr is in a long-term uptrend, with support from the 30-month EMA line at RM1.80. If an irregular uptrend line is drawn- connecting the trough- the share price is now at this line.


Chart 2: Spritzr's monthly chart as at July 30, 2015 (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance, attractive valuation and mildly positive technical outlook, Spritzr remains a good stock for long-term investment.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Spritzr.

Luxchem: Bottom-line jumped

Background

Luxchem Corporation Bhd ('Luxchem') is a supplier of industrial chemicals whose principal business activities incorporate the following: -
marketing and distribution of industrial chemicals and materials; and
manufacture of UPRs (unsaturated polyester resins).

Recent Financial Results

For QE30/6/2015, Luxchem's net profit increased by 532% q-o-q or 107% y-o-y to RM9.8 million while revenue was mixed- down 7% q-o-q but up 5% y-o-y to RM161 million. Revenue dropped q-o-q mainly due to lower revenue from trading segments. PBT increased q-o-q as PBT in the previous quarter was depressed by the recognition of Share Option Expenses of RM8.48 million in the Profit or Loss.


Table: Luxchem's last 11 quarterly results (Source: ShareInvestor.com)
 
 
Chart 1: Luxchem's last 11 quarterly results (Source: ShareInvestor.com)

Valuation

Luxchem (closed at RM1.03 yesterday) is now trading at a PER of 9.0 times (based on last 4 quarters' EPS of 11.4 sen).  At this PER, Luxchem is deemed fairly attractive. However, if the Share Option Expenses of RM8.48 million charged off in 1Q2015 is excluded, its full-year EPS would jump to 14.8 sen. This would push down its PER to 7 times. At this adjusted PER, Luxchem looks very attractive.

Technical Outlook

Luxchem is in an uptrend, with support at the 30-week EMA line at RM1.00-1.02.


Chart 2: Luxchem's weekly chart as at July 30, 2015 (Source: ShareInvestor)

 
Chart 3: Luxchem's monthly chart as at July 30, 2015 (Source: ShareInvestor)

Conclusion

Based on good financial performance, attractive valuation and positive technical outlook, Luxchem could be a good stock for a long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Luxchem.

Penta: Bottom-line soared

Results Update

For QE30/6/2015, Penta's net profit increased by 86% q-o-q or 102% y-o-y to RM3.3 million while revenue was mixed- up 24% q-o-q but down 10% y-o-y to RM24 million.   The higher sequential revenue  recorded  was  due  to  the increase in  sales from  the  automated equipment  operating  segment which  was partially offset  by  the drop  in revenue contribution from  the  automated manufacturing  solution  operating  segment. Consequently, the  Group achieved a higher profit before  tax  of RM4.0 million as compared to RM1.4 million in the preceding quarter.


Table: Penta's last 11 quarterly results (Source: ShareInvestor.com)
 
 
Chart 1: Penta's last 11 quarterly results (Source: ShareInvestor.com)

 Valuation

Penta (closed at RM0.865 yesterday) is now trading at a PER of 12.7 times (based on last 4 quarters' EPS of 6.8 sen).  At this PER, Penta is deemed fully valued. However, if Penta can sustain its earning based on latest quarterly EPS, then its full year EPS could be 9.8 sen. This will push down PER to 8.8 times; giving room for a potential 20-30% price gain.

Technical Outlook

Penta broke above its horizontal line at RM0.85. Its next resistance will be at the psychological RM1.00 mark and beyond that, at RM1.40.


Chart 2: Penta's monthly chart as at July 30, 2015 (Source: ShareInvestor)

Conclusion

Based on good financial performance, reasonable valuation and positive technical outlook, Penta could be a good stock for a medium-term investment. (For more on Penta, go here)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Penta.

Wednesday, July 29, 2015

Perstim: Mixed Results

Results Update

For QE30/6/2015, Pertima's net profit dropped 47% q-o-q but rose 63% y-o-y to RM9.3 million while revenue was similarly mixed- dropped 8.5% q-o-q but rose 6.4% y-o-y to RM158 million. The Group’s lower revenue was due to lower selling price coupled with lower sales volume. The Group's profits declined due to lower profit margin coupled with lower sales volume.


Table: Perstim's last 8 quarterly P&L


Chart 1: Perstim's last 44 quarters' P&L

Tin Prices Trend

From the tin price charts below, we can see that tin prices are at its 15-year low. In the past 1 year, tin prices declined from US24000/tonne in April 2014 to USD14000/tonne in June this year. Last 2 weeks, tin prices may have broken above its accelerated downtrend line, R2-R3 at USD14800/tonne. An uptrend in tin prices would lead to higher selling prices, which will translate to higher top-line and bottom-line.


Chart 2: Tin's monthy chart as at July 28, 2015 (Source: LME)


Chart 3: Tin's weekly chart as at July 28, 2015 (Source: LME)

Valuation

Perstim (closed at RM4.70 yesterday) is now trading at a trailing PER of 10 times (based on last 4 quarters' EPS of 47 sen). With a dividend payout of 35 sen, Perstim's DY is at an attractive 7.4%.

Technical Outlook

Perstim is in a long-term uptrend line with support at RM3.80. Its immediate resistance is at RM5.00-5.20.


Chart 4: Perstim's monthly chart as at July 28, 2015 (Source: ShareInvestor.com)  

Conclusion

Based on attractive valuation & positive technical outlook, Perstim is a good income stock for long-term investment.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Perstim.

SEG: Dividend Could Be Wrongly Reported?!

Result Update

For QE30/6/2015, SEG's net profit dropped 26% q-o-q but rose 18% y-o-y to RM8.0 million while revenue was similarly dropped 3% q-o-q but rose 5% y-o-y to RM65 million. Lower sequential revenue & net profit is in line with the general trend where the first quarter results are normally stronger that the second quarter. However, it is encouraging to see that the performance is better than last year.

 
 Table: SEG's last 8 quarterly results

 
 Chart 1: SEG's last 29 quarterly results

Possible Error in the Financial Accounting Statements (FAS)

The company again reported that it will be declaring a dividend of 7%. I believe that it is an error, because the same quantum of  dividend was declared last quarter and paid out in this quarter. The accountant may have made a mistake between a proposed dividend and a payment of dividend. See the Note to the latest FAS and the announcement for the dividend that paid out.


Diagram 1: Note on Dividend in FAS for QE30/6/2015


Diagram 2: Announcement on Dividend Entitlement for June 2015
 
Valuation

SEG (closed at RM1.42 yesterday) is now trading at a PER of 35 times (based on last 4 quarters' EPS of 4.2 sen). At this PER, SEG is deemed expensive. However, its DY is fairly attractive at 10% (assuming a dividend payout of 14 sen).

Technical Outlook

SEG has found a support at RM1.40. It is trying to form a base from which the stock may stage its recovery in the future.


Chart 2: SEG's monthy chart as at July 28, 2015 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance and decent dividend yield, SEG could be a good income stock. Due to the possible error on the proposed dividend, the share price may move higher. Do not chase this move.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, SEG.

Tuesday, July 28, 2015

The Sacking of Gani Patail (UPDATED)

The market is filled with excited talks about the Cabinet reshuffle, including the sacking of our Deputy Prime Minister. To me, what's more critical is the sacking of Gani Patail. As Attorney General, Gani was one of the 4 persons tasked to investigate the transfer of a large sum of money into our Prime Minister's personal bank accounts. And, in our system of government, the AG is the person empowered to institute criminal prosecution. Though poor health was given as the reason for his termination- a reason that surprised even Gani - the true reason could be less gratuitous and more unpleasant. After all, Gani could well last until October this year, when he is due to retire. Gani's sacking could trigger a constitutional crisis.


(Source: Malaysiakini)

A constitutional crisis is in the far end of  a spectrum of outcomes for the 1MDB scandal; the end that's marked as the bad outcomes. If things spun out of control, this could lead to major unrest that could endanger lives and properties as well as threatening our democratic system of government. I sincerely hope that everyone involved would step back and place the country & the rakyat first before they take the next course of action.

I just saw this unbelievable news: 3 members of the Public Accounts Committee- its chairman Datuk Nur Jazlan Mohamed, Datuk Seri Reezal Merican Naina Merican and Datuk Mas Ermieyati Samsudin - have been appointed as deputy ministers. These 3 persons were involved in the investigation of the 1MDB affair! You can draw your own conclusion. This is a sad day for Malaysia!  

Mieco: Time to take profit

Yesterday, it was announced that the new major shareholder of Mieco, Purnama Kuantan, has ceased to be the major shareholder when the conditional letter of agreement in relation to the sale & purchase of Mieco shares due to failure to fulfill condition precedents to the transaction since July 20 (here). Purnama Kuantan- linked to Datuk Mohamed Moiz J.M. Ali Moiz of BRDB Development Sdn Bhd ("BRDB") - had earlier acquired 56.76%-stake in Mieco from Ambang Sehati Sdn Bhd and BRDB (here). The latter companies are also controlled by Datuk Mohamed Moiz. 

I don't know how a "restructuring" of shareholding among Datuk Mohamed Moiz's group could fail to be consummated. I also equally surprised that this fact was not disclosed earlier since it was knwon on July 20 and only announced to Bursa Malaysia on July 27 (here).

Since the share price has rallied significantly, I think it is a good idea to take profit on this trade.


Chart: Mieco's monthy chart as at July 28, 2015_9.45am (Source: ShareInvestor)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Mieco. 

Monday, July 27, 2015

FTSE China A50 broke July 9 low

Today, Chinese stock market plunged again. It broke below the recent low of 11067 recorded on July 9. In fact, it was trading below 11000 right now. See Chart 1 below.


Chart 1: FTSE CHINA A50 d20150727_3.00pm (Source: investing.com)

From Chart 2 below, we can see that 11000 is more than a psychological support; It is also a strong horizontal support. We will have to wait and see whether the Chinese Plunge Protection Team can salvage the market right now.


Chart 2: FTSE CHINA A50 d20150727_3.00pm (Source: investing.com)

As expected, the call & put warrants are trading with big losses and gain. This is an arena for the die-hard or professionals where the volatility is astronomical. If FTSE CHINA A50 could not recover from 11000 mark, the put warrant prices will continue to go up. If  FTSE CHINA A50 can recover from 11000 mark, the put warrant prices will drop back sharply.


Table: CHINAA50 Call & Put Warrants as at 3.30pm 
 

Friday, July 24, 2015

CCB: Bottom-line soared

Background

Cycle & Carriage Bintang Bhd (‘CCB’) is the largest dealer of Mercedes-Benz motor vehicles in Malaysia, involved in retail and after-sales service.

Its After Sales centres will provide vehicles complete care, from routine maintenance work to complete restoration of your vehicles plus retailing Mercedes-Benz Merchandise items.

Mercedes-Benz Sales Rising

Based on latest Motor Vehicles sale data (up to the month of May), we can see that the Mercedes-Benz sale volume has risen substantially. It is currently sitting in 7th position- rose from 15th position in July 2014. It managed to chalk up a sales volume of 3970 in 5 months of this year as compared to 3876 for the first 7 months of last year.

Diagram 1: Malaysia's MV Sales for May 2015 & July 2014 (Source: MMA, via MotorTrader)

Worldwide, Mercedes-Benz sales volume rose 15.7% to 960589 for first 6 months of the year. In Asia-Pacific ex-Japan & China, the sale volume grew by 25.5% to 86629.

Diagram 2: Mercedes-Benz's Global Sales for 1H 2015 & 2014 (Source: Media.Daimler)  

Recent Financial Performance

CCB's top-line and bottom-line rose gradually over the last 3 years. That steady increase suddenly went exponentially. The reason given for the improved top-line and bottom-line are:

  • Unit sales up 46%
  • Higher earnings from Mercedes-Benz operations 
  • Dividend received from Mercedes-Benz Malaysia (“MBM”)
 
Chart: CCB's last 12 quarters' P&L (Source: ShareInvestor.com)

Valuation

CCB received a dividend of RM11.2 million from MBM for 1H2015. In FY2014, it did not receive any dividend from MBM due to poor financial result. In FY2013 & FY2012, CCB received dividend totaling RM11.2 million respectively, in 2 equal tranches. Does this mean that CCB may receive another dividend of RM11.2 million from MBM this year? If so, CCB's FY2015 EPS could be as high as 57 sen. CCB (closed at RM3.46 yesterday) is now trading at a PE of 6 times. In addition, CCB may pay out dividend again after suspending in FY2013 & FY2014. It paid out dividends totaling 10 sen in FY2012 & FY2011. If it does the same in FY2015, the DY for the stock is 2.9%.


Diagram 3: CCB's 1H2015, 1H2014 & 1H2013 P&L (Source: Company via Bursa website)

 
Diagram 4: CCB's FY2014, FY2013 & FY2011 P&L (Source: Company via Bursa website) 

Technical Outlook

CCB has broken above its downtrend line at RM2.20 in May. The share price could potentially test the "horizontal" line ('AB') at RM6.00.


 Chart 2: CCB's weekly chart as at July 23, 2015 9Source: ShareInvestor.com)

 
 Chart 3: CCB's monthly chart as at July 23, 2015 9Source: ShareInvestor.com)

Conclusion

Based on good financial performance, fairly attractive valuation & positive technical outlook, CCB could be a good stock for long-term investment.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, CCB.