Monday, August 12, 2013

Supermx- may have a bullish breakout

Technical Breakout

Supermx broke above its strong horizontal resistance at RM2.28 as well as the psychological resistance at RM2.30. With this breakout, Supermx may go higher & possibly test its nest resistance at RM2.78-2.80.


Chart 1: Supermx's daily chart as at Aug 12, 2013_10.30am (Source: Quickcharts)

Recent Financial Result

The latest quarterly result for Supermx is for QE31/3/2013. Its net profit was marginally lower q-o-q by 1% but rose 14% y-o-y to RM32 million while revenue was similarly down marginally q-o-q by 1% but up 29% y-o-y to RM321 million. The bottom-line was given a boost by reinvestment allowance claimed in that quarter which lowered its effective tax rate to 13% from 25% in QE31/12/2012. From Chart 2 below, we can see that Supermx's profit margin has been sliding for the 3 quarters.


Table: Supermx's last 8 quarterly results


Chart 2; Supermx's last 26 quarterly results

Valuation

Supermx (at RM2.33 as at 11:00am) is now trading at a PE of 13 times (based on last 4 quarters' EPS of 18.46 sen). At this PE, Supermx is deemed relatively cheaper than Harta, Topglov and Kossan.

Conclusion

Based on cheaper valuation & technical breakout, Supermx could be a good stock for a trading BUY. Like Topglov, Supermx needs to tackle the problem of its deteriorating profit margin in order to get investors to jump into this stock.

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, Supermx.

13 comments:

wei chong said...

Ringgit depreciate against US dollar, rubber price decrease and mers and h7n9 will benefit this counter.

lima said...

Hi Alex,

What is your outlook on Iris - technical chart

Anonymous said...

Hi alex- couple of weeks ago i requested you views on supermax then at 197 as i was worried about stanley thai political leaning.I pased and now at 2.30 plus should i follow my instinct to jump in ?

SwingTrader188 said...

You put too many technical indicators on your chart. Do they help?

lima said...

Hi Alex,

For Spritzer and NTPM, can we classify them as consumer stock, as such, is it possible that their value could trade at PE of 15 to 20 times like PWROOT etc...?

Sim said...

Hi Alex, Did you do any research about ENGTEX?

Dom said...

Hi Alex

Will the recovery of technology related industries in the USA have any impact on JCY?

Alex Lu said...

Hi Wei Chong,

Yup. Those are some positive factors driving the share price higher.

Alex Lu said...

Hi lima,

Iris's resistance is around the present price of 25 sen. If it can surpass this level, its next resistance is at the psychological 30 sen mark & then at the strong resistance at 40 sen.

Alex Lu said...

Hi charles leong

Hmm... Sometimes we saw a breakout and we wonder: Is this for real or is it a bull-trap?

If the resistance is very strong (like RM2.30 is to Supermx), then you should try to take a small position. If it was a wrong call, we can cut loss. When you are not sure why a stock rallied (like this case), it is strictly speculation. There is nothing wrong with that, as long as you have your stop-loss protection in place.

Alex Lu said...

Hi lima

Spritzer and NTPM are consumer stocks. I think Spritzer can trade at the same multiple as Power Root. NTPM may not.

Alex Lu said...

Hi Sim

I posted on ENGTEX. See link below.

This stock is trading at low PE multiple. Its recent rally was very sharp and I expect it to consolidate at RM1.15-1.20 for a while. Its immediate resistance is at RM1.30 and then RM1.45.

http://nexttrade.blogspot.com/2013/07/engtex-stock-to-watch.html

Alex Lu said...

Hi Dom

The Edge had a good piece on the prospects of HDD sector last week. It seems that the near term outlook is not exciting. The growth in this sector will be driven by the growth of cloud computing instead of from sale of pcs. JCY may not be well-positioned to take advantage of this shift in the market.