Zhulian- poised to test its all-time high of RM2.00

Results Update

Zhulian has recently announced its results for QE30/11/2011. Its net profit increased by 18.4% q-o-q or 18.6% y-o-y to RM28.8 million while turnover eased off 5.4% q-o-q but rose 2.3% y-o-y to RM86.8 million. The improved bottom-line was attributed to higher share of profit from an equity-accounted investee of RM792k and forex gain.


Table: Zhulian's last 8 quarterly results



Chart 1: Zhulian's last 21 quarterly results

Valuation

Zhulian (closed at RM1.97 today) is now trading at a PE of 9.4 times (based on the last 4 quarters' EPS of 20.9 sen). For a company with a CAGR of about 10%, Zhulian's PEG of about 1 time is deemed fair.

Technical Outlook

Zhulian has slowly risen steadily in the past few weeks. It is poised to test its recent high of RM2.00 soon. If it can break above the RM2.00 mark, Zhulian's uptrend could continue.


Chart 2: Zhulian's weekly chart as at Jan 27, 2012 (Source: quickcharts)

Conclusion

Based on good financial performance and fair valuation, Zhulian is rated a HOLD. If the stock were to break above the RM2.00 mark, it may be a good trading BUY.

Puncak- the bottoming phase may be over?

Puncak declined from a high of RM3.00 in September 2010 to a recent low of RM0.96. It then formed a base over the past 6 months, at RM0.96-1.33. If it can break above the RM1.33, the bottoming phase may have completed. It may begin its recovery stage. Its immediate resistance would be the intermediate downtrend line at RM1.55.

The fair value for this stock varies significantly. MIDF has a target price of RM1.32 as per its report in November 2011 (here) while OSK valued it at RM3.65 in May 2011 (here). I believe that the company is worth more than RM2.00 and as such, the stock is an attractive stock to consider for a recovery play.

If Puncak can break above the RM1.33 level, it could be a trading BUY.


Chart: Puncak's daily chart as at Jan 27, 2012_12.00pm (Source: Quickcharts)

Mudajya may continue its recovery

As noted earlier, Mudajya is an attractive construction stock with strong experience in the building the power plant. Since that post, the stock has been inching higher. Recently, the rise was capped by the horizontal resistance at RM2.57. Today, it broke above that level. With this, Mudajya may test the next resistance is the horizontal line at RM2.75 and then the intermediate downtrend line at RM3.00.

Based on this, I think Mudajya can be a good trading BUY.


Chart: Mudajya's daily chart as at Jan 27, 2012_9.30am (Source: Quickcharts)

Cenbond has a bullish breakout

Cenbond has just broken above its strong horizontal resistance at RM0.85. It has also surpassed its all-time high of RM0.88. Based on this double breakout, Cenbond's technical outlook is very bullish. Its immediate target is RM1.00.

Cenbond is involved in paper & plastic packaging. It has 2 lines for the production of stretchable film. For 1H2012 ended 30/9/2012, Cenbond reported a net profit of RM7.7 million on a turnover of RM90.6 million. Its annualized EPS for FY2012 is about 12.8 sen. At RM0.89 now, the stock is trading at a PE of 7.0 times.

Based on technical breakout, Cenbond could be a good trading BUY.


Chart: Cenbond's monthly chart as at Jan 3, 2012 (Source: Tradesignum)

Market Outlook as at January 26, 2012

Our market has been recovering cautiously after the selldown in July-September. This recovery is reflected in the medium-term uptrend line, SS. The recovery rally had encountered strong resistance which triggered sharp pullbacks. These pullbacks can be fitted into a 3-fan downtrend line, with the market currently testing the third fan-line (R-R3). With the negative crossover noted in the MACD indicator, there is a good chance that the rally will not be able to surpass the resistance at 1525. This could set the stage for a correction in the market. FBMKLCI may pullback to the medium-term uptrend line support at 1510 or the psychological 1500 level. A break below the 1500 level could lead to a longer consolidation in the market.

Based on the above, you should exercise careful discretion in your trading.


Chart: FBMKLCI's daily chart as at January 25, 2012 (Source: Tradesignum)

Semicon stocks poised for recovery

The Philadelphia Semiconductor Index (SOX) has broken above its intermediate downtrend line (see Chart 1 & 2 below). In addition, SOX has broken above the 200-day SMA line and a few of the indicators are turning upward. However, I believe SOX will not rally immediately as the ADX is still flat & will probably turn upward over the next 2-3 weeks. This will give us time to accumulate some semicon stocks.


Chart 1: SOX's weekly chart as at Jan 16, 2012 (Source: Stockcharts)



Chart 2: SOX's weekly chart as at Jan 16, 2012 (Source: Yahoo Finance)

The best play for this sector is the market leader, Unisem. The good entry to Unisem is at RM1.20. Gtronic & MPI would bring up the rear, with good entry at RM0.90 & RM3.00, respectively.


Chart 3: Unisem's weekly chart as at Jan 16, 2012 (Source: Tradesignum)



Chart 4: Gtronic's weekly chart as at Jan 16, 2012 (Source: Tradesignum)



Chart 5: MPI's weekly chart as at Jan 16, 2012 (Source: Tradesignum)

SMRTech- a promising IT stock

Background

SMR Technology Bhd ('SMRTEch') is involved in the provision of IT solutions for human resource development. It recently secured a 1-year contract of RM14 million from the Human Resources Ministry (here). This is on top of a 3-year contract of RM89.5 million secured in 2010 from the Ministry of education for the recruitment & management of English language teaching consultants and to implement the In-Service Teacher Training for English Language Teachers (ELT) in primary schools (here).

Recent Financial Performance

SMRtech's financial results for QE30/9/2011 is deemed satisfactory with net profit of RM2.3 million while turnover is at RM10.7 million. From Chart 1 below, we can see SMRTech's top-line & bottom-line have soared in the past 6 quarters.


Table: SMRTech's last 8 quarterly results



Chart 1: SMRTech's last 14 quarterly results

Valuation

SMRTech (closed at RM0.215 on Friday) is now trading at a PE of 4.5 times (based on last 4 quarters' EPS of 4.8 sen). At this PE multiple, SMRTech is deemed fairly attractive.

Technical Outlook

SMRTech broke above its downtrend line at RM0.15 in second half of 2011. The horizontal resistance at RM0.20 has capped its rise for the past 9 months. Last week, the stock broke above the RM0.20 mark. This may signal the begin of a play for the stock. First target is RM0.25. Second target is RM0.35.


Chart 2: SMRTech's weekly chart as at Jan 16, 2012 (Source: Tradesignum)

Conclusion

Based on satisfactory results, large contracts in-hand, undemanding valuation and positive technical outlook, SMRtech could be a good trading BUY.

Happy New Year 2012

According to the Chinese Zodiac, 2012 will be the year of the Water Dragons. Water is expected to calm the Dragon’s fire. Water Dragons are known to be capable of seeing things from different points of view. As such, they can make good decisions. Let hope that the world leaders can do the same and take the courageous moves that would pull the global economy out of its present doldrums.

Meanwhile, let's enjoy the 4 days' break & spend time with our friends & family. I wish everyone a Happy & Prosperous New Year.


Source: ChinaInstitute

MBMR may have a bullish breakout

Yesteday, MBMR broke above its 3-fan downtrend line at RM3.40. This morning, it broke above its strong horizontal resistance at RM3.50 (on good volume). With this double breakout, MBMR could rally to the psychological RM4.00 level & then to the all-time high of RM4.50-4.60.

Based on this technical breakout, MBMR could be a good trading BUY.


Chart: MBMR's monthly chart as at January 3, 2012 (Source: Tradesignum)

Maybulk & Haio- Strong rally! Time to take profit?

Presently, two stocks have rallied despite uninspiring financial performance. The first stock is Maybulk, the shipping company that is part of the Robert Kuok group. Maybulk tested its long-term downtrend line at RM2.25. Unless there is breakout above the downtrend line, I feel that you should sell into the present rally.


Chart 1: Maybulk's weekly chart as at Jan 19, 2012_11.00am (Source: Quickcharts)

The second stock which has rallied very well is Haio. The chart looks very nice as the stock has broken above the 40-week SMA line at RM2.01. At the present price of RM2.30, Haio is trading at a PE of 15 times. At that multiple, Haio is fully valued. Despite the bullish technical outlook, I feel investors should take profit on their investment in Haio, especially when it approaches the resistance at RM2.40.


Chart 2: Haio's weekly chart as at Jan 19, 2012_11.00am (Source: Quickcharts)

For my recent posts on Maybulk & Haio, go here & here.

Huayang may continue its uptrend

Results Update

Huayang has just announced its results for QE31/12/2011. Its net profit rose 5% q-o-q or 90% y-o-y to RM14.6 million while its turnover rose 11% q-o-q or 71% y-o-y to RM84 million. The improvement due mainly to better performance in the property development segment.


Table: Huayang's last 8 quarterly results



Chart 1: Huayang's last 14 quarterly results



Chart 2: Huayang's profit margin for last 14 quarterly results

Valuation

Based on the current price of RM1.36, Huayang is now trading at a PE of 4 times (based on last 4 quarters' EPS of 34 sen). At this multiple, Huayang is deemed inexpensive.

Technical Outlook

Huayang is presently pressing against its overhead resistance at RM1.36-1.37. If it can break above this resistance, Huayang may hit a high of RM1.70 (assuming a 1-to-1 gain of 35 sen from the breakout level of RM1.36).


Chart 3: Huayang's weekly chart sa at Jan 16, 2012 (Source: Tradesugnym)



Chart 4: Huayang's monthly chart sa at Jan 16, 2012 (Source: Tradesugnym)

Conclusion

Based on attractive valuation, continuing good financial performance & positive technical outlook, Huayang could be a good stock for medium-term investment.

BJFood is likely to continue its uptrend

BJFood was listed in March ay an IPO price of RM0.51. For the 6-month ended 31/10/2011, it reported a net profit of RM4.5 million on a turnover of RM38 million. Annualized EPS is about 6.3 sen. At the current price of RM1.09, the stock is trading at a PE of 17 times.

BJFood had announced two substantial corporate developments, as follows:

- Proposed acquisition of Berjaya Starbucks Coffee Company Sdn Bhd for RM71.698 million; &
- Proposed JV to set up Kenny Rogers Roasters business in Indonesia (a 51%-stake costing RM1.91 million).

To finance the Starbucks acquisition, BJFood has also proposed a Rights Issue of 4 shares (with 4 free warrants) for every 5 shares owned at a price to be determined later. For more on the Starbucks acquisition & Rights Issue, go here. For more on the Indonesia JV, go here.

In the past few days, BJFood has been trying to break free of the horizontal line at RM1.03. Today, it gained 4 sen to close at RM1.09, albeit on a volume of 4024 board lots. It looks like the stock may continue to rise steadily & test its recent high at RM1.17.

Based on the bullish breakout at RM1.03, BJFood could be a good trading BUY or medium-term investment. The stock falls under the consumer theme play that I had written about earlier.


Chart 1: BJFood's daily chart as at Jan 18, 2012 (Source: Quickcharts)



Chart 2: BJFood's weekly chart as at Jan 18, 2012 (Source: Quickcharts)

PChem may have a bullish breakout

PChem broke above its downtrend line at RM6.35 as well as its horizontal line at RM6.40 yesterday. With this breakout, PChem is likely to rise further. As at 4.30pm, it was trading at RM6.63- a gain of 12 sen over yesterday's close of RM4.51.

Based on the bullish breakout, PChem could be a trading BUY.


Chart: PChem's weekly chart as at Jan 18, 2012_4.30pm (Source: Quickcharts)

E&O- Any suit will do?

E&O is rallying today. At the close of the morning session, it was at RM1.49- up 8 sen from the close of RM1.41 yesterday. If we ignored the two big dips in December 2008 & March 2009, we can draw an intermediate uptrend line with support at RM1.30. Its long-term downtrend line will pose resistance at RM1.60. E&O tested its uptrend line in November 2011. Now, it is likely to continue to rise & it may test its downtrend line at RM1.60. Can it break above that resistance?

Readers may recall that a minority shareholder had filed a suit against Securities Commission for failure to compel Sime Darby to undertake a general offer when it bought a 30%-stake in E&O from three substantial shareholders at a price of RM2.30 a share. That price was substantially higher than the market price then and since it gives Sime Darby management control of the company, there is ground to argue that Sime Darby should make a general offer. Is E&O rising because of that suit? For more on the suit, go here & here.

What I can say is that the sign of a possible rally was flashed out by the market action for the three CWs- E&O-CA, E&O-CB & E&O-CC. We saw huge volume traded over the past two days for all three CWs. Something is about to be announced for E&O.

Since the stock is already up 8 sen, I rate the chance of E&O testing the RM1.60 resistance as equal to the chance of it dropping back to the starting price of about RM1.40. As such, this is not an easy trade. Only for the nimble traders.


Chart: E&O's weekly chart as at Jan 16, 2011 (Source: Tradesignum)

Emivest- may have a bullish breakout UPDATED

NOTE:

I REGRET TO ADVISE THAT EMIVEST IS THE SUBJECT OF A PRIVATIZATION EXERCISE WITH THE BUY-OUT OFFER AT RM0.90. SINCE THE STOCK IS NOW TRADING AT RM0.88-0.89, THERE IS NO UPSIDE TO THIS STOCK. AS SUCH, THIS POST IS NOT ACTIONABLE.

Emivest broke above its horizontal resistance at RM0.87-0.88 yesterday. It could potentially go to RM1.10 as its previous two upside breakouts in 1H2009 & 2H2010 had resulted in gain of about RM0.20. On weakness, the stock may pull back to its support levels at RM0.83-0.85 (from the 10, 20 & 40-week SMA lines).


Chart: Emivest's weekly chart as at January 16, 2012 (Source: Quickcharts)

Emivest reported an impressive 264%-jump in its net profit to RM12 million on the back of a 35%-increase in its turnover to RM196 million for QE30/9/2011 (here). The increased turnover was attributed to the commencement of operation of 2 new feedmill plants at Port Klang & Vietnam. However, we must note that the increased plant capacity has resulted in higher gearing of 1.3 times as at 30/9/2011 as compared to 0.96 time as at 31/12/2010. Based on its closing price of RM0.885 yesterday, Emivest is now trading at a current PE of 2.2 times (based on annualized EPS of 40 sen).

Based on technical consideration & attractive valuation, Emivest could be a good trading BUY as well as a good long-term investment stock (albeit with a medium risk profile).