Monday, January 21, 2013

Market Outlook as at January 21, 2013

FBMKLCI dropped 23 points to 1653 as at 10.35am. This sharp drop could be driven by uncertainties surrounding the upcoming General Election, with more damaging revelations before the Royal Commission of Inquiry tasked with investigating the issuance of false ICs to manipulate the election outcome in Sabah in 1990s.

Regardless of the sellers' motivation, it seems that all the indicators have turned negatively for the market. The immediate support is the horizontal line at 1650. If that support is violated, I see the index testing the 1600 psychological mark.

In view of this negative technical outlook, we must exercise careful discretion in the market.

Chart: FBMKLCI's daily chart as at Jan 21, 2013_10.35am (Source: Quickcharts)


Mat Cendana said...

Prices of the index-linked counters had gone up too much too far over the previous week or so and a correction is in line. But the severity and breadth are a relative surprise. The much talked about "GE Factor" has probably kicked in.

Prices are looking really attractive and there's a seeming mild rebound as of this moment. Despite the worry that "cheap might become cheaper", it's difficult to resist some of the quality counters. Some cautious buying while keeping most of the capital at the sidelines, might be a prudent strategy.

Anonymous said...

Hi Alex

Can you comment on CYpark? Its has transform to mini IPP for green energy, namely solar, biogas and biomass

CYpark is awaiting 20MW Biomass in its landfill at ladang Tanah Merah to be official sign under BOT for 25year concession.

CYpark currently already operate in Tanah Merah landfill site to treat and dispose municipal solid waste. As the landfill is capable to generate biomass up to 20MW, CYPark is secure concession and sign feed in traffic concession with TNB, it will enable CYpark not only derive eanring from tipping charge on solid waste but also earning from generating power from biomass.

Currently, CYpark already derive Renewal energy from its 8MW solar and 2MW biogas in Pajang (NS) integrated renewal energy park. So far, it have newly install another 5MW solar, making total RE 15MW (8+5 MW solar+ 2 MW biogass)

CYpark also replicate these integrate renewal energy park in other 3 other landfill, namely Bukit Palang (NS), Rimba Terjun (Johor), Kuala Perlis (Perlis), totaling another 20MW solar + 5 MW biogas.

All in all, CYPark RE division will increase multifold these year onward from 8MW solar to total 33MW solar and 7MW biogas. If CYpark can secure tanah Merah Biomass RE, it will add another 20MW biomass in its RE portfolio

ryan said...

Hi Alex,

If I take cimb-aviva deal as an example:

and assume Takaful Ikhlas sold at price-to-book (PB) multiple of 2.4 times based on its latest financial result:

2,467,269,000(total asset) - 1,873,902,000 (total liabilities) = 593,467,000

593,467,000 (book value) x 2.4 = 1,424,320,800

1,424,320,800 / 213,069,500 (MNRB shares issued) = 6.684

It will return RM6.684 to its holding company MNRB.I would like to know if my calculation working correctly?


Alex Lu said...

Hi Mat Cendana,

I agree. The drop was very sharp and some stocks look very attractive. With global economy looking brighter, this presents a good buying opportunity.

Alex Lu said...

Hi Hng,

Thank you for the information on Cypark. I have seen a few reports on the stock, with fair value pegged at RM2.30-2.50. So, it could be a good buy at current price.

Alex Lu said...

Hi Ryan,

That is a bit simplistic. Takaful Iklas's net profit is only RM1.96 million for 6-month ended 30/9/2012. I doubt it could command a P/book of 2.4 times.

Assuming it can command that PB multiple, the Shareholders' fund is RM300 million as at 30/9/2012. The price tag would be RM720 million.

Since Takaful Iklas's share capital is RM295 million, this means that MNRB has invested that much into TAkaful Iklas. The gain from any sale would be RM425 million. But I doubt it.