That report generated great excitement for Kbunai & Petaling Tin Bhd [PtgTin] (both controlled by Dr Chen Lip Keong). Both Kbunai & PtgTin own big tracts of land in Menggatal, Kota Kinabalu where the 6-star Nexus Karambunai Resorts is located.
I has serious doubt about the chances of the proposed casino taking off in view of the following:
1) The political situation in Sabah may not be conducive to a project that might anger the general population, whether Muslims or Christians. Two years ago, Sabah's Chief Minister Datuk Seri Musa Aman stopped the construction of a giant statute of Kuan Yin in the state because it might anger the Muslims within the vicinity. This caused a bitter spate with the then Deputy Chief Minister Tan Sri Chong Kah Kiat, the leader of another component parties of Barisan Nasional who later resigned from the state government (here). Can the same Chief Minister allow a casino to be built in the State? Some may recall that a few months ago, a few state assemblymen actually proposed the construction of a casino in the Sabah but the idea was shot down by the State Tourism, Culture and Environment Minister Datuk Masidi Manjun (here).
2) A casino is now a dime a dozen. Unlike 20 years ago, you can find casinos all over the region. While many investors are enamored about the spectacular performance of Genting Singapore, they forget that there are many casinos that are struggling to stay afloat. To succeed, the casino must have sufficient local population with wealth. If not, you would be relying on overseas gamblers. In such a situation, the chance of the casino making money is not good. Sabah does not have a large population with wealth to sustain a casino.
Based on the above, I would rate the chance of Kbunai's developing a casino as unlikely.
Technical View
Looking at the monthly chart of Kbunai (plotted on log scale), we see that the stock has broken above the accelerated downtrend line at RM0.12 & tested the strong horizontal resistance at RM0.20. If the stock can break above the RM0.20 horizontal resistance, it may test the long-term downtrend line at RM0.30. However, if profit-taking were to set in over the next few days, the stock may drop back to the horizontal support at RM0.10-12, which is the breakout level of the accelerated downtrend line.
Chart 1: Kbunai's monthly chart as at Sept 1, 2010_plotted on log scale (Source: Tradesignum)
From the monthly chart of PtgTin (plotted on log scale), we can see the long-term downtrend line is at RM0.20. The stock broke above that downtrend line on Friday but dropped back towards the breakout level at the close. Can it hold onto this breakout level over the next few days & weather the profit-taking activities?
Chart 2: PtgTin's monthly chart as at Sept 1, 2010_plotted on log scale (Source: Tradesignum)
Comment/Conclusion
In view of the political & economic factors, I believe that the casino proposal is unlikely to take off. Based on this, I think that one should be very careful trading in these two stocks. If you choose to rely on technical analysis for your trade, be sure to stick to the technical rules. Set protective stops & stick to them.
14 comments:
Dear Alex,
Could you kindly comment on Lionfib? It has breached another new high of the year today..
TQ
Dear Alex,
Any latest view on Unisem after the recent ETP by govt.
Any comment on good fundamental solar energy stocks in Bursa main list which i foresee a potential and grooming sector in Malaysia.
Thanks. Good day.
Hi! Alex,
I heard Tongher's directors are buying their co's shares, is it true?
The co.'s performance seems not that consistence, is it due to the nature of its' business?
Lastly, if I buy below RM2.00, is it ok?
Best Regards,
Desmond
hi Alex,
any comment on Bornoil
Hi Wilson
LionFib's financial results as reported look good. However, if you exclude all the exceptional gains, LionFib is not only very ordinary, it has sliding for the past 2 quarters. The adjusted pre-tax profit is about RM10 million for the latest QE30/6/2010.
The exceptional gains come from the restructuring of debts & bonds by Silerstone as well as sale of investment in China (I think it's Parkson Retail Group Ltd) by an associate (LionDiv).
Technically speaking, LionFib seems to have broken above the 12-year trading range of RM0.30 & RM1.60. Why is there a breakout? I don't know. The next resistance is at the psychological RM2.00 level.
Hi Layman
I am not sure how Unisem can benefit from the ETP announced by the government.
I am not aware of any company listed on our exchange that is seriously involved in solar energy. I understand that some Taiwanese semicon players have ventured into that sector over the past 2-3 years. Is Unisem planning to do something similar?
According to your article, the plan to have a casino in Sabah, are not going to happen. The poverty line in Sabah are still unresolved. Emm but when we owns a casino, it would be attracting people from all around the world to came and invest the money in here. Hows dat? May be i am wrong about these, but may be you can give an opinion.
Hi Desmond
Tongher's directors bought some shares in the company, but the amount is negligible.
Tongher's financial performance has been slowly improving over the past 1 year. Its last 4 quarters' EPS was 15 sen- a 5-fold increase from 3 sen recorded in the preceding 4 quarters. Based on its last done price of RM1.75, it is trading at a PE of 11.7 times.
Chartwise, the stock has been trading within a symmetrical triangle over the past 2 years!! The support & resistance are at RM1.72 & RM1.92, respectively. A breakout in either direction could lead to a big move. I am inclined to believe that it would be a move to the upside.
Based on the above, you can nibble into this stock at the RM1.70-75 level.
Hi William
Bornoil may have a bullish breakout at RM0.15-16. Please check out the fundamental of the stock by going through the financial statements (by visiting Bursa website). I personally do not like the management of this company.
Saya dah anggap bahawa kasino ini hanya khabar angin sahaja.
Hi Poppy
Do you go to Cambodia to play in the casino? Probably not. You go there to visit the Angkor Wat. I go back to Sabah to visit Mount Kinabalu & the many beautiful national parks that Sabah has. BTW I am a Sabahan.
Unless the host has a fairly large & wealthy population (like Singapore) or a neighbor that has a fairly large & wealthy population (like Hong Kong), then the casino would rely heavily on distance foreign visitors. It's also very important that this population is pre-disposed to the gambling habit (read: Chinese). Which is why the Cambodian casino is struggling! I believe that a casino in Sabah would also suffer the same fate. BTW I have been staying in KL for the past 27 years & I have been inside the Genting casino only 3 times.
Thanks Sir
Rasanya kasino ini tidak akan dibina di Sabah.
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