Chart 1: Cocolnd's weekly chart as at July 19, 2010 (Source: Tradesignum)
Cocolnd is a small-cap consumer company, which reported a net profit of RM19.7 million on turnover of RM133 million for FYE31/12/2009. In FY2008, it recorded a net profit of RM8.7 million on turnover of RM129 million. Based on the closing price RM2.75, Cocolnd is trading at a trailing PER of 17 times (based on EPS of 16.4 sen for FY2010).
Like Cocolnd, OFI has also seen an increase in its top-line and bottom-line over the past 2 financial years. For FY2010, OFI's net profit increased by 126% to RM12.4 million on the back of a 6%-growth in turnover to RM126 million. Based on the closing price of the morning session of RM2.09, OFI is trading at a trailing PER of 10 times (based on EPS of 20.7 sen for FY2010).
The financial position of Cocolnd & OFI is about the same for their last financial year. Current ratios are very high at 2.9 times for Cocolnd or 3.8 times for OFI. Borrowing is minimal for both companies, with gearing ratio at less than 0.1 time for either company.
OFI has broken above its trading range between RM0.60 & RM1.90 on July 16 (as well as its January 2010 high of RM1.85). It has since surpassed the high of 2004 & the all-time high (recorded in 2000) of RM2.00 & RM2.08, respectively. In technical analysis, a stock that has surpassed its all-time high tends to continue to rise- like Cocolnd. Would OFI do a Cocolnd? We will have to wait & see.
Chart 2: OFI's weekly chart as at July 19, 2010 (Source: Tradesignum)
Based on valuation, I would prefer OFI to Cocolnd. However, I am very weary of a stock that has broken through so many resistance in such a short span of time. If one likes to get into this stock, the safer approach would be to wait for a pullback to either the psychological RM2.00 or the breakout level of RM1.90. However, a break below the RM1.90 level would be a bearish sign, especially if accompanied by high volume. Both Cocolnd & OFI are presenting us with trading opportunities. However, these trading propositions are very risky. If you choose to go in, do so with tight protective stop.
15 comments:
Dear Alex,
What do you think of JADI and PERSTIM? What TP will you give them?
Thanks!!
wats your take on TDM technically? room for further upside?
hi bro alex. today top gainers dominant by biscuit and cocoa confectionery. how u think PMCORP which also involved in manufacturing, marketing and distribution of cocoa-based and other food and confectionery products. please comment on this stock. thx alots bro.
Hi Kai-Foong Kok
I've posted on Perstima in January 2010, where I have noted its attractive valuation but a very challenging technical outlook. To wit:
"Perstima seems to be range-bound in the past 5 years, with support at RM2.00 & resistance at RM4.00. As such, Perstima's short-term upside may be limited, unless it can surpass the RM4.00 resistance level."
Perstima had managed to break above the RM4.00 resistance and it's poised to test the RM6.00 projected peak for this rally. This projection is derived by connecting the peaks recorded in 1998, 2000 & 2005.
Jadi has a nice consolidation at about 16-18 sen for the past 6 months before a breakout rally where it surpassed the strong horizontal line at 22 sen. Its next strong resistance is in the congested area between 26-30 sen.
Check out the fundamentals via Bursa website.
Hi Wedding Gifts,
TDM is in an uptrend, with the next resistance at RM2.25-30 and then at the Jan 2008 high of RM2.70.
Check out the fundamentals via Bursa website.
Hi wong
Look like you may know PMCORP more than me. I remember it as a perennial under-performer, with unimpressive profit track record. However, its Price to Book is relatively low at 0.3 times only.
Chartwise, it has been in a downtrend for the past 7-8 years. The downtrend breakout at 12-14 sen based on arithmetic scale or at 20-22 sen based on logarithmic scale.
If the stock can surpass the downtrend line (better use the log scale chart & set the breakout at 20 sen), then PMCorp could be a trading BUY.
Dear Alex,
What do u think about Hwatai?
It has been going up since pass few days. Is it an uptrend?
Many Thanks.
Hi @h Tong,
Hwatai has just broken above its long-term downtrend line at 65-67 sen. Its immediate horizontal resistance is at RM0.80 & thereafter at the psychological level of RM1.00.
FYI, Hwatai has a collaborative arrangement with Lonbisc while Kheesan is an associate company of Lonbisc. Both Hwatai & Kheesan have a fine rally over the past few days.
However, we have to be careful about Hwatai as it is a very quiet stock. The same comment would also apply to Kheesan.
Thanks Alex! Appreciate your response very much :)
Hi Alex,
Could you shed some light on Century Logistics? It seems to be trading at quite attractive valuations, do you think it's a good buy?
Thanks
alex,
it seems like bonia,apparel companies r performomg well? wht's ur opinion?
Hi rabaman,
Century Logistics is a good company. Technically, it has been trading sideway, with a downward bias for the past 7 months. If it can break above the "downtrend line" at RM1.65, it may continue with its prior uptrend. Its support is at the channel line [at RM1.42].
Hi lofan
Bonia has broken above its strong horizontal resistance at RM1.10. Its next resistance is at RM1.30.
Check on its financials by visiting Bursa website.
alex,
tq so much.there will be more upside ths time for bonia as their coming quater profit is going to b good after checking bursa. wif the coming dividend,it's still undervalue from my point of view.
Thanks for the reply, Alex.
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