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Thursday, February 27, 2014

KSL- a plunge in top-line & bottom-line

Result Update

For QE31/12/2013, KSL's PBT plummeted by 95% q-o-q or 91% y-o-y to RM4.5 million while revenue dropped by 44% q-o-q or 3% y-o-y to RM122 million. KSL incurred a net loss of RM10.5 million as compared to a net profit of RM68 million in QE30/9/2013 or RM35 million previous year.


The company attributed the drop in its PBT for the current quarter to the following:
1. The loss arising from fair value adjustment of RM9.4 million on investment properties; and
2. Provision of deferred taxation for RPGT of approximately RM13 million.

That just doesn't adequately explain the severity of the drop in the bottom-line of the group. The questions that would beg for some answers are:

  • Why the sharp drop in revenue? Is it due to slow start for newly projects? Is it due to poor sales?
  • What are the other negative items that caused the drop in PBT by RM43.2 million y-o-y or RM87.5 million? The 2 items listed above amounted to only RM22.4 million.

Table: KSL's last 8 quarterly results


Chart 1: KSL's last 37 quarterly results

Valuation

KSL (opened at RM2.18 today) is now trading at a PE of 4.8 times (based on last 4 quarters' EPS of 45 sen). We cannot be sure what will be KSL's EPS for the next financial year. I am sure it will be negative as the last quarter. Would KSL rebound back to chalk up an EPS of 45 sen like the last 4 quarters or would it be like the preceding 4 quarters' EPS of 33 sen?

Technical Outlook

KSLis in an uptrend. Its horizontal support levels are RM2.20 & RM2.00.


Chart 2: KSL's weekly chart as at Feb 26, 2014 (Source: Tradesignum)

Conclusion

Based on poor financial performance, KSL is now downgraded to a HOLD.

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, KSL.

Wednesday, February 26, 2014

LTKM- an attractive poutry stock

Results update

For QE31/12/2013, LTKM's net profit rose 11% q-o-q or 188% y-o-y to RM5.7 million on the back of higher revenue (which rose 11% q-o-q or 16% y-o-y to RM47 million). The increase in net profit was in tandem with the higher revenue resulting from higher sales and improved selling prices.


Table 1: LTKM's 8 quarterly result

LTKM's top-line has been on an uptrend for more than 5 years. Its PBT looks set to touch the RM10 million a quarter. The improvement on bottom-line in the past 2 years is attributable to higher revenue & improvement in profit margin. One reason for the improved margin is lower price of raw material, such as corn (see Chart 2 below). I believe LTKM will soon increase its dividend payout in line with higher profit.


Chart 1: LTKM's 28 quarterly results
 

Chart 2: Corn's monthly chart as at Jan 31, 2014 (Source: futures.tradingcharts.com)


Valuation

LTKM (closed at RM2.88 yesterday) is now trading at a PE of 5.5 times (based on last 4 quarters' EPS of 52 sen). At this multiple, LTKM is deemed attractive.

Technical Outlook

LTKM broke above its descending triangle in mid-2013 and rallied all the way to RM3.00. After this strong rally, the stock is likely to consolidate its gain before another big move.


Chart 3: LTKM's weekly chart as at Feb 25, 2014 (Source: Tradesignum)

Conclusion


Based on attractive valuation & goof financial performance, LTKM could be a good stock for long-term investment.

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, LTKM.

Tienwah- bottom-line plummeted

Result Update

For QE31/12/2013, net profit dropped 78% q-o-q or 74% y-o-y to RM1.5 million on the back of lower revenue of RM89 million  (down 7% q-o-q or 5% y-o-y). The company attributed the drop in revenue due to lower demand. Profit before tax was at RM3.0 million as compared to RM12.3 million for the preceding quarter, a decreased of RM9.3 million or 76%, impacted by lower revenue and provision of redundancy expenses of RM2.8 million for staff in a subsidiary.


Table: Tienwah's last 8 quarterly results


Chart 1: Tienwah's last 28 quarterly results

Valuation

Tienwah (closed at RM2.58 yesterday) is trading at a PE of 10.2 times (based on last 4 quarters' EPS of 25.4 sen). At this PE, Tienwah is deemed fairly valued.

Technical Outlook

Tienwah's gradual uptrend, SS picked up in 2011. The 'accelerated' uptrend line, S1-S1 should provide support to the stock at RM2.40. Its immediate resistance is at RM2.60.


 Chart 2: Tienwah's weekly chart as at Feb 25, 2014 (Source: Tradesignum)

Conclusion

Despite the poor financial performance, Tienwah is still a good stock for long-term investment based on reasonable valuation & positive technical outlook.

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, Tienwah.


Friday, February 21, 2014

MNRB- has a bullish breakout

Technical Outlook

MNRB broke above its horizontal resistance at RM3.85 yesterday. Today, it pulled away and broke above the psychological level of RM4.00. With these double breakout, MNRB is poised to march to the 2007 high of RM5.70.


Chart 1: MNRB's weekly chart as at Feb 21, 2014_12.30pm (Source: Interachart.com)

Recent Results

I will comment more on the financial performance once the results for QE31/12/2013 is out in the next few days. Meanwhile, you can take a look at its past financial results below.


Table: MNRB's last 10 quarterly results


Chart 2: MNRB's last 27 quarterly results

Conclusion

Based on technical breakout, MNRB may be a 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, MNRB.

Thursday, February 20, 2014

JCY- brighter prospect ahead


Recent Financial Result

IN QE31/12/2013, JCY reported net profit of RM30 million vs. a net loss of RM2.3million in QE30/9/2013 or RM25.7 million last year. Revenue rose by 15% q-o-q or 27% y-o-y to RM477 million. The company attributed the q-o-q increase in revenue to the higher quantities shipped and better ASP. JCY returned to profitability due to continuing efforts on improving its operational efficiency and the better revenue.

JCY expects demand for HDDs to remain stable, as the increased demand for cloud infrastructure, game consoles and other enterprise applications compensates for the decline in PC shipments. The consolidation of the HDD industry could lead to more favourable margins for HDD manufacturers. The combination of these and other factors will likely reduce downward pressures on ASP for mechanical HDD components.


Table 1: JCY's last 8 quarterly results

From Chart 1 below, we can see that top-line, bottom-line & profit margin are all rising. More importantly, the 4-Q PBT & NP margins are both positive. All these positives were present in 2011 when JCY had a sharp rally from RM0.40 to RM1.60. The same may happen today.

Chart 2: JCY's last 21 quarterly results 

Technical Outlook

JCY is poised to enter into its next upleg. The share price has just breached the line connecting the reaction highs (B-B1) at RM0.72-0.73. Its immediate resistance will be the horizontal line at RM0.90 and beyond that, we have resistance at RM1.00 (psychological level), RM1.05 & RM1.40.



Chart 1: JCY's weekly chart as at Feb 19, 2014 (Source: Tradesignum) 

Valuation

JCY (closed at RM0.755 yesterday) is now trading at a PE of 13 times (if we assumed that JCY can repeat its last quarter performance, with annualized EPS of 5.8 sen). At that PE, JCY is deemed fairly valued.
 
Conclusion

Based on improved financial performance, improving industrial outlook & mildly bullish technical outlook, JCY could be a good stock for a 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, JCY.


Wednesday, February 19, 2014

MPHBCap- the uptrend continues!

MPHBCap has finally broken above the horizontal line at RM1.77-1.78 as well as the RM1.80 psychological level. With this double breakout, the stock could zoom up to RM2.00.

Based on techncial breakout, MPHBCap is now a good trading BUY.


Chart: MPHBCap's daily chart as at Feb 18, 2014 (Source: Tradesignum)

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, MPHBCap.

Tuesday, February 18, 2014

Takaful- still going strong


Results Update

For QE31/12/2013, Takaful's net profit rose 31% q-o-q & 28% y-o-y to RM41.5 million while revenue was unchanged when compared to immediate preceding quarter (QE30/9/2013) but rose sharply by 20% y-o-y to RM378.5 million. Revenue increased due to higher sales generated by both Family and General Takaful business. Gross earned contribution from Family Takaful increased from RM198.3 million to RM246.1 million while for General Takaful business, it dropped from RM125.1 million to RM101.9 million. The surplus transfer in the quarter under review from Family Takaful was RM29.7 million as compared to RM28.3 million in the same period last year. General Takaful was RM17.0 million as compared to RM15.9 million previously. The higher surplus transfer from Family and General Takaful is mainly due to better underwriting and investment results.


Table: Takaful's last 8 quarters' results


Chart 1: Takaful's last 31 quarters' results

Valuation

Takaful (closed at RM10.68 at end of morning session) is now trading at a PE of 12.5 times (based on the last 4 quarters' EPS of 85.37 sen). At this PE multiple, Takaful is deemed very attractive, given its high CAGR of more than 30%.

Technical Outlook

The stock has been in an uptrend since its breakout at RM1.70 in 2011 (here).


Chart 2: Takaful's weekly chart as at Feb 17, 2014 (Source: Tradesignum)

Conclusion

Based on the good financial performance, strong growth and attractive valuation, Takaful could be a stock for long-term investment.
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, Takaful.

GBH- time to get out of the gutter!

Background

Gooh Ban Huat Bhd (GBH) is involved in the manufacture and sales of ceramic wares, ceramic formers, and pipes. A check on the company's website reveals that it has 4 divisions: tableware by Crown Lynn, GBH Clay Pipe Division, GBH Ceramic & GBH Bathroom. However, investors who look at this stock is only interested in one thing: When is GBH going to develop its 5.92ha of prime land in Segambut?

Historical Financial Performance

A look at GBH's 16-years financial performance reveals more missed opportunities & successes. One wonders how Signature group which is involved in the production of kitchen cabinet & wardrobe can ride the property boom so well while GBH cannot. Anyway, that's about to change under the management of Robert Tan who took over the company in 2009 (here). Robert Tan bought into GBH at the price of RM1.50 per share.


Chart 1: GBH's last 16 years results

Financial Position

GBH is a financially healthy company with current ratio stood at 10x as at 30/9/2013. Instead of bank borrowings, it has cash in hand of RM44 million or 24 sen p.s.

Technical Outlook

GBH broke above its strong horizontal resistance of RM1.30. If the stock can stay above the RM1.30 level, it may launch into an uptrend.


Chart 2: GBH's weekly chart as at Feb 17, 2014 (Source: Tradesignum)

Conclusion

Based on positive technical outlook, promising prospect of re-rating (on news of redevelopment of the Segambut land) and healthy financial position (albeit unimpressive financial performance), GBH could be a good stock for a 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, GBH.

Scomies or Scomi- which one is a better bet?


Over the weekend, we read that Quek Leng Chan has acquired a stake in Scomi Energy Services Bhd ('Scomies'). His stake is about 3.4% while a friendly party, Paul Poh also acquired a 4.6%-stake in Scomies. What is Quek's intention in regards to his investment in Scomies? Is it a speculative investment or is it a strategic investment?

We can see from Chart 1 below that Scomies has been trending higher quite nicely over the past 2 years after it broke above the 'horizontal line' at RM0.35 in the middle of 2012. With the recent breakout of the psychological level of RM1.00, Scomies may continue its uptrend. It could potentially hit the RM2.00 mark.



Chart 1: Scomies's weekly chart as at Feb 18, 2014 (Source: Tradesignum)

Meanwhile, Scomi group Bhd ('Scomi'), which owns 65%-stake in Scomies, also rallied yesterday and today. From Chart 2 below, we can see that Scomi has strong resistance at the horizontal line at RM0.44-0.45. this morning it broke above the strong resistance. At the time of writing, scomi is pressing against the next resistance is at RM0.50. Can it charge through that resistance?


Chart 2: Scomi's weekly chart as at Feb 18, 2014 (Source: Tradesignum)

Based on newsflow and positive technical outlook, both Scomi & Scomies could be good trading BUY, especially if they pullback a bit towards the breakout level (of RM0.44-0.45 for Scomi & RM1.00 for Scomies).

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, Scomies & Scomi.

Friday, February 14, 2014

MISC- bottom-line soared after booking in a one-off gain


Result Update

In QE31/12/2013, MISC's PBT rose 50.1% to RM1.08billion from RM721.11million a year ago, boosted by bigger share of profit from joint ventures (from RM64 million to RM891 million), especially the one-off gain from the disposal of the Gumusut-Kakap Semi-Floating Production System through a finance lease.

For FYE31/12/2013, MISC's net profit jumped 170.7% to RM2.08billion from RM770.24million, boosted by bigger share of profit from joint ventures (from RM274 million to RM1.17 billion).



Table: MISC's last 8 quarterly results


Chart 2: MISC's last 31 quarterly results 

Valuation

MISC (closed at RM6.50 yesterday) is now trading at a PE of 13.8x its FY2013 EPS of 47 sen. If exceptional gain (such as the one-off gain from the disposal of the Gumusut-Kakap Semi-Floating Production System of unknown quantum), the PE would be higher. Would that be compensated by better tanker shipping rates? We will wait & see.

Technical Outlook

Last week, MISC broke above its strong horizontal resistance at RM5.80. Its immediate resistance could come from the line connecting the highs for the past two years (AB) at RM6.45-6.50. Beyond that, the resistance would at the horizontal line at RM6.90-7.00. Thus, its short-term upside is limited.


Chart 1: MISC's weekly chart as at Feb 13, 2014 (Source: Tradesignum)

Conclusion

Based on improved financial performance, better outlook for tanker shipping rates & positive technical outlook (albeit short-term road blocks ahead), MISC remains a good stock for a recovery play.

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, MISC.

Friday, February 07, 2014

Herbalife- an epic battle

There is an epic battle being waged in Wall Street between those who have shorted Herbalife and those who are longed on that stock. In one corner, we have Bill Ackman of Pershing Square Capital Management LP, who claims that Herbalife Ltd. is operating an illegal pyramid scheme and his firm has a large short position on Herbalife stock. 

In the other corner, you have the well-known Carl Icahn & Dan Loeb of Third Point Capital who take the opposite position. Todate, Bill Ackman's firm is carrying paper loss of USD500 million as the share price of Herbalife rallied. However, the tide may be turning in Bill Ackman's favor. In January, Herbalife dropped back sharply from USD80 to USD60. Despite a sharp rebound over the past few days, the stock is still trading below its uptrend line. 


Chart: HLF's weekly chart as at Feb 6, 2014 (Source: Stockcharts)

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, Herbalife ('HLF').

MISC- propelled higher by Tanker Rates!


Technical Outlook

Last week, MISC broke above its strong horizontal resistance at RM5.80. What prompted this breakout?


Chart 1: MISC's weekly chart as at Feb 5, 2014 (Source: Tradesignum)

Recent Financial Results

The latest quarterly results is QE30/9/2013. Then, MISC reported higher net profit of RM401 million (+33% q-o-q; 189% y-o-y) while revenue was flattish (-5% q-o-q; + 0.5% y-o-y). Profit increased q-o-q due to reversal of over-provisions from completed projects in the  Heavy Engineering segment; lower op. cost in the Petroleum segment (due to smaller fleet size) and higher share of profit from lease commencement of Gumusut-Kakap FPS in June 2013.

Past financial performance could couldn't explain the rally in share price.


Table: MISC's last 8 quarterly results


Chart 2: MISC's last 30 quarterly results

Industry Outlook

The price chart for Baltic Dirty Tanker Index rallied substantially from November last year to January this year. The reason as given by the Marketrealist.com was as follows:

Towards the end of November, though, the index broke out of its long-term downward trend line—something was different. By the end of December, the Index almost hit 1,000. During the first two weeks of January, it continued to soar higher, reaching 1,222 by January 16, 2014. Year-over-year growth also shot up, and it was last seen at ~93.3% on January 16, 2014—its highest growth in years. What has been driving this rise?


Chart 3: Baltic Dirty Tanker Rate as at Jan 22, 2014  (Source: Frontline, Fearnleys via Marketrealist.com)

The reason for the rally: A drop in the supply of tankers! Again, Marketrealist.com has this to say:

Since mid-2013, tanker industry’s supply had grown at close to zero percent. As depressed levels of shipping rates persisted, companies continued to scrap in order to raise cash to pay interest and debt, or to remove vessels as part of cost cutting efforts. If a vessel were expected to incur significant survey or maintenance costs in 2014, it gave managers one more reason to scrap.

Plus, fewer newbuild deliveries perhaps contributed more to zero supply growth in late 2013. While scrapping activity remained high, it wasn’t as high as the late months of summer 2013, based on IHS Global Limited’s data. Since week-to-week supply growth held up near zero, and sometimes even went negative, we may infer that new supply deliveries were very limited.

There you have it: The reason for the rally in MISC. If high tanker rates can persist, we can expect better result for MISC and the improved performance would underpin the rally in the share price.


Table 2: Current Tanker Fleet & Orderbook (Source: Frontline, Fearnleys via Marketrealist.com)

Conclusion

Based on bullish technical outlook, MISC could be a 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, MISC.

Petdag- bottom-line dragged down by higher operating expenses

Result Update

For QE31/12/2013, Petdag's net profit dropped by 33% q-o-q & 14% y-o-y to RM151 million while revenue was mixed; unchanged q-o-q but rose 9% y-o-y to RM8.385 billion. Revenue decreased by RM26.0 million compared to the preceding quarter as a result of decrease in sales volume by 4.0% despite higher average selling price by 3.9%. Group Profit Before Taxation was RM193.8 million, a decrease of RM121.9 million compared to the preceding quarter mainly due to higher operating expenditure by RM71.9 million and lower gross profit by RM54.5 million.


Table: Petdag's last 8 quarterly results

The chart below shows that Airport's top-line has been rising steadily since FY2009 while the bottom-line has been flattish. This is due to the decline in its profit margin.


Chart 1: Petdag's last 23 quarterly results

Valuation

Petdag (closed at RM31.00 yesterday) is now trading at a trailing PE of 38 times (based on last 4 quarters' EPS of 81.7 sen). Based on PE multiple, Petdag is very expensive.

Technical Outlook

Petdag has been in a steady uptrend for the past 5 years. For the past 3 months, it has been range-bound between RM30 & RM31. With the 3 indicators (MACD, RSI & ADX) hooked down, the stock looks set for a pullback to its 40-week EMA line. This had happened before in late 2010, late 2011 & early 2013. The gravity-defying rise in this stock is nothing short of breath-taking!


Chart 2: Petdag's weekly chart as at Feb 6, 2014 (Source: Tradesignum)

Conclusion

Based on high valuation, poorer financial performance & some bearish technical signs, Petdag is rated SELL INTO STRENGTH.

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, Petdag.

Digi- Bottom-line set to rise

Result Update

For QE31/12/2013, Digi's net profit jumped higher by 22% q-o-q & 123% y-o-y to RM549 million while revenue inched up by 2% q-o-q & 6% y-o-y to RM1.733 billion. The surge in bottom-line was "mainly aided by higher service revenues from an increased subscribers’ base, coupled with reduced depreciation in tandem with the end of the network modernisation exercise, as well as lower operating costs incurred from the Group’s continued cost optimisation focus".


Table: Digi's last 8 quarterly results

It is indeed heartening to see the PBT margin hit the 32% mark in QE30/9/2013. That means the margin broke above its "downtrend line" at 30% in that quarter. If you think that was a fluke, the PBT margin came in at 39% n the latest quarter, QE31/12/2013. (See earlier post on this point.)


Chart 1: Digi's last 25 quarterly results

Valuation

Digi (closed at RM4.68 yesterday) is now trading at a trailing PE of 21 times (based on last 4 quarters' EPS of 21.9 sen). With earning growth of 41% for the last 4 quarters, the PEG ratio is about 0.5 time. Based on the low PEG ratio, Digi's valuation is deemed attractive.

Technical Outlook

From Chart 2, we can see that Digi's uptrend stalled in early 2013 (probably due to the high valuation & flattish bottom-line). For much of 2013, Digi was in a gradual upward channel. In the past 3 weeks, Digi broke below the channel due to indiscriminate selldown. Can the stock climb back into the channel? It needs to break above the RM4.70 mark which was the lower boundary of the violated channel.


Chart 2: Digi's weekly chart as at Feb 6, 2014 (Source: Tradesignum)


Chart 3: Digi's daily chart as at Feb 6, 2014 (Source: Tradesignum) 

Conclusion

Based on good financial performance & attractive valuation, Digi is a good stock for long-term investment. Its mildly bearish technical outlook may deter some but you may want to gain a small position while awaiting a change in the technical outlook (in view of the positive results & good valuation).

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, Digi.

Thursday, February 06, 2014

Airport- a selldown and a buying opportunity?

Result Update

For QE31/12/2013, Airport's net profit dropped 57% q-o-q & 39% y-o-y to RM48.5 million while revenue was mixed; down 16% y-o-y but rose 15% q-o-q to RM1.12 billion. Core revenue (excluding construction revenue) actually rose 16% y-o-y & 11% q-o-q to RM684 million. Core net profit (stripped off construction profit & impairment losses) dropped 72% y-o-y & 69% q-o-q to RM32.2 million due to larger than expected share of associate loses of RM48.8 million (from Istanbul Sabiha Gokcen [ISG]) and other one-off hike in operating costs (from the proposed acquisition of ISG & larger bonus payment & staff adjustment).

As per a  report from Alliance Research, Airport's core revenue increased by 14% from RM2.163 billion to RM2.463 billion. The increase in core revenue was due to 9% hike in landing & parking charges, strong passenger growth of 18.4% y-o-y, and higher retail and rental revenue. Despite the increase in core revenue, core net profit dropped 19.6% from RM400 million to RM322 million due to user fee (+137.3% y-o-y), staff costs (+20.9% y-o-y), depreciation and amortization costs (+25.6% y-o-y) and administration expenses (+15.8%) related to the acquisition of ISG


Table: Airport's last 8 quarterly results

The chart below shows that Airport's top-line has been rising steadily since FY2010 while the bottom-line has been slipping. This is due to the decline in its profit margin. Is this the result of handling more passengers who flew on discount carriers'?


Chart 1: Airport's last 31 quarterly results

Valuation

Airport (closed at RM7.94 today) is now trading at a trailing PE of 25 times (based on last 4 quarters' EPS of 31.86 sen). Based on PE multiple, Airport looks expensive. However, Alliance Research valued the stock at RM10.46 using DCF method of valuation.

Technical Outlook

Airport has entered a short-term downtrend (with lower 'low' and lower 'high' formed). It broke the psychological RM8.00 mark today. Unless it recovers back above the RM8.00 soon, the stock is likely to test its intermediate uptrend line support at RM7.20 and below that, the horizontal line at RM7.00. (Note: The selldown in Airport may be driven by news of the contractor for klia2 failing to obtain the Certificate of Completion and Compliance. It was reported that Indah Water Konsortium Sdn Bhd, the Sepang Municipal Council and the Fire and Rescue Department inspected the building for klia2 in the last week of January and found that 65% of the main terminal did not comply with fire and safety standards (here). This may delay the opening of klia2 in May this year.)


Chart 2: Airport's daily chart as at Feb 5, 2014 (Source: Tradesignum)


Chart 3: Airport's weekly chart as at Feb 5, 2014 (Source: Tradesignum)

Conclusion

While Airport is a good proxy for the play on the strong demand for air travel (driven by growth in discount carriers, such as Airasia), the technical breakdown could lead to further selldown. This selldown could be a buying opportunity. You can aim to buy at the RM7.00 level on the assumption that the stock will rebound back from the intermediate uptrend line. From here to the Alliance Research's target price of RM10.46, the upside is a whopping 49%!

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, Airport.

Tuesday, February 04, 2014

US Market Outlook as at February 4, 2014

The US stock markets dropped sharply again yesterday. All three major market barometers, DJIA, S&P500 & Nasdaq are likely to test their respective intermediate uptrend line soon. These uptrend lines lie about 3-6% below the current index level. For example, DJIA's strong support is at 14900 (about 3%below the present level of 15373), S&P500's strong support is at 1670 (about 4% below the present mark at 1742) and Nasdaq's potential uptrend line support is at 3750 (about 6% below the present mark at 3997).

Based on the above, I believe that US stock markets are likely to drop further over the next few days. That would compound the selling in many emerging markets which are driven by fear of economic turmoil caused by Fed tapering of its QE.


Chart 1: DJIA's daily chart as at Feb 3, 2014 (Source: Stockcharts)


Chart 2: S&P500's daily chart as at Feb 3, 2014 (Source: Stockcharts)


Chart 3: Nasdaq's daily chart as at Feb 3, 2014 (Source: Stockcharts)