Friday, October 09, 2015

LPI: Earnings dipped sequentially (Updated)

Result Update

For QE30/9/2015, LPI's net profit dropped by 12% q-o-q but rose 18% y-o-y to RM76 million while revenue rose 15% q-o-q or 16% y-o-y to RM350 million. The decrease in profits q-o-q was mainly due to the absence of a one-time gain of RM39.2 million on disposal of investment in equities that contributed to the higher profit for QE30/6/2015.

Table 2: LPIs last 8 quarterly results

If we removed the gain on disposal of investment in equities - which yielded huge gain in QE30/6/2015 & QE31/12/2014 of RM39.2 million & RM59.9 million respectively- then the profit trend is more predictable. Another thing that's clearer is the net profit margin, which is steady at just under 20%. 

Chart 1: LPI's last 38 quarterly results


LPI (closed at RM14.44 yesterday) is now trading at a PE of 14.4 times (based on last 4 quarters' EPS of 101 sen). At this PER, LPI is deemed fairly attractive.

However, if we excluded the exceptional gain on disposal of investment in QE30/6/2015 & QE31/12/2014), then LPI's last 4 quarters' EPS would drop from 101 sen to 71 sen. Its PER would rise from 14.4 times to 20.6 times. At this PER, LPI is deemed fairly valued.

Technical Outlook

LPI is in a long-term uptrend line with support at RM13.00. Immediate resistance is at the all-time high of RM15.00.

Chart 2: LPI's monthy chart as at Oct 8, 2015 (Source: 


Based on good financial performance, reasonable attractive valuation & positive technical outlook, LPI's rating is revised from HOLD to BUY.

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, LPI.

Wednesday, October 07, 2015

The End to the Political Stalemate in Sight?

via Malaysian Insider

Yesterday, we all read the news that the Conference of Rulers had decided in a pre-council meeting that the Rulers would like to see a quick resolution to the 1MDB problem. The Keeper of the Rulers' Seal, Datuk Seri Syed Danial Syed Ahmad later issued a statement to the media, from which I have picked out a few pertinent points:

  • All concerned should extend "real and sincere" cooperation so that the investigation (into the 1MDB problem) will achieve its objectives
  • Enforcement agencies and regulatory institutions such as the police, Malaysian Anti-Corruption Commission, Bank Negara Malaysia, Attorney-General's Chambers and the judiciary, as well as related government bodies should be worthy of God's trust and the people's faith with transparency, credibility and integrity
  • The findings of the investigation must be reported comprehensively and in a transparent manner
  • Appropriate stern action should be taken against all found to be implicated
From the above, it is very clear that the Rulers would like to see justice served in the 1MDB case by way of a proper & thorough investigation; proper reporting of the findings; and the punishment for persons implicated. In nutshell, there should be no cover-up. If these points are carried out accordingly, then a resolution to the 1MDB problem should be at hand.

In addition, I'm impressed by the call made to our "leaders" to uphold the constitution and to safeguard harmony & solidarity of the people. We have seen how the September 16 rally nearly led to an ugly incident in Petaling Street (or, better known as the China town of Kuala Lumpur). The relevant points raised by the Rulers are::
  • All leaders shall adhere to the Rukun Negara principles of upholding the constitution and the rule of law
  • Harmony and solidarity of the people should be safeguarded at all times and never be sacrificed for shallow political aims

Today, we saw the market gave a resounding vote of confidence that the message from the Rulers is the way forward to resolving the political stalemate caused by the 1MDB mess. The sharpest reaction came from the currencies market where the MYR rebounded strongly against the USD & SGD. From Chart 1 below, we can see that USD-MYR & SGD-MYR have both broken down below the lower line of their expanding triangle or upward channel. This means that both currency pairs have probably peaked and will likely to trend lower.

Chart 1: USD_MYR & SGD-MYR's daily chart as at Oct 7, 2015 (Source:

In the stock market, share prices rallied strongly in the afternoon session. FBMKLCI rose 27 points to close at 1689. That means FBMKLCI is now pressing against the neckline of the head and shoulders top reversal. If it can break through this level, the market will transition out of a bear market to either a horizontal trend or an uptrend market.

Chart 2: FBMKLCI's monthly & daily charts as at Oct 7, 2015 (Source:

The FBM70 index - representing the 2nd liner stocks - rose 280 points to close at 12686. This means the FBM70 index has broken above the strong horizontal line at 12400- probably signaling the end of the bear market for 2nd liner stocks! Will blue chip FBMKLCI be joining it shortly?

Chart 3: FBM70's monthly & daily charts as at Oct 7, 2015 (Source:

The past few weeks had been a very challenging time for all Malaysians. We can only hope and pray that the end to this difficult period will come quickly. We cannot afford to be distracted daily by our political mess while we are faced with a multitude of economic problems ranging from sharp decline in export revenue (due to declining commodity prices) to a slowdown in the global economy.

AEONCR: Earning Growth Ending

Result Update

For QE31/8/2015, AEONCR's net profit dropped 17% q-o-q to RM48 million on the back of a 2%-decline in revenue to RM229 million. Compared to the results for 3-mth ended 20/8/2014, net profit dropped 2% q-o-q on the back of a 9%-increase in revenue.

Profits dropped q-o-q due to lower revenue and increase in operating expenses and funding cost. Profits rose marginally when compared to 3-mth ended 20/8/2014 due to 19.3%-increase in financing receivables (brought on by 1.52%-growth in financing volume and 2.89%-increase in total transactions); 64.9%-increase in other operating incomes (mainly comprised bad  debts recovered, commission income from sale of insurance products and AEON Big loyalty programme processing fee); lower NPL ratio of 2.58% (compared to 2.65% for QE20/8/2014) but partially offset by higher ratio of operating expenses to revenue of 63.2% (compared to 59.6% for QE20/8/2014); and higher funding cost (due to longer tenor of borrowings).

Table: AEONCR's last 8 quarterly results

From the diagram below, we observe the following:
  • Both top-line & bottom-line had booked down.
  • These hook-downs coincided with their rate of change approaching the zero line.
  • Profit margins have been trending lower for the 10 quarters.
If top-line does not recover and/or profit margins continue to trend lower, AEONCR's bottom-line will inevitably start to decline noticeably.

Chart 1: AEONCR's last 33 quarterly results


AEONCR (closed at RM13.58 yesterday) is now trading at a PE of 9.8 times (based on last 4 quarters' EPS of 138.9 sen). At this PER, AEONCR is deemed fairly attractive.

Technical Outlook

AEONCR is still in a long-term uptrend line, SS with support at RM12.00. This coincides with the horizontal line of RM12.00. AEONCR's immediate support is at RM13.00 while its immediate resistance is at the intermediate downtrend line at RM14.00.

Chart 2: AEONCR's monthly chart as at Oct 6, 2015 (Source:


Based on satisfactory financial performance, fairly attractive valuation and still positive technical outlook, AEONCR is rated as a HOLD for now. With its financial performance expected to deteriorate going forward, those holding onto the stock should take any opportunity to REDUCE position or SELL INTO STRENGTH if the share price goes near RM14.00.

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, AEONCR.

Tuesday, October 06, 2015

FLBHD: Breaking higher

One of the stocks that impressed me a lot over the past few days has been FLBHD. It rallied from an intra-day low of RM1.27 in mid-August to an intra-day high of RM1.99 today. That's very commendable for a stock that did not drop sharply in the recent selldown.

I must admit that I was more surprised to discover that I had called a BUY on this stock in late August and forgot about it. I racked my brain, wondering why did I make such a call since I was rather bearish at that point of time. After re-reading my earlier post again, I understand why. Go ahead and read it for yourself.

Anyway, FLBHD has broken above the neckline of its inverted head and shoulders formation (which strangely appeared not at the end of a downtrend). This means the head and shoulders formation is now a continuation pattern (not a reversal pattern) and the stock will likely go higher. I have projected a target price of RM2.35 for the current move.

Based on the above, FLBHD could be a trading BUY. Good entry level could be at RM1.80-1.85. Immediate resistance at the psychological RM2.00 mark. Good luck!

Chart: FLBHD's weekly chart as at Oct 6, 2015_10.30am (Source:
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, FLBHD.

Market Outlook as at October 6, 2015

FBMKLCI rallied to an intra-day high of 1662 before correction set in. Looking at Chart 1, we can see that FBMKLCI nearly tested the upper line of its downward "channel". An upside breakout of this downtrend line as well as the neckline of the Head and shoulders top at 1690-1695 could herald the end of the downtrend. Since it did not happen today, we will have to wait a while longer.

Chart 1: FBMKLCI's daily chart as at October 6, 2015_10.15am (Source:

Meanwhile the FBM70 (representing the second liner stocks) has broken above its downtrend line at 12300. It went as far as 12424 this morning before correction set in. To go further, FBM70 needs to surpass the horizontal line at 12400.

Chart 2: FBM70's daily chart as at October 6, 2015_10.15am (Source:  
Over the past one month, we have seen the market improved steadily. Share prices are climbing higher against a wall of worries. At some point in the near future, we have to make a decision: Is there going to be another leg down? While we wait for the jury to decide, those who are holding cash may have to bite the bullet and slowly venture back into the market by nibbling into stocks that have been rallied too far off their recent low. Who said investing easy?!

Tunepro: An attractive insurance company

Results Update

For QE30/6/2014, Tunepro (formerly, Tuneins)'s net profit dropped by 2% q-o-q but rose 13% y-o-y to RM16.1 million while revenue increased by 4% q-o-q or 14% y-o-y to RM115 million. Revenue increased by RM4.0 million q-o-q due to increase of RM3.8 million in gross earned premiums ("GEP") and RM0.2 million in investment income. Segmental profit increased by RM1.1 million q-o-q  due to an increase of RM4.2 million in pre-tax profits in general insurance, offset by decrease of RM1.2 million in general reinsurance, higher management expenses of the Company of RM1.5 million and decrease of RM0.5 million in share of profits of associates in Thailand. 

Table: Tunepro's last 8 quarterly results

Chart 1: Tunepro's last 15 quarterly results

Tunepro (closed at RM1.28 yesterday) is now trading at a PER of 13.5 times (based on last 4 quarters' EPS of 9.5 sen). At this PER, Tunepro is deemed fairly valued.

Technical Outlook

Tunepro is in a downward channel, with support at RM1.15-1.20 & resistance at RM1.60-1.65. The stock has found its support at RM1.25-1.30. This could form the base from which the stock may recover in the near future.

Chart 2: Tunepro's weekly chart as at Oct 5, 2015 (Source: 


Despite the negative technical outlook, Tuneins is a good stock for long-term investment in view of its good financial performance, exciting prospect & reasonable valuation.

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, Tunepro.

Monday, October 05, 2015

Plantation: El Nino Boost?

Last week, CIMB issued a report on the Plantation sector entitled "El Nino to cut high palm oil stocks?" The report highlighted the followings:

1. The rally in CPO prices brought on by the weak MYR 

This point has been made many times in the past few weeks or months. Looking at the Plantation chart, we can see that the index tested the long-term uptrend line at 6500 in August and rebound in September. With Stochastic hooking up and MACD looks set to follow, a recovery for plantation stocks looks set to begin.

Chart 1: Plantation index's monthly chart as at Oct 2, 2015 (Source:

2) The concern about El Nino-induced drought for Indonesian planters
From the diagram below, we can see the drought enveloping the southern parts of Kalimantan & Sumatra as well as most areas in Java & Papua New Guinea. This means most Indonesian estates will be hit by El Nino-induced drought though the impact so far has not been felt yet (except for the haze).

Diagram: Rainfall in South East Asia in September (Source: CIMB Research, NOAA)

3) Some Malaysian planters may be spared

From the table below, we can see that some Malaysian planters have very little exposure in Indonesia. Two planters in particular have zero exposure: HSPlant & FGV. The latter may have exposure once it has completed its US$680 million (RM2.8 billion) deal to buy a stake in PT Eagle High Plantations. There is rumor that the deal may not go through. We will have to wait & see.

Table: Malaysia Planters Estate Location (Source: CIMB Research)

FGV has been in a steady downtrend for the past 15 months- dropping from RM4.50 in June 2014 to a low of RM1.20 in late August & early September. FGV may recover significantly due to higher CPO prices and the overall recovery in the Plantation index. I suspect the rebound in share price will pick up pace if the deal to acquire a stake in PT Eagle High Plantations is abandoned.

Chart 2: FGVs weekly chart as at Oct 2, 2015 (Source:

Based on the above, I believe it is time to re-look at the plantation sector in general and FGV in particular. 

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, plantation stocks (including FGV).

Friday, October 02, 2015

Kenanga Challenge II

Kenanga is back with the KenTrade Trading Challenge 2 where the grand prize will be a Volkswagen Beetle 1.2 TSI worth RM135,888.

The Grand Prize- a VW Beetle

The contest features two categories of participants, namely, the Student (between 18 and 24 years of age) and the Public (18 years and above) categories. Participants will be given RM1mil virtual money to trade from Oct 1 to Oct 30.

The top-20 players (10 from the Student and 10 from the Public categories) with the overall highest growth (which will look at virtual realized profit, unrealized profit and cash balance) will qualify to participate in the grand finale on Nov 9.

In addition to the prizes to be awarded in the final, the top-33 participants from each category who had achieved the highest percentage portfolio growth from Oct 1 to Oct 30 will receive weekly cash prizes.

This is the second year that Kenanga is organizing this contest. The first Kenanga Trading Challenge was won by 27-year-old analyst See Kwan Chian who amassed about RM70,000 during a three-and-a-half hour morning session on November 13, 2014. He won a brand new Volkswagen Jetta worth RM130,888.For more, go here.

I like to share a quick thought on why you should play this game & how you should play it:

Because it is a good way to test your trading skills and discipline in a real trading environment, albeit still with safety net

Since the contest is for 1-month period, you have to be trading-focus. Some ideas to consider for the game as well as your actual trading: 
  • stocks with close correlation to currency movement (example: Harta) 
  • stocks that have bullish breakout or on the verge of bullish breakout (example: LTKM)
  • stocks that are likely to be acquired by Valuecap
To learn more about this challenge, go to Kentrade Game.

Thursday, October 01, 2015

Hiaptek: Losses multiplied

Results Update

For QE31/7/2015, Hiaptek reported a loss before tax of RM64.65 million due to share of loss of jointly controlled entity of RM26.12 million and a provision for impairment of investment in the jointly-controlled entity of RM55 million.

Table 1: Hiaptek's last 8 quarterly results

From the chart below, we can see that Hiaptek's bottom-line slipped into the red 3 quarters ago. However, its top-line continued to inch higher due to domestic demand from construction sector. This has not translated to better earnings due to intense competition from cheap import. This challenging environment is not likely to improve in the near term.

Chart 1: Hiaptek's last 44 quarterly results

Financial Position

Hiaptek's financial position as at 31/7/2015 is deemed adequate with current ratio at 1.35x & gearing ratio at 0.73x. However there is some concern about the quality of its trade receivables. Hiaptek split up its Trade & Other Receivables totaling RM686.5 million to normal Trade & Other Receivables of RM302.8 million (classified as current assets) and Trade & Other Receivables of RM383.7 million (due from a jointly-controlled entity). In term of assessing the quality of the receivables, the global approach is more accurate. It gives a debtors' collection period of 199 days (against revenue of RM1257.6 million).

Let's compare this with another steel producer, Annjoo and pipe-maker, Engtex. Based on latest quarterly results, Annjo had a debtors' collection period was only 62 days (6-month Financial Statement) while Engtex had a debtors' collection period was only 110 days (here). Thus, Hiaptek's debtors far exceeded the normal credit term in its industry. It could be partly due to favorable term granted to the jointly-controlled entity and partly due to slow collection which could translate to bad debts.


Hiaptek (closed at RM0.26 yesterday) is now trading at a Price/Book Value of 0.2 time (based on NTA of RM1.20 p.s.). With losses per share of 11 sen for the past 4 quarters. we are unable to compute its PER.

Technical Outlook

Hiaptek has broken below its long-term trading range (with a downward bias). This breakdown led to an accelerated decline that had finally found a base. We will have to wait & see whether the share price will recover from here or will just stick to the bottom.

Chart 2: Hiaptek's monthly chart as at Sep 30, 2015 (Source:


Based on poor financial performance and bearish technical outlook, Hiaptek is a stock to be avoided unless your investment time horizon is very long. However, if you are invested in it, you might as well hold onto it.

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, Hiaptek.

Teoseng & LTKM: Egg Prices Recovered

There is a research report on Teo Seng Capital Bhd ('Teoseng') from AMResearch (via klse.i3investor) which states that egg prices are rebounding. To wit:

From our recent discussions with management, we learnt that egg prices have gradually rebounded from 28 sen/egg in 2QFY15 to 34 sen/egg over 3QFY15. Note that the latter was the average egg price in 4QFY14 and 1QFY15 and is the highest historically.

Interestingly, we also understand that the price of its egg exports to Singapore (~30% of total production) is presently as high as 38 sen/egg. This is unusual given that the price differential between the domestic and Singapore market is typically between 1-2 sen/egg. The wider spread is mainly attributable to the current weakness of the RM vis-à-vis the SGD (YTD: -31%).
Premised on the rebound in egg prices, AMResearch reaffirmed its earnings projection:

We make no changes to our FY15F-FY17F earnings estimates unchanged for now. The rebound in egg prices alongside the timely addition of two new farms in July and November (+25% capacity from 3.1mil eggs per day) bode well for TSC’s 2HFY15 earnings. 
Thus, AMResearch reiterated its BUY call on Teoseng at "an unchanged fair value of RM2.70/share. This is based on an unchanged fully-diluted PE of 13x FY15F EPS".
From this report, I have to revise my earlier calls on Teoseng as well as LTKM which were basically premised on a downtrend for egg prices. As both stocks have broken above their medium-term downtrend line (see from the chart below), the proper recommendation should be BUY ON WEAKNESS. Any inconvenience caused is much regretted.

Chart 1: LTKM's weekly chart as at Sept 30, 2015 (Source:

Chart 2: Teoseng's weekly chart as at Sept 30, 2015 (Source:

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, Teoseng and LTKM.

CPO: Riding on Weakened Ringgit & El Nino

After a hammer was sighted in late August (here), CPO ralliedall the way from RM1900 to yesterday high of RM2400. The rally was prompted by the expected drop in FFB output due to the dry weather brought on by the warm phase of the El Niño Southern Oscillation. In addition, CPO priced in MYR also received a big boost from the weakening of MYR vis-a-vis USD & other currencies.

Technical resistance for CPO plus technical support for MYR could cap the rise of CPO for the short-term after the huge rise. The RM2400 level should act as a strong resistance for now while immediate support levels are at RM2280 & RM2230. 

Chart: CPO's daily chart as at Sep 30, 2015 (Source:

Wednesday, September 30, 2015

VS: Profits bummed up by forex gain

Result Update

For QE31/7/2015, VS's net profit increased by 99% q-o-q or 45% y-o-y to RM53 million while revenue was mixed; rose 21% q-o-q or declined 5% y-o-y to RM507 million. VS's PBT rose q-o-q due to forex gain of RM24.4 million which was partially offset by inventory write-down of RM7.7 million, impairment loss for PPE & trade receivables totaling RM3.0 million & loss on disposal of PPE of RM1.0 million.

Table 2: VS's last 8 quarterly results

Chart 1: VS's last 42 quarterly results

In the past 2 years, VS's net profit has benefited from exceptional gains, such as forex gains (in QE31/7/2015 & QE31/4/2015), tax credit (in QE31/10/2014 & QE31/7/2014) & gain on purchase of a 17.18%-interest in VS International Group Ltd (in QE31/7/2013). If we leave out the exceptional gains, then we can see that the operating performance of VS has been on a steady rise.

Chart 2: VS's last 42Qs NP (as reported & adjusted for exceptional gains)   


VS (closed at RM1.47 yesterday) is trading at a trailing PE of 11.5 times (based on last 4 quarters' EPS of 12.8 sen). At this PER, VS (a cyclical stock) is deemed fairly valued.

(Note: VS had a share split of 1-to-5 in September.)

Technical Outlook

Since late 2013, VS has been on a scorching run-up from 25 sen to RM1.50 recently. In the process, VS touched the line connecting the peaks of 2000 & 2007. Naturally, this would present some kind of resistance to the stock. Will it cap the rise for now? We will have to wait & see.

Chart 3: VS's monthly chart as at SEpt 29, 2015 (Source:


Based on satisfactory financial performance andfair valuation, VS is a good stock for long-term investment. However, I would advise caution as the stock could be trading at peak earning.

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, VS.

Yinson: Seesawing Profits Left Investors Confused

Results Update

For QE31/7/2015, Yinson's net profit increased by 650% q-o-q or 155% y-o-y to RM78 million while revenue was mixed- down 10% q-o-q or 17% y-o-y to RM231 million. Pre-tax profit increased q-o-q due to forex gain of RM55 million & net gain from derivatives of RM18 million.

Table 1: Yinson's last 8 quarterly results

Chart 1: Yinson's last 32 quarterly results 

Yinson's net profit has been seesawing in the past 2 years. If we left out the forex gains, gains on derivatives & gain on bargain purchase (in QE31/7/2015, QE31/1/2015, QE31/10/2014 & QE31/1/2014), a clearer picture will emerge. The picture is one that shows earnings had peaked in QE31/10/2014. This is consistent with the breakdown in crude oil prices in August-September 2014.

Chart 1: Yinson's last 32Qs NP (as reported & adjusted for forex, derivatives & exceptional gains)  


Yinson (RM2.90 yesterday) is now trading at a trailing PE of 10.4 times (based on last 4 quarters' EPS of 28 sen). However, if we exclude forex gain & derivative gains, the last 4 quarters' EPS would be reduced to. ~8 sen and PER would rise to 35 times. While the earning growth is impressive based on either reported or adjusted net profit, it is doubtful that this trend will continue given the current weak crude oil environment. As such, Yinson is deemed fully valued for now.

Technical Outlook

In the past 1 year, Yinson has transitioned from an uptrend to a sideways movement with a downward bias. Its resistance is at RM3.20 while strong support can be seen at RM2.30.

Chart 3: Yinson's monthly chart as at Sept 29, 2015 (Source:

Based on pedestrian operating financial performance and demanding valuation, I would rate the stock as SELL ON STRENGTH. Aggressive selling is not necessary yet as the technical outlook is still neutral.

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, Yinson.