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Friday, December 29, 2006

Charting for everyone

I've received many requests for assistance on charting matters. The requests normally fall into two categories; one is charting knowledge and the other is the source for charts on shares listed on Bursa Malaysia. On the former, I think that one very good source is the Chart School provided by StockCharts.com. Of course you can go out and buy some books on technical analysis written by authors such as John Murphy etc. On the source of charts, I believe that one of the very good website that you can get free charts is TradeSignum.com (go here for the free charts). Alternatively, you can buy a charting software (such as Metastock etc) & then, subscribe for the data.

With this post, I shall be take my leave until 2007. I must say that 2006 has been a good year for me for business reasons as well as personal development. One of the best thing that has happened is the starting of this blog, which has been a very enjoyable & rewarding experiment for me. When I first started blogging in last July, I thought I would not be able to sustain for more than a few weeks. Six months down the road, I am still at it. The excitement of spotting a good stock or sector or calling a reversal in the market; that will drive me on. It is not an easy task to blog and still carry on my stockbroking/dealing job at the same time. If the dealing is too hectic, the blogging will have to wait. As such, you may find a post that is slightly late. Well, that's the limitation that I've lived with for now.

2007 is likely to be a very exciting year for Malaysian stocks. We must take our chances when the opportunity comes along and I believe that 2007 is a good time for equity. With each trade, we must weigh the reward & the risk carefully. In trading as in investing, commitment is everything. By commitment, I meant the acceptance of the risk that goes hand in hand with the reward that you hope for. There will be losses as much as there will be gains. If a trade goes against you, you need to take the loss and move on. The market in 2007 will test your mettle as a trader because the prices will likely to be much higher than now. If the market were to do a major top after a long run-up, there is only one thing to do. Sell quickly when the time comes. Until then, you must stay sharp & focused.

That's all for now. I wish you all a very Happy New Year.

Call Warrant updates

Those, who has been following my Call Warrants Updates, would have noticed that the last update was on December 18. I've discovered a good place to obtain call warrants' pricing/premium computation at OSK188.com. You can check out this source by going to this link (here).

OSK188.com provides a Structured Warrant Pricing Table, which is updated quite regularly. The December 28 table is reproduced below. I've highlighted those call warrants with premium less than 5% (in yellow) as well as those expiring in January 2007 (in blue) & 3 months thereafter (in green).



One thing that you may notice is that the table also distinguishes those call warrants which are physically settled from those which are cash-settled. The former is denoted with a "#". The holder of this type of call warrants will have to subscribe for the share & take physical delivery of the share. You may remember that I've pointed out that MPLant-CA was the first call warrant to fall into this category. Now, I've discovered that there are more of such call warrants then I've earlier thought.

Finally, the table also covers the 2 basket call warrants listed on Bursa i.e. ZA-OSKSB & ZA-CIMBB. I shall touch on these 2 instruments in the future.

Thursday, December 28, 2006

Market Outlook as at December 27

Ten days after the market has made a temporary top, there are tentative signs that the worst is now behind us. You can see from the 3 charts below- the daily charts for CI, Mesdaq & Second Board- that their short-term downtrend lines (marked as 'BB') have now been overcome. These indices have tested their medium-term uptrend lines and survived, except for the Mesdaq index.

The breaking of the short-term downtrend lines should turn the prevailing bearish mode to a neutral mode as the market begin to find its footing. We are likely to see the formation of a pattern (such as a triangle) and then we shall await the upside breakout of this pattern (thus turning it into a continuing pattern). Thereafter, the market would continue with its prior trend, which was an uptrend. That's the idea... but we all know that the market seldom behave as you expect. We must take the market as it comes.

With that scenario in mind, the next course of action is to "lose our cash". In another word, let's put our cash into stocks.


Chart 1: CI's daily chart as at Dec 27


Chart 2: Mesdaq's daily chart as at Dec 27


Chart 3: Second Board's daily chart as at Dec 27

NTPM has a bullish breakout at RM0.36

Background

NTPM is involved in the manufacture of toilet & tissue paper as well as sanitary products.

Recent Financial Results

NTPM's results for the last 4 quarters are significantly better than those achieved in the preceding 4 quarters. Its net profit for the last 4 quarters amounted to RM31.5 mil, which is 51.6% higher than the preceding 4 quarters while turnover increased by 15.4% to RM256.7 mi from RM222.4 mil.

The improvement in the current quarter is even more encouraging. For QE31/10/06, its net profit increased 8.3% y-o-y or 69.4% q-o-q to RM8.4 mil. Turnover has also increased by 3.4% q-o-q or 15.7% y-o-y to RM67.6 mil.



Valuation

Based on the last 4 quarters' cumulative EPS of 5.0 sen and its closing price of RM0.37, NTPM is now trading at a PE of 7.4 times. At this PE multiple, I believe NTPM is still inexpensive given its steady growth and exposure to the stable consumer sector.

Technical Outlook

NTPM has broken above its downtrend line in the w/e Feb 17 at the RM0.30 level. Since the breakout, the share has been trading in an ascending triangle pattern with the resistance at RM0.36 level. Today, NTPM has finally broken above the RM0.36 level & closed at RM0.37. Volume accompanying the breakout is quite heavy.

Chart: NTPM's weekly chart as at Dec 27

Conclusion

Based on improving financial performance & technical bullish breakout, NTPM is a good stock for medium-term investment.

TSH has a bullish breakout at RM1.45

Background

TSH is involved in 3 businesses i.e. palm & bio-integration; wood products manufacturing; and, cocoa & vegetable fats manufacturing. The wood products manufacturing is carried on by its 65%-owned subsidiary, Ekowood International Bhd. The latter is a public company listed on Bursa Malaysia.

Recent Financial Results

TSH's financial results has shown some recovery in the last 2 quarters (i.e. QE Sep 30, 2006 & QE Jun 30, 2006) after its net profit was eroded in the preceding 2 quarters (i.e. QE Mar 31, 2006 & QE Dec 31, 2005) by the decline in crude palm oil price and the lower margin of the wood and cocoa business segments. Its net profit increased by 36.4% y-o-y to RM12.2 mil on the back of a 9.6%-increase in turnover. When compared to the immediately preceding quarter, TSH's net profit has dropped by 9.8% while turnover was 4.3% lower.



Valuation

Based on its last 4 quarters' cumulative EPS of 9.29 sen & its closing price of RM1.53 today (December 28), TSH is trading at a PE of 16.5 times. At this PE, one can say that TSH is trading at its fair value. Nonetheless, we notice that TSH's main businesses have shown steady improvement of late, which will translate to btter margin for TSH going forward. As such, it is likely that its EPS for FY2007 will be higher.

Technical Outlook

TSH has broken above its downtrend line in the w/e Sep 22 at the RM1.40 level. Since then, the share has been trading in range between RM1.15 & 1.45. On December 27, TSH has broken above this range. This could signal the beginning of an upside move for TSH.

Chart: TSH's weekly chart as at December 27

Conclusion

Based on good technical set-up & improving business outlook, TSH could be a good stock for medium investment.

Wednesday, December 27, 2006

BRDB has broken above its downtrend line at R1.20

Background

Bandaraya Development ('BRDB') is involved in property development & investment as well as the manufacturing of chipboard (which is carried out by its listed 5.67%-owned subsidiary, Mieco Chipboard Bhd).

Past 5 years' results

The group's strong performance of 2002-2004 was interrupted in 2005 due to poor performance of Mieco (which saw its profit contribution dropping from RM35.0 mil to a mere RM5.5 mil due to intense competition amongst the chipboard manufacturers as a few manufacturers and Mieco had expanded their capacity at the same time in 2004/5). In addition, BRDB has also made provision for impairment loss for its property development cost amounting to RM44.0 mil in 2005. I believe that the worst is behind the group as the chipboard sector has already shown some recovery (maybe benefiting from the spillover effect of good plywood prices) and high-end properties have also recovered in the second half of this year.


Table 1: BRDB's past 5 years' results

Recent Financial Results

For the first 9 months of FY2006, BRDB reported a net profit of RM180k as compared to a loss of RM15.8 mil previously. This was achieved on a 19.3%-increase in turnover from RM328 mil to RM391 mil. The net profit could have been much better if not for additional tax incurred due to under-provision of prior years tax of RM5.4 mil.


Table 2: BRDB's past 8 quarters' results

Valuation

As BRDB's earning is not stable yet, its PE is hard to estimate. Nevertheless, based on its book vale of RM2.89 per share & the share price of RM1.25 as at December 26, BRDB is now trading at price to book of 0.43 times only. This is very undemanding.

Technical outlook

BRDB has finally broken above its downtrend last week. The breakout level is RM1.16/20. With this breakout & the weekly MACD crossing above the zero line, the prospect of BRDB looks promsing.

Chart: BRDB's weekly chart as at Dec 26

Conclusion

Based on undemanding valuation & promising technical set-up, I believe BRDB is an attractive stock for medium-term investment.

KSL has a bullish breakout at RM1.60

KSL is a Johor-based property developer. It has a sizeable landbank of 3,500 acres in Johor but it has recently added a small parcel of land of 30 acres in Putra Heights, which shall be its first venture in the Klang Valley. This land is located near the North-South Expressway Central Link. KSL's current projects in Johor are Tmn Nusa Bestari, Tmn Bestari Indah & Tmn Kempas Indah.

Its net profit for the last 4 quarters of RM70.5 mil is 10.6% lower than the preceding 4 quarters' net profit of RM78.9 mil. Turnover during the periods has inched up by 1.1% from RM277 mil to RM280 mil. See the table below.



Based on the last 4 quarters' EPS of 26.53 sen, KSL (closed at RM1.62 as at December 26) is now trading at a PE of 6.1 times. As such, KSL's valuation is deemed undemanding.

From the weekly chart below, we can see that KSL has broken above its downtrend line in the w/e May 5, 2006 at the RM1.45 level. The stock has however been trading in a range between RM1.20 & 1.60. Yesterday, it broke above the RM1.60 level on thin volume. If it can recruit enough support, the stock could be commencing its upside very soon. The catalyst for thsi upside move could be the pick-up in demand for its properties (which are mainly based in Johor) since the relaxation of properties acquisition by foreigners.


Chart: KSL's weekly chart as at Dec 26

Based on reasonable valuation & potentially bullish technical set-up, KSL could be an attractive investment for the medium term.

Thursday, December 21, 2006

BJCorp- What's up?

Yesterday, BJCorp share price has broken above its ascending triangle formation (see Chart 1). The same was observed for its loan stcok, BJCorp-LC (see Chart 2).

Chart 1: BJCorp's daily chart as at Dec 21


Chart 2: BJCorp-LC's daily chart as at Dec 21

Background

  1. Berjaya Corp Sdn Bhd (BJCorp) is the company which undertook the restructuring of BJGroup & it has subsequently assumed the latter's listing status.
  2. BJGroup shares, warrants & ICULs were exchanged for BJCorp shares or ICULs on the following basis:
    1. 5 shares of BJGroup exchanged for 1 share of BJCorp (par value of RM1.00);
    2. 20 warrants of BJGroup exchanged for 1 share of BJCorp; &
    3. 3 ICULs of BJGroup exchanged for 2 ICULs of BJCorp (nominal value of RM0.50).
  3. Right Issue of 4 BJCorp ICULs for every 5 BJCorp shares held after (2) above. For every ICUL applied for, applicant will get 0.27 free BJCorp ICULs.
  4. Repayment of bank borrowings by issuance of 1.46 billion BJCorp ICULs.
  5. Settlement inter-company loans (owing to BJ Land & BJ Cap) by issuance of 7.76 billion BJCorp ICULs.
  6. Acquisition of Bukit Tinggi Resort for RM802 million by issuance of 802 million of BJCorp shares.
For more information on BJCorp's business activities & financial performance, please refer to its annual report. This can be obtained from the Bursa website.

Recent Development

Some recent developments which may have positive impact on BJCorp share/ICUL price are:

  1. The disposal of 56.75% interest in Dunham-Bush for RM180.5 million.
  2. Steady buying of BJCorp ICULs by related parties such as Inter-Pacific Securities Sdn Bhd & Berjaya General Insurance Bhd. I've tabulated the purchases for the last 2 weeks below. This buying by related parties accounts for more than 70% of the BJCorp ICULs traded in some days.

Table: Acquisition of BJCorp ICULs by related parties from Dec 4-20.

Note: BJCorp ICULs are convertible to BJCorp share at a ratio of 2:1.

Based on bullish technical breakout, I think BJCorp share & ICUL are good for a trading buy. The interest shown by related parties could be a positive indication that this company may have a positive development coming soon. The good entry level for the share is at RM0.22/23 and, for the ICUL, it is at RM0.12.

Tuesday, December 19, 2006

Regional stock markets affected by Thai central bank's currency control measure

Stock markets throughout the region dropped after the Thai central bank announced yesterday that Thai banks shall lock up 30 percent of new foreign-currency deposits for a year to curb speculation. Overseas investors buying the baht will only be able to invest 70 percent of what they transfer and recoup all of their funds if they keep the money in Thailand for more than a year. Those who withdraw the reserved amount in less than a year will be fined 33 percent of that 30 percent portion.

In early morning trading today, the baht lost as much as 1.5 percent to 36.08 against the dollar; almost doubled yesterday's 0.8 percent drop. The benchmark Stock Exchange of Thailand index slid as much as 8.9 percent, the heaviest drop in more than three years.

Other regional markets were also affected, such as Singapore Straits Times (dropped 47.34 points), Hang Seng (dropped 226.18 points) and, obviously, the KLCI (dropped 18.58 points).

This move by the Thai central bank is likely to affect both new funds flowing into this region as well as causing some outflow of funds from this region. The short-term impact for Malaysia, which has only recently dismantled its capital control measures, is likely to be more severe than others.

The Thai central bank's move was intended to reduce excessive inflows, which has caused the baht to surge by 16 percent this year as overseas investors bought the nation's stocks. The rising baht has, however, hurt Thai exporters by cutting the value of their local currency-denominated profits and making their products more expensive compared with those of Asian rivals.

Monday, December 18, 2006

Market Outlook as at December 18

The correction in the CI has just begun last week. To get a clear idea of how sharp was the recent market run-up, just look at Chart 1 below. Since the CI broke above its rising wedge formation in mid-October, it has been moving up strongly for 7 consecutive weeks. A run-up like this is not uncommon for a market that has been consolidating for the past 2 & 1/2 years. And, a correction, when it happened, gives the market & its participants a welcome breather before it rises again.

The big question is how far & how long will this correction last? Most technicians believe that the correction for the CI will not be too sharp and that it will be a short one. Most feel that the CI will not surpass the 1050 level on the downside and the market will put in a Chinese New Year rally. We will wait & see.

Chart 1: CI's weekly chart as at Dec 15

For the retail players in the street, the current correction has been anything but shallow. A look at the Mesdaq index & the 2nd Board index shows the carnage of the current correction. As noted in any earlier post, the Mesdaq might be hit by correction in its 2 best performing stocks i.e. MTouche & GPacket. These 2 stocks have corrected; with GPacket breaking its immediate uptrend line of RM4.50 level and MTouche marginally below its long-term uptrend line of RM4.66 level. As a result thereof, the Mesdaq index has broken below its medium-term uptrend line (see Chart 2 below).

Chart 2: Mesdaq's daily chart as at Dec18

The 2nd Board is now at the uptrend line support of 90 after breaking its immediate uptrend line support of 92. We will have to wait & see whether the 2nd Board will stage a rebound from here or going the way of Mesdaq index i.e. going lower.

Chart 3: 2nd Board's daily chart as at Dec18

Based on the above, I believe that the correction may go on a while longer. Accumulation should be carry out slowly.

Call Warrant updates as at December 18

The call warrants' prices dropped 8.05% since December 13 as compared to a 0.18%-decline in the underlying share prices. The average premium continued to decline from 11.64% as at December 13 to 10.69% (see Table 1 below).


Table 1: Changes in Call warrants' prices, underlying share prices & premium from Dec 13 to Dec 18

The usual Call Warrants update is posted here as Table 2 for your easy reference. The cheap call warrants are highlighted in yellow while 2 call warrants that are due to expire in January 2007 (i.e. Astro-CA & Scomi-CA), have their expiry dates highlighted in pink and the 4 call warrants that are due to expire from February to April 2007 (i.e. BJToto-CA, Bursa-CA, IOI-CA & TM-CB) have their expiry dates highlighted in orange.


Table 2: Call warrants' intrinsic value & premium as at Dec 18

In my last update, I've examined the possibility of some tactical accumulation (read: trading buy) of call warrants in order to reap the benefit of a quick & strong recovery in the stock market. Unfortunately, that scenario did not pan out and the call warrants continued to drop. As a quick market recovery is fading, we should stick to the conservative approach of staying clear of this sector until the current selling has subsided.

Wednesday, December 13, 2006

Market Outlook as at December 13

From Table 1 below, you can clearly see that the CI has broken its immediate uptrend line at about 1090 level (or, 1087 level as stated in an earlier post). This breakdown may bring the CI to its medium-term uptrend line support at 1015 level (see Table 2 below). Along the way, it may find supports from the 20-day SMA at 1070 & 50-day SMA at 1020.


Table 1: CI's daily chart from Sep to Dec 2006



Table 2: CI's daily chart from Jun to Dec 2006

The market has benefited from the strength of its top blue chips, which is represented by the FBM30 index. FNM30 was able to stay above its immediate uptrend line (aa) until today. Its daily MACD indicator has yet to do a negative crossover (i.e. it hasn't given a SELL signal as at Dec 12). See Chart 3a & 3b for the recent movement of FBM30.

Chart 3a: FBM30 overlaid with trend lines


Chart 3b: FBM30 overlaid with moving averages

The second-tier blue chips, represented by FBM70, are relatively weaker. FBM70 has a sharp fall on Dec 12, which broke its immediate uptrend line (aa) support at 7200 level. Its daily MACD indicator has hooked down earlier. See Chart 4a & 4b for the recent movement of FBM70.

Chart 4a: FBM70 overlaid with trend lines


Chart 4b: FBM70 overlaid with moving averages

I've made a comment earlier that "if the CI breaks its uptrend line at 1087 level, I expect the consolidation of the market to last for a few weeks." The phrase "a few weeks" may appear to some to be extreme. I think it would be more helpful if I were to re-phrase that as "1 to 5 weeks". The thing with market correction is that we can never tell how deep or how long it may last. The only thing that we can take comfort in is that we are in a season that is generally positive for equity, from either year-end window dressing or lunar new year rally. And, even those two are not sure things.

Call Warrant updates as at December 13

While I have no intention of re-naming this blog as the "NextCallWarrant", I would certainly run this risk if I post too often on this sector. Nonetheless, I will take that chance because I like to point out that the last 2 days of sharp correction (i.e. yesterday & today) has unearthed a potentially attractive trading situation for the entire sector.

Assuming for a moment that the correction in the market has gone too far & therefore overshot some uptrend lines or moving averages that technicians had drawn or plotted and thus triggering the many bearish calls currently out there (including this blog). Why the overshooting? This is not unusual under the normal 'reversion to mean' where the market corrects its recent sharp run-up.

Next, assuming that after this current sharp correction, the market re-establishes its prior bullish move quickly. What do you think would be the best performing sector(s) in such a recovery scenario? Of course, one of them must be the call warrants because, firstly, they have dropped substantially; secondly, their recovery will be spurred on by the usual stronger blue chips' recovery; and, finally, their potentials are well-recognized by market players (including, I suspect, hedge funds). Yes, this is a 'high risk, high reward' trading situation.

Now, let's look at a sampling of call warrants & see how deep has the last 2 days' correction been. We can see from Table 1 below that 3 of the 5 call warrants have re-traced back 50% of their prior move. For example, Astro-CA has risen from RM0.20 to its recent high of RM0.80; thus, gaining RM0.60. If it re-traced back 50% of this gain, it will fall back to RM0.50. Its 20-day Simple Moving Average support is at RM0.50. It closed at RM0.51 today. Thus, buying Astro-CA is a good proposition because its chances of recovery is fairly good if the current market correction is a short one or it has almost run its full course.


Table 1: A sampling of call warrants' recent price movement.

The call warrants' prices dropped 10.19% today as compared to a 0.58%-decline in the underlying share prices. After 2-day of sharp drop in call warrants' prices, the average premium has finally declined from 13.28% to 11.64% (see Table 2 below).


Table 2: Changes in Call warrants' prices, underlying share prices & premium from Dec 12 to Dec 13

The usual Call Warrants update is posted here for your easy reference. The cheap call warrants are highlighted in yellow while 2 call warrants that are due to expire in January 2007 (i.e. Astro-CA & Scomi-CA), have their expiry dates highlighted in pink and the 4 call warrants that are due to expire from February to April 2007 (i.e. BJToto-CA, Bursa-CA, IOI-CA & TM-CB) have their expiry dates highlighted in orange.


Table 3: Call warrants' intrinsic value & premium as at Dec 13

In conclusion, we can see that the call warrants, which were the best performers in the recent market rally, are now bearing the brunt of the current market correction. As noted, the time may be right for some tactical accumulation (read: trading buy) of this potentially oversold instruments.

Note: This recommendation contradicts with my earlier recommendation to 'avoid the call warrants for a while'. The earlier recommendation is based on standard technical approach (such as 'sell if an uptrend is broken') while this current one includes some assumptions, which are clearly stated above, that may or may not materialize.

Finally, Pacmas terminates its proposed insurance merger

Yesterday, PacificMas (“Pacmas”) had announced that it has terminated the negotiations to merge its insurance business with those of GEH's subsidiaries, Great Eastern Life Assurance (Malaysia) Bhd and Overseas Assurance Corporation (Malaysia) Bhd. This proposed merger was first announced on Feb 21, 2003 (go here for the announcement).

This is the second time that Pacmas’ proposal to restructure its core business was not completed. In 1994, its predecessor, The Pacific Bank Bhd had proposed to merge its banking business with the Malaysian banking operations of Oversea-Chinese Banking Corporation Ltd (“OCBC”) but was later aborted. OCBC is the parent of Great Eastern Life Assurance (Malaysia) Bhd as well as being one of the major shareholders of Pacmas.

I’ve highlighted in an earlier post that this proposal is unlikely to succeed. I just wonder why it takes the parties so long to come to this decision or to make this announcement. The interests of the shareholders of Pacmas would have been better served if a quick decision has been forthcoming. Not surprisingly, the announcement did not give any specific reason why the proposal has finally been abandoned.

Call Warrant updates as at December 12

The call warrants' prices dropped for the first time after a strong run-up in the past few weeks. Their prices have declined by an average of 7.95% from December 8 while the underlying share prices have eased off by 1.01% during the same period (see Table 1 below). Despite the sharp drop in call warrants' prices, the average premium has inched up from 13.12% to 13.28%. The worst performing call warrant is Scomi-CA, which has lost 50.0% in just 4 days. This is one call warrant that you should avoid because of its short tenor to expiry & its underlying share is trading at a price (of RM0.97 as at Dec 12) that's lower than the call warrant's exercise price (of RM1.15 as at Dec 12).


Table 1: Changes in Call warrants' prices, underlying share prices & premium from Dec 8 to Dec 12

The usual Call Warrants update is posted here for your easy reference. The cheap call warrants are highlighted in yellow while 2 call warrants that are due to expire in January 2007 (i.e. Astro-CA & Scomi-CA), have their expiry dates highlighted in pink and the 4 call warrants that are due to expire from February to April 2007 (i.e. BJToto-CA, Bursa-CA, IOI-CA & TM-CB) have their expiry dates highlighted in orange.


Table 2: Call warrants' intrinsic value & premium as at Dec 12

If the CI breaks its uptrend line at 1087 level, I expect the consolidation of the market to last for a few weeks. In such a scenario, the call warrants' prices are likely to drop further. Avoid the call warrants for a while.

Tuesday, December 12, 2006

Market Outlook as at December 12

The market appears to be entering into a more serious correction phase after having made a possible top, based on the bearish trading witnessed yesterday. Yesterday's trading pattern is known as a "Shooting Star" in Japanese candlestick charting method. A "Shooting Star" happens when the market "opens higher, trades much higher, then closes near its open."

CI may be testing its short-term uptrend line at 1087 & its 10- & 20-day SMAs at 1085 & 1066, respectively. At 3.00 p.m., the CI is at 1089.5.

Chart 1: CI's daily chart as at Dec 11

Second Board has broken below its short-term uptrend line at 91.5 & its 10- & 20-day SMAs at 92.3 & 91.2, respectively. At 3.00 p.m., the Second Board is at 90.9.

Chart 2: Second Board's daily chart as at Dec 11

Mesdaq has broken below its short-term uptrend line at 118.5 & its 10- & 20-day SMAs at 118.5 & 119.0, respectively. At 3.00 p.m., the Mesdaq is at 117.5.

Chart 2: Mesdaq's daily chart as at Dec 11

Based on the above, I would advise caution in the days ahead as the market may need more time to digest the excess of the past few weeks.

Note: Wait & see whether the CI can hold above the 1087 level. If it can do so, the chance of a rebounce is higher. Otherwise, the consolidation can drag on much longer... (updated at 4.20 p.m.)

Saturday, December 09, 2006

Call Warrant updates as at December 8


Call warrants have continued to rise. Their prices have increased by an average of 9.99% from December 4 while the underlying share prices have gained a mere 0.54% during the same period (see Table 1 below). From the table, you will see that the average premium has increased from 11.50% to 13.12%. The best performing call warrant is Sime-CA, which has gained 60.26% in just 4 days. The gain came from both increased premium of 15.51% as compared to 13.53% previously as well as increased intrinsic value (as the underlying share price has increased by 10.53%).



Table 1: Changes in Call warrants' prices, underlying share prices & premium from Dec 4 to Dec 8

The usual Call Warrants update is posted here for your easy reference. The cheap call warrants are highlighted in yellow while 2 call warrants that are due to expire in January 2007 (i.e. Astro-CA & Scomi-CA), have their expiry dates highlighted in pink. I have also highlighted the expiry dates of the 4 call warrants that due are to expire from February to April 2007 (i.e. BJToto-CA, Bursa-CA, IOI-CA & TM-CB) in orange.


Table 2: Call warrants' intrinsic value & premium as at Dec 8

Wednesday, December 06, 2006

Call Warrant updates as at December 5

Call warrants have continued to rise. Their prices have increased by an average of 10.46% from December 1 while the underlying share prices have gained 1.33% during the same period (see Table 1 below).

In my last Call Warrant updates as at December 1, I have observed that the average premium have decreased marginally from 11.27% to 10.95%. In this update, you will see that the average premium has increased to 11.50%.




Table 1: Changes in Call warrants' prices, underlying share prices & premium from Dec 1 to Dec 5

The usual Call Warrants update is posted here for your easy reference. The cheap call warrants are highlighted in yellow while 2 call warrants that are due to expire in January 2007 (i.e. Astro-CA & Scomi-CA), have their expiry dates highlighted in pink. I have also highlighted the expiry dates of the 4 call warrants that due are to expire from February to April 2007 (i.e. BJToto-CA, Bursa-CA, IOI-CA & TM-CB) in orange.



Table 2: Call warrants' intrinsic value & premium as at Dec 5

Tuesday, December 05, 2006

Jobstreet is at its uptrend line

Jobstreet is involved in the provision of interactive recruitment services. Besides Malaysia, it operates in Singapore, the Philippines, India, Bangladesh, Indonesia and Vietnam. Some of these overseas' associates/subsidiaries (such as in Indonesia, India & Bangladesh) have just commenced their operations this year & they are not expected be profitable for 1 or 2 years.

The latest quarterly result for QE30/9/2006 shows a net profit of RM4.8 mil representing an increase of 11.2% over the previous year's same quarter's net profit of RM4.3 mil. This was achieved on a turnover of RM16.8 mil, representing an increase of 11.4% over the previous year's same quarter's turnover of RM15.1 mil. However, Jobstreet's financial performance has deteriorated when compared with the preceding quarter's result, with net profit declined by 1.5% resulting from a 3.5%-drop in turnover (see the table below).



Jobstreet has dropped back from its high of RM2.07 recorded in last April. The share is presently testing its uptrend line support at RM1.75 level. The share price may also find support at the strong horizontal of RM1.70 (see the chart below).



Being one of the leading Internet Recruitment websites in the Asia-Pacific, Jobstreet is a company with great potential. Based on decent financial performance & nice technical set-up, I believe Jobstreet would make a good long-term investment.

WWE reported a loss for QE30/9/2006

WWE has recently announced its result for QE30/9/2006. The results is disappointing as WWE reported a net loss of RM4.7 mil as compared to a net profit of RM6.0 mil achieved in the immediately preceding quarter. The change of fortune is attributable to a 90%-drop in pre-tax profit from RM7.9 mil to a mere RM0.8 mil (with no reason given) and a transfer from deferred tax to current tax amounting to RM5.4 mil (as certain expenses are not deductible for tax purposes and the absence of Group relief for losses suffered by certain subsidiaries). For more detail, see the table below.



WWE's share price had a very good run in last Sep & Oct following the good performance in the previous quarter, which I have posted on earlier. In mid-Nov, WWE's share price had weakened significantly & broken below its 10- & 20-day SMA. I expect the stock to have good support at the psychological RM1.00 level, failing which it may test the horizontal support of RM0.90 & thereafter, its short-term uptrend line support of RM0.80.



Given the poor performance & the ongoing correction/consolidation of its recent sharp rise, I believe that it is best to avoid this stock for a while. Nonetheless, if the share price were to drop below the RM0.90 level, I think this stock will again be an attractive investment as its projects in hands are fairly substantial.

KESM may have broken above its downtrend line at RM1.82

KESM is involved in the provision of semiconductor burn-in services, assembly of electronic components & testing of semiconductor integrated circuits. KESM's recent performance reflects the slow growth in the semiconductor sector, with its latest results showing a small drop in both turnover & net profit when compared to the preceding quarter. Nevertheless, they are much better than the previous year's corresponding quarter.

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 (see the table below). Based on yesterday (Dec 4)'s closing price of RM1.78, KESM is trading at a PE of 5.1 times.



Chartwise, KESM' share price has been dropping from its high of RM3.60 recorded in Nov 2003. Its recent lows are about RM1.48/50 recorded in last Aug/Sep. A downtrend line can be easily drawn, with the breakout level at RM1.80 (see the chart below). At 10.30 a.m. this morning, KESM's price is at RM1.81 but volume is still quite small at 210 lots traded. With the slight uptick in the volume traded in the past few days, there is a fairly good chance that KESM is about to breakout of its downtrend line.



Based on reasonable valuation & a possible breakout of its downtrend line, KESM is a stock worth tracking. If the breakout is confirmed over the next day or two, I believe KESM will be a good investment.

Java's net profit continue to rise

Java has recently announced its results for QE30/9/2006. Its net profit increased 28.6% q-o-q to RM17.0 mil despite a 22.3%-decline in turnover to RM80.7 mil. The improved net profit was attributable to the overall better timber prices. As result thereof, Java's EPS for QE30/9/2006 increased 12.3% to 10.3 sen when compared to the EPS for QE31/3/2006.

Based on the latest quarter's EPS of 10.3 sen, Java's annualized EPS is about 41.2 sen. As its hsare price closed at RM1.54 yesterday, Java is now trading at a PE of 3.7 times only.




Despite a very good set of results, Java's share price has dropped back a bit. From the chart below, you can see that the price has retraced below its 10-day SMA of RM1.55. I believe that Java is a good long-term investment based on its cheap valuation & the good price for timber logs. As such, you may use this period of price weakness to accumulate this stock.

Monday, December 04, 2006

Bursa made a new high


Bursa has surpassed its recent high of RM7.60 which was recorded in last May. Today, Bursa made a new high of RM7.80 & closed at RM7.75 (see Chart 1 below). Bursa-CA has also surpassed its recent high of RM1.30 recorded on Nov 27, where it achieved a new high of RM1.36 before closing at RM1.35 (see Chart 2 below).

As usual, a stock that made a new high is worth buying (or, at least tracking) as it has the tendency to go higher. How much high? Only time will tell.


Chart 1: Bursa's daily chart from May 2006 to Dec 01, 2006



Chart 2: Bursa-CA's daily chart from May 2006 to Dec 01, 2006

MAA may have broken above its downtrend line at RM1.82


MAA is a composite insurance company, offering both general insurance & life assurance services. Its past 8 quarterly results, which is tabulated below, are not very impressed.



During this 8-quarter period, losses were incurred in QE30/6/2006 due to temporary fair value loss of RM11.1 million on quoted equity investments in Sri Lanka by the non-insurance subsidiaries as well as in QE30/6/2005 & QE31/3/2005 due to additional provision made for diminution in value of quoted equity investments by the General Insurance Division of the local insurance subsidiary resulted from deterioration in the KLCI from 907.43 as at 31 December 2004 to 888.32 as at 30 June 2005.

MAA's share price has been declining from its high of RM3.30 in Feb 2004 to a recent low of RM1.35 in last October (see Chart 1 below). Since then, the share has recovered and was trading in a range between RM1.55 & RM1.65 for the past 5 weeks (see Chart 2 below). On Dec 1, MAA has broken above the RM1.65 level and today (Dec 4), it has broken above its downtrend line at the RM1.82 level.

With these 2 bullish breakouts, MAA's worst is now over. Over the next few days, the market will need to digest MAA's sharp 2-day rise. Thereafter, MAA could well be moving to higher level.

Notwithstanding the less-than-impressive financial performance, MAA's recent bullish breakouts mean that the share price may see greater height in the weeks or months ahead. A good entry level would be about RM1.82 level.



Chart 1: MAA's daily chart from Jan 2004 to 01 Dec 2006



Chart 2: MAA's daily chart from Jun 2006 to 01 Dec 2006