Thursday, November 30, 2006
Chart 1: Maybank's daily chart as at Nov 29
Chart 2: TM's daily chart as at Nov 29
Chart 3: Tenaga's daily chart as at Nov 29
Based on the 9-month’s EPS amounted to 27.64 sen, Yechiu’s full year EPS could be 36.8 sen. Yechiu closed at RM1.33 yesterday; giving a PE of 3.6 times.
Chartwise, the stock has just broken out of its descending triangle at RM1.28 yesterday.
Based on attractive valuation & bullish breakout, Yechiu is a BUY.
Wednesday, November 29, 2006
Table 1: Changes in Call warrants' prices, underlying share prices & premium from Nov 24 to 29
I have also posted below the usual Call Warrants update for your easy reference. The cheap call warrants are highlighted in yellow while 2 call warrants that due to expire in January 2007 (i.e. Astro-CA & Scomi-CA), have their expiry dates highlighted in pink. To be fair, I'm not too disturbed by the upcoming expiry of Astro-CA as it is trading within the money. It is Scomi-CA that you must avoid as it is trading outside the money.
Table 2: Call warrants' intrinsic value & premium as at Nov 29
Due to the sharp rise in net profit, Tongher's EPS for QE30/9/2006 is at 24.39 sen. If this earning can be maintained going forward, Tongher's EPS for full-year could be as high as 97.56 sen. At 3.00 p.m. (November 29), Tingher is trading at RM4.00. At this price, Tongher's PE is about 4.1 times, which is still relative inexpensive.From the weekly chart below, you can see that Tongher has broken out of its rising wedge at RM3.50 level in October. The next resistance was RM3.90, which was broken today. Tongher could revisit its high of RM4.30 recorded in December 2004.
Based on cheap valuation, I believe Tongher is still attractive investment despite having risen by about 80% in the past 12 months (i.e. from RM2.20 in December 2005 to RM4.00 at 3.00 p.m. today).
On weakness, I believe the CI may pull back to test the horizontal support of 1050 & the 10-day SMA of 1045. These levels should be able to hold up the market as it corrects the excess of last Friday & this Monday.
Chart: CI's daily chart as at Nov 28
In view of the above, you may use this morning's improved prices to raise some cash in order to take advantage of any correction that may roll in later.
Tuesday, November 28, 2006
Maxtral’s last 4 quarters’ net profit amounted to RM14.9 million, which is double that of the preceding 4 quarters. Turnover has increased by 49% from RM130.5 million to RM194.7 million during the same periods. Consequently, its EPS for the last 4 quarters increased by 110% to 7.04 sen from 3.36 sen previously.
Based on yesterday (November 27)’s closing price of RM0.435, Maxtral is now trading at a PE of 6.2 times. That’s not expensive for a timber-related stock given the current timber theme play.
The technical picture for Maxtral is quite attractive. The stock has recently surpassed its April high of RM0.39. With this breakout, the stock may rally upward in line with the other timber stocks.
Based on inexpensive valuation & nice technical set-up, I believe Maxtral is a fairly safe timber stock to invest in.
Sunday, November 26, 2006
Before we proceed further, let’s recap some outstanding significant corporate exercises that may have impact investors’ opinion on IJM. A few weeks ago, IJM has proposed to takeover of Road Builders in a deal which effectively swaps 2 Road Builders shares for 1 IJM new share. In addition, the market is also awaiting the confirmation of IJM’s acquisition of a stake in Kumpulan Euro, with the stumbling block being the finalization of the latter’s concession agreement with the State Government of Selangor regarding the development of the
As a technical rule, a stock that has made a new high has the tendency to continue to go higher. As such, IJM could be in for a very interesting time. Having said that, I like to introduce you to another technical rule; one that’s not so well-known. In the book, Trader Vic - Methods of a Wall Street Master, Victor Spenrandeo has made this observation: “In an uptrend, if a higher high is made but fails to carry through, and then prices drop below the previous high, then the trend is apt to reverse." That’s something that we must watch out for in the next few trading days- whether IJM share price may slide back below the RM7.05 level.
The big question is how do you gain entry into this developing play, besides buying into IJM. You can do anyone of the following:
- Buy Road Builders; or
- Buy IJM-CA or IJM-CB or IJM-WB.
Buying Road Builders to ride on IJM's rise is relatively safe since the IJM-Road Builders deal, being a friendly deal, is likely to be completed. As the Road Builders share shall be exchanged for IJM share at a ratio of 2:1, you should buy Road Builders at a price not exceeding RM3.55. In fact, you should build in a discount of 3 to 5% to take into account of the risk of the IJM-Road Builders deal may somehow falter.
Buy IJM-CA or IJM-CB or IJM-WB is more straight-forward. These are warrants or options that derive their value from the underlying share i.e. IJM and their value will appreciate as IJM rises. See the Table below.
Here, we have a very strange situation of IJM-WB trading at a discount of 40 sen or 5.6%. This doesn’t seem right. It gives rise to a situation where one can simply buy IJM-WB & exercise the conversion option by paying the exercise price of RM4.80 & thereafter disposing off the share at a profit of RM0.40 [IJM price of RM7.15 less (IJM-WB price of RM1.95 plus exercise price of RM4.80)]. In fact, the volume traded last Friday of 76,245 lots (or, 7.6245 million units) indicates that some investors may have spotted this discount & were buying quite substantially. The question is why are the sellers so willing to sell at a discount? In the past, I have noticed that such anomalies could persist for sometime, say a few days or even a few weeks. The longer this discount persists, the greater is the chance that the share price will correct. This is only natural as demand (for the share) will eventually be fulfilled by unending supply as more shares are created due to the investors’ exercising their warrants (i.e, IJM-WB) for new shares.So, over the next few days, watch out for IJM share price as well as IJM-WB price. If IJM share price drop below RM7.05 or the discount persist for IJM-WB, you are forewarned that this 'new high' may not sustain.
Yoko has just reported its results for QE30/9/2006 which shows a net profit of RM2.35 mil, which is a substantial improvement over a net loss of RM4.8 mil recorded in the previous corresponding quarter. Turnover for QE30/9/2006 of RM30.3 mil is 7.8% higher than turnover in QE30/9/2005. Current net profit is however 38.4% lower than the immediate preceding quarter’s net profit of RM3.8 mil. This is attributable to the recognition for the gain on disposal of a subsidiary in France of RM3.1 mil during the last quarter.
EPS for the first 3 quarters amount to 19.23 sen vis-à-vis an EPS of only 0.32 sen for the same periods last year. If we exclude the non-recurring exceptional gain of RM3.1 mil from the disposal of the subsidiary in France, the EPS would be lowered to about 12 sen. Annualizing this, we can arrive at a full year EPS of 16 sen for Yoko. Based on the clsoing price of RM0.555 as at November 24, Yoko is now trading at a PE of about 3.5 times only.
From Chart 1 below, you can see that Yoko may have just broken above its horizontal resistance of RM0.55. This followed the break above its 200-day Simple Moving Average (SMA) of RM0.48 at the end of October. You may also notice that the 50-day SMA has also crossed above the 200-day SMA. For a chart with a longer time frame, go to Chart 2 below.
Chart 1: Yoko's daily chart from Jan 2005-November 2006
Chart 2: Yoko's daily chart from Jan 2003-November 2006
Based on attractive valuation & potentially bullish technical outlook, Yoko is a stock good for a medium-term trade or for the long haul.
Friday, November 24, 2006
Kesm’s net profit for the last 4 quarters has increased by 18.9% to RM14.9 mil when compared to the preceding 4 quarters. This was achieved on the back of a 5.7%-increase in turnover to RM176 mil. EPS has also increased by 15.3% to 34.6 sen. Based on yesterday's closing price of RM1.78, Kesm is trading at a PE of 5.1 times.
Mycron has achieved a net profit of RM7.6 million on a turnover of RM84.2 million for QE30/6/2006 (the latest available result). Its EPS fro that quarter amounted to 4.3 sen; giving a full year EPS of 17.2 sen. Based on its closing price of RM0.83 today, Mycron is trading at a PE of only 4.8 times.
The weekly chart (Chart 1) shows that Mycron share price is in a downtrend with a possible breakout at RM0.80. It has tested that level yesterday (Nov 23) but failed to stay above the RM0.80 mark (see the daily chart, Chart 2). Today, Mycron has again broken above this level & closed at RM0.83. If this breakout can hold, the share price may go higher, with horizontal resistances at RM0.85, RM0.95 & RM1.00.
Chart 1: Mycron's weekly chart as at Nov 22
Chart 2: Mycron's daily chart as at Nov 22
Based on relatively cheap valuation & possible bullish breakout, Mycron could be a good trade.
Today, call warrants had a fantastic day. Amongst the top 20 stocks with the biggest volume, 8 of them are call warrants. Of the top 20 stocks with the highest percentage gain, 7 of them are call warrants. Of the total volume of stocks traded of 1.333 billion, 221 million were contributed by call warrants. The big question now is whether this increase can sustain.
From Table 1 below, I have tabulated the percentage gain of the call warrants vis-a-vis the percentage gain of the mother shares (from yesterday i.e. November 23 to today). You can see that the call warrants had gained 14.34% as compared to a gain of 1.54% for their mother share. That may worry many but if you look carefully you will see that the increase is not unusual. You can see that the average premium of the call warrants had only increased from 9.41% to 9.69%. The only thing that I am concerned with is the huge volume, which may lead to some overhang next week.
Table 1: Comparison of Call Warrants' changes, Mother shares' changes & Call Warrants' premium.
In addition, I have tabulated below the latest list of call warrants' intrinsic value & premium for your perusal. As usual, call warrants with premium below 10% are highlighted in yellow & the two earliest call warrants to expire i.e. Astro-CA & Scomi-CA have their expiry date highlighted in pink.
Chart 1: Bursa-CA's daily chart as at Nov 24
Chart 2: Bursa's daily chart as at Nov 24
Bursa-CA, the call warrant of Bursa Malaysia, has been running up very strong since its breakout above RM0.46 at November 10 (see Chart 1 above). It gained 12 sen to close at RM0.855 at the end of the morning session today. Bursa share price has gained 5 sen to close at RM7.00 at the same time.
During the period of 10 days, Bursa-CA's premium has increased from 2.65% as at November 14 to 11.77% as at the end of this morning session. Is this a sign that something bullish is ahead for the mother share?
If you look at the mother share's chart (see Chart 2 above), you will see that the share has been pressing against the RM7.00 level. A break above this level could be the start of another bullish move that may bring Bursa to its recent high of RM7.65. At the time of writing this post, Bursa is at RM7.05.
Wednesday, November 22, 2006
Chart 1: RUBhd's weekly chart as at Nov 21
Chart 2: RUBhd's daily chart as at Nov 21
The reason for the big price movement was the announcement of its result for QE30/9/2006 where RUBhd’s net profit jumped 77% q-o-q or 99% y-o-y to RM58.5 mil on the back of a turnover of RM157 mil, which represents a gain of 7% q-o-q or 10% y-o-y. With this oversized improvement in net profit, RUBhd’s EPS had also increased to 19.88 sen. If it can maintain this performance, RUBhd’s full year EPS could touch 79.52 sen. The improved performance was attributable to higher margin which flows from the restructuring of the water concessions operation in the State of
After the big price move mentioned earlier, RUBhd share price has retraced back to RM1.48. Today, it has begun to move up again. The share closed at RM1.56 at the end of the morning session, gaining 6 sen on a volume of 4,276 lots. At this price & assuming a full year EPS of 79.52 sen, RUBhd is trading at a PE of 2.0 times only. Hard to believe…
The share price also reflects NSTP's fortune. From a high of RM5.10 in Feb 2004, the share price has dropped to a low of RM1.63 in Jun 2006. Since then, the share price has been bottoming out with its rise capped at RM1.84. A recent attempt to break above this level went as high as RM1.91 on Nov 8 before succumbing to selling pressure. This morning, NSTP has again surpassed the RM1.84 level & also breaking above its medium-term downtrend line at RM2.00 level. At the close of the morning session, NSTP was trading at RM2.03. See the daily & weekly charts below.
Chart 1: NSTP's weekly chart as at Nov 21
Chart 2: NSTP's daily chart as at Nov 21
If NSTP can hold above the RM2.00 level, there is a good chance that the share can go higher. An entry at RM2.00 would be relatively safe.
Tuesday, November 21, 2006
Scicom's share price has been rising steadily from a recent low of RM0.345 on June 12, 2006 to a high of RM0.665 on October 31. The sharp rise coincided with a 1-for-1 bonus issue that was complated in October. Since then, the share price has been drifting down & it may soon test its uptrend line support at RM0.53 (& rising). This would be a very good level to make your entry into Scicom. See the daily chart below.
Based on a theoretical entry price of RM0.53 & the full year's EPS of 5.04 sen (based on the latest EPS of 1.26 sen for QE 30/9/06), Scicom is trading at a PE of 10.5 times. That's quite attractive for a stock that is enjoying such a strong growth.
Friday, November 17, 2006
I have updated the list of call warrants below. Included in the list are 2 new call warrants i.e.
As always, the call warrants with premium less than 10% are highlighted in yellow while the 2 call warrants expiring in Jan 2007 i.e. Astro-CA & Scomi-CA have their expiry date highlighted in pink.
From the monthly chart below, we can see that the CI will be coming up against the 1060 resistance next. Since the market has run up quite sharply in the past few days, I believe that its could be due for a minor correction. One of the possible reasons for this current rally could be the ongoing UMNO assembly but this assembly will be ending this week end. Personally, I do not subscribe to the idea that the current run will end with the completion of the UMNO assembly but, if the market needs a rest, it will use any excuse to do so. And, this market could do with a short rest.
Chart: CI's monthly chart as at Nov 16
Have a nice week end.
Chart: Dialog's monthly chart as at Nov 16
Dialog has an EPS of 3.2 sen for the past 4 quarters. Based on its current price of RM0.675, its PE is at 21 times, hardly cheap even for an oil & gas company.
Based on bullish technical outlook (if the breakout can sustain), Dialog could be a good trading buy. As observed, it is not cheap based on fundamental valuation.
Net profit has increased by more than 17-fold y-o-y or more than 3-fold q-o-q to RM86.1 million. This was achieved on the back of a turnover of RM435.5 million, which represents an increase of 41.0% y-o-y or 25.1% q-o-q. The good performance is attributable to better price for logs and plywood as well as higher production volume. In line with the jump in its net profit, Lingui's EPS has increased to 13.1 sen for QE30/9/2006. Based on this, its full-year EPS could be 52.4 sen. See table below.
Based on this estimated EPS & Lingui's closing price of RM1.19 as at yesterday (November 17), Lingui is now trading at a PE of 2.3 times. That's very cheap. And, because this computed PE is so low, there is ample room to absolve any error that may arise in our calculation of Lingui's full-year EPS.
Chartwise, Lingui has broken above its medium-term downtrend in August at RM0.95. Its current up leg may face strong horizontal resistance at RM1.50 & 1.80.
Chart: Lingui's daily chart from Jan 1, 2003 to Nov 16, 2006
Based on the cheap valuation, good sectoral outlook & nice technical picture, I believe Lingui to be a very good investment.
Thursday, November 16, 2006
TM has broken above its medium-term downtrend line at RM9.00 on November 7. Thereafter it continued to drift sideway. Besides the downtrend line, TM share price also faces a strong horizontal resistance of RM9.20, which has been in place since June.
At 11.45 a.m. this morning, TM has finally broken above the strong horizontal resistance of RM9.20. At the close of the morning session, TM share price was at RM9.45. With this breakout, I believe that TM is about to commence on its uptrend move. See Chart 1 & 2 below.
Chart 1: TM's weekly chart as at Nov 15
Chart 2: TM's daily chart as at Nov 15
For the traders, you may like to try out TM-CA, the call warrant of TM, with an exercise ratio of 1:1; an exercise price of RM9.21 & expiring on November 18, 2007. At the price of RM0.595 at the close of this morning session (with the mother price of RM9.45), TM-CA is trading at a premium of 3.8% only. Chartwise, TM-CA hasn’t broken above its downtrend line yet, even after this morning’s sharp rise (see Chart 3 below). To achieve a breakout, TM-CA needs to surpass the RM0.65/66 level.
Chart 3: TM-CA's weekly chart as at Nov 15
In conclusion, I believe TM is now a good buy after this morning’s breakout. Even though TM-CA hasn’t broken above its downtrend line yet, I believe it is likely to happen soon. A good entry for TM is probably now. TM-CA is trickier but a gradual entry starting now would be safer (without missing the boat).
Wednesday, November 15, 2006
I’ve updated the list of call warrants. See Table 1 below.
Table 1: List of call warrants as at Nov 14
The call warrants have out-performed the broader market by a large margin (see Table 2 below). The percentage gain for call warrants averages about 40.2% vis-a-vis a gain of 5.5% for the mother shares. The average premium has increased from 8.6% to 11.4%.
Table 2: Change in the price of call warrants, shares & premium from Nov 3 to Nov 14
So, those who have invested in call warrants would have made very good return in the current bullish market. As the premium is still low (as compared to 20-30% in a well-recognized bull market), call warrants will still hold an appeal to many, especially those who adopt a more short-term approach in their trading/investing. As always, an instrument that afford leverage exposure will enhance return as well as the accompanying risk. Off hand, a few call warrants that appeal to me are call warrants for Tenaga, Astro and, maybe, Maxis.
Yesterday, Maxis-CA has a very sharp run-up. It gained 18.5 sen to close at RM1.06. In the process, Maxis-CA has broken above two important resistances i.e. the medium-term downtrend line which commenced in w/e Jan 14, 2005 at the RM1.03 level as well as the psychological resistance of RM1.00. With this breakout, Maxis-CA may test the next resistances at RM1.15 & RM1.35. See Chart 1 below.
Chart1: Maxis-CA's weekly as at Nov 14
The mother share has gained 20sen to close at RM9.05, yesterday. It is important that the share should surpass the RM9.05 or 9.10 resistance, which has been in place since November 2005 (see Chart 2 below). Unless this happens, the rise in the price of Maxis-CA is not likely to sustain.
Chart1: Maxis' weekly as at Nov 14
By 11.00 a.m. this morning, the share has broken above the RM9.05/10 resistance to touch RM9.20 while Maxis-CA gained 19 sen to touch RM1.25. For those who are interested to gain entry to Maxis, the level to look out for is RM9.05/10. An exposure via Maxis-CA may be a bit tricky after this current sharp run-up. You may want to see whether it can pull back to resistance-turned-support levels such as RM1.15 or a much safer level RM1.00.Maxis-CA has an exercise ratio of 1:1; an exercise price of RM8.11 & expiring on November 18, 2007. At the price of RM1.25 at 11.00 a.m. this morning (with the mother price of RM9.20), Maxis-CA is trading at a premium of 1.7% only.
Tuesday, November 14, 2006
Chart 1: UMW's weekly chart as at Nov 13
The immediate resistance is at RM7.80, which is the high achieved in July 2006. If it can overcome this resistance, it may revisit its all-time high of RM8.70 in February & April 1997. See the monthly chart, Chart 2 below.
Chart 2: UMW's monthly chart as at Nov 13
Monday, November 13, 2006
Chart 1: Astro's daily chart from Jan 1, 2006 to Nov 13, 2006
Chart 2: Astro's daily chart from Jan 1, 2005 to Nov 13, 2006
For those who favor a trading approach, you may like to try out Astro-CA, which is a call warrant with exercise ratio of 2:1 & exercise price of RM4.65 but expiring on January 29, 2007. At the closing price of RM0.275 yesterday, Astro-CA is trading at its intrinsic value only, without any premium. This very attractive valuation could be due to its short tenor remaining but nevertheless this is a very good exposure to a semi-blue chip that has just achieved a bullish breakout.
Chart 3: Astro-CA's daily chart from Jun 1, 2006 to Nov 13, 2006
Based on the above, I believe Astro would make a good medium-term investment. Astro-CA would give a higher relative return but accompanied with higher risk.