Monday, November 29, 2010
Since the new Maybank shares to be acquired is at a substantial discount to the market price, it is a better option than receiving cash dividend. To do so, you need to complete & execute the Dividend Re-investment Form (here). The dateline is December 8. If you choose to accept cash, then you need not do anything.
The only downside to re-investing your dividend in new Maybank shares is that you would end up with odd lot. Since the number of shareholders with odd lot would increase sharply after this exercise, I believe the pricing for odd lots would improve (or the discount to Board lots would be smaller). This is because of greater liquidity & the opportunity for arbitraging between Board lots & Odd lots, which would narrow the difference between the prices in these 2 markets.
Based on the above, I would recommend Maybank shareholders to accept the dividend re-investment.
Thursday, November 25, 2010
Uchitec has just announced its results for QE30/9/2010. Its net profit increased by 16% q-o-q or 75% y-o-y to RM16 million while its turnover increased by 21% q-o-q or 36% y-o-y to RM30 million. The company explained that the better performance was due to higher sales (obviously!).
Table: Uchitec's last 8 quarterly results
Chart 1: Uchitec's 20 quarterly results
Uchitec's financial position is deemed satisfactory. As at 30/9/2010, its current ratio stood at 13.5 times while its debts to equity is very negligible. The company has FDs totaling RM130 million & Cash in banks totaling RM9 million as at 30/9/2010. This translates to a cash per share of 37 sen!
Uchitec (closed at RM1.32 yesterday) is now trading at a trailing PE of 9.7 times (based on last 4 quarters' EPS of 13.56 sen). If the cash reserve is excluded, Uchitec's PE is only 7 times. At this multiple, Uchitec is deemed quite attractive.
Uchitec has been consolidating in a triangle, with resistance & support at RM1.40 & RM1.25 respectively. There is no sign that this stock is about to breakout of its current sideway trend.
Chart 2: Uchitec's weekly chart as at Nov 22, 2010 (Source: Quickcharts)
Based on improving financial performance & undemanding valuation, Uchitec can be a good stock for long-term investment. The stock may become a trading buy in the event that it break above the RM1.40 level.
Notion has just announced its results for QE30/9/2010. Its net profit increased by 172% q-o-q but dropped by 38% y-o-y to RM8.1 million on the back of lower turnover of RM53 million (which declined 13% q-o-q or 2.5% y-o-y). The company attributed "the lower revenue... to decrease in sales from HDD segment and the lower USD foreign exchange rate versus the Malaysian Ringgit". The improvement in net profit is mainly attributable to "lower R&D cost, improved material yield, less incidence of rework and quality issue, foreign exchange gain from hedging contracts and reinvestment allowances resulting in lower taxation".
The big question is how much of the improved bottom-line is due to the reduction in R&D cost. A company may enjoy a short-term boost from this action but prolonged reduction of R&D cost would lead to loss of long-term competitiveness. The rebound in the bottom-line cannot disguise the uncertain outlook for Notion's HDD segment which was still suffering from poorer demand.
Table: Notion's last 8 quarterly results
Chart 1: Notion's 16 quarterly results
Notion's financial position is deemed satisfactory. As at 30/9/2010, its current ratio stood at 1.9 times while its debts to equity stood at 0.4 time.
Notion (closed at RM1.64 yesterday) is now trading at a trailing PE of 6.5 times (based on last 4 quarters' EPS of 25.29 sen). At this multiple, Notion is deemed undemanding. However, with the negative outlook in the HDD sector, the market is not likely to assign a higher PE multiple for this stock.
Notion dropped from its peak of RM3.46 in March 2010 to a low of RM1.50 in September. The stock is now consolidating between RM1.50 & RM1.80. I believe the stock is likely to remain in this trading range for the next few months (until the outlook of HDD sector has improved).
Chart 2: Notion's weekly chart as at Nov 22, 2010 (Source: Quickcharts)
Based on the uncertain outlook for the HDD sector, Notion is expected to trade sideway for the next few months. For those who believe in swing trading, you may try to get into this stock at RM1.50-1.60 & sell at RM1.80.
Maybulk has announced its results for QE30/9/2010 recently. Its net profit increased by 178% q-o-q or 26% y-o-y to RM88 million while turnover increased by 14% q-o-q or 11% y-o-y to RM109 million. In the past few quarters, Maybulk's performance was freed from the lumpy gain from the disposal of vessels. For QE30/9/2010, Maybulk's turnover grew due to increased revenue days even though the shipping rates slipped slightly. Higher turnover coupled with a slightly lower operating expense led to higher net profit.
Table: Maybulk's last 8 quarterly results
Chart 1: Maybulk's 18 quarterly results
Maybulk (closed at RM2.91 yesterday) is now trading at a trailing PE of 11 times (based on last 4 quarters' EPS of 26 sen). With the weak outlook for shipping rates, Maybulk is deemed fairly valued at the present PE multiple.
Maybulk has been consolidating within a symmetrical triangle for the past 18 months. A breakout above RM3.00 could signal the start of an upleg for the stock. Conversely, a break below RM2.80-85 would signal a bearish outlook for the stock.
Chart 2: Maybulk's weekly chart as at Nov 22, 2010 (Source: Quickcharts)
Based on improving financial performance, Maybulk is worth close monitoring. A breakout above RM3.00 would be a trigger for a trading BUY for this stock.
Tuesday, November 23, 2010
South Korea scrambled fighter jets and returned fire after North Korea lobbed dozens of shells into its territory, injuring four soldiers, Yonhap News reported.
A South Korean Defense Ministry official, who declined to be identified, confirmed the shelling, without giving any further details. The military has been put on high alert and will “respond strongly” to further provocation, he said.
Evergreen has just announced its results for QE30/9/2010. Its net profit dropped by 47% q-o-q or 37% y-o-y to RM19.5 million while its turnover declined 5% q-o-q but rose 8% y-o-y to RM229 million. The company attributable its "sharp decline in profit... the weaker US dollar, higher log costs, sharp hike in freight charges to the Middle East during the Ramadan festive period and higher initial cost incurred as the Indonesian plant began to resume commercial production."
Table: Evergreen's last 8 quarterly results
Chart 1: Evergreen's 23 quarterly results
Evergreen's financial position is deemed satisfactory as at 30/9/2010. Its current ratio was at 1.4 times while its debts to equity stood at 0.5 time.
While the company has expressed confident that it can achieve satisfactory results in the next quarter (due to greater efficiency & cost control), the market may be concern about the next round of capacity expansion as announced by some players in this sector, especially among the Thai producers. The last round of aggressive expansion program in 2007-2008 had caused an overhang which has yet to be fully absolved. Why are these producers expanding again?
Evergreen (closed at RM1.40 yesterday) is trading at a trailing PE of 5.5 times. At this multiple, Evergreen is deemed undemanding.
As noted earlier, Evergreen appeared to have broken below its uptrend line at RM1.55 in October. However, the stock staged a rebound in the 2nd week of November, hitting a high of RM1.55 before faltering. Its next support levels would be the horizontal lines RM1.30 & RM1.20.
Chart 2: Evergreen's weekly chart as at Nov 23, 2010_10.00am (Source: Quickcharts)
Based on the drop in Evergreen's bottom-line, bearish technical outlook & uncertainty generated by another round of expansion program in the sector, I believe that we should reduce our position in this stock. Since Evergreen is trading at an undemanding multiple, I do not foresee an immediate sharp drop in the share price.
Chart: FBM-KLCI's weekly chart as at Nov 23, 2010_10.10am (Source: Quickcharts)
I would rate the above scenario as a likely event. I do not rule out the possibility of a much sharper correction, with the FBM-KLCI testing its 40-week SMA line (or, equivalent to the 200-day SMA line) at 1388. This latter scenario may pan out if the USD were to rebound sharply which could be due to deterioration of the debts situation in Europe or further tightening in China. A sharp rebound in USD would lead to a roll-back of the carry trade (or, risk assets trade) which saw huge inflow of funds into emerging stock markets, such as Malaysia.
Monday, November 22, 2010
Chart: P&O's weekly chart as at Nov 22, 2010_12.00pm (Source: Quickcharts)
Based on the above, P&O is rated a trading SELL.
Friday, November 12, 2010
I must confess that this is one planned holiday that comes at the wrong time. I do not like to leave my station with the market in such critical condition.
Carlsberg Brewery Malaysia Bhd ('Carlsbg') is involved in the manufacturing & distribution of beers, stout & other beverages in Malaysia and it has investments in Sri Lanka, Taiwan & Singapore.
Carlsbg has generated considerable excitement when it acquired the Singapore outfit from its parent company in late 2009. The contribution of the Singapore outfit was reflected in the results for QE31/12/2009. However we must be careful about the exact operation of Carlsbg. A recent report in the Star newspaper stated that Carlsberg Group could benefit tremendously from Carlsberg China operation. Since the report was carried in our local newspaper, we may wrongly jump to the conclusion that Carlsbg is tapping into the Chinese market. Could this explain why the share price of Carlsbg rallied in the past few weeks?
Recent Financial Results
Carlsbg's net profit increased by 11% q-o-q or 57% y-o-y to RM34.1 million while its turnover increased 36% y-o-y but declined marginally q-o-q to RM329 million.
Table: Carlsbg's last 8 quarterly results
Chart 1: Carlsbg's 20 quarterly results
Carlsbg (closed at RM5.85 yesterday) is now trading at a trailing PE of 14.6 times (based on last 4 quarters' EPS of 40 sen). At this multiple, Carlsbg is deemed fairly valued. If it can trade at the same multiple of 16.4 times as Guinness Anchor Bhd- a more established company- then Carlsbg may go as high as RM6.56. At this moment, I do not think Carlsbg can command that kind of valuation. As such, I think its upside is rather limited.
Carlsbg is in an uptrend line with support at RM5.10-5.20. The resistance posed by the parallel line (to the uptrend line) would cap its upside at RM6.00-6.10. Horizontal support can be seen at RM5.50 & RM5.30.
Chart 2: Carlsbg's weekly chart as at Nov 12, 2010_10.00am (Source: Quickcharts)
Despite good financial performance, I see very limited upside for Carlsbg for reasons as stated above. However, if the stock were to pullback to RM5.00-5.20, it could be a good long-term investment.
KKB has just announced its results for QE30/9/2010. Its net profit increased by 73% q-o-q or 123% y-o-y to RM23.3 million while turnover increased by 9% q-o-q or 40% y-o-y to RM68.6 million.
Table 1: KKB's last 8 quarterly results
Chart 1: KKB's 12 quarterly results
KKB (at RM2.08 as at 11.30am this morning) is trading at a trailing PE of 7.9 times (based on last 4 quarters' EPS of 26.3 sen). At this multiple, KKB is reasonably valued. It can potentially trade up to a PE of 9-10 times- giving the stock a potential upside of 30-55 sen.
KKB has been consolidating in a triangle ('ABC'). This morning, it broke above the triangle at RM1.98-2.00. It also broke above the psychological-cum-horizontal resistance at RM2.00-2.02. Its immediate resistance would be the recent high of RM2.18.
Chart 2: KKB's weekly chart as at Nov 12, 2010_9.45am (Source: Quickcharts)
Based on good financial performance, reasonable valuation & bullish technical breakout, KKB could be a good trading BUY. However, you should exercise careful discretion in any trade given the current weak market condition.
Note: Previous posts (here & here).
Chart: Faber's daily chart as at Nov 12, 2010_10.50am (Source: Quickcharts)
Based on the negative reading of these 3 indicators, we should wait for a convincing rebound in Faber (say, the stock going above RM2.90) before venturing into the stock. Faber is a stock with promising fundamental but I have misgiving about the management's accounting report (go here).
Thursday, November 11, 2010
Mamee is one of my favorite consumer stock. I highlighted this stock in August 2009 (here). Since then the stock has rallied very strongly. Its financial performance has been very satisfactory over the past 22 quarters (see Chart 1). However, we can see that the bottom-line seems be stagnant over the past 5-6 quarters despite steadily rising top-line. From the table below, we can see that Mamee's net profit dropped 11.7% q-o-q or 1.0% y-o-y to RM10.6 million while turnover was 4.2% q-o-q or 16.8% y-o-y to RM120.2 million. The company attributable the slide in net profit to higher spending on sales & marketing.
Chart 1: Mamee's last 22 quarterly results
Table: Mamee's last 8 quarterly results
We can see that Mamee looks very toppish. If the 10-week SMA line were to break below the 20 or 40-week SMA lines, the stock is likely to enter into a bearish phase. Look at the indicators which are all pointing towards weakness ahead.
Chart 2: Mamee's weekly chart as at Nov 10, 2010 (Source: Tradesignum)
Based on weakening technical outlook & slide in its bottom-line, Mamee's share price could be peaking. To be sure, we should look for a negative crossunder of the SMA lines (as discussed). Until then, you should avoid this stock.
Unless we see a quick recovery in Tenaga's share price, the technical outlook for this stock would turn bearish.
Chart: Tenaga's weekly chart as at Nov 10, 2010 (Source: Quickcharts)
Wednesday, November 10, 2010
The huge liquidity outflow from U.S. is due to Fed's much-publicized decision to buy long government bonds, the second such attempt to create inflationary condition in order to beat off the equally feared condition called deflation as well as to boost the weak U.S. economic growth. This policy move by Fed is called Quantitative Easing II or in short, QE2.
When QE2 was talked about openly a few months back, the quantum of government bonds to be acquired was in the ball park of RM1.0-1.5 trillion. Like the Obama administration, the Fed is mindful of the popular revolt in American heart land towards any government decision that would erode the value of the USD or lead to increased government borrowings. Now, the Fed has come out openly & confirmed that the amount to be spent on QE2 would be only USD600 billion. Is that sufficient? To make matter worse, the U.S. government had a hard time at the recent G-20 meeting when Germany, China, Brazil & a few other countries attacked the U.S. government decision which creates inflationary condition worldwide. For more, go here.
Finally, the World Bank has spoken out on a topic that was once considered taboo- the prospect of Asian countries implementing capital control in order to check the huge inflow of foreign funds. For more, go here. This would certainly provide the cover for emerging Asian economies to discuss & then jointly implement some measures that would check the liquidity inflow & the sharp rise in their currencies.
These two developments could potentially happen over the next few weeks or months which could lead to a reversal of the inflow. Once the inflow stopped, the stock market rally would weaken.
Chart: Evergreen's weekly chart as at Nov 9, 2010 (Source: Quickcharts)
However, Evergreen's financial performance is quite commendable. For 1H2010 ended 30/6/2010, it recorded a net profit of RM69.6 million on turnover of RM480 million. This compared favorably to the same period last year when its net profit was RM14.9 million & turnover was RM335 million. Its financial position is also healthy with current ratio at 1.53 times & debts to equity at 0.5 time.
Based on bearish technical outlook, it is advisable to avoid Evergreen until the technical picture has improved.
Harta has just announced its results for QE30/9/2010. Its net profit increased by 13.6% q-o-q or 42.3% y-o-y to RM47.1 million while its turnover 8.4% q-o-q or 37.0% y-o-y to RM184 million. The better bottom-line was attributable to increased demand for nitrile glove, effective cost control & recognition of fair value gain in financial derivative of RM1.6 million.
Table: Harta's last 8 quarterly results
Chart 1: Harta's last 16 quarterly results
Harta (closed at RM5.53 yesterday) is now trading at a trailing PE of 12 times (based on last 4 quarters' EPS of 47 sen). At this multiple, Harta is deemed undemanding.
Harta is still consolidating, with upside capped by the strong horizontal resistance at RM5.60-5.66. However we can see that the MACD indicator has hooked up, which could be signaling a potential re-test of the RM5.60-5.66 level.
Chart 2: Harta's weekly chart as at Nov 9, 2010 (Source: Quickcharts)
Based on good financial performance & undemanding valuation, Harta may be good for long-term investment. However, the stock's upside is capped at RM5.60-5.66. If it can break above that level, Harta could become a good trading BUY.
Tuesday, November 09, 2010
Supermx announced its results for QE30/9/2010 yesterday. Its net profit dropped 17% q-o-q or 5% y-o-y to RM38 million while its turnover was relative unchanged at RM235 million. This means that Supermx reported a second quarter of sequential drop in its bottom-line, which confirmed my belief that the rubber glove sector has peaked & future earning is likely to be lower.
Table: Supermx's last 8 quarterly results
Chart 1: Supermx's last 16 quarterly results
From the chart below, we can see that Supermx is likely to drift lower & test the psychological level of RM4.00 & possibly retesting its recent low of RM3.75.
Chart 2: Supermx's weekly chart as at Nov 9, 2010 (Source: Quickcharts)
Based on the declining trend in Supermx's bottom-line, I believe this stock is a SELL until a clear sign that this trending has reversed or the technical outlook has improved.
Chart 1: FBM-KLCI's weekly chart as at Nov 9, 2010_11.30am (Source: Quickcharts)
The daily chart, Chart 2 shows the strong rally in FBM-KLCI over the past 5 months. You may notice the bearish divergence in the MACD over the past 6 weeks. Could this be a sign of a protracted correction to come?
Chart 2: FBM-KLCI's daily chart as at Nov 9, 2010_12.00pm (Source: Quickcharts)
I have appended below the daily chart for the previous market top in January 2008. The rally from August 2007 reached its pinnacle in early January 2008. You may notice a similar bearish divergence in the MACD indicator in October to November 2007. This bearish divergence was nullified by the strong rally in December 2007. So, a bearish divergence in the MACD indicator is not a guarantee that the market will not go higher. We must bear this in mind in the current situation.
Chart 3: FBM-KLCI's daily chart from July 2007 to June 2008 (Source: Quickcharts)
However, a re-test of market extremes (either the low or the high) tends to bring out the wrong reaction by market players. Nobody wants to be the last one to get into the market in the case of a retest of the market peak nor does anyone want to be the last one to get out of the market in the case of a retest of the market bottom. These tendencies lead to market players buying into the market as the previous peak is approaching or vice versa. Similarly, an upside breakout above the previous peak can bring forward a deluge of buying or vice versa. As such a test of a market extreme or a break of this extreme can be achieved due to the herding mentality of market players. The appropriate action is to sell at the resistance or to buy at the support. And, the previous market peak is a very strong resistance while the previous market bottom is a very strong support. If you need a reminder, just look at the chart below.
Chart 4: FBM-KLCI's monthly chart as at Nov 1, 2010 (Source: Tradesignum)
Be careful out there!
Thursday, November 04, 2010
(Source: Orkut Glitters)
Chart: HSBC's daily chart as at Nov 3, 2010 (Source: Stockcharts)
For the chart of HSBC as traded in HKEX, go to Yahoo Finance.
Based on the above, you can consider the 2 CWs of HSBC listed on our exchange. The terms & valuation are as follows:
Table: HSBC's CW valuation
I prefer HSBC-C7 for its longer tenor. However, HSBC-C6 also has its attractions, such as lower premium & higher gearing.
Chart: LHH's weekly chart as at Nov 4, 2010_10.00am (Source: Quickcharts)
Wednesday, November 03, 2010
Perstima has just announced its results for QE30/9/2010. Its net profit increased by 3.7% y-o-y to RM21.2 million on the back of a 6.0%-increase in turnover to RM217 million. When compared to the immediate preceding quarter (QE30/6/2010), net profit declined by 12.8% despite a 7.2%-increase in turnover.
Table: Perstima's last 8 quarterly results
Chart 1: Perstima's last 24 quarterly results
Based on current price of RM5.20, Perstima is trading at a trailing PE of 5.6 times. At this multiple, Perstima is deemed attractive.
Perstima has just broken above its recent high of RM5.12 but on thin volume (see Chart 2 below). The stock is now entering into a heavily-congested area, with multiple resistance levels. However, if we use the line connecting its multi-year peaks, it is possible to see that this stock may retest this line at RM6.30-6.40.
Chart 2: Perstima's daily chart as at Nov 3, 2010_9.10am (Source: Quickcharts)
Chart 3: Perstima's monthly chart as at Oct 30, 2010 (Source: Tradesignum)
Based on attractive valuation & technical breakout, Perstima could be a good trading BUY. Nevertheless, you should take some precaution by placing protective stops since the stock has risen quite substantially in the past 18 months. A good cut loss level would be the 20-week SMA line at RM4.80.
Monday, November 01, 2010
Its financial position is deemed healthy based on its audited accounts for 31/12/2009, with current ratio at 2.2 times & debts to equity at 0.3 time. Its detailed financial statement for QE30/6/2010 (uploaded onto Bursa website) cannot be accessed.
Daya is in a long-term uptrend line with support at RM0.16-0.17. If we use the 30-week SMA line as the medium-term downtrend line, then Daya broke above that "downtrend line" at RM0.20 last Friday. On Monday, it broke above the horizontal resistance at RM0.21. Today, it tested the horizontal resistance at RM0.25- a level that may be too much to overcome after its recent sharp rally. Failure to do so could set the stage for a correction for this stock. This correction could be a good opportunity to buy, especially on pullback towards the horizontal support at RM0.21.
Chart: Daya's weekly chart as at October 30, 2010 (Source: Tradesignum)
Based on technical analysis, Daya could be a good stock for trading BUY. Buy on pullback, ideally at RM0.21.
Sunrise is poised to test its strong horizontal resistance at RM2.40. A break above this level could signal the beginning of an upleg for this stock. The next resistance levels are at RM2.60-2.70 & then at RM3.00-3.10.
Chart: Sunrise's weekly chart as at Novemner 1, 2010_11.00am (Source: Quickcharts)
This is an anticipatory trading BUY call. Based on technical analysis, Sunrise would be a good trading BUY if it can break above the RM2.40 resistance.