Tuesday, January 31, 2012
Chart 1: GenM's daily cahrt as at Jan 31, 2012 (Source: quickcharts)
If you look at the daily chart above, we can see that GenM has broken above the horizontal resistance at RM3.95. It has also broken above the psychological RM4.00 level (see the weekly chart below). GenM's movement over the past 16-18 months take the shape of an expanding triangle. This triangle would pose resistance as well as support for the stock. As such, I believe the immediate resistance for GenM is at RM4.20, the upper boundary of the triangle.
Chart 2: GenM's weekly cahrt as at Jan 31, 2012 (Source: quickcharts)
Should you trade this breakout? I shall leave that to your discretion.
MPI has just announced its results for QE31/12/2011. It was another bad quarter for MPI, with net loss of RM16 million- an increase of 52% over the net loss for the immediate preceding quarter, QE30/9/2011. The loss was attributed to a 11.5%-drop in turnover to RM279 million. This in turn was due to a drop in the demand across Asia (16%), Europe (9%) and the US (6%). In addition to declining sales, MPI was also hit by inventory correction.
This double whammy is not likely to recur in the current quarter. There are clear signs that the US economy is beginning to recover. This should lead to improve demand for many consumer electronic goods. As such, the demand for semiconductors should improve.
Table: MPI's last 8 quarterly results
Chart 1: MPI's last 20 quarterly results
It is not meaningful to look at MPI's PE multiple as the company has been on a losing streak for the past two quarters. While Price to Book is also not be a useful indicator, it does give a sense of how much this stock has dropped & its potential for recovery. Based on yesterday's close of RM3.68, MPI is now trading at PB of 1 time only. Ignoring the crazy dotcom era, MPI had traded at PB as high as 5-5.5 times in 2002-2004. Can it return to this level again?
MPI is owned by Quek Leng Chan, a shrewd businessman which has grown many businesses to new heights & through 2-3 business cycles. I am confident that he & his management team will be able to do the same again for MPI. Which is why I post MPI as a long-term BUY in October 2011 (here).
MPI has recovered substantially from its low of RM2.60 in December. Its next resistance is at RM4.20-4.30 (the low in early 2009), while the immediate support is at RM3.40 & then at RM3.00.
Chart 2: MPI's monthly chart as at Jan 30, 2012 (Source: Tradesignum)
We should not be too perturbed by the poor results for the last quarter as this has probably been factored into the share price over the past few quarters. As such, I would rate MPI as a HOLD based on the expected turnaround in the semiconductor sector & the low share price (after a long decline).
Spritzr has just announced its results for QE30/11/2011. Its net profit recovered substantially to its previous high. It grew by 114% q-o-q or 14% y-o-y to RM3.3 million while its turnover increased by 9% q-o-q or 26% y-o-y to RM45.1 million.
Table: Spritzr's last 8 quarterly results
From the two charts below, we can see that Spritzr's turnover has been climbing steadily for the past 20 quarters. Net profit margin took a hit in late 2010 after the completion of the Shah Alam plant- where the huge capacity was not fully utilized- resulting in under-absorption of the higher overhead; thus the lower profit margin. Spritzr's turnover can continue to rise as it slowly used up the capacity of its new plant. As such, I believe Spritzr's top-line & bottom-line would continue to improve.
Chart 1: Spritzr's last 20 quarterly results
Chart 2: Spritzr's net profit margin last 20 quarterly results
Spritzr (currently, at RM0.85) is trading at a PE of 8.3 times (based on the annualized EPS of 10.2 sen). At this multiple, Spritzr is deemed fairly attractive for a consumer stock.
From the chart below, we can see that Spritzr has dropped back from its high of about RM1.30 in 2010 to a recent low of RM0.75. It has good horizontal support at RM0.80 while its intermediate downtrend line would pose resistance at RM0.95.
Chart 3; Spritzr's weekly chart as at Jan 30, 2012 (Source: Tradesignum)
Based on the good financial performance & undemanding valuation, Spritzr is rated as a good stock for long-term investment. If it can break above the intermediate downtrend line at RM0.95, it may start on its next upleg.
Notion has broken above its intermediate downtrend line at RM1.85 in mid-January. After the upside breakout, the stock stayed around the breakout level for 2 weeks before it rallied to break above the RM1.85 level yesterday. This could be the start of its next upleg, which in the past has been very rewarding.
Chart 1: Notion's weekly chart as at Jan 30, 2012 (Source: Quickcharts)
Recent Financial Performance
Notion has recovered from its poor financial performance in second half of 2010. For QE30/9/2011, it reported a net profit of RM12.5 million on a turnover of RM62 million.
Table: Notion's last 8 quarterly results
Chart 2: Notion's last 20 quarterly results
Based on its close of RM1.94, Notion is now trading at a PE of 6.5 times. At this multiple, Notion is deemed attractive.
Based on good financial performance, reasonable valuation and bullish technical outlook, Notion could be a good trading Buy or a medium-term investment stock.
Monday, January 30, 2012
Chart 1: FBMACE's weekly chart as at January 30, 2012 (Source: Quickcharts)
Chart 2: FBMSCAPs weekly chart as at January 30, 2012 (Source: Quickcharts)
FBMFLG had also broken above its intermediate downtrend line in the middle of January but the rise was more timid.
Chart 3: FBMFLG's weekly chart as at January 30, 2012 (Source: Quickcharts)
The earlier observed weakness in FBMKLCI is still intact. We have seen the daily MACD hooking down. The immediate support for FBMKLCI is its medium-term uptrend line supportat 1505-1510. At the time of writing, FBMKLCI is down 7.5 point to 1513. Can FBMKLCI stay above the uptrend line. If that support failed, the next support is the psychological 1500 mark.
Chart 4: FBMFLG's daily chart as at January 30, 2012 (Source: Quickcharts)
A sharp drop in FBMKLCI could trigger a broad corection among the 2nd and 3rd liners and a pullback for FBMACE, FBMSCAP and FBMFLG. Let's wait & see.
Over the past few weeks, a few stocks have reversed from their long downtrend & rose sharply. These include Maybulk & Unisem (see Chart 1 & 2). However, it must be noted that V-spike reversals- as seen in the cases- are not the norm. Reversals are usually preceded by common reversal patterns, such as Double Bottom, Triple Bottom, Inverted Head-&-Shoulders, Rounding Bottom, etc. For a stock or a market to undergo a V-spike reversal, all the players must change their opinion on the stock or market completely and that’s very rare. Reversals are normally preceded by a battle between the bears & the bulls- the outcome of that battle is never a sure-thing- and it is usually traced out in the patterns, as mentioned earlier. I will give you two interesting examples.
Chart 1: Maybulk's daily chart as at January 26, 2012 (Source: Quickcharts)
Chart 2: Unisem's daily chart as at January 26, 2012 (Source: Quickcharts)
The first stock is Puncak, which has declined from a high of RM3.00 in September 2010 to a recent low of RM0.96. Over the past 5-6 months, Puncak has formed a bottoming phase, where the bears or sellers are exiting while buyers or bulls are slowly accumulating. One of the big sellers is EPF, who has been disposing Puncak due to uncertainty surrounding the stock as it edges closer to a default on its debt covenants. This is due to the refusal of Selangor State Government to raise the water tariff rates. To the laymen who are not burdened with rules governing fund management, I do not see why you should sell Puncak at such low prices. In fact, Puncak’s water assets should be taken over soon, whether by the Selangor State Government or by the Federal government, via PENGURUSAN ASET AIR BERHAD (PAAB) or Water Asset Management Company (WAMCO). Many research houses have valued Puncak at more than RM3.00.
Chart 3: Puncak's daily chart as at January 26, 2012 (Source: Quickcharts)
From Chart 3, we can see that Puncak’s bottoming phase would be completed once the stock recovers above the RM1.33-1.35 level. I do not expect a quick recovery until the stock has broken above its intermediate downtrend line at RM1.55.
The second stock to look at is GENM or Genting Malaysia Bhd. At first glance, GENM seems to have formed a topping phase in the shape of a rounding top. Here, the buyers or bulls are buying while the sellers or bears are slowly distributing. However, not every congested trading at the top is distribution nor every congested trading at the bottom is accumulation. Each case warrants further investigation. GENM is an interesting stock because it has been tarnished by its past Related Parties Transactions (‘RPT’). The most infamous RPT case undertaken by GENM was the RM250mil acquisition of a stake in Walker Digital Gaming from its chairman Tan Sri Lim Kok in November 2008. Since then, GENM has never gotten the respect enjoyed by its parent, Genting Berhad or its sister company, Genting Singapore.
At one stage, GENM was sitting on a cash pile of more than RM6 billion. That cash pile has now dropped substantially as the cash reserve was used to acquire Genting UK as well as to finance two ventures in the US- Genting New York which is undertaking the racino project and Genting Miami which will undertake a proposed mega property project that may include a casino. If all of these new projects work out well, GENM would be a very different stock than what it is today. It would morph from a company owning one casino, Resort World in Genting Highland to a 4-casino company. Are the investors excited? I think they are slowly warming to this stock.
Chart 4: GENM's daily chart as at January 26, 2012 (Source: Quickcharts)
From Chart 4, you can see that GENM would pull back quickly every time it tested the resistance from the line connecting the peaks over the past 16 months- except for the past 3 months. Why have the buyers been so consistently strong despite the persistent selling? To me, this is not a sign of topping phase where one would expect the selling or distribution to overwhelm the buying. I believe the buyers are fairly strong and there is a good chance that the steady accumulation would wear down the selling & GENM would then go higher. The turning point is when GENM succeeds in breaking above RM4.00.
These are two stocks that you should keep watch out for. To all the Chinese readers, Cong Xi Fa Cai.
(This is my latest article in Merdeka Review. For the Chinese version, go here.)
Friday, January 27, 2012
Zhulian has recently announced its results for QE30/11/2011. Its net profit increased by 18.4% q-o-q or 18.6% y-o-y to RM28.8 million while turnover eased off 5.4% q-o-q but rose 2.3% y-o-y to RM86.8 million. The improved bottom-line was attributed to higher share of profit from an equity-accounted investee of RM792k and forex gain.
Table: Zhulian's last 8 quarterly results
Chart 1: Zhulian's last 21 quarterly results
Zhulian (closed at RM1.97 today) is now trading at a PE of 9.4 times (based on the last 4 quarters' EPS of 20.9 sen). For a company with a CAGR of about 10%, Zhulian's PEG of about 1 time is deemed fair.
Zhulian has slowly risen steadily in the past few weeks. It is poised to test its recent high of RM2.00 soon. If it can break above the RM2.00 mark, Zhulian's uptrend could continue.
Chart 2: Zhulian's weekly chart as at Jan 27, 2012 (Source: quickcharts)
Based on good financial performance and fair valuation, Zhulian is rated a HOLD. If the stock were to break above the RM2.00 mark, it may be a good trading BUY.
The fair value for this stock varies significantly. MIDF has a target price of RM1.32 as per its report in November 2011 (here) while OSK valued it at RM3.65 in May 2011 (here). I believe that the company is worth more than RM2.00 and as such, the stock is an attractive stock to consider for a recovery play.
If Puncak can break above the RM1.33 level, it could be a trading BUY.
Chart: Puncak's daily chart as at Jan 27, 2012_12.00pm (Source: Quickcharts)
Based on this, I think Mudajya can be a good trading BUY.
Chart: Mudajya's daily chart as at Jan 27, 2012_9.30am (Source: Quickcharts)
Thursday, January 26, 2012
Cenbond is involved in paper & plastic packaging. It has 2 lines for the production of stretchable film. For 1H2012 ended 30/9/2012, Cenbond reported a net profit of RM7.7 million on a turnover of RM90.6 million. Its annualized EPS for FY2012 is about 12.8 sen. At RM0.89 now, the stock is trading at a PE of 7.0 times.
Based on technical breakout, Cenbond could be a good trading BUY.
Chart: Cenbond's monthly chart as at Jan 3, 2012 (Source: Tradesignum)
Based on the above, you should exercise careful discretion in your trading.
Chart: FBMKLCI's daily chart as at January 25, 2012 (Source: Tradesignum)
Wednesday, January 25, 2012
Chart 1: SOX's weekly chart as at Jan 16, 2012 (Source: Stockcharts)
Chart 2: SOX's weekly chart as at Jan 16, 2012 (Source: Yahoo Finance)
The best play for this sector is the market leader, Unisem. The good entry to Unisem is at RM1.20. Gtronic & MPI would bring up the rear, with good entry at RM0.90 & RM3.00, respectively.
Chart 3: Unisem's weekly chart as at Jan 16, 2012 (Source: Tradesignum)
Chart 4: Gtronic's weekly chart as at Jan 16, 2012 (Source: Tradesignum)
Chart 5: MPI's weekly chart as at Jan 16, 2012 (Source: Tradesignum)
SMR Technology Bhd ('SMRTEch') is involved in the provision of IT solutions for human resource development. It recently secured a 1-year contract of RM14 million from the Human Resources Ministry (here). This is on top of a 3-year contract of RM89.5 million secured in 2010 from the Ministry of education for the recruitment & management of English language teaching consultants and to implement the In-Service Teacher Training for English Language Teachers (ELT) in primary schools (here).
Recent Financial Performance
SMRtech's financial results for QE30/9/2011 is deemed satisfactory with net profit of RM2.3 million while turnover is at RM10.7 million. From Chart 1 below, we can see SMRTech's top-line & bottom-line have soared in the past 6 quarters.
Table: SMRTech's last 8 quarterly results
Chart 1: SMRTech's last 14 quarterly results
SMRTech (closed at RM0.215 on Friday) is now trading at a PE of 4.5 times (based on last 4 quarters' EPS of 4.8 sen). At this PE multiple, SMRTech is deemed fairly attractive.
SMRTech broke above its downtrend line at RM0.15 in second half of 2011. The horizontal resistance at RM0.20 has capped its rise for the past 9 months. Last week, the stock broke above the RM0.20 mark. This may signal the begin of a play for the stock. First target is RM0.25. Second target is RM0.35.
Chart 2: SMRTech's weekly chart as at Jan 16, 2012 (Source: Tradesignum)
Based on satisfactory results, large contracts in-hand, undemanding valuation and positive technical outlook, SMRtech could be a good trading BUY.
Friday, January 20, 2012
Meanwhile, let's enjoy the 4 days' break & spend time with our friends & family. I wish everyone a Happy & Prosperous New Year.
Based on this technical breakout, MBMR could be a good trading BUY.
Chart: MBMR's monthly chart as at January 3, 2012 (Source: Tradesignum)
Thursday, January 19, 2012
Chart 1: Maybulk's weekly chart as at Jan 19, 2012_11.00am (Source: Quickcharts)
The second stock which has rallied very well is Haio. The chart looks very nice as the stock has broken above the 40-week SMA line at RM2.01. At the present price of RM2.30, Haio is trading at a PE of 15 times. At that multiple, Haio is fully valued. Despite the bullish technical outlook, I feel investors should take profit on their investment in Haio, especially when it approaches the resistance at RM2.40.
Chart 2: Haio's weekly chart as at Jan 19, 2012_11.00am (Source: Quickcharts)
For my recent posts on Maybulk & Haio, go here & here.
Huayang has just announced its results for QE31/12/2011. Its net profit rose 5% q-o-q or 90% y-o-y to RM14.6 million while its turnover rose 11% q-o-q or 71% y-o-y to RM84 million. The improvement due mainly to better performance in the property development segment.
Table: Huayang's last 8 quarterly results
Chart 1: Huayang's last 14 quarterly results
Chart 2: Huayang's profit margin for last 14 quarterly results
Based on the current price of RM1.36, Huayang is now trading at a PE of 4 times (based on last 4 quarters' EPS of 34 sen). At this multiple, Huayang is deemed inexpensive.
Huayang is presently pressing against its overhead resistance at RM1.36-1.37. If it can break above this resistance, Huayang may hit a high of RM1.70 (assuming a 1-to-1 gain of 35 sen from the breakout level of RM1.36).
Chart 3: Huayang's weekly chart sa at Jan 16, 2012 (Source: Tradesugnym)
Chart 4: Huayang's monthly chart sa at Jan 16, 2012 (Source: Tradesugnym)
Based on attractive valuation, continuing good financial performance & positive technical outlook, Huayang could be a good stock for medium-term investment.
Wednesday, January 18, 2012
BJFood had announced two substantial corporate developments, as follows:
- Proposed acquisition of Berjaya Starbucks Coffee Company Sdn Bhd for RM71.698 million; &
- Proposed JV to set up Kenny Rogers Roasters business in Indonesia (a 51%-stake costing RM1.91 million).
To finance the Starbucks acquisition, BJFood has also proposed a Rights Issue of 4 shares (with 4 free warrants) for every 5 shares owned at a price to be determined later. For more on the Starbucks acquisition & Rights Issue, go here. For more on the Indonesia JV, go here.
In the past few days, BJFood has been trying to break free of the horizontal line at RM1.03. Today, it gained 4 sen to close at RM1.09, albeit on a volume of 4024 board lots. It looks like the stock may continue to rise steadily & test its recent high at RM1.17.
Based on the bullish breakout at RM1.03, BJFood could be a good trading BUY or medium-term investment. The stock falls under the consumer theme play that I had written about earlier.
Chart 1: BJFood's daily chart as at Jan 18, 2012 (Source: Quickcharts)
Chart 2: BJFood's weekly chart as at Jan 18, 2012 (Source: Quickcharts)
Based on the bullish breakout, PChem could be a trading BUY.
Chart: PChem's weekly chart as at Jan 18, 2012_4.30pm (Source: Quickcharts)
Tuesday, January 17, 2012
Readers may recall that a minority shareholder had filed a suit against Securities Commission for failure to compel Sime Darby to undertake a general offer when it bought a 30%-stake in E&O from three substantial shareholders at a price of RM2.30 a share. That price was substantially higher than the market price then and since it gives Sime Darby management control of the company, there is ground to argue that Sime Darby should make a general offer. Is E&O rising because of that suit? For more on the suit, go here & here.
What I can say is that the sign of a possible rally was flashed out by the market action for the three CWs- E&O-CA, E&O-CB & E&O-CC. We saw huge volume traded over the past two days for all three CWs. Something is about to be announced for E&O.
Since the stock is already up 8 sen, I rate the chance of E&O testing the RM1.60 resistance as equal to the chance of it dropping back to the starting price of about RM1.40. As such, this is not an easy trade. Only for the nimble traders.
Chart: E&O's weekly chart as at Jan 16, 2011 (Source: Tradesignum)
I REGRET TO ADVISE THAT EMIVEST IS THE SUBJECT OF A PRIVATIZATION EXERCISE WITH THE BUY-OUT OFFER AT RM0.90. SINCE THE STOCK IS NOW TRADING AT RM0.88-0.89, THERE IS NO UPSIDE TO THIS STOCK. AS SUCH, THIS POST IS NOT ACTIONABLE.
Emivest broke above its horizontal resistance at RM0.87-0.88 yesterday. It could potentially go to RM1.10 as its previous two upside breakouts in 1H2009 & 2H2010 had resulted in gain of about RM0.20. On weakness, the stock may pull back to its support levels at RM0.83-0.85 (from the 10, 20 & 40-week SMA lines).
Chart: Emivest's weekly chart as at January 16, 2012 (Source: Quickcharts)
Emivest reported an impressive 264%-jump in its net profit to RM12 million on the back of a 35%-increase in its turnover to RM196 million for QE30/9/2011 (here). The increased turnover was attributed to the commencement of operation of 2 new feedmill plants at Port Klang & Vietnam. However, we must note that the increased plant capacity has resulted in higher gearing of 1.3 times as at 30/9/2011 as compared to 0.96 time as at 31/12/2010. Based on its closing price of RM0.885 yesterday, Emivest is now trading at a current PE of 2.2 times (based on annualized EPS of 40 sen).
Based on technical consideration & attractive valuation, Emivest could be a good trading BUY as well as a good long-term investment stock (albeit with a medium risk profile).
Monday, January 16, 2012
There will be some questions raised about the proposed sale. The first question would be whether Khazanah should have a more transparent process to sell its stake in Proton. By limiting your choice of buyers, you are not getting the best people to takeover the sick national car project. Would Proton improve or would it get worse after the sale? If it get worse, do we have to bailout the privatized Proton?
The second question is whether Proton will continue to enjoy subsidies as well as protection from imported cars? It was reported that Proton received subsidies totaling RM416 million in FY2008-2010 (here). The reason that Proton enjoys this subsidies is because it belongs to Khazanah. It should not be entitled to subsidies once it has been privatized.
The third question to ask is whether Khazanah could have obtained a better price for Proton. The way the sale was carried out, it would only guarantee that Khazanah will not get the best price and obversely, the buyer will get a good deal. As I see it, Proton is a classic case of a company that is worth less than the sum of the parts. Since DRBHicom bought Proton at a very low price, it can easily strip the company off its excess assets, such as its land in Shah Alam. The sale proceed can be applied to pay down its debts. It would then run a leaner operation at a decent profit, especially with government subsidies to tap on.
Finally, the biggest question to ask is why DRBHicom, a group owned by Syed Mokhtar? This businessman has acquired many assets & businesses that belonged to the government over the past few years, from ports to airports, and from postal service to Proton car distribution (and, now Proton car production). It was even picked to takeover Bernas (after a Hong Kong-based company, Wang Tak Co Ltd secured controlling stake in Bernas) & the sugar refining business of Robert Kuok. Why is Syed Mokhtar getting the preferential treatment?
Imagine how much Malaysia could have benefit if we have sold off Proton years ago to the highest bidder? In 2005, VW approached Khazanah to buy over its stake at RM10 apiece (here). In addition to getting a higher price & not having to pay for the subsidies to Proton for the past few years, Malaysian car buyers could have enjoyed lower-priced cars; thus each family would have saved tens of thousands of ringgit. Then, our automotive sector would have been opened up and we could have hundreds of feeder factories set up in Malaysia, employing thousands of graduates & vocational school leavers. All in all, Proton has been a heavy burden for Malaysians from all walks of live. Even after the sale of Proton to DRBHicom, I doubt whether we see the end of this saga.
Thursday, January 12, 2012
Chartwise, MMC looks poised for an upswing. From Chart 1, we can see that MMC is now pressing against the intermediate downtrend line at RM2.75. A breakout above this downtrend line could be the start of a rally for the stock. Its immediate resistance is the horizontal line at RM2.90 and then at RM3.15. Its immediate support is at the horizontal line at RM2.70 & then at RM2.50.
Based on the above, you should keep a close tabs on this stock.
Chart 1: MMC's daily chart as at Jan 12, 2012_12.10pm (Source: Quickcharts)
Chart 2: MMC's weekly chart as at Jan 12, 2012_12.10pm (Source: Quickcharts)