Progressive Impact Corporation Bhd ('PICorp') is principally involved in the provision of environmental consulting, monitoring equipment/system integration, waste management engineering, environmental training, Environmental, Safety and Health (ESH) Consulting, laboratory testing and environmental data management services.
Recent Corporate Development
PICorp had a strong rally in 2007-2008, riding on the back of the followings:
1) a generous bonus issue & share split (here); and
2) its 60%-owned subsidiary, Seeco Engineering for Sewerage & Environmental Co. Ltd ("SEECO") securing a contract of USD55 million from the Sudanese Government (which was later raised to USD85 million). For more, go here & here.
The Sudanese contract did not work out as the Sudanese Government failed to furnish an international bank guarantee as security for the payment of contract works to be carried out. This contract has now been terminated & PICorp has disposed off its 60%-stake in SEECO (here).
Recent Financial Results
Due to the provision made for the impairment of concession assets under construction (as per the Sudanese contract) of RM13.656 million, PICorp incurred a huge net loss of RM4.8 million in QE30/6/2010. In QE30/9/2010, PICorp's financial performance was still very weak. The company expressed the opinion that the 4Q2010 results would be favorable.
Table: PICorp's last 8 quarterly results
Chart 1: PICorp's last 13 quarterly results
Valuation & Other comments
A company that is afflicted by a loss-making subsidiary or division would usually suffer a drop in its profitability & this would lead to a decline in its share price. After the loss-making operation has been shut down or expunged, the company's bottom-line would slowly improve & along with that an improvement in its share price.
PICorp (closed at RM0.255 yesterday) is now trading at a PE of about 13 times (assuming a normalized earning of 2 sen). At this multiple, PICorp- a smallcap- is deemed fairly valued.
Technical Outlook
From the daily chart below, we can see that PICorp has broken above its downtrend. It has surpassed its 100 & 200-day SMA line at about RM0.245-0.25.
Chart 2: PICorp's daily chart as at Dec 8, 2010 (Source: Tradesignum)
Conclusion
Based on positive technical outlook & a potential shift in operational results & market psychology, PICorp could stage a steady recovery from its recent low. Its valuation is however not cheap & its results have yet to confirm its turnaround. As such, it would warrant further monitoring or only slow accumulation.
32 comments:
what's your view on BJCorp chartwise? Financially, Cosway seems to be able to contribute more with its expansion plan...
Hi Alex,
Could you take a look at FPI? After a very nice 7 sen dividend in June, the stock seems to be dropping although its profits appear intact. I'm thinking of accumulating close to 80 sen.
Thanks!
Do you suggest that slow accumulation n monitoring of this stock at price levels 0.24-0.25 since its slow recovery is begin to take place
Hi Alex,
Recently CIMB has been going up and approaching RM9. Any reasons behind it? What do you think will be the supporting price and will it break RM10 soon?
Thanks!
hi alex. please comment on RAMUNIA. can buy at current level ?? thx.
Hi Alex,
Any thoughts on Faber? Thought of buying at close to 2.60.
Tq.
Hi Seong Wai
Faber has broken below its uptrend line at RM2.80-85 in mid-November. It may continue to slide to test its horizontal support at RM2.50.
Hi wong
RAMUNIA is half-way through a saucer bottom formation. It may be another 9-12 months before this bottom will be completed. we may then see a swing above RM0.75 to signal the beginning of its recovery. Meanwhile the stock should have good support at RM0.35-0.40.
Hi Lim
I have no idea why CIMB charged up in the past few days.
hye alex,
fyi, i just involve in klse for 2 weeks.
1. i bought keuro at 1.33 recently
but i noticed the counter is in the down trend these 2 3 days.
what is ur opinion?
should i keep it or let it go.
2. cud u comment on drbhicom?
hwangdbs said it could reach 3.55. is it posible coz its almost 100& of current pric. if true, big bucks there. :D
haq
Hi ayseng
You have to weigh the risk & reward. On the one hand, it's fairly value & the results are not exactly exciting yet. On the other hand, the technical breakout is very tempting. I think the RM0.24-25 level is pretty safe & a small position may not be a bad idea.
Hi AlexP
FPI has corrected quite a bit after making a high of RM1.17 in early 2010. However its uptrend line is still intact with strong support at the horizontal area of RM0.75-0.85 & uptrend line at RM0.75 (plotted on log scale).
Please check on its financial performance by visiting Bursa website.
Hi hkloon
BJCorp is undergoing the bottoming phase which can take awhile. The support is at RM1.00 & then RM0.93-0.95. Resistance is at RM1.10.
A breakout above the RM1.10 could signal the beginning of the next upleg.
Hi Alex,
Thanks for your comment. What do you think will be the support price? Thanks!
Hi ~~Dis life,
I will say this about you, you don't do thing in half-measure. For a new investor, you have chosen the hottest stocks to ride on. This is my take on these stocks:
1. keuro
Ignoring the high of RM1.50 on the first week of its listing in 2003, Keuro has not traded higher than what it is doing now. It broke above the strong horizontal resistance at RM1.10-1.20. This stock may go higher. However, it has risen more than 5 times from the low of RM0.20 in 2009!
2. drbhicom
This stock has broken above the 3rd fan line of its 8-9 year 3-fan trend line at RM1.40 (based on log scale monthly chart). What's a 3-fan trend line? Go check out in the internet. With this breakout, the stock may test the immediate resistance at RM2.00. It may even go higher & test the next 2 resistance levels at RM2.50 & RM3.00.
WARNING: These 2 stocks have risen quite substantially over the past few weeks. Stocks that have gone up significantly are prone to correct back very sharply. You must be careful & do not take excessively large position.
HI Alex, how u look at IJM stock? Plan to choose IJM-WC
Hi Alex,
What's your view on Allianz (RM4.29)& Icap (RM2.05)from fundamental as well as TA? I'm currently holding the above stocks.
What's your view on plantation (small cap like cepat) & glove counters (supermax & kossan). These two counters has gone up quite substantially recently. Are there still worth for short-term trading buy & long-term buy? Thank you.
hi alex,
after lionfib dispose its tyre biz, it will be cash rich. do you think it is still a good company to invest for long term?
thanks
maxwealth88
Hi MaxWealth88
After Lionfib dispose its stake in Silverstone, it has cash but very little earning going forward. It's a case of having your cake & eating it. Since the share price has run up quite substantially, the upside of the stock may be limited. However, the stock had undergone a sharp correction of 25% recently. After this correction, Lionfib may revisit its recent high again. It could be a good trading BUy at RM1.80-2.00.
Hi st
Plantation stocks are likely to trend higher. That includes Cepat even though it has gone up a lot & as such is prone to a sharp pullback.
Rubber glove sector is tricky. It has a good correction & is holding at current level. For the medium-term, it will continue to be affected by forex volatility & high raw material prices. On the longer term, it will be affected by demand & supply equation. Is supply growth exceeding demand growth? If supply has outpaced demand, competitive pressure will kick in & profit margin will be compressed. The market has anticipated this scenario & the players have reacted accordingly. Have they overreacted? Has the operating results conformed with expectation? We will have to wait & see.
Hi st
My view on Allianz is as per my earlier post. On ICap, it should track the market. From most recent records (2006-7), ICap does not move in locked steps with the FBM-KLCI. ICap tends to lag FBM-KLCI on the initial 70% of the rally. As FBM-KLCI struggled on the last leg (the last 30%), ICap rallied ahead sharply. If the same were happened this round, we could see a decent rally in ICap.
Could you comment on Hovid , a ( PN 17 ) stock . Is it on the road to recovery ? or just have to ignore it ? Your advice is greatly appreciated. Thanks
Hi cheer
IJM is poised to test its February 2007 high of RM6.60-6.70. If it can surpass that level, it may go to RM8.00. This is based on the assumption that IJM can repeat the feat of breaking its previous all-time high of RM4.00 [in 1997] & made a new high of RM4.80.
Based on the above, you can consider IJM-WC which is trading at a premium of 7.3% now.
Hi ayseng,
On Hovid, I have replied to it earlier. To wit:
I am not sure about Hovid. I have studied this stock 1 or 2 months back when it was classified as PN17 due to the problem in Carotec. As you may know, Hovid is a decent company which is dragged down by its associate/subsidiary Carotec. To help Carotec to secure a bank loan, Hovid has executed an understanding to remain as a holding company of Carotec (similar to a Letter of Comfort). Strangely, it has been disposing off its shares in Carotec lately & it is no longer the holding company of Carotec. The question is whether the bank has consented to the sale-down. What is Hovid's liability now?
Hovid is now trading at RM0.17 or at a Price to Book of 1.3 times. Assuming all liabilities are accounted for, Hovid- after a clean break from Carotec- may report an earning of RM16 million a year or an EPS of 2 sen. This means that Hovid is now trading at a PE of about 8.5 times. For a smallcap, that's a reasonable valuation.
For all the uncertainties, the upside for Hovid may not be very exciting. You may be better rewarded by investing somewhere else.
Hi Alex,
What's your view on Annjoo and it's warrant ?. TQ
hi alex.
could u gv me little advice of my stock in keuro since it has been drop pretty bad lately.
is there any sign keuro will keep falling or it has the potential to rise back above 1.30.
thanks alex
Hi Alex:
You had commented Bursa in Yr 2006 positively . How about this time around? It seemed that most counters had reached their heights except Bursa still laggard behind. Is the counter going for a big surprise in Jan 2011? May you comment on its warrants CO, CP CQ CR . Which amongst them is having te best potentials after considering the limited time available due for expiry. Thanks in advance
Hi ayseng
My post on Bursa in Yr 2006 is no longer applicable as it was a very old post. Things changed & we have to change accordingly.
Bursa's earning is about 5 sen each quarter or 20 sen for a full-year. At this earning level & at a price of RM8.00, Bursa is trading at a PE of 40 times. At this PE multiple, Bursa is richly valued.
Hi ~~Dis life&
Keuro's price movement is not surprising of late. It rose from RM0.20 to this level of RM1.20-1.30 over 2 years. For the past few weeks, it rose from under RM1.00 to a high of RM1.35! It may correct back to to RM1.10-1.20 over the next few weeks but the uptrend is still intact. If it break below the RM1.00 level, you should be very worried. For now, it's just undergoing some minor correction.
Hi Stephanie
Annjoo has just broken above its medium-term downtrend line at RM2.90-2.92. This means that the stock is likely to slowly recover from here on.
Annjoo-WB is fairly valued. Its exercie price is at RM2.50 & expiry is in 2013. At the current price of RM0.71 (& the share price at RM3.00), the warrant is trading at a premium of 7%. Very reasonable premium.
thnks alex for ur informative info
:) wish u best in ur career
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