Monday, August 30, 2010

Petgas's net profit jumped

Background

Petronas Gas Bhd ('Petgas') Petgas is involved in the gas business value chain, providing gas processing and transmission services to PETRONAS through two of its divisions. The Plant Operations Division (POD) handles all activities pertaining to the processing of feed gas whilst the Transmission Operations Division (TOD) is responsible for the transmission and delivery of sales gas to end customers throughout the peninsula. It also delivers sales gas to customers in East Malaysia through a 45km pipeline in Sarawak. In addition to the throughput services business, it has also diversified into manufacturing, supplying and marketing of industrial utility products to the Kertih Integrated Petrochemical Complex and Gebeng Industrial Area through our Centralized Utility Facilities (CUF) Division.

Recent Development

Petgas appears to be benefiting from a new Gas Processing & Transmission Agreement ('GATP') starting from 1 April 2010 to 31 March 2014. To be frank, I can't see the difference between the previous agreement (here) and the new one (here). However, I believe it has a very positive effect on Petgas's last quarter results where the turnover was marginally higher but the profit margin spiked up substantially. See Chart 1 below.


Chart 1: Patgas's profit margin for the last 16 quarterly results

Recent Financial Results

For QE30/6/2010, Petgas's net profit increased by 90% q-o-q or 42% y-o-y to RM383 million while turnover increased by 9% q-o-q or 11% y-o-y to RM873 million.


Table: Petgas's 8 quarterly results



Chart 2: Petgas's last 16 quarterly results

Valuation

Petgas (closed at RM10.40 last Friday) is now trading at a current PER of 13.4 times (based on annualized EPS of 77.4 sen). Assuming a PER of 15 times, Petgas should have a fair value of RM11.61. It dividend yield is reasonable at 4.8%.

Technical Outlook

Petgas is in an uptrend line with support at RM9.70-9.80. Its next horizontal resistance is RM10.50 & then RM12.00.


Chart 3: Petgas's monthly chart as at Aug 22, 2010_log scale (Source: Tradesignum)

Conclusion

Based on improved financial performance, attractive valuation & positive technical outlook, Petgas could be a good stock for long-term investment.

Friday, August 27, 2010

Rubber glove sector- when the going gets tough...

I have appended below the tables of the last 8 quarterly results for Supermx, Kossan & Harta (plus the charts of their past quarterly results). We can see that all three companies suffered a drop in their net profit in QE30/6/2010 when compared to the immediate preceding quarter (QE31/3/2010). Is this a sign that the balance has swung from a seller's market to a buyer's market? This may explain the drop in their profit margin as cost increases cannot be fully passed onto the customers. In my opinion, the rubber glove sector has crossed the tipping point & their profit would likely to continue to decline, albeit at a gradual rate. If this scenario panned out, I believe we have seen a peak in the share prices for all the stocks in this sector.


Table 1: Supermx's 8 quarterly results (plus chart)



Table 2: Kossan's 8 quarterly results (plus chart)



Table 3: Harta's 8 quarterly results (plus chart)

As such, it may be advisable to avoid these stocks for a while.

Integra's bottom-line improved

Results Update

Integra has just announced its results for QE30/6/2010. Its net profit increased by 54% q-o-q or 51% y-o-y to RM13.7 million while its turnover was up 2% q-o-q or 10% y-o-y to RM23.5 million. The improved performance was attributable to increased cargo throughput in its 2 ports off Lumut as well as its 20%-owned associate, PGMC due to higher shipment of nickel.


Table: Integra's 8 quarterly results


Chart 1: Integra's last 13 quarterly results

It's worth noting that PGMC's shipment of nickel ore jumped from 4 shipments of 128,363 DMT in QE31/3/2010 to 27 shipments of 873,739 DMT in QE30/6/2010. At this current rate, PGMC may ship out more nickel ore in 2010 as compared to total shipment of 1,227,221 DMT recorded in 2009. Prices of nickel is still way off its high of USD54,000 in 2007 but it has recovered substantially from the low of USD10,000 in early 2009.


Chart 2: Nickel's monthly prices

Valuation

Integra (closed at RM1.24 yesterday) is now trading at a PER of 8.8 times (based on the last 4 quarters' EPS of 14.12 sen). At this multiple, Integra is deemed attractive. It may trade up to a PER of 10 times, giving te stock a fair value of RM1.41.

Technical Outlook

Integra is in an uptrend line, with support at RM1.10. A parallel line can be drawn and it may mark the resistance level for the stock at RM1.40. See Chart 2 below.


Chart 3: Integra's daily chart as at Aug 26, 2010 (Source: Quickcharts)

From the monthly chart (plotted on logarithmic scale), we can see that Integra seems to move in cycles (or waves) . It may be on the crest of its present cycle, with limited upside.


Chart 3: Integra's monthly chart as at Aug 25, 2010 (Source: Tradesignum)

Conclusion

Based on improved financial performance & attractive valuation, Integra could be a good stock for long-term investment. However, the stock could be at the crest of its present cycle, with limited upside potential. To beat the cycle, Integra would depend on continued favorable return from its investment in PGMC. Would nickel ore continue to rise?

Thursday, August 26, 2010

TWS- a good long-term investment

Background

Tradewinds (M) Bhd ('TWS') is involved oil palm cultivation, sugar refining and rice processing & distribution. For more on the group, check out its website (here).

Recent Financial Results

TWS's top-line & bottom-line rose sharply in the past 2 quarters after the completion of its acquisition of a majority 50.1%-stake in Padiberas Nasional Bhd ('Bernas') in January 2010. For QE30/6/2010, its net profit increased by 13% q-o-q or 562% y-o-y to RM87 million while turnover declined marginally by 1% compared to the immediate preceding quarter (QE31/3/2010) but increased by 210% y-o-y to RM1.286 billion.


Table 1: TWS's last 8 quarterly results


Chart 1: TWS's last 8 quarterly results

Financial Position

The main concern for this stock is the high gearing position after the acquisition of Bernas. From Table 2 below, we can see that the gearing ratio is very high at 1.28 times while liquidity position as reflected in its current ratio is adequate at 1.26 times. As 54% of the bank borrowings are classified under current liabilities, they are most likely used to finance its working capital requirement. As such, I believe the gearing is not excessive though it would be good if the company can raise its capital & bring down the gearing ratio to below 1 time.


Table 2: TWS's Balance Sheet as at 30/6/2010

Valuation

TWS (closed at RM3.53 yesterday) is now trading at a PER of 3 times only (based on the annualized EPS of 119.52 sen). At this multiple, TWS is deemed very attractive.

Technical Outlook

TWS is trapped between the horizontal lines of RM3.30 & RM3.60. From October 2008 to July 2010, TWS was tracing out a pattern known as a wedge. The stock broke above the wedge in late July at RM3.30. As such, the RM3.30 is a strong support level.


Chart 2: TWS's weekly chart as at Aug 25, 2010 (Source: Quickcharts)

Conclusion

Based on major shift in financial performance & attractive valuation, TWS could be a good stock for long-term investment. However, the main concern for the stock is its higher gearing as well as nagging corporate governance issue that always follows its major shareholder, Syed Mokhtar.

Wednesday, August 25, 2010

Market Outlook as at August 25, 2010

Our FBM-KLCI is displaying the same pattern that we saw in the last quarter of 2007 & first month of 2008 (which I have denoted as 'X'). Back then, the index had a parabolic rise that culminated in a V-shape reversal. We may be witnessing a steady build-up of a parabolic rise over the past few weeks- with the promise of the blow-off stage to come. No one know how long & far this rally can go. However, we know from historical records that parabolic rises culminate in sharp falls. Notice how the MACD & RSI have both broken above their downtrend line (denoted as 'Y'), just like in the last quarter of 2007 (denoted as 'X'). This market may correct & rise again. Like a shooting star, the market may rise until it can rise no more. Be very careful...


Chart: FBM-KLCI's daily chart as at Aug 24, 2010 (Source: Tradesignum)

Sunway- a good long-term investment

Background

Sunway Holdings Bhd ('Sunway') is involved in the followings businesses:
  • constructing building and civil works and providing mechanical, electrical and piling works.
  • trading and manufacturing construction and industrial products, building materials, etc.
  • quarrying, manufacturing and supplying premix, manufacturing ready-mixed concrete and producing building stones.
  • developing housing and commercial properties, leasing, managing, tenanting, licensing and disposing properties.
Recent Financial results

Note: Sunway has recently changed its financial year end from June 30 to December 31. This means that comparison with previous year's quarterly results may be misleading. My comment below must be read with this proviso in mind.

Sunway has just announced its results for QE30/6/2010. Its net profit increased by 22% q-o-q or 164% y-o-y to RM48.6 million while turnover increased by 1.5% q-o-q or 35% y-o-y to RM509 million. From Chart 1 below, we can see that Sunway's bottom-line has been steadily for the last 4 quarters.


Table: Sunway's last 8 quarterly results


Chart 1: Sunway's last 12 quarterly results

Valuation

Sunway (closed at RM1.57 today) is now trading at a PER of 6.9 times (based on last 4 quarters' EPS of 22.82 sen). Assuming a PER of 10 times, Sunway's fair value could be about RM2.28.

Technical Outlook

From Chart 2 below, we can see that Sunway is in an uptrend. The uptrend line support is at RM1.40. However, if we looked at Chart 3, which is the monthly chart plotted on a logarithmic scale, we can see that Sunway is trapped within a rising or bearish wedge, with upside breakout at RM1.80 & downside breakout at RM1.40. If it can break above the RM1.80 level, Sunway may rise to the resistance posed by the line connecting the two most recent 'high' (denoted as 'RR') at RM2.40.


Chart 2: Sunway's daily chart as at Aug 25, 2010_9.20am (Source: Quickcharts)



Chart 3: Sunway's monthly chart as at Aug 2, 2010, plotted on log scale (Source: Tradesignum)

Conclusion

Based on steadily improving financial performance & attractive valuation, Sunway could be a good long-term investment.

Tuesday, August 24, 2010

US markets in dangerous water again

Yesterday, I wrote about the arrival of the Hindenburg Omen for the US stock markets. This rare & rather abstract technical concept would not be easy to accept, not only by lay men but also by many technical analysts. While the Hindenburg Omen warns about the danger of a sharp drop or even a crash, what concerned me more is the possibility that the US stock markets may have made a top. I would use the 50, 100 & 200-day SMA lines to examine the US stock markets as represented by DJIA & S&P500.

From Chart 1 below, we can see that the 50-day SMA line has crossed below the 200-day SMA line for both DJIA & S&P500 in June. This negative signal, which is called the death cross, did not lead to a bear market for US stocks but instead was followed by a sharp rally in June & July. Now, the 100-day SMA line looks set to take a stab at the 200-day SMA line. How would another negative crossover impact the market?


Chart 1: DJIA & S&P500 daily chart up to August 23, 2010 (source: Stockcharts.com)

To answer the above question, let's look at Chart 2 below. We can see that DJIA & S&P500 made a top in 2007 & the confirmation of that top is attained when both the 50 & 100-day SMA lines had crossed below the 200-day SMA line in December 2007 & January 2008.


Chart 2: DJIA & S&P500 daily chart up to June 30, 2008 (source: Stockcharts.com)

Whether you buy the bearish implication of a confirmed Hindenburg Omen or not, you must take cognizance of the danger presented by the twin crossing of the 200-day SAM line by the 50 & 100-day SMA lines. If the 100-day SMA line were to cross below the 200-day line, then the US stock markets may have a confirmed top. What follows after a top is usually a bear market.

Monday, August 23, 2010

The Hindenburg Omen Has Arrived

One of the most feared patterns in technical analysis is the dreaded Hindenburg Omen. According to Wikipedia, the Hindenburg Omen is a technical analysis that attempts to predict a forthcoming stock market crash. It is named after the Hindenburg disaster of May 6th 1937, where the German zeppelin was destroyed in a sudden conflagration.

The Hindenburg Omen is not a guarantee of a crash, and the five criteria that must be met for a Hindenburg trigger typically need to recur within 36 days for reconfirmation. The statistics are however very startling. Based on historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and usually takes place within the next forty-days. There is a 30% probability that a stock market crash - a drop of 15%- occurring a confirmed Hindenburg Omen. For the record, the first sighting was on August 12, while the second sighting (or, confirmation) was on August 20. The last time this signal was sighted was on June 6, 2008 & again on June 17, 2008 and we all know what happened shortly thereafter (go here).

The 5 criteria of the Omen are as follows:
  1. That the daily number of NYSE new 52-Week Highs and the daily number of new 52-Week Lows must both be greater than 2.2 percent of total NYSE issues traded that day.
  2. That the smaller of these numbers is greater than or equal to 69 (68.772 is 2.2% of 3126). This condition is a function of the 2.2% of the total issues.
  3. That the NYSE 10-Week moving average is rising.
  4. That the McClellan Oscillator is negative on that same day.
  5. That new 52-Week Highs cannot be more than twice the new 52-Week Lows (however it is fine for new 52-Week Lows to be more than double new 52-Week Highs).
For more on this, go here & here.

Ogawa's performance continued to improve

Background

Ogawa World Bhd ('Ogawa') is involved in designing, marketing, retailing, distributing, and servicing of health care equipment and supplementary appliances. It provides a range of health and wellness equipment comprising various relaxation, therapeutic, fitness, diagnostic, and hygiene products.

Recent Financial Results

Ogawa's net profit increased by 256% q-o-q or 88% y-o-y to RM6.1 million, while turnover increased by 29% q-o-q or 14% y-o-y to RM47.7 million. The improved performance was attributable to higher sales & higher gross profit margin.


Table: Ogawa's last 8 quarterly results


Chart 1: Ogawa's last 8 quarterly results

Valuation

Ogawa (closed at RM0.44 last Friday) is now trading at a trailing PER of 6.4 times (based on last 4 qaurters' EPS of 6.9 sen). At this multiple, Ogawa is deemed fairly valued.

Technical Outlook

Ogawa is trying to break above the horizontal resistance of RM0.44. A break above that level could be the start of an upleg for this stock. Its immediate resistance is at RM0.51-52 & then at RM0.82.


Chart 2: Ogawa's weekly chart as at Aug 20, 2010 (Source: Quickcharts)

Conclusion

Based on improving financial performance & a possible upside break out above its horizontal resistance at RM0.44, Ogawa is worth tracking closely. If it succeed in breaking above the RM0.44 level with good volume, the stock could be a good trading BUY.

UMW's top-line & bottom-line rose sharply

Results Update

For QE30/6/2010, UMW's net profit increased by 59% q-o-q or 167% y-o-y to RM212 million, while turnover increased by 8% q-o-q or 27% y-o-y to RM3.282 billion. The improvement in turnover was attributable to higher sales of Toyota vehicles as well as industrial & heavy equipment. Bottom-line has improved in line with better sales as well as improved profit amrgin due to favorable forex movement & lower losses incurred by overseas associate.


Table: UMW's last 8 quarterly results


Chart 1: UMW's last 13 quarterly results

Valuation

UMW (closed at RM6.43 last Friday) is now trading at a trailing PER of 12.6 times (based on last 4 quarters' EPS of 51 sen). At its current rate of improvement in earning, UMW is trading at a fair multiple to its earning. Assuming a PER of 15 times, UMW's fair value could be RM7.65.

Technical Outlook

UMW has broken above its strong horizontal resistance at RM6.35. Its next resistance is at the horizontal lines of RM6.70 & RM6.80. The MACD & DMI have yet to turn up to signal the continuation of UMW's prior uptrend.


Chart 2: UMW's weekly chart as at Aug 20, 2010 (Source: Quickcharts)

Conclusion

Based on good financial performance, UMW could be a medium-term investment.

Friday, August 20, 2010

MISC- better results but still unattractive

Results Update

MISC has just announced its results for QE30/6/2010. Its net profit increased by 118% q-o-q or 83% y-o-y to RM428 million while turnover dropped 1% q-o-q or 16% y-o-y to RM3.27 billion. The improved performance is attributed to better results from the restructured Liner business as well as increased profitability from the Heavy Engineering business.


Table: MISC's last 8 quarterly results

From Chart 1 below, we can see that MISC's turnover has stabilized after a sharp drop in 2008. Bottom-line has shown signs of recovery in the past 3 quarters.


Chart 1: MISC's last 17 quarterly results

Valuation

MISC (closed at RM8.86 yesterday) is now trading at a trailing PER of 42 times. At this multiple, MISC is deemed overvalued.

Technical Outlook

Like a giant oil tanker, MISC moved very slowly. Over the past 18 years, MISC had only rallied twice. Its first rally came at the end of the 1993 bull run and the next bull rally came in 2003-2006. The periods in between are marked by long sideway movement or consolidation (in the form of triangle or double-triangle). I believe MISC is now in such a formation, with prices trapped between RM8.00 & RM10.00.


Chart 2: MISC's monthly chart as at Aug 19, 2010 (Source: Tradesignum)

Conclusion

Based on high valuation & unattractive technical outlook, MISC is a stock to be avoided.

Uchitec- good results & possible technical breakout

Results Update

Uchitec has just announced its results for QE30/6/2010. Its net profit increased by 40% q-o-q or 198% y-o-y to RM13.9 million while turnover increased by 4% q-o-q or 12% y-o-y to RM25 million. The company attributed the improved performance to increased demand for its products as well as increase in R&D projects.


Table: Uchitec's last 8 quarterly results

From Chart 1 below, we can see that Uchitec is slowly recovering after the steep drop in sales in 2007 & 2008.


Chart 1: Uchitec's last 18 quarterly results

Valuation

Uchitec (closed at RM1.41) is now trading at a trailing PER of 12 times (based on last 4 quarters' ESP of 11.69 sen). Uchitec, known for its high dividend payout, has seen its dividend yield sliding in the past 2 years. Today, its dividend yield stood at 4.3% only.

Technical Outlook

Uchitec may have broken to the upside of its symmetrical triangle at RM1.38-1.40. If it can recruit sufficient buying interest, it may test its horizontal resistance at RM1.60 & then at RM1.90.


Chart 2: Uchitec's weekly chart as at Aug 19, 2010 (Source: Quickcharts)

Conclusion

Based on steady improvement in financial performance & possible technical breakout, Uchitec could be a trading BUY or even a medium-term investment.

Thursday, August 19, 2010

SPSetia-WB may have a bullish breakout

SPSetia-WB broke above its downtrend line at RM0.44 in early August. The breakout was followed by a correction back to the downtrend line. In the past few days, it rose slowly & timidly. Yesterday, it rallied strong in the afternoon session (see Chart 1). Is this the start of a rally for this warrant & the mother share?


Chart 1: SPSetia-WB's daily chart as at Aug 18, 2010 (Source: Quickcharts)

The last time SPSetia-WB broke above the 40-week SMA line in w/e April 17, 2009, it coincided with a similar breakout in the mother share. SPSetia then rose from RM3.00 to RM4.60 over a period of 8-9 weeks. See Chart 2 & 3.


Chart 2: SPSetia-WB's weekly chart as at Aug 18, 2010 (Source: Quickcharts)



Chart 3: SPSetia's weekly chart as at Aug 18, 2010 (Source: Quickcharts)

Based on the bullish breakout, SPSetia-WB could be a trading BUY. A better alternative trading BUY could be the mother share, SPSetia.

Note: Based on yesterday's prices, SPSetia-WB is now trading at a premium of about 15%. Its main terms are exercise price of RM4.48; exercise ratio of 1-for-1; and, expiry date in Jan 2013.

SEG- watch out for the unadjusted earning

Results Update

SEG has just announced its results for QE30/6/2010. The announced results in Bursa was presented without adjusting for the 1-for-2 split & 2-for -5 bonus. See Table 1 below.


Table 1: SEG's results for QE30/6/2010 (Source: Bursa)

The adjustment was not made to the financial statement because the entitlement date was on July 27, which was after the closing date for QE30/6/2010. However, investors looking at the announced results would immediately compute the PER for SEG and unknowingly arrive at a much lower & incorrect PER. I have appended below the adjusted EPS, Dividend per share & NTA per share for SEG (see Table 2). You will see that SEG's adjusted EPS for QE30/6/2010 is about 4.33 sen. Based on its close of RM2.73 yesterday & the last 4 quarters' EPS totaling 9.49 sen, SEG's trailing PER is about 29 times.


Table 2: SEG's last 8 quarterly results

Technical Outlook

SEG is still in a strong uptrend with bearish divergence in the MACD & RSI.


Chart: SEG's daily chart as at Aug 18, 2010 (Source: Tradesignum)

Conclusion

Albeit the still bullish technical outlook, SEG is to be avoided due to its excessively high valuation.

Wednesday, August 18, 2010

Ogawa- gearing up for a bullish breakout?

Ogawa is involved in designing, marketing, retailing, distributing, and servicing of health care equipment and supplementary appliances. It provides a range of health and wellness equipment comprising various relaxation, therapeutic, fitness, diagnostic, and hygiene products.

Listed in June 2007, Ogawa has been in a downtrend until last month when the stock broke above its downtrend line at RM0.35. The stock is now attempting to break above the horizontal resistance at RM0.45-46. If successful, it may challenge its next resistance at the horizontal line of RM0.51-52. A break above this latter resistance could see the stock sailing up to the horizontal line at RM0.85-90.


Chart 1: Ogawa's weekly chart as at August 18, 2010_9.05am (Source: Quickcharts)

Ogawa's financial performance has turned around this year. For the 9-month ended 31/3/2010, Ogawa recorded a net profit of RM2.2 million on turnover of RM108 million. This compared favorably with last year's 9-month results where it incurred a net loss of RM15.7 million on turnover of RM87 million. Oqawa (closed at RM0.45 yesterday) is now trading at a trailing PER of 19 times or at a Price to Book of 0.9 time (based on NTA per share of RM0.49 as at 31/3/2010). At these multiples, Ogawa is deemed very demanding.

Can Ogawa duplicate the success of its close competitor from Singapore, OSIM? For QE30/6/2010, OSIM reported a net profit of S$12.1 million (a y-o-y increase of 142%) and a turnover of S$131 million (a y-o-y increase of 12%). For more, see the table below.


Table: OSIM's 2Q2010 & 1H2010 results

Due to its strong recovery, OSIM rose from a low of S$0.10 in April 2009 to a recent high of S$1.10. See Chart 2 below.


Chart 2: SIM's daily chart as at August 17, 2010 (Source: SGX)

Conclusion

Ogawa may rally if it can break above the horizontal resistance at RM0.45-46 convincingly. The catalyst for a rally could be a good set of number for QE30/6/2010 (expected any day now).

Tuesday, August 17, 2010

GenM may have a bullish breakout... finally

Gentimg Malaysia Bhd ('GenM') has finally broken above its strong horizontal resistance at RM2.90 as well as the next resistance at RM3.00. Based on this, I believe GenM may rise further. The stock is doing catch-up with its parent, Genting Bhd as well asGenting Singapore- both stocks have a huge rally in the past few days.


Chart: GenM's weekly chart as at August 17, 2010_9.20am (Sourece: Quickcharts)

GenM could be a good trading BUY.

Monday, August 16, 2010

Maybank may have a bullish breakout

Maybank finally broke above its horizontal resistance of RM7.77-78 this afternoon. This upside breakout may mirror the February/March 2010 breakout where Maybank rose about RM1.00, from below RM7.00 to RM7.70.


Chart: Maybank's daily chart as at August 16, 2010_2.45pm (Source: Quickcharts)

Based on this upside breakout, Maybank could be a good trading BUY.

Friday, August 13, 2010

Century's bottom-line jumped

Results Update

Century has just announced its results for QE30/6/2010. Its net profit jumped 14% q-o-q or 79% y-o-y to RM7.5 million while its turnover increased by 26% q-o-q or 60 % y-o-y RM75 million. The better performance is simply attributed to increased business from new & existing customers.


Table: Century's last 8 quarters' results


Chart 1: Century's last 17 quarters' results

Valuation

Century (closed at RM1.66 yesterday) is now trading at a PER of 4.3 times based on last 4 quarters' EPS of 38 sen. Before we get too excited about this low PER, we must remember that the stock has traded at equally low trailing PER in the past (such as 3-4 times in the middle of 2008). Notwithstanding this, I believe that Century is very attractive.

Technical Outlook

The stock is trapped between a long term downtrend line and an intermediate term uptrend line; forming a triangle (ABC). The upside breakout level is at RM1.65-67. A few indicators seem to point towards that possibility.


Chart 2: Century's daily chart as at August 12, 2010 (Source: Quickcharts)

Conclusion

Based on good financial performance and attractive valuation, Century could be a good stock for long-term investment. However, those who are technical inclined would like to wait for an upside breakout at RM1.65-67 before venturing in for a trade.

Thursday, August 12, 2010

Kianjoo & Canone- closure at last?

On July 19, I posted on Kianjoo testing its horizontal resistance at RM1.32-33, after an upside breakout of its triangle formation (go here). Since then, Kianjoo has broken above the RM1.32-33 resistance and it may challenge higher resistance level at RM1.50 & RM1.60. See Chart 1 below.


Chart 1: Kianjoo's weekly chart as at August 12, 2010_10.20am (Source: Quickcharts)

Interestingly, Canone has also broken above its strong horizontal resistance at RM1.12 yesterday. Canone could potentially revisit its April 2006 high of RM1.60-62. Is there a connection between these 2 stocks? You may recall that Can-One, through its wholly-owned subsidiary Can-One International Sdn Bhd, entered into a share sale agreement with Kian Joo Holdings to buy a 32.9% stake in KJCF for RM241.12mil or RM1.65 per share in April 2009 (go here). Subsequently, Kianjoo's managing director Datuk See Teow Chuan and 13 others filed a legal suit against Canone, claiming that the transaction was ‘’illegal’’. Is the Court about to rule in favor of Canone?


Chart 2: Canone's weekly chart as at August 12, 2010_10.20am (Source: Quickcharts)

Based on technical consideration only, Kianjoo & Canone could be good trading BUYs.