Friday, January 04, 2013

Semiconductor stocks poised for a minor rally


Two days ago, the Philadelphia Semiconductor Index ('SOX') broke above its intermediate downtrend line at 390. This upside breakout could be the start of a minor rally, similar to what we saw in January-March 2012.


Chart 1: SOX's daily chart as at Jan 3, 2013 (Source: Stockcharts)

In early 2012, Unisem & MPI also had a decent rally, when Unisem rose from RM1.00 to RM1.60 while MPI rose from RM2.70 to RM3.50.


Chart 2: Unisem's daily chart as at Jan 4, 2013_12.00pm (Source: Stockcharts)


Chart 3: MPI's daily chart as at Jan 4, 2013_12.00pm (Source: Stockcharts)

If the breakout for SOX can sustain, then we may see a similar rally in Unisem & MPI. As such, these two stocks could be a good trading BUY.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Unisem & MPI. 

5 comments:

Ethan Lee said...

Hi Alex, thank you for your fundamental briefing about Adventa before.

Can you please comment about TRIPLC? I saw its financial results quite good and share price will be surge if good financial result released.

Thank you very much.

Anonymous said...

Hi Alex

Can you comment on IGB? With krisassest corporate exercise toward the tail end, the largest stake holder should be the biggest beneficial stock. But IGB still much laggard behind and underperformed, when will it due for re-rating ?

Based on IGB Q3 balance sheet, IGB have total cash 2,234m cash and total borrowing is 647m, translate to net cash of 1,587m. With IGB have total number share 1,490, it have net cash of 1.06 per share. IGB also active in share buyback, accumulating 4.9% so far.

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Alex Lu said...

HI hng

IGB's strong support levels are the horizontal line at RM2.20 as well as its long-term uptrend line at RM2.00.

You may have extracted the wrong bank borrowings number. Go to the link below.

http://announcements.bursamalaysia.com/edms/edmswebh.nsf/all/42F8B350B14999D548257AD5005D837D/$File/IGB%203q12%20announcement.pdf

Alex Lu said...

Hi Ethan Lee

I am not familiar with TRIPLC. It apparently secured a contract to construct UiTM campus in Kuala Selangor worth about RM300 million. See link below. Its balance sheet has ballooned up due to Medium Term Note of RM240 million taken to finance the project. This inflated its borrowings to the tune of RM260 million while the cash drawn down is sitting in the bank to the tune of RM232 million.

What I find amazing is the results of its construction operation!! It made a pre-tax profit of RM30 million on revenue of RM77 million for FYE May 2012. For QE August 2013, its pre-tax profit amounted to RM15 million on a revenue of RM43 million. This is likely to come from the UiTM contract, which seems to have a profit margin of 35-40%! Something is not right. I don't think our government is that dumb to give away such a lucrative contract. The 'huge profit' is probably due to incorrect profit recognition. If so, then TRIPLC will 'surprise' us with a write-off a few quarters down the road. Watch out!!!

http://www.theedgemalaysia.com/in-the-financial-daily/165477-nearly-rm900m-contracts-given-out-for-3-uitm-campuses-under-pfi.html