Chart 1: Genting HK's daily chart as at Sept 13, 2010 (Source: SGX)
Chart 2: Genting SP's daily chart as at Sept 13, 2010 (Source: SGX)
The question that most investors is asking is when would Genting Malaysia ('GenM') join in this party. GenM's financial performance is also quite commendable. I believe that GenM would take part in the rally very soon. As at 10.30 am this morning, GenM has gained 8 sen to trade at RM3.18. This means that the stock has broken above the strong horizontal resistance of RM3.10. Its next resistance is at RM3.50. See Chart 3 below.
Chart 3: GenM's daily chart as at Sept 13, 2010 (Source: Tradesignum)
Based on technical consideration as well as attractive valuation, GenM could be a good trading BUY.
36 comments:
Am a avid reader of your blog. Can I get your comments on GCorp. It was supposed to offer RM1.70 per share but so far there has not been any further announcement on it except that GCorp has transferred all its business to a company and is now under PN17. Thanks.
hi Alex,
report is saying that our market is due for correction, yet it defies all gravity and everyday seems to be a new high. it crossed the 1450 resistance level with ease. seems like 1500 is not a problem.
what is your take on this euphoria?
thanks
maxwealth88
Hi Arsenal,
With the completion of the proposed Disposal of the Company's entire business on September 6, GCorp has triggered the following criteria prescribed under PN17 of the Listing Requirements.
In addition, the Company would soon be proposing to the shareholders to undertake a members’ voluntary winding-up (“Proposed Winding-Up”). If the Proposed Winding-Up is approved, the shareholders will receive their proportionate shares in the Company’s assets (in the form of cash of approximately RM1.70 per share held). If the Proposed Winding-Up is not approved, the capital repayment may still be carried out, as indicated by the Company’s announcement dated September 6, 2010 (go here) .
If GCorp dropped too far below RM1.70, it may be a good income stock. You may have to hold the stock for 6 months to get the full payment of RM1.70. At the close of the morning session, the stock (at RM1.58) could field a return of 7.6% for a holding period of 6 months.
May I know what's the TP of GenM in FA point of view?
Thanks!
what if GCORP end up buying or venture into other bizness... guess there wont be any capital repayment...?
Hi steve
TP of GenM could easily be about RM4.20-30. Its EPS for 1H2010 is about 10 sen. Based on this & a PE of 15 times, the stock is worth RM3.00.
However, GenM has a huge cash or near-cash in hand of RM7.18 billion. That's equivalent to RM1.22 per share. If this cash is added to the value of the stock derived above (at 15 times its annualized earning of 20 sen), then GenM's fair value would be RM4.22.
Hi MaxWealth88
Mr Market can suffer erratic mood swings from time to time. One moment, he can be gloomy & decides to sell his stocks at depressed prices. The next moment, he can be sunny & offers to buy up more stocks at elevated prices. We are seeing the latter today, but who knows what Mr Market will do tomorrow. If you are getting confused, don't worry. You are not alone. You have me as company!
Hi Wedding Gifts,
GCORP has specifically announced that it intends to go for voluntary liquidation. I can't remember another instance of a listed company going down a similar path. I will be very surprised if GCORP were to reverse its earlier radical proposal & instead uses the sale proceed to acquire another business.
Hi Alex,
Good day!
From the Month of August 2010, everyone is caution about the "The Hindenburg Omen Has Arrived" BUT our FBMKLCI keep hitting recent HIGH.
I still remember in ur Aug article of "Market Outlook as at August 25, 2010-----the market may rise until it can rise no more. Be very careful..."
I am confused and just “wait and see”....... the market keeps going up and up.
I agreed wt U, Alex. “who knows what Mr. Market will do tomorrow.”
Thank you.
Ha ha...interesting comment of "The Gloomy and Sunny of Mr Market" ...Arrrrrgh...moody market ! We got to trade along with the weather forecast ...Good day Alex
After our PM interview by CNBC, seems like the market is rallying strongly. Even Mark Mobius is impressed. He said "Malaysia is going through a transformation with the political changes that we've seen."
Alex, what do you think of Genting Berhad? Still cheap? It has to move in order for KLCI to go to 1580 (OSK target).
HI Alex,
I'm a new member of your blog and a beginner of share trading. Get to know your blog from a fren and find it very useful and learn something technical at your blog. I look at the unisem chart and found the share price has been droped from May until Sept whcih is forming a triangle, and resistance at MA 200 Day on 1.94 . But looking at the Company Financial Report, it is making good money . What is your comment on Unisem. Is it worth for buying it at low price and keep ? TQ!
Hi Alex,
Thanks for your valuable analysis for Litrak and Eksons.
Litrak still in getting high and Eksons already at RM1.03
Hi Alex,
What are your point of views on Konsortium Logistiks.
Kind regards,
Jeremy
Although the index scaled new high, some observations:
1)EPF is busy disposing its shares
2)Only blue chips are moving namely Genting,Maybank,CIMB but 2nd liners are still sleeping
If EPF is busy disposing its shares, I guess we need to be careful. EPF seems to be a shrewd investor since they were accumulating during the crisis and now at year high, they are starting to disposing them.
regards,
maxwealth88
Dear Alex,
Hope to hear from you about tech counters. Amongst ESC, ENG, UNISEM and Theta, which has the best potential from keeping. Entry price. Thanks.
Good Day. Enjoy your blog.
Hi JY
Genting Berhad has been rated a BUY by many research houses. This is attributable to many factors but the main reason is the good results from Genting SP. However, I feel that the reaction to the results from Genting SP may be overdone. The company did point out that the results was skewed by exceptional favorable "luck factor". It is telling us that a similar results can only be achieved if exceptional favorable "luck factor" persists. Can it persist for prolonged period? It's statistically not likely. In which case, the results going forward may disappoint investors in both Genting SP & Genting Berhad.
Genting Berhad is now approaching its all-time high of RM10.30 in April 2007. Based on the foregoing, I believe it's advisable to SELL INTO STRENGTH if the share price surpassed RM10.20.
Hi ppfoo
Welcome to the blog.
Unisem is now testing the uptrend line that started in March 2009. The support for that uptrend line is at RM1.90. It has broken below the 200-day SMA line support at RM1.94 (as noted by yourself). So chartwise, Unisem is at a crossroad. Would it rebound & recover? Or, would it break below the uptrend line & slide further? Watch it closely for the next few days...
Financial statements is a good source of historical information. At the tipping point, this information may not be very useful. One only has to looked at how badly HDD producers' share price had dropped over the past few months. Only after the drop, we can see their financial results have turned negative. The same has also happened to rubber glove makers. Would semicon players be next? I think so but even if I am wrong, I think that these stocks are likely to trade sideway rather than rally to new high for the rest of the year.
Finally, if you know more about semicon players than the general investors (I profess no in-depth knowledge of this sector), then you may venture into Unisem if the stock can rebound off its uptrend line the next few days.
Good luck!
Hi jeremy tan
Konsortium could be a trading BUY as it has broken above the strong horizontal resistance of RM1.40 last week. Good entry is at RM1.40.
At the current price of RM1.48, it's trading at a PE of 9.9 times or at a Price to Book of 1 time. Its financial position is satisfactory with low gearing & adequate liquidity position.
Hi Alex,
Regarding your comment on Genting Bhd all time high price of 10.30 on April 2007. At that time, it do not have GentingSP, going forward after adding GentingSP and soon to be Resorts New York, the bottom line should improve a lot.
Hi MaxWealth88
Thanks for the tip on the selling by EPF. One wonders whether EPF would step back into the ring when the buying by foreign funds dried up. The foreign buying of Malaysian stocks (and other emerging markets) is driven by strengthening local currencies as well as better growth prospects in emerging economies as compared to the developed economies.
Hi Layman
I will look into the tech counters, if time permits.
Dear Alex, How about Spritzer?
Can buy now?
Alex,
AIM, major shareholder reduced its shareholding early last month, subsequently resigned as a ceo of the company. In 25/08/10 company has declare bonus on basis of 1 bonus issue for existing 3 ordinary share, the following day the major shareholder/ex-ceo has disposal entire share holding.
The share price has increased from 13sen to highest of 19.5sen,after annoucement of bonus issue. Company has since then buy back share,as at todate company has buy back 5.93% share, also disposed off a land and factory in shah alam. please advise based on the scenario above.
1. what is likely company intend to pursue?
2. Company has zero gearing and good cash position, however the revenue and profit was down, what is the potential of this company?
3.why company buy back share only now?
4.Do you think it is good counter to enter now? as i bought this counter before, price did not move i sold off,just before the bonus issue announcement and made marginal profit, when i read the announcement that the ceo resigned.
Thank you
Hi Alex,
Thank you for your advise and sharing.Actually there is some uncertainty and look like in a side way now . I know it is abit over to look at technology share but knowing the company is expanding and doing good business and running at its full loading for the coming quarters . That's why I hope it can bounce back and hope to get low and sell in a hiher price. Anyway, you got you point also and I will wait and see. Many thanks.
hi alex, can you comment abit on jerneh? it fell sharply upon resumption of trading? do you foresee a rebound in the price on continuing to fall on friday? thanks
Hi CK, there will be another announcement soon about Jerneh.
I guess the investors are just unloading because of all the uncertainties of this counter. The amount being offered by ACE does not look that impressive and investors are not sure what this will translate to.
The final question is at what price. Its NTA is RM2.70. Looking at similar deals, they have been between 1.5x to 2.5x. Jerneh' insurance business is well managed and should be priced at a premium to recent deal but probably would be closer to 2.0x.
What do you think Alex?
hi Alex,
In your fair value for GenM, I wonder if you can value GenM in that way by summing its PE price of 3.00 to cash of 1.22 to give 4.20. The E in the PE ratio include all incomes earned from its aseets, including all non-operating cash also and hence you may have double counted the E. Secondly, all business need operating cash as working capital, unless that additional cash is non-operating, for example as short-term investment, investment in associates etc, your way seems to double count again in certain aspect. Even that, as I mentioned earlier, the E has already included all earnings.
Cheers
hi alex. heard DRBHCOM will buying into PROTON at price around RM8 per share.do u think RM8 is fair value ??
Hi Issac
Spritzer is a good stock. The strong demand for its mineral water in the Klang Valley will now be handled by the newly completed plant in Shah Alam. The close proximity of its output to the consumer means higher profit margin. The plant utilization is expected to reach breakeven level in a mere 6 months. After that, the profit will start to pour in.
The parent company is very confident of Spritzer & this reflected in its continued buying of the stock. It may trigger a MGO very soon if this buying persists.
Kenanga valued Spritzer at RM1.12 based on PE of 8 times & forecast FY2012 EPS of 14 sen.
Hi jeremy tan & CK
I would defer to the opinion of the experts when it comes to valuing Jerneh. Kenanga valued the stock at RM3.70 after the factoring in the sale of its 80%-owned Jerneh Insurance at RM654 million. However, you must bear in mind that the method adopted by Kenanga is the sum-of-parts method of valuation, which in my opinion tends to be very generous.
Unless Jerneh acquires an exciting new business to replace the soon-to-be disposed insurance business, I think the share price is likely to be capped around the RM3.00. The market is now voting in favor of taking profit & moving on because it has assumed that Jerneh may either sit on the money or merely give back to the shareholders.
Hi K C
I agree that I may be double-counting as far as the interest income is concerned but interest income is not very significant with interest rate at only 2-3% pa. At most, it has pushed up EPS by 0.5 sen. As to whether GenM needs the cash, I do not think so. Its operation is carried out almost entirely on cash basis, with minimal cash requirement. That's why when you look through the accounts for the past few years, the cash reserves keep on rising. It reach a point that it has to invest some in financial assets.
Hi wong
Sorry, I have no comment on this circus called Proton. It's really pathetic & it's beginning to look like a "village bicycle". Everybody can ride for free!
Hi ysney26
I don't know much about AIM. The company incurred a small loss in FY2009 & FY2008 but it managed to make a small profit for 1Q2010 & 2Q2010. You have rightly noted that it is a company with sound financial position. In fact, it has cash, bank balances & FDs totaling RM25 million or RM0.134 per share. With this, it is not a surprise that it undertakes some share buybacks.
The change in the major shareholder could be a precursor to a change in the business direction of the company. We do not have any idea what's that new business is nor do we know who the new major shareholder is. We can only assume that he or she will do good for the company.
Technically, the stock has good support at the uptrend line support of RM0.125 and the horizontal line support of RM0.135. It would face stiff resistance at RM0.20 and then at RM0.22.
As the company is now trading at about RM0.185, the downside risk is not substantial. Each share is backed by NTA of RM0.183, of which RM0.134 is in the form of cash. Based on the above, AIM can be a decent long-term investment if the new shareholder has the company's interest at heart.
HI Alex, thanks for your input. Hypothetically if JAB sits on the money and is slow in getting a new "exciting" business, how long can they hold on before they have to decide to distribute the money back to shareholders ? And if they do not get a new exciting business soon, what kind of time frame they have before they have to decide to delist ? thanks
Hi CK,
I don't know how long they would hold onto the cash or if they are getting a new business soon or the timeframe to delisting exercise? The company did not mention about any delisting exercise. The company that did announce something like that is GCorp.
Post a Comment