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Wednesday, June 27, 2012

GASMSIA revisited

On June 11, I posted on GASMSIA's fair value (here). A few days later, I was invited for a phone interview on the Market Watch program of BFM 89.9 - The Business Station. For those who like to listen to the podcast, you can go here.

Before the interview, I have re-computed my financial projection after reading the comment from the management of GASMSIA that the investment community was fussing too much about the decline in its profit margin. I have tweaked the projection slightly and extended the period to 2015. Basically, the earning is about the same for FY2012.



Assumptions
A) Volume of sale increased by 10% in FY2012 and increased subsequently at 5% per annum from FY2013 to FY2015.

B) Margin is as follows:


C) Other Cost of Sales expenses assumed to be 3% of Revenue for FY2012 and increased subsequently at 10% per annum from FY2013 to FY2015.

D) Admin expenses, which was about RM30 million for FY2009-2011, assumed to rise at 10% per annum from FY2012.

E) Effective tax rate at 24%.

F) Profit after Tax for FY2009-2011 from the projection is about RM768 million. This is very close to the actual total of RM770 million (see page 15 of Prospectus).

GASMSIA's modus operandi is a tolling operation. A tolling operation has its pros & cons. It is very stable albeit unexciting. You see that in stocks as as Litrak where growth can only come from increase in volume of cars passing thru its toll booths.However, if there are strong sales volume (& revenue) growth, then the earning could jump. You can see that in Airport and Biport. We may see a sudden rise in sale volume (& revenue) for GASMSIA but the unfortunate thing is that the margin has dropped substantially. We do not know how much will the sales volume growth going forward. Natural gas is a cheap source of energy but are Malaysian users prepared to pay the higher prices? I have assumed a growth of 10% for FY2012 & 5% thereafter. This gives an EPS of 10.9 sen to 13.5 sen for period from FY2012 to FY2015. On the other hand, if I were to assume a growth of 10% from FY2012 to FY2015, GASMSIA's EPS would rise steadily from 10.9 sen to 16.7 sen for that period. As such, GASMSIA (closed at RM2.51) is trading at a PE of 23 times its FY2012 earning.That means GASMSIA is fully valued.

However, GASMSIA is breaking above the slightly expanding "trading range" of RM2.38 & RM2.52. An upside breakout of a trading range (albeit imperfect one) could signal the beginning of a bullish move.


Chart: GASMSIA's 15-min chart as at June 27, 2012_9.30am 9Source: Quickcharts)

When financial projection gives a different picture from the technical analysis (or the price chart), you have to make a judgement call. I tend to give credence to technical analysis than financial studies. As such, I would say GASMSIA has a bullish breakout and it is now a possible trading BUY. 

Tuesday, June 26, 2012

Market Outlook as at june 26, 2012


Our FBMKLCI made a new all-time of 1611, which surpassed the previous all-time high of 1609, recorded in April 3 & 4 this year. The breaking of the previous high could set the stage for the continuation of the prior uptrend. However, we have to be cautious. The present market rally is driven by local fund managers, especially those with close tie with GLCs. Foreign funds had been selling for the past few weeks, even months. Retail players would not be a big factor in the present run-up as many have been badly mauled by the sharp consolidation among 2nd & 3rd liners in the past 3 months. The current market is very similar to what we saw in July 2011 or even January 2008. When you compared the strength of the blue chips (as represented by FBMKLCI) and the weakness among the 3rd liners (as represented by FBMFLG), we can see that the divergence between the two indices. FBMFLG has acted as a canary in a coal mine- warning us that the light at the end of the tunnel is an oncoming train. Is it the same this time around?

 
 Chart 1: FBMKLCI's weekly chart as at June 26, 2012_2.45pm (Source: Quickcharts)

 
  Chart 2: FBMFLG's weekly chart as at June 26, 2012_2.45pm (Source: Quickcharts)

FGVH- born with a silver spoon


Introduction

FGVH is the third largest listed palm oil operator globally, in term of landbank. In addition, they have access to the largest crude palm oil (CPO) producer globally through its 49%-owned associate, Felda Holdings Bhd (FHB).

Business Segments

FGVH primarily operates in 3 business segments:

• Plantations
• Downstream
• Sugar

Investment Appeals

FGVH’s appeal lies in 3 areas:

1) FGVH, through its 49%-owned associate, FHB produces 3.3 Million MT of CPO in 2011. This accounts for 6.7% of the global CPO output of 49.2 Million MT in 2011. The enormous size will yield greater cost saving as well as gaining certain advantages to the group.

2) Following from this tie-up with FHB, FGV Plantation Malaysia (a wholly-owned subsidiary of FGVH) entered into an agreement with F Palm Industries (FPI) [a subsidiary of FHB] where the latter will buy FFB from FGVH, Felda settlers, F Agricultural & third parties for processing into CPO & PK. The CPO produced would in turn be sold to FGVH. This agreement took effect on March 1, 2012 and it will effectively boost FGVH’s topline & bottomline substantially. For example, FGVH’s turnover for FYE31/12/2011 was only RM4.2 billion but its projected turnover for FY31/12/2013 may be RM11.3 billion (as per ECMLibra report).

3) In addition to the FFB/CPO arrangement, it has also entered into a very attractive land lease agreement with Felda to lease 355,864 hectares of land for a period of 99 years at an annual rate of RM700 per hectare plus 15% of the plantation operating profit. This rate is applicable for the next 20 years starting from March 1, 2012. Assuming a relatively well-managed estate producing 20 MT of FFB per hectare, the operating profit is about RM10,000 per annum at current FFB/CPO prices. This means that the amount payable per hectare is about RM2,200 (RM700 plus 15% of RM10,000 profit). This compared favorably to the annual lease payment is RM3,500 per hectare that Boustead has to pay to its REIT. FGVH enjoys a saving of RM462.54 million per annum.

4) FGVH is the leading sugar refiner in Malaysia. Sugar is a stable consumer product which should give another layer of stability to its earning.

FGVH’s negative points:

1) FGVH is essentially involved in two main businesses- upstream & mid-stream oil palm business and sugar refining & distribution business.  It has minor exposure in rubber cultivation; soyabean & canola seed crushing & processing; and production of oleochemical products. Its ambition is global but todate, they have nothing much to show for it. Then again, it is a relatively young company and its two main businesses are stable & do not face any serious threat.

2) Its oil palm estates are fairly old & need to be replanted. This will lead to a reduction in FFB output. However, FGVH produces 31.9% of the FFB that FPI has to process. As such, any decline will not be significant.

3) FVGH was born in rather acrimonious circumstances, with political parties in the ruling coalition & opposition vying to get the support of Felda settlers. These settlers, who were traditionally staunch supporters of the ruling coalition, are being courted by the opposition. It is possible that the sweetheart deals (for the land lease & the CPO/FFB arrangement) come with strings attached. FVGH could be called upon to do ‘national duties’ to appease the settlers and this could affect its earning. The chairman of FGVH is a former UMNO leader, Tan Sri Mohd Isa and his loyalty may not lie with the company.

Valuation

ECMLibra valued FVGH at RM5.65 based on a PE multiple of 16 times its FY2012 EPS of 35.3 sen. MIDF valued FGVH at RM5.30 based on the Sum-of-Parts method. This Sum-of-Parts method derived the bulk of its value from the Plantation division, which was valued at a PE of 18 times its earning for FY2013. Sime & IOI are currently trading at a PE of 14-15 times their respective earning for FY2012.

I would value FGVH at a PE of 14 times its FY2012 EPS of 35.3 sen (based on ECMLibra). As such, my fair value for FGVH is RM4.94.

Monday, June 25, 2012

Tenaga may have a bullish breakout


With the FBMKLCI making new high, we should look at blue chips that may continue to rise; thus giving support to the rising FBMKLCI. We have seen TM making new high in this cycle. This morning, it is the turn for Tenaga to charge.

Tenaga broke above its horizontal line, R2-R2 at RM6.70. It may rise to test the resistance of its uptrend channel line at RM7.20-7.30. Note that there is some resistance at the horizontal line at RM7.10.


Chart 1: Tenaga's daily chart as at June 25, 2012_11.00am (Source: Tradesignum)

Tenaga is coming into a positive news cycle, which will likely to coem from two sources:
1. The renegotiation of the old Power Purchase Agreements (PPAs) with Independent Power Producers (IPPs) which could lead to a significant reduction in its operating costs; and
2. Increased in power consumption.

Another catalyst for a re-rating of Tenaga is the correction in the prices of its fuel. We can see from Chart 2 & 3 that the price of Natural Gas & Coal (Australia) have eased off. Cheaper prices of Natural Gasmay not benefit Tenaga signififcantly for now as its purchases from Petronas Gas is subsidized currently. In 2016 onwards, the price of Natural Gas would be at market rate & any downward pressure on Natural Gas is a positive development for Tenaga.


Chart 2: Natural Gas price chart as at May 2012 (Source: mongabay.com)


Chart 3: Coal (Australia) price chart as at May 2012 (Source: mongabay.com)

If you look at the monthly chart for Tenaga, you will see that Tenaga is once again testing the 3rd fan downtrend line (R-R3) at RM6.70. The last time, it broke above a 3rd fan downtrend line (r-r3) was in 2006 when it rose to a high of about RM10.00. If Tenaga can break above the RM6.70 resistance (preferably RM7.00 as well), it may swing up & revisit the RM10.00 mark. My most optimistic forecast is that it may hit RM12.00 within a 1-year period, based strictly on technical projection.


Chart 4: Tenaga's monthly chart as at June 22, 2012 (Source: Tradesignum)

Based on the above, Tenaga could be a trading BUY or even a medium-term trade if it can break above the RM6.70 mark convincingly.

Presbhd has a bullish breakout

In May, I had posted about Presbhd, a smallcap with potential (here). The stock is in an uptrend line, withe support at RM0.95 & strong horizontal resistance at RM1.05. This morning, Presbhd broke above that resistance. It is currently trading at RM1.14. Its potential target is RM1.30.


Chart: Presbhd's weekly chart as at June 25, 2012_9.15am (Source: Quickcharts)


Based on the bullish breakout, Presbhd is a trading BUY.

Friday, June 22, 2012

TM- uptrend to continue

TM broke above its recent high of RM5.59. From the chart below, we can see that TM is likely to continue with its uptrend line.


Chart: TM's daily chart as at June 22, 2012_11.15am (Source: quickcharts)

Based on the upside breakout, TM could be a good trading BUY.

Thursday, June 21, 2012

Rubber glove stocks- good trading BUY

Topglov has broken above its intermediate downtrend line at RM4.80 as well as its psychological RM5.00 level. Its next resistance would be the horizontal line at RM5.30. For more on Topglov, go to my earlier post.

Chart 1: Topglov's daily chart as at June 21, 2012_10.00am (Source: Quickcharts)

Other rubber glove companies, such as Kossan & Supermx, are likely to record better results for the last quarter and the next quarter. Kossan has yet to test its downtrend line while Supermx has tested its downtrend line yesterday but failed to break above it. I believe that Kossan & Supermx are good stocks to buy even though they did not achieve a bullish breakout like Topglov.


Chart 2: Kossan's daily chart as at June 21, 2012_10.00am (Source: Quickcharts)


Chart 3: Supermx's daily chart as at June 21, 2012_10.00am (Source: Quickcharts)

Wednesday, June 20, 2012

Bstead- breaking above the diamond pattern

Since June 15, Pharma had a sharp rally from RM6.00 to a high of RM11.02 this morning. Presently, it is trading at RM9.81 (as at 9.40am). Could the rally in Pharma, a subsidiary of Bstead, be linked to some positive development in Bstead? Bstead share price has risen from about RM5.11 on June 15 to a high of RM5.51 this morning. Now, it is trading at RM5.39 (as at 9.40am).

Chartwise, Bstead has broken above its diamond pattern at RM5.30. The breakout is not convincing as it is not accompanied by high volume. If it can recruit more buying support or if the Pharma rally is due to a positive development that could boost the performance of the Bstead group, then Bstead could continue to rise. Its immediate resistance is at the 'horizontal; line at RM5.70 & then the line connecting its previous 'high' at RM7.50.

As such, Bstead is worth close tracking.


Chart 1: Bstead's weekly chart as at June 19, 2012 (Source: Tradesignum)


Chart 2: Bstead's monthly chart as at June 19, 2012 (Source: Tradesignum)

Note: Pharma had replied to an Unusual Market Action from the Exchange on June 18 by saying that it is not aware of any possible explanation for the sharp rally in the share price.

Tuesday, June 19, 2012

Market Outlook as at June 19, 2012


Both FBMKLCI & FBMEMAS broke above their respective medium-term downtrend line at 1580 & 10800, respectively. With these breakout of the downtrend line, we can expect the market to continue to rise. While the volume has picked up, it is still relatively thin. Market breadth is still unconvincing, with gainers outnumbering losers by 467 to 264.

 
 Chart 1: FBMKLCI's daily chart as at June 19, 2012 (Source: Quickcharts)

 
 Chart 2: FBMEMAS's daily chart as at June 19, 2012 (Source: Quickcharts)

How far can this rally go? From the weekly chart below, we can see that FBMKLCI & FBMEMAS would encounter the resistance from the expanding triangle, ABCD at 1620 & 11000, respectively. We have seen similar pattern before & the outcome was a draw- an upside breakout in 2010 & a downside breakout in 2008. Would the market do an upside breakout like 2010 or would it be a downside breakout like 2008 (when the world was gripped by the US Financial Crisis)? I am inclined to believe that the latter scenario may be more likely than the former. As such, I think it is advisable to sell into strength if the market continue to rise over the next few days.

 
 Chart 3: FBMKLCI's weekly chart as at June 19, 2012 (Source: Quickcharts)


Chart 4: FBMEMAS's weekly chart as at June 19, 2012 (Source: Quickcharts)

Friday, June 15, 2012

CPO- downtrend likely to continue

CPO continued its decline after breaking below its long-term uptrend line at RM3200 (see the composite Chart 1 below).


Chart 1: CPO's weekly chart as at May 28, 2012 (Source: iFS.marketcenter.com)

In early June, CPO broke below the psychological RM3000 level. From the daily Chart 2 below, we can see that the Bollinger Band is expanding and the prices are heading lower. This means that CPO's downtrend is likely to continue.


Chart 2: CPO's daily chart as at June 14, 2012 (Source: iFS.marketcenter.com)

Based on the above technical outlook, we should underweight the Plantation sector.

Topglov- light at the end of the tunnel?

Results Update

Topglov has just announced its results for QE31/5/2012. Its net profit increased by a minuscule 1% q-o-q but rose 110% y-o-y to RM53.8 million while its revenue increased by 10% q-o-q or 13% y-o-y to RM603 million. The marginal increase in Topglov's net profit on q-o-q basis was due to higher latex prices (from RM6.81 per kg to RM7.52 per kg) & loss on fair value of forex contract of RM2.5 million (as compared to a gain of RM15.8 million in QE29/2/2012). If the fair value adjustment is excluded, the pre-tax profit would rose by 24.9%. In addition, it must be noted that rubber latex price has dropped sharply since May, which would lead to better profit for Topglov in the next quarter.


Table: Topglov's last 8 quarterly results


Chart 1: Topglov's last 24 quarterly results


Chart 2: TOCOM RSS3 price chart as at June 14, 2012 (Source: Rubbernet)

Valuation

Topglov (at RM4.88) is now trading at a PE of 18.3 times (based on last 4 quarters' EPS of 26.64 sen). If we divide the share price with the annualized earning for QE31/5/2012 (of 34.8 sen), the PE would be 14 times. Based on the latter figure, Topglov is still deemed fully valued.

Technical Outlook

Topglov appears to have broken above its strong horizontal resistance at RM4.70 as well as long-term downtrend line at RM4.80. With this breakout, the stock could be poised to test the psychological RM5.00 level & then its next strong horizontal resistance at RM5.30. An upside breakout of the RM5.30 horizontal line should make the beginning of its next upleg.


Chart 3: Topglov's daily chart as at June 15, 2012_10.00am (Source: Quickcharts)

Conclusion

Based on good financial performance & positive technical breakout, Topglov could be a good stock for trading BUY. With rubber latex prices weakening further, its future prospect is brightening. Those looking to buy for long-term can start nibbling now.

Bintai- poised to start its upleg?

Background

Bintai Kinden Corporation Bhd ('Bintai') is involved in the following businesses:

  • Electrical Installation for high-rise buildings, offices, factories, hospital, hotels, departmental stores, supermarkets, schools, sports facilities, airports, aircraft hangars, roads & highways etc.
  • Mechanical Installation of air-conditioning, ventilation, plumbing, sanitary and fire protection systems.
  • Electrical Power Supply Installation for power stations, sub-stations, power transmission lines, distribution and communication lines and other related engineering works.
  • Electrical and Instrumentation System For Oil and Gas Refineries.
Recent Financial Results

Bintai has recently announced its result for FYE31/3/2012 where it reported a net profit of RM17 million on revenue of RM368 million. This result is an improvement over last year's result where its net profit was RM10 million while its revenue was RM380 million. The jump in bottom-line is attributable to the following:
  • Gain on disposal of investment properties of RM5.3 million
  • Gain on disposal of Property, Plant & Equipment of RM4.4 million
  • Gain on de-consolidation of a former sub-subsidiary of RM5.4 million
  • Non-provision & lower share of losses in associates (amount not stated)
If you deduct the top 3 exceptional items are excluded, Bintai's results would look very pedestrian. Nevertheless, the management sounded very positive in its outlook for the next financial year based on healthy projects pipeline as well as projects being undertaken currently in Malaysia, Singapore & Vietnam.

Valuation

Bintai (at RM0.50) is now trading at a Price to Book of 0.57 times (based on NTA p.s. of RM0.87 as at 31/3/2012). I will not attempt to compute its PE ratio because its recent earning has been inflated with a few exceptional items which I am not sure that we can simply deduct from the net profit figure. Some of these items may be at the associate or subsidiary-level.

Technical Outlook

Bintai recently broke above its long-term downtrend line at RM0.40. It has also broken above its horizontal resistance at RM0.46 yesterday. Today, it is trying to break above the horizontal resistance at RM0.50. Bintai is exhibiting bullish signs of a stock about to launch into an upleg.


Chart: Bintai's monthly chart as at June 14, 2012 (Source: Tradesignum)

Conclusion

Based on technical consideration, Bintai could be a good trading BUY if it can break & stay above the RM0.50 level. Until its earning has improved & also shows consistency, the stock cannot be considered to be an investment stock.

Thursday, June 14, 2012

Penergy may have a bullish breakout

Penergy broke above its strong horizontal resistance at RM1.25 early this morning. The stock had earlier broken above its intermediate downtrend line at RM1.15 in late April. Its next resistance would be the horizontal line at RM1.45.


Chart: Penergy's daily chart as at June 14, 2012_9.30am (Source: Quickcharts)

For QE31/3/2012, Penergy reported a net profit of RM7.2 million on a revenue of RM131 million. Based on annualized EPS of 13.4 sen & present price of RM1.34, Penergy is trading at a PE of 10 times.

Based on technical consideration, Penergy could be a good trading BUY. You may buy when the share price eased back to the RM1.25-1.30 level.

Tuesday, June 12, 2012

SCC- rose above its IPO price

Background

SCC Holdings Bhd ('SCC') is involved in the distribution of animal health products & Foodservice Equipment. It was listed on our exchange in August 2010. Its IPO price was RM0.78.

Recent Financial results

From the table & Chart 1 below, we can see that the financial performance of SCC is deemed quite satisfactory. In the latest quarter (QE31/3/2012), its net profit dropped 31% q-o-q but rose 5% y-o-y to RM1.3 million while its revenue dropped 13% q-o-q or 7% y-o-y to RM8.8 million. While the company has stated that there is no seasonal effect on its performance, we can see that its top-line & bottom-line tend to perk up at the year end, which is not unusual since its products have some connection to the consumer sector (that benefits from year end festivities).


Table: SCC's last 7 quarters results


Chart 1: SCC's last 7 quarters results

Valuation

SCC (closed at RM0.93 today) is now trading at a PE of 7.4 times (based on last 4 quarters' EPS of 12.5 sen). At this PE multiple, SCC is deemed fully valued for a smallcap.

Technical Outlook

SCC broke above its resistance at RM0.65 & RM0.78 over the past 2 months. The breakout above its IPO price is quite significant as this means that investors have come around to view the stock in a positive light. For this to happen in a market that is overflowing with negative sentiment, speaks a lot about the positive outlook for the stock. However, the current strength could be due to nothing more than an attractive dividend payout of 6.5 sen (entitlement date: July 7).


Chart 2: SCC's weekly chart as at June 12, 2012_4.30pm (Source: Quickcharts)

Conclusion

Based on good financial performance and potentially bullish technical outlook, SCC could be a good stock for long-term investment.


Fajar has a bullish breakout, but...

Fajar broke above its downtrend line at RM1.00 yesterday. Today, it moved higher & broke above its horizontal resistance at RM1.06. The next resistance is the horizontal line at RM1.17.


Chart 1: Fajar's daily chart as at June 12, 2012_4.30pm (Source: Quickcharts)

Fajar-WA also did a bullish breakout yesterday. Strangely, this warrant, which has an exercise price of RM0.50, is now trading at a slight discount. This little give-away is a warning that something is not quite right with this stock. For those who has bought the stock earlier, you may want to take some profit despite the bullish technical outlook.


Chart 2: Fajar-WA's daily chart as at June 12, 2012_4.30pm (Source: Quickcharts)

For QE31/3/2012, Fajar reported a net loss of RM1.1 million on a revenu of RM132 million. For more, go here.

Monday, June 11, 2012

Market Outlook as at June 11, 2012

Our FBMKLCI is again testing its downtrend line at 1578. An upside breakout above that line would mean the market could be sideway or even stage a recovery.


Chart 1: FBMKLCI's daily chart as at June 11, 2012_3.45pm (Source: Stockcharts)

Most of the important equity markets have broken above its medium-term downtrend line, with the exception of DAX. This means that these equity markets have found a temporary bottom, where a base could be formed or a recovery could begin.


Chart 2: STI's daily chart as at June 8, 2012 (Source: Stockcharts)


Chart 3: HSI's daily chart as at June 8, 2012 (Source: Stockcharts)


Chart 4: DJIA's daily chart as at June 8, 2012 (Source: Stockcharts)


Chart 5: CAC's daily chart as at June 8, 2012 (Source: Stockcharts)


Chart 6: FTSE's daily chart as at June 8, 2012 (Source: Stockcharts)


Chart 7: DAX's daily chart as at June 8, 2012 (Source: Stockcharts)

Based on the above, I believe that we can begin to build our buy list of beaten down stocks. Once FBMKLCI had broken above the downtrend line, we can begin to slowly accumulate some of these stocks. To be sure, we should still be cautious in the current market given the uncertainty surrounding the Eurozone debt problem.

GASMSIA- trading at a high PE multiple

 Background

Gas Malaysia Bhd ('GASMSIA') is listed on the exchange today. Its IPO price was at RM2.20 & it traded at a price between RM2.39 & RM2.52 (in the morning session). GASMSIA is one of two gas distributors in Malaysia. It is mainly involved in the distribution of natural gas where pricing is regulated.

I have re-tabulated below the new buying & average selling price for GASMSIA as announced by the Government on May 30, 2011 (see Page 16 of Prospectus). However, the current buying & average selling price is still based on the revised prices implemented on June 1, 2011. Further implementation of the new pricing structure would lead to further compression of GASMSIA's profit margin.



Table 1: GASMSIA's selling & buying price from 2011 to 2015

I have done a projection of the earning for GASMSIA for FYE31/12/2012. For the purpose of projection, I relied on the relevant pricing structure (page 15 of Prospectus) to compute the average selling price & buying price for the relevant financial periods.


Table 2: GASMSIA's selling & buying price from 2009-2012

Projected Earning


Table 3: GASMSIA's Projected Earning for FY2012

Assumptions

1. Average Selling & Buying Prices for FYE31/12/2012 remained unchanged as per prices as at June 2011.
2. Volume is computed backward by dividing Revenue with Average Selling Price. This is quite close to the Volume Usage as per page 64 of Prospectus.
Assuming a volume growth of 10%, we can arrive at the Revenue for FYE31/12/2012.
3. Gross Profit margin is as per Table 2 above.
4. Based on Net Profit for FY2009, FY2010 & FY2011, we can compute Net Profit margin as well as the Other Expenses, Net as a percentage of Revenue.
5. Assuming Other Expenses, Net as a percentage of Revenue remained unchanged at about 7%, we can arrive at the Net Profit margin & Net Profit for FYE31/12/2012.
Hence, we can compute the EPS for FY2012 which is about 10 sen.

Valuation

We can use Petgas's PE multiple to value GASMSIA. Petgas is currently trading at a PE of about 24 times. GASMSIA should not command a PE multiple equivalent to Petgas. If we assume a 10% discount, then the fair value of GASMSIA is about RM2.16 (10 sen x 24 times x 90%). So, GASMSIA which is currently trading at RM2.44, commands a PE of 24 times or equivalent to Petgas's current PE multiple. I do not believe GASMSIA deserves such high PE multiple. Based on the above, I think one should avoid the stock for now.

Thursday, June 07, 2012

Airasia- poised to continue its uptrend

Airasia is breaking to the upside of its intermediate downtrend line (AC) at RM3.70. If it can sustain this breakout, the stock may continue with its prior uptrend. At the time of writing, the stock is trading at RM3.74. Based on this bullish breakout, Airasia could be a trading BUY.


Chart: Airasia's weekly chart as at June 6, 2012 (Source: Tradesignum)

Wednesday, June 06, 2012

MPHB may have a bullish breakout

MPHB is breaking above its horizontal resistance at RM3.26-3.27 (see Chart 1). If it can recruit sufficient buying support & break clear of the strong horizontal resistance at RM3.30-3.40, this stock can then test its next strong horizontal resistance at RM4.00 (see Chart 2).


Chart 1: MPHB's 120-min Chart as at June 6, 2012_11.00pm (Source: Quickcharts)


Chart 2: MPHB's monthly chart as at June 5, 2012 (Source: Tradesignum)

For the aggressive traders, you can also ride this play by buying into its CWs, which I have tabulated below. You must be mindful that CWs are leverage instruments that magnify your result. If the trades work in your favor, your result would be amplified. If not, the loss would similarly be amplified. In this challenging time, you should be careful not to take on too much risk. Having said that, the CWs of MOHB look quite attractive.


Table: MPHB's CWs' main terms & valuation

Sunday, June 03, 2012

A Brief Hiatus

I will be on leave for the next two days. I won't be posting anything during that period.