Friday, August 03, 2012

PPB broke the strong RM15.00 support

PPB broke its strong horizontal support of RM15 yesterday, to close at RM14.90. This morning, it pulled away from the breakdown level with a further decline of 30 sen to close at RM14.60 at the end of the morning session. With this breakdown, PPB's next support will be its long-term uptrend line at RM13.00.

 Chart 1: PPB's weekly chart as at August 2, 2012 (Source: Tradesignum)

Chart 2: PPB's monthly chart as at August 2, 2012 (Source: Tradesignum)

PPB's share price declined is a follow-up of the decline in the share price of its related company, Wilmar International Ltd (which is listed on SGX). Wilmar broke below its strong horizontal support of S$5.00 in May and it may soon approach its long-term uptrend line at S$3.00. For Wilmar's chart, go here.

The decline in share price of Wilmar and also PPB is attributed to the poor perfomance of the Soya Bean operation in China. It is understood that the processing of soya bean & refining of soya oil is suffering from losses due to over-capacity in the market, high raw material prices as well as pressure from the government to cap the selling price. This problem will be a drag on the performance of Wilmar & PPB for a while.

In view of this problem & the bearish technical outlook, I would rate PPB as a trading SELL. If it cannot hold above the long-term uptrend line at RM13, it would be an outright SELL.


Anonymous said...

Hi Alex

Today, WCT try again to break through its resistance market at 2.50. The problem now whether its can stay above these level for next upward to RM 2.80 level

Anonymous said...

Ho Alex

It is interesting to note that WCT-WB warrant price response exaggerate for every movement of its underlying share, WCT. The 2-3 sen down from WCT also follow by its WB, but in turn of percentage, WCT only down by <1%, while WB down >10%. Nonetheless, it is understandable as WB gearing is almost 10x of its underlying share, 27 sen vs. RM 2.45

I do acknowledge that the warrant expire in 7 month time, due Apr 2013, the premium now is about 13%, exercise price at 2.50. The warrant was issue back in 2008, issue at cost 25sen on 1 for 5 underlying share.

Since there is close relationship between warrant and underlying share, any good news for WCT will be follow by its warrant now.

WCT is expect to announce its Q2 result by middle of these month, which will come with interim dividend payout of at least 5sen. WCT also scheduled to have EGM on 14 of these month to conclude deal for acquisition landbank in OUG for total 450m. These piece of land have GDV more than 4b, situated in mature area, next before Endah parade along KESAS.

Currently WCT already secure more than 1b job, namely HQ for MITI, Medical center in Sabah, widening Plus highway, Vale projects. and is targeting to secure addition 1b by end of these year. This is sharp contras compared to last year, whereby WCT only manage to secure 187m.

In turn of WCT revenue breakdown, infra and construction still contribute more than 70%, follow by property development and property investment. However, the ratio going to change soon, as WCT already embark more aggressive in property development, especially high end , high rise development. Its first venture in Iskandar, IMedin, GDV 700m received take up rate 90%. Its upcoming EGM, if approve, will allow WCT venture outside klang to KL (OUG), plan to build integrated high rise condo + SOFO + mall + hotel

WCT also building up its property investment namely exiting Aeon Bukit Tinggi + 1st 4 star Premier Hotel, and newly open Paradigm Mall (91% occupied) + 2rd premier Hotel in kelana Jaya. The paradigm will be wholly manage by WCT itself rather than lease out like Aeon Bukit Tinggi, which could command higher earning. By next year, another mall, Gateway in KLIA2 will be ready. All in all, these property investment will at least PAT 40m pa onwards. WCT also build up its landbank in Rawang, replicate its success in Bukit Tinggi Township in klang

WCT ultimate aim is to diversify its earning based into more sustainable, breaking into 45% infra/construction: 30% property development: 25% property investment

Alex Lu said...

Hi Hng,

I agree with what you wrote. The stock has a technical breakout at RM2.50 but without volume, it is not ready to go. It will then drift lower- possibly testing the support from the overcome downtrend line (at RM2.40). Its next strong resistance will be the RM2.70-2.75 level. However, this level is not likely to be challenged any time soon.