Chart 1: CPO's daily chart as at Jan 10, 2011 (Source: ifs.marketcenter.com)
I have also appended below the weekly chart for CPO (Chart 2) and the daily chart for Plantation index (Chart 3). If CPO were to break below the RM3750 and/or the RM3650 level (as mentioned above), then Plantation index may correct back to its uptrend line support at 7500. However, this negative scenario (which may not pan out) does not spell the end of the end of the rally in CPO. After a short correction or a consolidation of a few weeks, CPO may re-test the RM3900 level again. However, if CPO were to break below the RM3650 level, it is advisable to take some profit on your investment in the Plantation sector.
Chart 2: CPO's weekly chart as at Jan 10, 2011 (Source: ifs.marketcenter.com)
Chart 3: Plantation's daily chart as at Jan 10, 2011 (Source: Quickcharts)
29 comments:
hi Alex... its me again... haha... wat do u think bout Ecofirst?
Peak season of oil palm will commence from early april to early october . Thereafter the crop may drop until early Mac /April . So it is more of supply and demand scenario unless someone speculates the crop or the overhang stock is still big to offset the demand. Otherwise it is cyclical in nature and impacted on its price structure. So by early Mac or April , the price will swing south and by that time big corrections will follow suit . Pls do not be too happy and contented as to hold on to plantation stocks when the timing is out. This is my piece of advice being an agriculturist.
hi alex,
thanks for the good call on allianz. any news about today MNRB shooting up?
regards,
Ryan
Hi Alex,
Masterskil seems pretty attractive, so I bought in at 2.46. Now look likes catching a falling knife. Pls advise- Hold/Sold/Accumulate?
hi alex,
Based on your opinion,do you have any recommend plantations counters now?
besides that, can you give comments on TDM and TSH ? which one is better?
Thanks
Hi Mr Alex,
Lately i noticed that there is a counter namely HEXAGON which is involved in Oil & Gas sector with global network and also 18% held by our ex-Sugar King, Mr Robert Kuok ... But then it didn't enjoy the strong uptrend like KNM, Kencana, Sapcrest and others.
Furthermore, it's trading at its all-time low only RM0.45 and it's profitable all these years.
Can you pls share with us your analysis work and comments on this counter?
Thank you very much.
Do your article recommendations on kseng in your oct 2010 issue still stands? What are the reasons behind the selling of treasury shares by kseng mgt under present scenario? What has been written about the suppressing of its share prices seemed perfectly matched by the recent doing concurred with certain thoughts expressed lately.
Hi leslieroycarter
kseng mgt suppressing of its share prices? I don't think so. I still feel that investors feel that the stock is richly valued & are taking profit.
Hi etrader
HEXAGON dropped from a high of RM2.27 in Dec 2007 to touch a low of RM0.42 in the past 4 months. The strong downtrend is a warning. Check out its financial statements by visiting Bursa website. If the stock can break above the downtrend line at RM0.60, the recovery may begin. Until then, this stock should be avoided.
Hi Clc
After a strong run-up, I normally let the stocks drop for a few weeks before scanning for BUYs.
Hi st
Masterskil broke above a descending triangle at RM2.20 on Jan 5. The current correction should not bring the share price below the line that was taken out earlier. That line is at RM2.15-16. Today, it has traded slightly below that level. It is important that it stays above RM2.15-16.
Hi Alex
Can you comment on Bsdreits? Its final income distribution is due to declare by end of these month + performance fee. Any further upside potential?
Hi ryan
I did not hear anything on MNRB. With all the disasters overseas, one does wonder what are their impact on MNRB's bottom-line for the current year. This nagging fear will be a dampener on the share price of MNRB.
Hi Loryau
Ecofirst has been in a bottoming phase for the past 5 years. If it can break above RM0.30, the stock's recovery may commence. However, I have my doubt that this company can mend its way. To be in the dump for 5 years should raise some suspicion that this company is not doing well. To be in this situation while the overall market has rallied for 22 months is a confirmation that it is more than a suspicion: it's probably a fact.
Hi Alex,
What's your view on Jotech? It has exposure in AIC, which is increasingly doing well, it has stakes in Coal due to its entry 2 years ago, and it has intention to diversify into palm oil based on the latest announcement. However, the stock seems to move only little trying to challenge 0.14 resistance. However, daily volume is amazing.. is this stock something to look at or it's just the share capital is huge it takes time to push?
appreciate your time so far... i'm learning more with each of your teaching...
is the rally in TDM over?
Good day Alex,
what is yr take on Wah Seong and Eden? thanks in advance
Hi Alex, JTI and Mahsing Shares is keeping up...so based on ur analysis what u think about both of this shares?
Hi Raymond Y
Last week, JTI tested its 1996 high of RM6.80. At the current price of RM6.60, JTI is trading at a PE of 12.8 times. That's a sharp discount to BAT's PE of 18.8 times (based on current price of RM48.00 & annualized EPS of 256 sen). If we price JTI at a PE equivalent to 80% of BAT's PE, then JTI's fair value is about RM7.80.
Mahsing broke above its 2007 high of RM1.94 and it is now trading at all-time high. A stock that has broken above its all-time high tends to go higher. Nevertheless, I believe property stocks could come under selling pressure once the Government institutes more stringent measures to check rampant speculation in the property sector. These measures may come soon as the outcry against running house prices gets louder.
Hi solomon
Wah Seong may have broken above its longer-term downtrend line at RM2.38-2.40. However, it rose from RM2.00 over the past 4 weeks & it probably needs to consolidate its gain before charging again. Its immediate resistance is at the horizontal line RM2.50 & then at RM2.70.
Eden has broken above its medium-term downtrend line at RM0.40. Its next 2 resistance levels are at the horizontal lines at RM0.52 & RM0.60.
Please check on their accounts by visiting Bursa Malaysia's website.
Hi WK
TDM looks fairly toppish. It has surpassed the Dec 1993 high of RM3.30 before correction set in. Can it recover & challenge the all-time high of RM3.80 recorded in Jan 1994? I feel that this stock has risen too much in too short a timeframe.
However, one can also say that the stock is not excessively overvalued. For QE30/9/2010, TDM recorded a EPS of 12.82 sen. If you annualized this & compared to its current price of RM3.08, TDM's PE is only about 6 times. Let the stock pull back to RM3.00 before getting in. If CPO price were to correct more meaningfully (say, breaking below the uptrend line of RM2600 per tonne), then TDM's correction could be more severe (possibly breaking below the RM3.00 level). If this later scenario panned out, I would revise the entry level to 100-day SMA line at RM2.60.
Good luck.
Hi Mr.Alex;
Based on your previous experience and information , do you have any record for running business of Charcoal Company ???
Much Appreciated ..
Thanks
Chee_Nian
Hi Alex,
What's your view on Jotech? Perhaps you missed this question earlier... still anticipate your view on this company
regards
Hi Alex... thanks for the info... anyway... r u the person who is commenting on nanyang siang pau every monday?
bsides tat, im wondering y the price of CPO is not going according to our weather instead of following other country's weather? such as argentina though they r producing soy oil, this can be explain by the subtitutes effect...
but as we know, the weatther in msia n indonesia is not good... msia is having cold weather... which is unnormal, while parts of indon is too dry for palm... while palm oil nid lots of water n sunshine... but no water for indon(partly) while less sunshine in msia... tats mean lower production.. . lets assume the demand is still there... but how come the CPO is not rising? yet they still tends to follow the price of soy oil... may i know y?
Dear Alex,
Please comment for SLP. I saw it high volumn today and share price already stable after downtrend and may go up again.
Thank you.
HI Ethan Lee
I don't know much about SLP but its spectacular slump interests me. The company is making profit or earning about 2.94 sen for 9-month ended 30/9/2010. This means SLP is trading at a PE of 11 times (fully valued). Its financial position is alright, with current ratio at 2.5 times & debts to equity of 0.12 time.
Chartwise, it has good horizontal support at RM0.45 & its uptrend line support is at RM0.43.
Since it is full valued, its upside is limited. However the technical support should hold up the stock at the present price for a while. Can one look forward to a good rebound after a while ... maybe.
Hi Loryau
No, I am not the person commenting on nanyang siang pau every monday.
You raised the question why CPO should not drop due to weather. That's a tough one. Let me stab at it. I believe in the wisdom of the crowd. If you see a certain condition in the market, you act on it. Others will join you. In a short while, the market has fully factored in that condition, i.e. its impact on profit, etc. As time goes on, you & the rest of crowd discount new information, such as more severe impact which results in higher prices & higher profit. The market will adjust accordingly.
Back to your question. You think the weather should justify higher CPO prices. Is this information already baked into the price? Is this information shared by all or only a handful of investors?
There are investors & pundits who criticize technical analysis. At its most basic, technical analysis is nothing but a moving picture of the market- albeit a historical picture. If you subscribe to the idea that history repeats itself, then you should be able to accept the notion that some chart patterns also recur. I hate to sound like a broken record but I feel that by merely looking at chart, I can get a good handle on the market for many assets, whether they are stocks or commodities. To be frank, I do not know anything about the weather pattern or inventory level for CPO.
Hi hkloon
I am not familiar with Jotech. It recorded a EPS of 0.65 sen for 9-month ended 30/9/2010. At RM0.135, Jotech is trading at a PE of 14 times (fully valued).
Look at the chart of Jotech since its listing in 2000 (link below). The stock is a good stock for swing trading, which unfortunately comes around only once every 3 years. Is it about to swing up? Maybe. Its range is fairly big- between 6 sen & 20 sen [or if you include the extreme prices- between 4 sen & 24 sen]. It's a long shot, which I would give a miss.
http://www.tradesignum.com/chart/jotech
Hi Chee Nian
I have no knowledge of how to run the business of a Charcoal Company. Why do you ask?
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