KESM is involved in the provision of semiconductor burn-in services, assembly of electronic components & testing of semiconductor integrated circuits. KESM's financial performance tends to mirror that of the semiconductor sector. In line with the healthy recovery in the performance of semiconductor sector, we can expect the same to happen to KESM.
Recent Financial Results
KESM's financial performance has rebounded in the past 3 quarters. In its latest quarterly results, i.e. QE31/1/2010, KESM's net profit increased by 36% q-o-q or nearly 3-fold to RM2.6 million. Turnover has also increased significantly by 18% q-o-q or 42% y-o-y to RM56 million.
Table: KESM's last 10 quarterly results
Chart 1: KESM's last 20 quarterly results
Valuation
Based on its latest quarterly results, KESM's annualized EPS would be about 24 sen. KESM (closed at RM2.58 today) is now trading at a PER of 11 times. At this multiple, KESM's upside is limited (say, 10-20%).
Technical Outlook
KESM is now testing its long-term downtrend line resistance at RM2.58-60. A bullish breakout above this level could see the stock challenging its 2008 high of RM2.80.
Chart 2: KESM's weekly chart as at Apr 5, 2010 (Source: Tradesignum)
Conclusion
KESM could be a good stock for medium-term investment due to the recovery in the semiconductor sector. It has a reasonable valuation but further upside could only happen if the stock can surpass the long-term downtrend line resistance at RM2.58-60.
15 comments:
Dear Alex:
Lonbisc seems to me to be staging a b/o (cup& handle). What is your comment please?
Good day Alex,
What do think abt KPS in technical perspective?
Dear Alex:
What do u think abt UNISEM rose 3.2 already?
And when UNISEM give dividend??
Dear Alex,
Recently a lot mentioned about the possibility of China bubble explosion. I invested some in local unit trust fund such as china select fund, China Ittikal fund, eto. Like to hear your view on its possible impact in Bursa and funds. Precaution wise, is it prudent to sell all china related trust funds/shares to avoid losses? THANKS.
Hi Raymond,
Lonbisc attempted to break above its long-term downtrend line at RM1.20 on April 7. That attempt failed.
This is a good consumer stock worth buying at the present price. However, its upleg will only begin upon a decisive breakout above RM1.20 level.
Hi solomon,
KPS looks interesting in technical perspective. It has reached a crossroad, where the uptrend line dating back to Jan 2007 & the downtrend dating back to Feb 2008 intersect. Support is at RM1.40, while resistance is at RM1.60. The share has traded almost to the point of intersection (or, if you see this as a triangle, the apex of the triangle). If there is no breakout soon, the share price shall exit this point at about RM1.50 & continue to drift in a horizontal trend (or, sideway). The set-up for a potential breakout & a possible rally would be lost.
Hi Issac,
UNISEM has risen quite a bit since the breakout of the long-term uptrend line at RM2.00 in early January. Its next resistance levels are at RM3.30, RM3.50 & RM4.40.
Based on the sharp rise over the past 3-4 months, I think some profit-taking at the present level is a good idea.
Hi Layman,
There have been many articles written about the many bubbles in China. While there may be some element of truth in these stories, I am not sure that we can measure China by the yardstick used in the West. However, China will be brought back to earth by the law of gravity, but when?
For now, I think a better guide to where China may be heading for the next few years is the Shanghai's SSEC index. This index has been consolidating in a symmetrical triangle since July last year, with support at 3000 & resistance at 3200.
Do u think is the best time to collect some glove stocks?
Hi cheer,
When is it a good time to collect some glove stocks? It depends on whether this sector will be entering into a short correction (temporary top) or will be making a cyclical top?
Go to my latest post on Topglove (link provided below) and have a good look at Chart 3- the long-term chart of Topglove. You will see that Topglove (and the other rubber glove makers) are good trend-follower and once the trend (using moving average line) has been violated, the opposite trend kicks in. For example, Topglove's current uptrend could be in serious trouble if the share price were to break below RM12.40-50. That's the 10-week SMA line which has been intact since Dec 2008!
Finally, you may have notice research reports are beginning to sound a bit unsure about this sector, with concern about the increased capacity, the strengthening of the RM exchange rate, the increased latexx cost, higher fuel cost, etc. I think the tide could be turning against this sector.
http://nexttrade.blogspot.com/2010/03/topglove-another-great-quarter.html
What do u think AFG now ?
http://nexttrade.blogspot.com/2010/01/blog-post.html
revaluation of yuan is the topic now, so u think those chinese company earnings will surge compare to ringgit after the revaluation?
Hi cheer,
All I can say about AFG is that it has surpassed the horizontal resistance at RM2.95 & the psychological RM3.00 level. Its next resistance is at RM3.20-25 and thereafter RM3.50-60.
Hi Wedding Gifts, Favours, Bells,
Revaluation of yuan? There are some very good articles in the internet on this subject. I won't be able to articulate as well as some of these experts. By the way, I read a surprising story about the recent Singapore dollar revaluation, which I wasn't aware of. Check out the link below.
http://www.businessinsider.com/whil-the-world-was-focused-on-the-yuan-everyone-missed-the-real-tectonic-landmark-2010-4#ixzz0lDgNZczH
Post a Comment