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Tuesday, July 10, 2018

Topglov: Technical Rebound


Topglov is having a strong technical rebound today. If you managed to buy yesterday, you may be keen to know what are the resistance levels to aim to take some profit. I think the natural level will be the psychological level of RM10.00. I have drawn a few horizontal lines where resistance can be expected- RM9.90, RM10.35 & RM10.70.


Chart: Topglov's daily chart as at July 10, 2018_2.45pm (Source: Shareinvestor.com)

Despite the strong rebound in the share price, some Topglov call warrants are still dropping. In selecting call warrants to buy, you follow this set of rules:
1. Select CWs with adequate time to expiry (say more than 3 months)
2. Select CWs with low premium (say, 10% or less)
3. Select CWs with good gearing
4. Select CWs that's not too deeply OTM

Of course, we have skipped the first rule in picking CWs to buy; that's select the tight right stock. In this case, I believe that Topglov is still a good stock to BUY.

From klsescreener, I have extracted all the CWs of Topglov. I have sorted them according to their expiry dates. Only 4 CWs meet the first rule on time to expiry (highlighted in yellow). Only one CW, Topglov-C29 meets the remaining 3 rules (Note: The premium of slightly above 10% is stretching the rule a bit).


Table: Topglov's CWs terms & valuation (Source: Klsecreener)

Topglov-C24, C27, C28, C30 & C31 have very short time to expiry and carry substantial (time value) premium. Avoid these 5 CWs.

Good luck!

Monday, July 09, 2018

Topglov: The Gloves Are Off

Last Friday, Topglov announced that it have taken legal proceedings against Adventa Capital Pte Ltd (“Adventa”) vide the KL OS and the Singapore OS, as well as Low Chin Guan, Wong Chin Toh and ACPL Sdn Bhd (“ACPL”) vide the Writ Action on 29.6.2018 and 2.7.2018.

This is in relation to Topglov’s wholly-owned subsidiary’s Top Care Sdn Bhd (“Top Care”)’s purchase of the 270,850,119 shares in Aspion Sdn Bhd (“Aspion”) from Adventa Capital for a fixed amount of RM1.37 billion in January this year.

Topglov claimed that Adventa & its sponsors have made misrepresentations which resulted in Topglov & Top Care entering into the agreement to purchase Aspion. Topglov and Top care are claiming for a sum of not less than RM714,862,759 arising from a conspiracy to defraud them.

The loss of RM714.86 million for Topglov, with outstanding issue shares of 1.28 billion units, translates to a loss of 56 sen per share. Its NTA will be reduced from RM1.78 to RM1.22. If we exclude the impact of this one-off exceptional loss, Topglov (now at RM9.00 @9.45am) is trading at a PER of 26 times (based on  last 4 quarters' EPS of 34.3sen). That's fairly attractive for a rubber glove stock. Even Supermx is now trading at a PER of 28 times (based on price of RM4.50 & last 4 quarters' EPS of 15.9 sen).

Chartwise, Topglov's immediate support is at the horizontal line at RM8.00. next support will be at the tentative uptrend line, SS at RM6.50. 


Chart: Topglov's monthly chart as at july 9, 2018 (Source: Shareinvestor,com)

Based on good financial performance & attractive valuation, Topglov is a good BUY.

Thursday, July 05, 2018

Hohup-WA: What's UP?!


Hohup-wa (now at RM0.125) is one of the top volume security traded today. This warrant has the following terms:
Exercise price: RM0.60
Expiry date: December 21, 2018 (169 days)
Conversion ratio: 1-to-1
As Hohup is now trading at only RM0.515, Hohup-wa is out-the-money. The entire amount of the warrant price of RM0.125 is conversion premium, and this will slowly decay over the next 169 days. Be careful if you choose to get into Hohup-wa.


Chart 1: Hohup-wa's daily chart as at July 5, 2018_4.40pm (Source: Shareinvestor.com)


Chart 2: Hohup's daily chart as at July 5, 2018_4.40pm (Source: Shareinvestor.com)

Note: I spoke about this in a BURSA MALAYSIA webinar entitled Warrant 101 on July 3. The first trap to avoid in trading warrant is a warrant exactly like Hohup-wa.

Sunday, July 01, 2018

Cypark: Earning Soared

Result Update

For QE30/4/2018, Cypark's net profit rose 53% q-o-q or 62% y-o-y to RM12 million while revenue increased by 18% q-o-q & % y-o-y to RM99 million. Revenue and profit before tax rose q-o-q mainly due to the better income contributed by the intense specialist work activities performed in the current stage of the project cycle in Environmental Engineering division. 


 Table: Cypark's last 8 quarterly results


Graph: Cypark's last 32 quarterly results

Valuation

Cypark (closed at RM2.29 last Friday) is now trading at a PE of 9.3 times (based on last 4 quarters' EPS of 24.72 sen). At this multiple, Cypark is deemed fairly attractive.

Technical Outlook

Cypark broke its long-term uptrend line, SS at RM2.50 in April. Its decline has been checked by the horizontal line at RM2.20.


Chart 1: Cypark's monthly chart as at Jun 29, 2018 (Source: Shareinvestor.com)

On closer look, the horizontal support appears to be at RM2.25


Chart 2: Cypark's weekly chart as at Jun 29, 2018 (Source: Shareinvestor.com)

Conclusion

Based on the good financial performance and fairly attractive valuation, I consider a good stock for long-term investment. My rating is downgraded to a HOLD because of the breakdown below the uptrend line.

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.

AEONCR: Earning Rebounded Strongly

Result Update

For QE30/5/2018, AEONCR's net profit rose 21% q-o-q or 31% y-o-y to RM99 million while revenue rose 5% q-o-q or 8% y-o-y to RM326 million. Pre-tax profit rose 25% q-o-q mainly due to lower impairment loss on financial receivables.


Table: AEONCR's last 8 quarterly results

As noted previously, AEONCR's revenue & profits are at a new "high" territory!


Graph: AEONCR's last 44 quarterly results

Valuation

AEONCR (closed at RM14.40 last Friday) is now trading at a PE of 10.7 times (based on last 4 quarters' EPS of 135 sen). At this PER, AEONCR is deemed fairly attractive. In addition, it pays a decent dividend with DY of 2.9% (based on last year dividend of  41.13 sen).

Technical Outlook

Despite recent correction, AEONCR's uptrend seems intact as the decline was stopped by the 30-week EMA line.


Chart 1: AEONCR'sweekly chart as at Jun 29, 2018 (Source: Shareinvestor.com)


Chart 2: AEONCR's monthly chart as at Jun 29, 2018 (Source: Shareinvestor.com)

Conclusion

Based on satisfactory financial performance, fairly attractive valuation, steady growth prospect & positive technical outlook, AEONCR 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.

Friday, June 29, 2018

Tenaga: The Cost Pass-through Rule Still Applies (Updated)


This morning, Tenaga jumped up more than RM1.00 after it announced that the Government of Malaysia (“Government”) has approved, via a letter from Suruhanjaya Tenaga (“ST”) dated 28 June 2018, the continued implementation of Imbalance Cost Pass-Through (“ICPT”) for the period of 1 July – 31 December 2018. For more, go to here.

Chart 1: Tenaga's daily chart as at June 29, 2018 (Source: Shareinvestor.com)

This is a positive development as the market was concerned over the past few weeks that Tenaga may have to do "national service" by absorbing instead of passing through cost increases. In fact, the market - which is under selling pressure from foreign funds - was gripped by the fear that the new government will go after these companies for their past link to Najib & UMNO. I find that illogical because most of these blue chip stocks are government-linked companies. By default, they are owned by the people of Malaysia. The new government will not be so silly as to harm these companies even if their Chairmen were friendly to Najib & UMNO. The most logical thing to do is to put some pressure on their Board of Directors to remove the Chairman. That's why I believe the sell-down of CIMB is grossly overdone.  

Chart 2: CIMB's daily chart as at June 29, 2018 (Source: Shareinvestor.com)

The Government's decision in regards to the Tenaga cost pass-through rule suggests that it cannot simply pressure TM to lower its broadband charges. Earlier the minister concerned has declared that Unifi should lower its broadband charges by 25% by end of the year (here). This call by the minister has added pressure on TM share price - leading to a sharp drop over the past few weeks.


Chart 3: TM's daily chart as at June 29, 2018 (Source: Shareinvestor.com)

Thursday, June 28, 2018

Market Outlook as at June 28, 2018

Our FBMKLCI has been sliding for 13 days up to yesterday. We are not sure how it will perform today though it is now in positive territory as at 3.30pm.


Chart 1: FBMKLCI's daily chart as at June 28, 2018_12.30pm (Source: Shareinvestor.com)

The drop in FBMKLCI has brought the index to the line connecting the low since 2010 (denoted as "AB"). The support from that line should be at 1650. That coincides with the horizontal line too. Thus I believe FBMKLCI should have a decent chance of at least a technical rebound from this level. I would not be surprised if this level may stop the current market sell-off.


Chart 2: FBMKLCI's monthly chart as at June 28, 2018_12.30pm (Source: Shareinvestor.com)

You see the composite charts of FBM70, FBMSCAP, FBMACE & FBMFLG are showing the 2nd & 3rd liner stocks; Ace Market stocks; and the fledgling stocks have not dropped as badly as the blue chip stocks. The drop in blue chips is due to selling by foreign fund managers due to many market fears, notably trade war waged by the U.S. against her major trading partners.


Chart 3: FBM70, FBMSCAP, FBMACE  and FBMFLG's daily chart as at June 28, 2018_12.30pm (Source: Shareinvestor.com)

It is hard to advise on how you should position yourself in a weak market. How much you should hold or buy in a falling market is determined by your own market outlook, experience and pain tolerance. If the market decline is giving you sleepless nights, you should consider reducing your portfolio to a level that allows you to sleep better. On the other hand, you may find share prices are trading at fairly attractive level and you feel like buying in the market now. My advice is to buy slowly so that you won't be joining those who are having sleepless nights. Good luck.

Wednesday, June 27, 2018

Pohuat: Earning Stabilized

Results Update

For QE30/4/2018, Pohuat's net profit rose 73% q-o-q or 2% y-o-y to RM11 million while revenue dropped 23% q-o-q or 2% y-o-y to RM126 million. Revenue dropped y-o-y due to 12.4%-decline in turnover for the Vietnamese operations, due to lower exchange rate for VND to MYR, which was partially offset by a 16.3%-increase in turnover for the Malaysian operation due to strong orders for our panel-based bedroom sets for the US market.

Despite higher sales, the Malaysian operations reported a lower gross profit margin of 18.1% in the current reporting period against 26.9% in the previous corresponding reporting period due to the
progressive increase in raw material costs as well as the weakening of the USD against the Ringgit which has resulted in lower Ringgit selling prices for our products.

In line with the lower sales, the Vietnamese operations reported a lower profit before tax of RM4.00 million as Profit before tax margin weakened to 5.84% against 9.39% previously due to the shift in our product mix to the affordable ranges and progressive increases in raw material and labor costs over the last 12 months.

During the quarter, Pohuat recorded exceptional gains from fire insurance compensation of RM1.27 million (for its Malaysian operation) as well as a net income of RM3.95 million being the final payment under the Settlement of Enforcement Proceedings Agreement for the disposal of our former subsidiary, Poh Huat Furniture Industries (Qingdao) Co Ltd. If these 2 one-off exceptional items were excluded, Pohuta's profit before tax would be lowered to RM7.4 million. Thus, Pohuat's profit before tax would show a decline compared to the immediate preceding quarter.


Table 1: Pohuat's last 8 quarterly results


Graph: Pohuat's last 46 quarterly results

Valuation

Pohuat (closed at RM1.31 at the end of the morning session) is now trading at a trailing gross PER of 6.4 times (based on last 4 quarters' EPS of 20.65 sen). At this PER, the stock is fairly attractive. In addition, the stock pays dividend totaling 8 sen in last 4 quarter, which translates to an attractive Dividend Yield of 6.1%.

Technical Outlook

In January this year, Pohuat broke its 20-month EMA line at RM1.70, which effectively signaled the end of its uptrend.


Chart 1: Pohuat's monthly chart as at Jun 27, 2018_12.30 (Source: Shareinvestor.com)

After a steady decline over the past 6 months, Pohuat has recently broken above its downtrend line, RR at RM1.30. This means the share price is likely to at least form a base around the RM1.30 level before it may begin its recovery.


Chart 2: Pohuat's weekly chart as at Jun 27, 2018_12.30 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance (albeit weaker than before) and fairly attractive valuation, Pohuat 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.