Friday, March 30, 2012
Haio has just announced its results for QE31/1/2012. Its net profit increased by 15% q-o-q or 43% y-o-y to RM9.1 million while its turnover increased by 12% q-o-q or 9% y-o-y to RM63 million. The improved performance was attributed to better results from the MLM & wholesale divisions while the retail division suffered a decline in profit contribution due to higher A&P expenses- despite higher sales due to the CNY season.
Table: Haio's last 8 quarterly results
Chart 1: Haio's last 28 quarterly results
Haio (at RM2.17) is trading at a current PE of 13 times (based on the last 4 quarters' EPS of 16.64 sen). At this PE multiple, Haio is deemed fully valued.
Haio reversed from its long downtrend in October last year. We can see that a higher 'high' and a higher 'low' has formed. Thus, we can say that a medium-term uptrend is in progress.
Chart 2: Haio's weekly chart as at Mar 30, 2012_4.00pm (Source: Quickcharts)
Based on favorable technical outlook, Haio could be a good stock for long-term investment. However, for the stock to rise significantly, its financial results needs to improve further. At its present earning, it is hard to justify a strong rally in the share price.
Tuesday, March 27, 2012
Chart 1: LVS's daily chart as at March 26, 2012 (Source: Stockcharts)
If you look at the chart of Genting, you will see that this stock has also traded in a mild downtrend line since January 2011. Yesterday, Genting nearly tested its downtrend line at RM11.20. If Genting can break above this downtrend line, it may continue its prior uptrend in the same manner as LVS. As such, we should keep a close tab on Genting.
Chart 2: Genting's daily chart as at March 27, 2012_10.00am (Source: Quickcharts)
Recently, the share price of Takaful Malaysia rose steadily after breaking above its horizontal resistance at RM2.40. It is now trading at RM2.70. Takaful is reported to be close to selling a stake in its Indonesian unit to a local partner to expand its distribution network in the republic (here). This could be the reason for the ra-rating of the stock, which was the pioneer in the field of Islamic insurance but alas it was overtaken by many newcomers.
I have lined up the chrats of BIMB & Takaful below. You may note the followings:
1) BIMB's immediate resistance is at the horizontal line at RM2.40; and
2) BIMB's most recent rally was in June 2011, which was preceded by a rally in Takaful in April.
Since Takaful has broken above its horizontal resistance at RM2.40, the question to ask is whether BIMB will follow suit & break above its resistance at RM2.40. As such, it is worth to track the price movement in BIMB closely & buy once it break above the RM2.40.
Chart: BIMB & Takaful's daily chart as at March 27, 2012-10.30am (source: Quickcharts)
The corporate exercise is being carried out in two stages; the Share Split completed in January (here) and we are now in the final leg which includes the Special Dividend & the Rights Issue (here & here). I have received a few comments & emails on this. these are my thoughts on MFlour:
1. Financial Performance
Due to the increase in raw material costs, MFlour's bottom-line has peaked in QE31/12/2010. Its pre-tax profit has dropped from RM46 million in QE31/12/2010 to the range of RM20 million for the past 3 quarters. Unless the profit margin rebounds back, I do not see a recovery in the share price.
Table: MFlour's last 8 quarterly results
Chart 1: MFlour's last 23 quarterly results
2. Share Price Performance
MFlour is still in a medium-term uptrend line with support at RM3.90-4.00. I believe this support will hold for the near term.
Chart 2: MFlour's daily chart as at Mar 26, 2012 (Source: Quickcharts)
MFlour (closed at RM4.44 yesterday) is now trading at a PE of 12 times (based on last 4 quarters' EPS pf 38 sen). Based on this PE, MFlour is deemed fairly valued with limited upside.
Based on the above, I would rate MFlour a SELL ON STRENGTH if there is any rally prior to the ex-date of the above Rights Issue cum Special Dividend.
Friday, March 23, 2012
JTiasa had just announced its results for QE31/1/2012. Its net profit increased by 11% q-o-q or 14% y-o-y to RM45.5 million while turnover was marginally lower at RM238 million. JTiasa benefited from lower effective tax rate due to no tax effect from the disposal of a subsidiary; thus boosting its profit after tax. It should be noted that its pre-tax profit actually declined by 13% q-o-q or 15% y-o-y to RM50.0 million.
Table: JTiasa's last 8 quarterly results
Chart 1: JTiasa's last 22 quarterly results
JTiasa (RM8.39 as at 11.00am) is now trading at a PE of 11.4 times (based on its last 4 quarters ' EPS of 73.82 sen). At this PE multiple, JTiasa is deemed fully valued.
Proposed Capital Exercise
JTiasa has proposed a private placement up to 15% of its share capital and a bonus issue of 2-for-1 thereafter. It has also fixed the ex-date for a dividend-in-specie of 1 Treasury share for every 20 shares owned. These capital exercise is driving up the share price currently.
From the monthly chart below, we can see that JTiasa has broken above its long-term downtrend line at RM5.00 in early 2011. It has just broken above its horizontal resistance at RM7.80. It may attempt the next resistance at the horizontal line at RM10.00.
Chart 2: JTiasa's monthly chart as at March 1, 2012 (Source: Tradesignum)
Based on generous capital exercise & positive technical outlook, JTiasa could be a good trading BUY. However, this will be a medium to high risk trade since the stock has rallied quite substantially over the past 3 years. For those who are holding this stock for investment purpose, I would recommend to take profit on this stock.
Thursday, March 22, 2012
- Import Duty amounting to RM31,452,344.00
- Excise Duty amounting to RM54,805,709.42
- Sales Tax amounting to RM5,492,365.50
When it released its latest financial results for QE31/12/2011, Harison merely referred to the above demand & made the following comments:
i) It does not admit being liable to pay RM91,750,418.99.
ii) It is seeking legal advice on the demand.
iii) It has on 27 February 2012 written to the Custom to request for a two months extension to reply to their letter.
The above comment is a standard comment which is to be expected since the matter is still pending. If this claim is not successfully challenged by Harison, it could lead to two things:
a) A full payment would reduce its Shareholders' Funds from RM268.9 million to RM177.2 million or its NTA per share from RM3.93 to RM2.59 (based on its Balance Sheet as at 31/12/2011).
b) Its future sales volume & operating margin will be affected due to higher duties and/or sales tax payable.
In my opinion, it is probable that Harison will not succeed in disputing the claim by the Custom. As such, the prudent approach is to reduce one's position in this stock. From the chart below, we can see that Harison has broken its 40-week SMA line at RM3.22 (which you may consider its uptrend line).
Chart: Harison's daily chart as at March 22, 2012_12.15pm (source: Quickcharts)
Chart: Unico's daily chart as at March 22, 2012_12.30pm (Source: quickcharts)
Unico is a plantation stock. For 9-month ended 31/12/2011, Unico reported a net profit of RM59.8 million on a revenue of RM231 million. Its annualized EPS for FY2012 is about 9.21 sen. Based on the present price of RM1.28, Unico is trading at a PE of 14 times. At this PE, Unico is deemed fully valued.
Based on the technical breakout, Unico could be a good trading BUY.
Wednesday, March 21, 2012
Topglov had reported its results for QE29/02//2012 recently. Its net profit increased by 70% q-o-q or 110% y-o-y to RM53.5 million while turnover increased by 13% y-o-y but dropped marginally by 1% q-o-q to RM549 million. The improved bottom-line was attributed to due to 18% drop in latexx prices & strengthening of the USD.
Table: Topglov's last 8 quarterly results
Two Main Determining Factors examined
The financial performance of Topglov, like many rubber glove producers, is heavily dependent on favorable movement in Rubber latexx prices & USD. From the two charts - Chart 1 & Chart 2 - below, we can see that USD's near term outlook is mildly bearish but the medium-term outlook is still favorable. Rubber prices (used as a proxy to rubber latexx price) is in a downtrend after it peaked at February 2011. Is this downtrend over? It is hard to tell as both the 5 & 10-month SMA lines are still heading lower. If the USD & runner latexx prices remained at the present level, we can expect continued good results for Topglov. As you can see from Chart 3, Topglov's profit margin has recovered substantially in the last quarter.
Chart 1: USD daily chart as at March 20, 2012 9Source: Stockcharts)
Chart 2: Rubber Monthly Price Chart as at March 19, 2012 (Source: indexmundi.com)
Chart 3: Topglov's profit margin for last 27 quarterly results
Chart 4: Topglov's last 27 quarterly results
Topglov (closed at RM4.82 yesterday) is now trading at a PE of 22 times (based on the last 4 quarters' EPS of 22.08 sen). At this PE multiple, Topglov is deemed fully valued.
Topglov had broken above its intermediate downtrend line (RR) at RM4.70 in December 2011. A medium-term uptrend line (SS) has also formed with support at RM4.70. For now, I believe the stock can stay above the 200-day SMA line at RM4.82.
Chart 5: Topglov's daily chart as at March 20, 2012 (Source: Tradesignum)
Despite the good financial performance & positive technical outlook, Topglov is rated a HOLD due to its high valuation. If the financial results improved further, Topglov could be rated a BUY.
Tuesday, March 20, 2012
Subsequently, the true impact of the flood became apparent. Even one of the major shareholder, Dato' Teh Eong Liang (the brother to ENG's CEO Dato' Teh Yong Khoon and the son of ENG's Chairperson, Datin Low Yeow Siang) sold down his stake in ENG (here). The stock traded at a low of RM1.50 but I felt that the selldown was overdone & I recommended a HOLD.
My faith in ENG took a further knock when I read its accounts for QE31/12/2011. In that statement, the company wrote off property, plant & equipment as well as inventories totaling RM45.8 million arising from the flood. I always felt that the management of ENG was very professional & conservative and they must have taken adequate insurance against many risks, including flood. The write-off seems to suggest otherwise.
Yesterday, ENG announced that the offeror has proposed a revision in the buyout price to RM2.00 (here). If this is acceptable to ENG, the deal may still go through. To those who have stayed with the stock, you may make a small profit from this investment. Of course, you could have done better by putting your money into other stocks which were heavily sold down during that period. My call on ENG reminds me of another earlier call to buy Courts; both have proven to be interesting journey. One day, we can talk about ENG- like Courts- with a slight tint of nostalgia because they won't be with us any more. However, as a blogger, I wish all my calls would be straight forward, with no wild swing.
Chartwise, you can see that ENG is now pressing against the horizontal resistance at RM1.80. This coincides with the line connecting the recent highs after the flood. If it can break above this level, it may go to RM1.90 - a 5% discount to the revised buyout price at RM2.00. The current price of RM1.80 incorporates the risk that the deal may still falter & the share price may drop back to the 50 & 100-day SMA line at RM1.72. There is very little profit to be made from a trade on this stock now. For those who are still holding into the stock, you can wait for the buyout & take home a further 20-sen profit (or a return of 11%) for a holding period of 3-4 months.
Chart: ENG's daily chart as at Mar 20, 2012 (Source: Quickcharts)
For QE31/12/2011, TGuan's net profit increased by 41% q-o-q or 8% y-o-y to RM7.7 million while turnover inched up marginally by 1% q-o-q or 3% y-oy- to RM144 million. The improved bottom-line was attributable to higher sales & better margin.
Table: TGuan's last 8 quarterly results
Chart 1: TGuan's last 27 quarterly results
TGuan (closed at RM1.46 today) is now trading at a PE of 5.7 times (based on last 4 quarters' EPS of 25.85 sen). At this PE, TGuan is deemed fairly attractive.
TGuan is in a slow & steady uptrend. Over the past 2 months, the stock appeared to be trapped in a flag formation, with breakout at RM1.40. Today, the stock has broken above this flag formation and this could signal the continuation of its prior uptrend. The next resistance would be at RM1.60.
Chart 2: TGuan's daily chart as at Mar 20, 2012 (Source: Quickcharts)
Chart 3: TGuan's weekly chart as at Mar 19, 2012 (Source: Quickcharts)
Based on good financial performance, attractive valuation & positive technical outlook, TGuan could be a good stock for a medium-term investment.
Friday, March 09, 2012
Thursday, March 08, 2012
From the table below, we can see that the Main Board is divided firstly into the healthier stocks that made up the FBMEMAS & the not-so-healthy stocks that made up the FBMFLG. The FBMEMAS can then be divided further into the top 100 stocks, which are grouped under FBM100 & the smaller stocks that are grouped under FBMSCAP. Finally, FBM100 can be divided into FBMKLCI & FBM70.
Table: FTSE Bursa Malaysia Indices
If you look through the few charts below, you will find that FBMEMAS is barely hanging onto its uptrend line. It is slightly below the uptrend line, SS but marginally above the uptrend line, S1-S1.
Chart 1: FBMEMAS's daily chart as at Mar 8, 2012 (Source: Quickcharts)
On the other hand, we can see that FBMKLCI & FBMSCAP are above their respective uptrend line. The same cannot be said above FBM70, which has broken below its uptrend line (be it uptrend line, SS or uptrend line, S1-S1).
Unlike FBMKLCI, which has benefited from steady buying support from the fund managers, or FBMSCAP, which has benefited from enthusiastic buying by retail players, FBM70 must find its way into investors' radar. In that sense, FBM70- like a canary in a coal mine- may give a better picture of the true state of our market. If so, you can expect the broad market to eventually follow suit & consolidate some of its recent gain. As such, we may be better served by reducing our exposure to the market in the near term.
Chart 2: FBMKLCI's daily chart as at Mar 8, 2012 (Source: Quickcharts)
Chart 3: FBMSCAP's daily chart as at Mar 8, 2012 (Source: Quickcharts)
Chart 4: FBM70's daily chart as at Mar 8, 2012 (Source: Quickcharts)
Wednesday, March 07, 2012
I studied the financial statement for QE31/12/2011 & QE30/9/2011 and discovered a sudden increase in its Property, Plant & Equipment from RM36.7 million to RM70.0 million, which was financed by an increase in Other Payables & Accrued Expenses from RM0.8 million to RM30.9 million. These changes caused the company's Total Assets to jump from RM58.6 million to RM94.5 million while its Total Liabilities increased from RM2.6 million to RM34.6 million. While gearing ratio was negligible, its current ratio plummeted from 8 times to 0.6 times. However, AMedia was sitting on Cash & Bank Balances of RM12.6 million as at 31/12/2011 and this probably gave investors a high degree of comfort that the company was in a good financial position. It will be interesting to learn what caused the sudden drop in AMedia. I hope that it is not some skeletons in the closet like Silver.
Meanwhile, we can see that the stock should find support at the horizontal line at RM0.34 and thereafter at the intermediate uptrend line at RM0.32.
Chart: AMedia's daily chart as at March 7, 2012 (Source: Quickcharts)
Chart: Dijacor's daily chart as at March 7, 2012 (Source: Quickcharts)
Monday, March 05, 2012
After the sharp rally over the past few days & the failure to surpass the all-time high today, our market is likely to enter into a short correction over the next few days.You may use this correction to gain entry into the market.
Chart 1: FBMKLCI's daily chart as at March 2, 2012 (Source: Tradesignum)
As the FBMKLCI approaches the all-time high, we can expect the same for many of the sector indices. A quick look at the major sectors revealed the following:
- Consumer Products has been making new high ever since it surpassed the previous all-time high in December last year;
- Industrial Products, Plantation and Trading Services are at or near their respective all-time high; and
- Finance, Construction & Properties have not come near the all-time high but they have broken above their respective downtrend line.
Of these three laggard sectors, finance sector may be the first to test its all-time high. From Chart 2 below, we can see that Finance index has just broken to the upside of the wedge formation at 14100. It could rally to test its immediate resistance is at 14500 & then the psychological 15000 mark.
Chart 2: Finance's weekly chart as at March 2, 2012 (Source: Quickcharts)
The properties index broke above its intermediate downtrend line at 1040 in early February. It nearly tested its horizontal resistance at 1070 before it entered into a correction. This brought the index down to its medium-term uptrend line support at 1032. Today, it tested the horizontal resistance of 1070 but it failed to stay above it. An upside breakout above this horizontal resistance could send the index to the next horizontal resistance at 1130 & then the psychological 1150 mark.
Chart 3: Properties's weekly chart as at March 2, 2012 (Source: Quickcharts)
Finally, the construction sector corrected back to its medium-term uptrend line support at 260. It has earlier broken above its intermediate downtrend line resistance at 264 in early February. Can it recruit enough support to continue its upleg?
Chart 4: Construction's weekly chart as at March 2, 2012 (Source: Quickcharts)
If you are looking at some laggards to play catch-up, you can consider these three sectors. My personal preference is for the finance & construction sectors. Some finance stocks to consider are AMMB, CIMB, RHBCap & Maybank, and some construction stocks to look at are MMC, Gamuda, WCT & IJM.
Friday, March 02, 2012
CIMB has issued a research report on this surprising 'news' and it has valued Litrak at RM4.45 (here). CIMB prefers Gamuda, the major shareholder of Litrak, to Litrak if one wants to play the news on the sale of Litrak.
From the Chart 2, we can see that Litrak has risen substantially over the past 3 years. The breakout above an important psychological level; the setting of a new all-time high; and, rumor of a buyout could propel the stock into an exponential rise, known as the blowout stage. While the volume traded has not been impressive, that may not be a critical criteria for a blowout in the share price. If you look at how much some blue chips such as GAB, Carlsbg & DLady - or even second-tier stocks such as Kassets or AEONCR- have risen over the past few weeks or months on relatively thin volume, then one can make a case that the same could happen to Litrak.
Based on the above, Litrak could be a good trading BUY.
Chart 1: Litrak's daily chart as at Mar 2, 2012 (Source: quickcharts)
Chart 2: Litrak's monthly chart as at Feb 27 2012 (Source: Tradesignum)
Sime has broken above the psychological RM10.00 mark today (see Chart 1). Sime has been range-bound between RM8.00 & RM10.00 for the past 2 & 1/2 years (see Chart 2). With this breakout, Sime could commence on its long-awaited upleg. Potential target is RM12.00, with resistance in between at RM10.80 & RM11.50.
Based on this technical breakout, Sime could be a trading BUY.
Chart 1: Sime's daily chart as at Mar 2, 2012_12.00pm (Source: Quickcharts)
Chart 2: Sime's weekly chart as at Feb 27, 2012 (Source: Tradesignum)
Thursday, March 01, 2012
As such, CIMB is definitely worth a close watch.
Chart: CIMB's weekly chart as at Mar 1, 2012_10.00am (Source: Quickcharts)
PBA's results for QE31/12/2011 was disappointing. Its net profit increased 12-fold q-o-q or 33% y-o-y to RM16.7 million while its pre-tax profit dropped 14% q-o-q or 51% y-o-y to RM6.3 million. The reason for the divergence between the pre-tax profit & the after-tax profit is because of a small tax credit which arose due to reinvestment allowance & an origination & reversal of temporary difference for deferred tax of RM9.5 million.
If we looked at the bottom-line at the pre-tax profit level, we have reason to be concerned about PBA. In the latest notes to the accounts, the management has attributed the poorer performacne to increase in the cost of sales. This means that the company will have to raise the tariff rates on water- something which may be unpopular with the General Election around the corner. As such, I expect PBA's financial performance to be disappointing for the next 2 or 3 quarters.
Table: PBA's last 8 quarterly results
Chart 1: PBA's last 27 quarterly results
If we exclude the one-off origination & reversal of temporary difference for deferred tax of RM9.5 million, PBA's after-tax profit for the past two quarters would be RM13.02 million. This would give a 6-month EPS of 3.93 sen or a full-year EPS of 7.86 sen. PBA's outstanding shares issued is 331.27 million. As such, PBA (closed at RM0.945 yesterday) is now trading at a current PE of 12.0 times. For a utility stock, that PE is deemed fair. The stock proposed or paid dividend totaling 3.5 sen for the past 4 quarters. Thus its dividend yield is only 3.7%.
PBA is still in a bottoming phase, despite a failed breakout above its long-term downtrend line in June 2011. It should have good support at RM0.85-0.88 from the line connecting its recent lows.
Chart 2: PBA's monthly chart as at Feb 2, 2012 (Source: Tradesignum)
Based on poorer financial performance, unexciting technical outlook & almost-full valuation, I would rate PBA as a SELL and redeploy your cash into something more rewarding.
Kianjoo has announced its results for QE31/12/2011. Its net profit dropped by 47% q-o-q or 35% y-o-y to RM15 million while turnover increased by 6% q-o-q or 5% y-o-y to RM292 million. The y-o-y decline in its bottom-line was attributed to a 25%-decline in pre-tax profit from the Can division which resulted from higher raw material costs & increased commodity derivatives contract losses. The decline on q-o-q basis was due to higher raw material costs & accrual of staff performance incentives.
Table: Kianjoo's last 8 quarterly results
Chart 1: Kianjoo's last 23 quarterly results
Comparison with Canone's results
The poorer results for Kianjoo - confined mainly to poorer results for its Can division - should be contrast against the better results from Canone, which came mainly from better performance for the latter's Can division. Has the management of Kianjoo relaxed their tight cost management, leading to a drop in its profit margin?
Kianjoo (closed at RM2.20 yesterday) is now trading at a PE of 9.3 times (based on last 4 quarters' EPS of 23.6 sen). At that PE multiple, Kianjoo is deemed attractive.
Kianjoo is in an uptrend line with support at RM2.10. Its immediate resistance is at RM2.20.
Chart 2: Kianjoo's daily chart as at Mar 1, 2012_12.00pm (Source: Quickcharts)
Based on satisfactory, albeit poorer financial performance; attractive valuation; and positive technical outlook, Kianjoo is still rated a good stock for long-term investment.