If you run through all the indices of the sectors on our local bourse, you would discover that Consumer index is the only sector that has surpassed its high recorded in June or July 2011. The rise in Consumer index in 2011 was propelled by multi-national companies such as Nestle, F&N, Dutch Lady. This has now spread to local companies. These companies basically satisfy the needs of the consumers, by providing such basic goods such as food, beverages & apparel, as well as providing basic services such as consumer financing (AEONCR) & healthcare (KPJ). This week, we've also seen some companies that produce goods for & provide services to consumer companies, starting to rally. Among them are flexible packaging companies, such as Daibochi & Tomypak and can producers, such as Kianjoo and Canone.
Consumer sector could be the next theme play in our market and if the past two breakouts can be a guide, this theme play can last for a while. The last breakout was in August 2009 and it lasted 24 months to July 2011. The rally before that started in April 2006 & lasted 22 months to January 2008.
Chart: Consumer index's monthly chart as at Jan 3, 2012 (Source: Quickcharts)Long live the Consumer King!
12 comments:
alex, have a question here..this was raised by a guy in other forum
hibiscus exercise price is 50 cents, mother share is 1.25 now, shouldnt the warrant be traded higher than 75 cents ?
now is currently 64 cents, please enlighten, or could this be another arbitrage opportunity?
Dear Alex,
Absolutely agree with you.
What is your view on YHS?
I like the turnaround story of YHS with good growth in Indonesia.
Hi Alex ,
Yes i really agree that consumer stocks are more defensive and safer during this uncertainty time. People still have to eat , drink or receive medical treatment no matter how bad is the economy.However , the europe problem will certainly haunt the market again at any time and all stocks will be affected when the fear takes control.
having said that, what do you think of Apollo Food? It is churning out good dividends for the past few years now although the price is laggard in movements.
hi alex,
however biscuit companies didnt enjoy the consumer rally theme?
thanks
maxwealth88
Hi kc
Good question. Why is Hibiscs-wa trading at a discount of 8% to the underlying share? I don't know. Unless there is a good reason, this should not be the case.
However, I am always wary when I see something like this. In the early days, I know a chap who liked to arbitrage between Anson & its ICULs. He did many rounds of conversion & made 10% return each time. Finally, the stock plunged along with the rest of the market in 1997. Because of the collapse of the general market, I can't say for sure that the discount was a sign of trouble ahead. To me, it is a sign of trouble.
Whenever the market serves up a free lunch, be careful!
Hi TRULY MALAYSIAN
YHS had a bullish breakout at RM1.80. Like any thinly-traded stock, it surged whenever the demand jumped. You may use the current correct to gain entry at RM2.00 mark.
YHS is an attractive beverage company trading at a PE of 12 times.
Hi kerry lee
Apollo Food can also be considered. It is trading at a PE of 13 times. For FYE 30/4/2011, its net profit dropped to RM18 million from RM25 million previously. It has good horizontal support at RM2.80-2.90.
Hi MaxWealth88
Market works in mysterious way. Patience is needed.
Hi Alex ,
What do you think about Tienwah technical outlook for these few days? It seems to attract some buying interest recently but it is reaching the strong resistance at 1.9 . Should we wait until the breakout first?
Tx!
Hi luckystock2
Tienwah is testing its intermediate downtrend line at RM1.85. If it can break above that with good volume, the stock may challenge its recent high at RM2.00. If it can surpass the RM2.00 mark, it can rally!
HI alex, pls comment maybulk with current market... a stock to consider?
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