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Wednesday, October 18, 2017

Market Outlook as at October 17, 2017

Investopedia considers a formal downtrend occuring when each successive peak and trough is lower than the ones found earlier in the trend. Looking at Chart 1 below, the downtrend has just occurred. Unless we see a quick rebound in the next 1-2 days, our market is likely to go South.


Chart 1: FBMKLCI's daily chart as at Oct 17, 2017 (Source: Shareinvestor.com)

People will inevitably ask, "Where is the next support?" The answer is 1730. And, below that the next support is at 1700.


Chart 2: FBMKLCI's weekly chart as at Oct 17, 2017 (Source: Shareinvestor.com)

The next 1-2 days will be very critical for our market. This is not what I have expected in the light of US markets going into new high as well as regional markets making new highs. Let's hope the market will prove me correct in my earlier bullish forecast and stay the course for a new high in 2018. Until the quick rebound happens, be careful out there.

Tuesday, October 17, 2017

Happy Deepavali


I like to wish all my readers of the Hindu faith a HAPPY DEEPAVALI.

Asiafle: A Good Stock For Long-term Investment (UPDATED)

Results Update

For QE30/6/2017, Asiafle's net profit dropped by 12% q-o-q to RM14.2 million on the back of an unchanged revenue of RM91 million. Compared to the same quarter last year, net profit rose marginally by 1% while revenue was also unchanged.

Profit before tax dropped 9.4% q-o-q mainly due to a much lower share of profit of associate (June 2017: RM0.94 million cf. Mar 2017: RM 3.64 million) which was partially offset by improvement in investing results (June 2017: RM 2.0 million cf. Mar 2017: RM 1.4 million) and higher foreign exchange gain (June 2017: RM 1.4 million cf. Mar 2017: RM 368,000). (Note: Asiafle's QE30/6/2017 was announced on 29 August.)


Table: Asiafle's last 8 quarterly results


Graph: Asiafle's past 48 quarterly results
 
Financial Position

Asiafle's financial position is deemed satisfactory as at 30/6/2017, with current ratio at 5.0x and gearing ratio at 0.15x. It was sitting on a net cash balance of RM43 million.

New Business Venture

Asiafle’s existing core business is filing and stationery business. Asiafle is poised to add a second core business when its new venture into paper & plastic disposable food ware takes off in end 2017. Its new business will be based in a 3,200 sq m facility located in Simpang Ampat. For more on this new business, go here.

Valuation

Asiafle (closed at RM3.05 yesterday) is now trading at an attractive PER of 10.5 times (based on last 4 quarters' EPS of 29.08 sen). The stock pays a decent dividend yield of 5.2%. Based on attractive DY and fair PER, Asiafle is deemed to be an attractively priced.

Technical Outlook

From the monthly chart below, we can see that Asiafle is now testing its long-term uptrend line at RM3.00.


Chart 1: Asiafle's monthly chart as at Oct 16, 2017 (Source: Malaysiastock. biz)


Chart 2: Asiafle's weekly chart as at Oct 16, 2017 (Source: Malaysiastock. biz)

Conclusion

Based on satisfactory financial performance & position, fairly attractive valuation & positive long-term technical outlook, Asiafle could be a good stock for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Sunday, October 15, 2017

Topglov: Gangbuster Quarter!

Results Update

For QE31/8/2017, Topglov's net profit rose 27% q-o-q or 51% y-o-y to RM99 million while revenue rose 4% q-o-q or 25% y-o-y to RM902 million. Sales Volume (quantity sold) was exceptionally high with double-digit growth of 14.0% as compared to QE31/5/2017. This led to an all-round improvement on its profits. The improved performance was attributed to improvements in product quality and manufacturing efficiency, coupled with new capacity coming on-stream and strong demand growth.

 
Table: Topglov's last 8 quarterly results


Graph: Topglov's last 45 quarterly results

Valuation

Topglov (closed at RM6.01 last Friday) is now trading at a trailing PE of 22.6X (based on last 4 quarters' EPS of 26.55 sen). At this PER, Topglov is deemed fully valued.

Technical Outlook

Since it made a high of RM7.00 in December 2015, Topglov has not traded above the RM6.00. Last Thursday & Friday, it did just that. This may signal a re-test of the all-time high of RM7.00 in the next few months. 


Chart 1: Topglov's monthly chart as at Oct 13, 2017 (Source: Malaysiastock.biz)


Chart 2: Topglov's monthly chart as at Oct 13, 2017 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance and positive technical outlook, I think Topglov is poised to go higher. I hereby revise my rating from REDUCE to HOLD.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Friday, October 13, 2017

HoHup: An Easy Rally!


A few weeks back, I discussed with a client about the successful launch of Malton's The Park 2 Pavilion in Bukit Jalil. This is the project which Hohup is entitled to a 18% share of the gross development value. In addition, Hohup has an adjoining piece of land measuring 10 acres. Thus I rated Hohup as a cheap proxy to ride on growing demand for Bukit Jalil area. Unlike Malton which rose from RM0.90 to RM1.10, Hohup declined from RM0.80 to below RM0.70. Today Hohup announced that it will not go ahead with its Rights Issue to raise fund for its construction & property development business. Under normal circumstances, that would be a bad news. In the present market, it is not. Hohup rose from RM0.67 to RM0.71 as at 4.10pm.

Looking at  the charts below, Hohup can be a good stock to consider for a recovery play. It is trading at the long-term uptrend line, with support just below RM0.70 (see Chart 2). If it can recruit enough buying support, it may even put in a short rally to test the upper line of the downward channel at RM0.85 (see Chart 1).


Chart 1: Hohup's daily chart as at Oct 13, 2017_4.00pm (Source: Malaysiastock.biz)


Chart 2: Hohup's weekly chart as at Oct 13, 2017_4.00pm (Source: Malaysiastock.biz)

Thursday, October 12, 2017

Topglov & Harta: Upside Breakout

Topglov and Harta have both broken above their downtrend line. In both cases, the upside breakout was followed by strong rally on substantial volume. For Topglov, the breakout level was at RM5.70 and, for Harta, it was at RM7.00. Since Kossan and Supermx have not witnessed similar upside move, I suspect there is a joint development involving Topglov and Harta. Could it be a merger of these companies? Only time will tell...


Chart 1: Harta's daily chart as at Oct 12, 2017_4.00 (Source: Malaysaistock.biz)


Chart 1: Topglov's daily chart as at Oct 12, 2017_4.00 (Source: Malaysaistock.biz)

Based on the bullish breakout, Topglov and Harta are possible trading BUY. Good luck.

Market Outlook as at October 12, 2017


Our market is at a critical juncture. If it breaks below 1750, it could well be the end of the rally that began in January this year. Lower support levels at 1725 & 1700 are mere stops for a market in search of a bottom. What could possibly cause the rally in our market to end? Politics!


Chart 1: FBMKLCI's daily chart as at Oct 12, 2017_12.30 (Source: malaysiastock.biz)


Chart 2: FBMKLCI's weekly chart as at Oct 12, 2017_12.30 (Source: malaysiastock.biz)

Our rally has always been billed as an election rally. While the election has yet to be called, the ugliness of our politics has shaken the confidence of investors. In the past few days we saw incredulous reports of a huge corruption case in Sabah involving an opponent of the ruling party. How could RM1.5 billion of budget allocation be stolen? Of course, we know bigger sums went missing in a certain company but that's a company controlled by a few crooks. If corruption has reached a point where RM1.5 billion could be carted away from our government ministries, the end is near for Malaysia.

Next, we read about a personal attack on the Sultan of Johor who had earlier spoken out against certain extreme religious practices. What's surprising was the disquiet and inaction on the part of the authority to investigate the case. This has led to much unhappiness in Johor and possibly to the current round of wild talk about secession from the Federation.

Now is a good time to put a swift end to no-holds-barred politicking which we have seen in the past few years. The responsibility rests on our Prime Minister to do the needful and not merely keeping an elegant silence. He must decide what is more important; his political career or the fate of the nation. If he choose to put his survival ahead of the nation, he will not be judged kindly by future generations.

Wednesday, October 11, 2017

Sunway-WB: Such High Premium? (UPDATED)

If you have been in the market long enough (or, too long for some of us), you may remember one peculiar factoid about company-issued warrants of large construction-based stocks, such as Gamuda and IJM: They tend to have very low premium. My understanding is that these companies consistently issued warrants as sweeteners for their bond issuance and, as result, after the initial euphoria, the warrant premium will drop back to as low as 1-3%. Today, Gamuda has one warrant outstanding- Gamuda-WE- which is trading at a premium of 1.5%. Currently, IJM has no more warrant outstanding. Its last one, IJM-WC had expired in Oct 2014.

Now, the last 2 days we've witnessed the euphoric rise in Sunway-WB. This warrant has an exercise price of RM1.86 and expiring only in Oct 2024. Based on its current price of RM0.70 and share price of RM1.82, Sunway-WB is trading at a premium of 40.4%.

If my observation of past premium for construction groups holds true, the current price of Sunway-WB can only sustain if Sunway share price were to rally strongly & quickly. Otherwise the price of Sunway-WB will likely come down. If you have this warrant, it is advisable to take some profit soon.


Chart 1: Sunway-WB's intra-day chart as at Oct 11, 2017_10.45 (Source: Shareinvestor.com)


Chart 2: Sunway's daily chart as at Oct 11, 2017_10.45 (Source: Shareinvestor.com)

Thanks to a reader's comment, I like to update my post to amend an error in the exercise price.

The exercise price of RM1.86 per Warrant will be effective for a period of one year from the date of issuance of the Warrants. Subsequently, the exercise price is subject to a fixed annual step-down of RM0.07 on each of the anniversary dates from the date of first issuance of the Warrants.

This means that the exercise will drop progressively as follows:
  • RM1.86 on and after Oct 4, 2017
  • RM1.79 on and after Oct 4, 2018
  • RM1.72 on and after Oct 4, 2019
  • RM1.65 on and after Oct 4, 2020
  • RM1.58 on and after Oct 4, 2021
  • RM1.51 on and after Oct 4, 2022
  • RM1.44 on and after Oct 4, 2023


How do you determine the premium? To be frank, I am not sure. If we used the average exercise price of RM1.65 - the mid point from the above schedule – then, the premium is about 29% now (based Sunway-WB at 0.675 & Sunway at RM1.80). It still looks expensive.

Monday, October 09, 2017

SKPRES: Next Upleg Beckons?

Result Update

In QE30/6/2017, SKPRES's net profit rose marginally by 1% q-o-q or 83% y-o-y to RM33 million while revenue was mixed, down 11% q-o-q but up 64% y-o-y to RM525 million. Revenue dropped q-o-q mainly due to lower sales recorded in June 2017 as a result of Hari Raya festive holidays. Despite the sharp drop in revenue, PBT dropped only marginally by 1.4% as a result of improved margin due to operational efficiency. (Note: SKPRES's result was announced on August 25.)


Table: SKPRES's last 8 quarterly results


Graph: SKPRES's last 37 quarterly results

Financial Position

As at 30/6/2017, SKPRES's financial position is deemed fairly satisfactory with good current ratio at 1.76x but slightly elevated gearing ratio at 0.92x. (Note: SKPRES's gearing ratio is no worse off when compared to VS's gearing ratio of 1.27x as at 31/7/2017. These EMS groups are doing a roaring business which is very taxing on its capital.)

Valuation

SKPRES (closed at RM1.58 yesterday) is now trading at a PER of 15 times (based on last 4 quarters' EPS of 10.01 sen). Its PEG ratio is 0.4x (based on last 2 years' earning CAGR of 35%). As such, SKPRES is deemed fairly attractive for a growth stock.

Technical Outlook

SKPRES is now testing its recent high of RM1.58. If it can break above level, SKPRES can commence on its next upleg.


Chart 1: SKPRES's weekly chart as at Oct 6, 2017 (Source: ShareInvestor.com)


Chart 2: SKPRES's monthly chart as at Oct 6, 2017 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, attractive valuation for a growth stock & potentially bullish technical outlook, SKPRES could be a good stock to consider for investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

3A: Testing Its Uptrend Line

Result Update

For QE30/6/2017, 3A's net profit dropped 11% q-o-q but rose marginally by 0.4% y-o-y to RM9.2 million while revenue dropped 0.8% q-o-q but rose by 5.6% y-o-y to RM102 million. Revenue dropped q-o-q due to lower sales. PBT dropped q-o-q due to forex loss this quarter and lower profit margins. (Note: The last quarterly result was announced on August 17, 2017.)


Table: 3A's last 8 quarters' P&L


Graph: 3A's last 16 quarters' P&L

Financial Position

As at 30/6/2017, 3A's financial position is deemed satisfactory with current ratio at 3.76x and gearing ratio at 0.24x.

Valuation

3A (closed at RM1.11 last Friday) is now trading at a PER of 13x (based on last 4 quarters' EPS of 8.66 sen). Its PEG ratio is 0.3x (based on last 3 years' earning CAGR of 45%). As such, 3A is deemed fairly attractive for a growth stock.

Technical Outlook

Over the past 2 years, 3A has risen gradual from RM0.70 in September 2015 to a high of RM1.45 in June 2016. The current correction has brought the share price down to the uptrend line. The support from the uptrend line is at RM1.10.


Chart: 3A's daily chart as at Oct 6, 2017 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance & financial position, attractive valuation and mildly bullish technical outlook, 3A remains a very good stock to consider for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Wednesday, October 04, 2017

SOP: An Attractive Plantation Stock

Background

Sarawak Oil Palms Bhd ("SOP") is involved in the cultivation of oil palms and the operation of palm oil mills. Its business divisions include Plantation, Milling, Downstream, Marketing & Trading and Property Development.

In December 2016, it completed the acquisition of Shin Yang Oil Palm (Sarawak) Sdn Bhd (SYOP) from a related party, Shin Yang Holdings Sdn Bhd (SYHSB) for an enterprise value of RM873 million. This raised its total land bank by 65% to 119,653ha, with planted area increasing by 37% to 87,744ha.


SOP's Planted Hectarage as at December 2016 (from Annual Report for FY2016)

Historical Financial Performance

SOP's revenue has been on a steady uptrend since 2009. Profits, which peaked in FY2011, began to recover in FY2016 mainly due to the favorable palm products average realized prices which more than offset the drop of the Group's FFB production by 11% (as a result of the El-Nino phenomenon). The profits for FY2017 is projected to increase as the 1H2017 has already showed better results due to higher FFB production volume and higher average palm products realized price improvement and a fair value gain on derivative financial instruments of RM27 million.


Graph 1: SOP's last 19 years' P&L

Recent Financial Results

In QE30/6/2017, SOP's net profit dropped 2% q-o-q but rose 100% y-o-y to RM67 million while revenue rose 9% q-o-q or 28% y-o-y to RM1.22 billion.


Table 1: SOP's last 8 quarters' P&L


Graph 2: SOP's last 12 quarters' P&L

Latest Financial Position

As at 30/6/2017, SOP's financial position is deemed healthy with current ratio at 1.65x and gearing ratio at 0.96x.

Valuation

SOP (closed at RM4.17 yesterday) is now trading at a trailing PER of 10.5x (based on last 4 quarters' EPS of 39.6 sen). This compared favorably to other larger plantation groups, like KLK (with PER of 22x) or UTDPLT (with PER of 17x) or GENP (with PER of 18x).

Technical Outlook

SOP has broken above its downtrend line at RM3.60 in August. On October 2, it broke above the "horizontal line" at RM4.00 - albeit on thin volume. Yesterday it continued to rise - still on relatively thin volume. Its immediate resistance is at the horizontal line at RM4.45.


Chart 1: SOP's weekly chart as at Oct 3, 2017 (Source: MalaysiaStock.biz)

SOP is in a long-term uptrend line with support at RM3.50.


Chart 2: SOP's monthly chart as at Oct 3, 2017 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance & position, attractive valuation & positive technical outlook, SOP could be a good stock for long-term investment.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Tuesday, October 03, 2017

Crude Oil: Just a Pullback

In the past few days, we saw fairly deep correction among O&G stocks. That reflects the sharp correction in crude oil prices. However the correction is not out of order. I expect Brent to drop back to its uptrend line, SS with support at USD 54-55. 


Chart 1: Brent's daily chart as at Oct 2, 2017 (Source: Stockchart.com)

If Brent can stay above the uptrend line - or consolidate around USD54-55 but violating the uptrend line - then the prospect of it breaking above the oval-shape continuation pattern is  still there. When that happens, it may launch into its next upleg.


Chart 2: Brent's daily chart as at Oct 2, 2017 (Source: Stockchart.com)

If you want to get into the O&G sector, you can do so slowly once it is fairly clear that the USD54-55 price level for Brent can hold. Good luck!

Monday, October 02, 2017

Engtex: A Genuine Technical Breakdown?

Background

Engtex Group Bhd ("Engtex") is involved in the following businesses:
1) Wholesale and distribution of pipes, valves, fittings, plumbing materials, steel related products, general hardware products, construction materials and bitumen materials.
2) Manufacture and sale of steel and ductile iron pipes and fittings, valves, manhole covers, hydrants, industrial casting products, welded wire mesh, hard-drawn wire and other related products.
3) Property development & hotel operation

Diagram: Engtex's business segmental revenue

Prospects

In August, JF Apex Securities called a BUY on Engtex, valuing the stock at RM1.60 (here). The analyst highlighted the positive near term prospects of the company due to the following:
  • Engtex has secured RM127 million worth of piping contracts from Phase 1 & 2 of the Langat 2 water treatment plant project. It is looking to bid for more jobs from Phase 3 & 4. 
  • The Selangor government announced its plan to build two water treatment plants with a combined cost of RM800 million to be completed in end-2017 and 2019.
  • Apart from new piping projects, there is also potential for pipe replacement in line with the government’s target to reduce Non-Revenue Water to 25% by 2020. The length of pipes to be replaced was estimated to be about 44,000 km or RM5 billion worth of pipes.

Recent Financial Performance

For QE30/6/2017, Engtex's net profit dropped 24% q-o-q or 34% y-o-y to RM13.6 million while revenue was mixed- up 12% q-o-q but down 4% y-o-y to RM285 million. Revenue rose q-o-q mainly due to the recovery in market demand for certain metal related trading products. However, the profit before tax decreased mainly due to lower gain on disposal of vacant industrial lands of approximately RM1.3 million as compared to RM7.1 million previously. Excluding the sale of vacant industrial lands, Engtex's profit before tax rose from RM17.0 million to RM19.1 million. 


Table: Engtex's last 8 quarterly P&L


Graph: Engtex's last 50 quarterly P&L

Financial Position

As at 30/6/2017, Engtex's financial position is deemed satisfactory. Current ratio is adequate at 1.6x while gearing ratio is a bit elevated at 1.1x.

Valuation

Engtex (closed at RM1.12 in the morning session today) is now trading at a trailing PER of 6.3x (based on last 4 quarters' EPS of 17.86 sen). Dividend yield is negligible at less than 1%. Based on low PER, Engtex is deemed fairly attractive.

Technical Outlook

Engtex broke below the wedge or trading range in August. As a result, the stock may test its long-term uptrend line with support at RM1.00 soon. In drawing the uptrend line, I ignored the sharp dip in 2013.


Chart 1: Engtex's monthly chart as at Oct 2, 20147_12.30 (Source: Malaysiastock.biz)

From the weekly chart below, we can see the erratic movement of Engtex share price in the past few months. Prior to the August breakdown, Engtex actually broke above the wedge or trading range in May. I view the erratic movement as a product of the stock finding its "right price level" ahead of the expiration of the warrant. The subsequent drop in the share price is the result of arbitraging activity. In my opinion, Engtex is likely to recover back into its wedge or trading range after the expiry of the warrant (Engtex-WA). [Note: A cheaper entry to Engtex is by way of buying the warrant & then converting it to ordinary share. Engtex-WA is now trading at 25.5 sen or at a discount of 3.5 sen after taking into account its exercise price of RM0.83.]


Chart 2: Engtex's weekly chart as at Oct 2, 20147_12.30 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance & decent financial position and attractive valuation, Engtex is a good stock for long-term investment. Its present mildly bearish technical outlook is no doubt a matter of concern. However, I believe the technical breakdown is due to arbitraging activity which should cease once the trading of Engtex-WA has ended on October 9. (Note: The last date of trading is on October 6 while expiry is on October 25).

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Friday, September 29, 2017

MRCB: Cheap Enough?

MRCB is an integrated transport hub developer. Since the successful completion of its KL Sentral CBD development, it has expanded its projects to include PJ Sentral, Kwasa Damansara & Penang Sentral. For more on its projects, go to here

To finance its mega projects, MRCB has proposed a 1-for-1 Rights Issue at 79 sen which comes with 1 free warrant for every 5 shares subscribed for. The exercise price for each warrant is fixed at RM1.25. For details of the fixing of the Rights Issue & warrant exercise price, go here. The Rights issue has prompted a sharp drop in MRCB share price from RM1.75 in May to as little as RM1.01 on Sep 26 & 27.

Kenanga has maintained a fairly positive view on MRCB, valuing MRCB at RM1.14 after the Rights issue. Assuming that MRCB closed at RM1.03 today (the last cum date), the theoretical ex-Rights price is about RM0.97. This gives MRCB an upside of about 17%. I feel that Kenanga's fair value is too conservative, probably due to market reality.

Based on the sharp drop in share price over the past 4 months, I believe MRCB is a good stock for long-term investment. You can either buy MRCB today and then go through with the Rights issue or buy it after the Rights issue when further "massaging" may throw out even lower prices. Good luck!


Chart 1: MRCB's daily chart as at Sep 28, 2017 (Source: Shareinvestor.com)


Chart 2: MRCB's monthly chart as at Sep 28, 2017 (Source: Shareinvestor.com)

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Thursday, September 28, 2017

VS: Earnings Dropped q-o-q

Result Update

For QE31/7/2017, VS's net profit dropped 27% q-o-q but rose 236% y-o-y to RM37 million while revenue rose 15% q-o-q or 77%  y-o-y to RM983 million. VS's profits dropped q-o-q mainly attributable to lower gross profit margin resulting from weakening of US Dollar against Ringgit Malaysia. In addition, profits decline was aggravated by impairment loss on property & other investment of RM12.0 million and RM4.0 million respectively.


Table: VS's last 8 quarterly results


Graph: VS's last 50 quarterly results

Valuation

VS (closed at RM2.53 yesterday) is trading at a trailing PE of 19.1 times (based on last 4 quarters' EPS of 13.22 sen). At this PER, VS is deemed fairly valued.

Technical Outlook

VS had a strong rally after it broke above the horizontal line at 14 sen in 2014. It consolidated for a year in 2016 and broke above the horizontal line at RM1.60 in late January this year and then rallied to a recent high of RM2.68. All indications are this rally may continue.


Chart 1: VS's weekly chart as at Sep 27, 2017 (Source: MalaysiaStock.Biz)

VS is very well supported by either the 10 or 20-day SMA lines. You may use these lines to gain entry into the stock. That levels will be around RM2.40 mark in the next few weeks.

 
Chart 2: VS's daily chart as at Sep 27, 2017 (Source: MalaysiaStock.Biz)

Conclusion

Despite the drop in earning last quarter, VS is a good stock for long-term investment based on steady financial performance & positive technical outlook, Even though earning lagged the sharp rise in revenue, I believe earning may soon catch up. Thus, I revise my rating from SELL INTO STRENGTH to BUY ON WEAKNESS.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Wednesday, September 27, 2017

YTLPOWER: Who's Afraid Of Dividend?!

I was getting ready to post on YTLPower dividend play for the past few days. I held back after seeing what happened to Star right after its dividend entitlement went ex. That plus the non-action in KPJ's 1-to-5 share split seem to suggest that the market is non-responsive to management reward- a big change from the days of over-enthusiastic response we had seen in 6 months ago.

Nonetheless the logic behind YTLPower dividend play remains. In the chart below, I have listed down the past 3 years dividend payout and the upcoming payout in early September. Past dividend payouts had been announced in late August & carried out in October. The current one will go ex on October 24, and it consists of a 5-sen dividend and a treasury share distribution of 1-for-50. If you valued the Treasury share at RM1.37 each, the entire dividend will be worth about RM77 (or 7.7 sen per share).

Note the following:
1) YTLPower share price has dropped ahead of the current dividend
2) YTLPower is now trading at the uptrend line support

So, the plan is to own the stock in order to get the 7.7 sen dividend and the possible rebound in the share price of about 15-sen towards the upper line, RR.


Chart: YTLPower's weekly chart as at Sep 27, 2017_4.15 (Source: Malaysiastock.biz)

STAR: A Costly Dividend

Star went ex today for first interim and special dividends totaling 36 sen. Yesterday, it dropped 6 sen ahead of the dividend ex date. It closed at RM2.30. After deducting the 36-sen dividend, Star's reference price is RM1.94. Amazingly Star is now trading at RM1.80 as at 3.20pm. This means that a shareholder who held the stock for the dividend received 36-sen dividend but is down 50 sen.    

It is worth highlighting that the selldown is overdone notwithstanding the competitive nature of the media business, etc. Chartwise, we can see that the share price is trading just below its long-term uptrend line (in blue) at RM1.85 as well as the line connecting the last 2 years' troughs (in orange) at RM1.80. I won't be surprised that the stock may see a 10-15 sen rebound over the next few days.

Assuming Star continues with its twice yearly dividend of 9 sen each (or, 18 sen in total), its dividend yield is now a whopping 10%.


Chart 1: Star's weekly chart as at Sep 27, 2017_3.20pm (Source: Malaysiastock.biz)


Chart 2: Star'smonthly chart as at Sep 27, 2017_3.20pm (Source: Malaysiastock.biz)

Crude Oil Recovery Began?

Crude oil has revisited its January 2017 high of USD58 last 2 days. If it can break above this level as well as the psychological USD60 mark, crude oil price is likely to continue its upleg. 

What is more amazing than the strong recovery in crude oil price is the change of tune of among the pundits. Citibank came out with an article highlighting the potential oil squeeze in 2018! Goldman Sach demand forecast for oil is also now being questioned! Notwithstanding the bullish calls, crude oil recovery hinges on successful breakout above USD60.


Chart 1: Brent's daily chart as at Sep 26, 2017 (Source: Stockchart.com)

In a market that is deprived of trading ideas, the rally in crude oil price has not gone unnoticed. In the past few days, we have seen sharp rally among the penny O&G stocks. I have appended below the charts of some spectacular rally. You can see that some are knocking on resistance. Be careful!


Chart 2: Hibiscus's daily chart as at Sep 26, 2017 (Source: Malaysiastock.biz)


Chart 3: Reach's daily chart as at Sep 26, 2017 (Source: Stockchart.com)


Chart 4: Carimin's daily chart as at Sep 26, 2017 (Source: Stockchart.com)


Chart 5: Icons' daily chart as at Sep 26, 2017 (Source: Stockchart.com)

Note: I am using Brent chart because I have concern about WTIC price movement after the recent 2 hurricanes had hit oil installations in the region.