Thursday, September 19, 2019

DLady: Attractive Enough?

DLady reported a poor set of result in QE30/6/2019. Its net profit dropped 49% q-o-q or 44% y-o-y to RM17 million. This was accompanied by revenue decline of 8% q-o-q or 4% y-o-y to RM244 million. The q-o-q profit decline was due to lower revenue, category product mix changes, coupled with strategic pricing, increase in raw material prices, negative forex changes and investment in advertising and promotional spend.

Table: DLady's last 8 quarters' financial performance

Following the poor results, DLady's share price began to tumble. As at yesterday, DLady has dropped nearly RM8 over  the past 2 weeks to RM56.70. The next strong support is at the horizontal line at RM50.00-51.00. 

Chart 1: DLady's weekly chart from 2012 to Sep 18, 2019 (Source: Malaysiastock.biz)

I have overlaid 3 extreme moving average lines, i.e. the 100-week, 200-week and 250-week SMA lines (see Chart 1). The last time DLady went as low as the 250-week SMA line was during the Global Financial Crisis of 2008 (see Chart 2). DLady is now slightly below the 250-week SMA line (see Chart 1). 

Chart 2: DLady's weekly chart from 2003 to 2011 (Source: Malaysiastock.biz)

If you owned this stock or planned to invest in it, the current price level is quite tempting. Among the reason given for the decline in profits is "investment in advertising and promotional spend". This item can be a wild card that has exaggerated its profit decline, and its absence could also help to swing the profits the other way. 

Based on past strong financial performance and steady market leadership, I believe DLady could be a good stock for long-term investment. To be on the safe side, we should wait for the results for the next quarter before taking an oversize position in the stock.

Genting: Approaching Long-term Uptrend Line

For the past 2 weeks, Genting has been struggling to stay around the RM5.90 level which was the low recorded in December 2018. It traded to intra-day lows of RM5.81 before closing at around RM5.85.

However, Genting broke below the RM5.80 level yesterday to an intraday low of RM5.73. It managed to climb back up to close at RM5.80 in the last hour of trading.

If Genting failed to stage a strong rebound in the next 1-2 days, it may continue to go lower. However, if you look at the monthly chart, we can draw a tentative long-term uptrend line where the support is at RM5.40-5.50.

Based on this technical analysis, Genting's near-term outlook is negative as the share price has now convincingly broken below the last low of RM5.90-5.91. If Genting continued to slide, then the next support at the tentative long-term line at RM5.40-5.50 would be critical. We will have to wait and see how Genting will fare in the weeks ahead.


Chart 1: Genting's weekly chart as at Sep 18, 2019 (Source: Malaysiastock.biz)


Chart 2: Genting's monthly chart as at Sep 18, 2019 (Source: Malaysiastock.biz)

Monday, September 16, 2019

BAUTO: Earnings Dipped

Results Update

For QE31/7/2019, BAuto's net profit dropped 16% q-o-q but up slightly by 0.5% y-o-y to RM50.5 million while revenue dropped slightly by 0.6% q-o-q but rose 10% y-o-y to RM535 million.

Group revenue dropped marginally by 0.6% or RM3.3 million q-o-q mainly attributed to lower sales volume recorded from the Philippine operations because of supply constraint from Mazda Japan for the new Mazda3 and affected demand for Mazda CZ-3 due to the launch of the facelift model in the next quarter. Revenue growth from the domestic operations was flattish as its sales volume was comparable to the preceding quarter.

Group pre-tax profit dropped RM12.6 million or 16.2% q-o-q mainly due to compressed gross profit margin from the domestic operations following the Mazda CX-5 run-out promotion where more sales incentives were given to hasten the sale of this model to clear the inventories as the upcoming launch date of the facelift model draws closer.


Table: BAuto's last 8 quarters' financial performance


Graph: BAuto's last 31 quarters' financial performance  

Financial position

As at 31/7/2019, BAuto's financial position is deemed satisfactory with current ratio at 2.37 times and total liabilities to total equity at 0.87 time.

Valuation

BAuto (closed at RM2.39 last friday) has a fair PER of 10.4 times (based on last 4 quarters' EPS of 22.88sen). BAuto paid quarterly dividends which totaled 22 sen over the past 4 quarters. This translates to a dividend yield of 9.2%. Based on the above, BAuto is an attractive stock.

Technical Outlook

BAuto has been moving in sideways manner between RM1.90 and RM2.40 from late 2015 until middle of 2019. In June 2019, BAuto broke above the RM2.40 resistance and rose to RM2.75 in July. After peaking at RM2.78, the share price dropped back into the trading range again in late August. 


Chart: BAuto's weekly chart as at Sep 13, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance & financial position and fair valuation, BAuto is 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.

Oil & Gas Stocks May Rally This Week

On Saturday, Saudi oil processing facility at Abqaiq and the nearby Khurais oil field were attacked by drones. These attacks knocked out 5.7 million barrels of daily crude production or 50% of Saudi's oil output (here). The tighter supply of crude oil led to prices soaring more than 10% today (here). Brent crude oil price was trading at USD65.45 as at 6:42 AM EDT on Sep 16. The attack will lead to increased geopolitical risk of a war in the Middle East, as the U.S. has already pointeda finger at Iran (here).

Prior to the attack, Brent crude oil was drifting lower- pressed by an intermediate downtrend line, RR with resistance at USD68. The downside would not valid the longer term uptrend line, SS with the support at USD55. This morning, Brent crude oil price shot to a high of USD71.95 but it has since dropped back below the intermediate downtrend line, RR. As the situation in the Middle East will remain fluid, the crude oil price may retest the downtrend line again in the days ahead.


Chart 1: Brent's daily chart as at Sep 13, 2019 (Source: Stockcharts.com)

Our Energy index has been trending higher ever since it broke above its downtrend line at the start of the year. I expect the index to test its recent high at 1130 tomorrow.


Chart 2: Bursa Energy index's daily chart as at Sep 13, 2019 (Source: Kenanga BTX)

I have short-listed a few O&G stocks that are rated as Out-perform by Kenanga for your consideration.

Table: Selected Kenanga Oil & Gas stocks

Friday, September 13, 2019

ASTRO: Earnings Rebounded

Results Update

For QE31/7/2019, Astro's net profit rose 9 folds y-o-y to RM169 million on the back of a 13%-drop in revenue to RM1.24 billion. Compared to the immediate preceding quarter (QE30/4/2019), net profit dropped 4% while revenue rose marginally by 0.2%.

Revenue was lower by RM180 million or 13% against corresponding quarter mainly due to a decrease in subscription revenue and licensing income. EBITDA margin improved by 15.0% against corresponding quarter, due to lower content costs and marketing and distribution expenses. Net Profit increased by RM153 million or 10 folds compared with the corresponding quarter mainly due to increase in EBITDA and lower net finance costs, offset by higher tax expenses.


Table: Astro's last 8 quarterly results


Graph: Astro's last 32 quarterly results

Financial Position

Astro's financial position improved slightly with current ratio of 0.98 time and gearing ratio of 6.6 times.

Valuation

Astro (closed at RM1.39 in the morning session) is now trading at a trailing PE of 11 times (based on last 4 quarters' EPS of 11.83 sen). In addition, Astro paid out dividend quarterly which amounted to 6 sen for the last 4 quarters; giving the stock an attractive DY of 4.3%. Based on these PER and DY, Astro is deemed fairly attractive.

Technical Outlook

Astro is trapped in a triangle, with the upside capped at RM1.45 and downside supported at RM1.30. Until Astro can break out of this triangle, it will likely be around the RM1.40 level.


Chart 1: Astro's daily chart as at Sep 13, 2019_12.30 (Source: Malaysiastock.biz)


Chart 2: Astro's weekly chart as at Sep 13, 2019_12.30 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, I believe Astro is still a good stock for long-term investment based on fair valuation.

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 11, 2019

Magni: Earnings Continued to Rise

Results Update

In QE31/7/2019, Magni's net profit rose 40% q-o-q or 39% y-o-y to RM30.5 million while revenue rose 40% q-o-q or 20% y-o-y to RM327 million.

Revenue rose 40% q-o-q due to 45%-increase in Garment revenue mainly due to higher sale orders received while packaging revenue slipped by 5.9% amid lower sale orders received.

PBT increased by 50% q-o-q due to 59%-increase in Garment PBT mainly due to higher revenue, better gross profit margin mainly driven by the improvement in operational efficiency, and the lower foreign exchange loss of RM0.011 million versus foreign exchange loss of RM1.126 million in QE30/4/2019. Packaging PBT was 37.9% lower mainly due to weaker revenue, gross profit margin and dividend income.


Table: Magni's last 8 quarterly results


Graph: Magni's last 50 quarterly results

Financial Position

As at 31/7/2019, Magni's financial position was very healthy with current ratio at 5.3 times and gearing ratio at only 0.21 time.

Valuation

Magni (closed at RM5.40 yesterday) has a trailing PE of 7.9 times (based on last 4 quarters' EPS of 68.3 sen). At the same time, Magni  paid quarterly dividend which totaled 23 sen; giving the stock a DY of 4.26%. Overall, Magni is still fairly attractive.

Technical Outlook

Magni has been gradually rising in the past 9 months. It has now surpassed the resistance from the horizontal line at RM5.25 as well its July high at RM5.38. It may continue to climb higher and test the resistance at the horizontal line at RM5.65


Chart: Magni's weekly chart as at Sep 10, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and position, attractive valuation and mildly bullish technical outlook, Magni is a 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.

Tuesday, September 10, 2019

Axiata & Telenor: Merger Deal off


Axiata and Telenor (DIGI's parent company) have just called off their merger deal (here and here). This should bring down the share prices of Axiata & DIGI to the levels just preceding the announcement on 6 May (here and here). If we were to factor in the unwinding of any position built-up after the merger announcement, then the price levels may go down a bit more (say, another 10 sen lower). Thus, if you want to buy into the selldown of Axiata and DIGI, the good price to aim for would be RM3.85-4.00 for Axiata and RM4.30-4.40 for DIGI.


Chart 1: Axiata's daily chart as at Sep 10, 2019_9.15am (Source: Malaysiastock.biz)


Chart 2: DIGI's daily chart as at Sep 10, 2019_9.15am (Source: Malaysiastock.biz)

Monday, September 02, 2019

Market Outlook as at August 30, 2019

Last Friday, our market had a decent rally ahead the Merdeka holiday. The index, which was hovering at 1602 around 3:00 pm, was pushed up to close at 1612 in the last 1 hour. Coupled with the morning gain, FBMKLCI rose nearly 17 points last Friday. 


Chart 1: FBMKLCI's daily chart as at Sep 2, 2019 (Source: Malaysiastock.biz)

Given the hour push-up, I expect the index to cede easily 10 points on opening Tuesday. However, if you were to take a closer look at the FBMKLCI chart, the index is poised for recovery after a long decline from 1690 in late July. Thus I believe the index will likely trade around 1600 next week.


Chart 2: FBMKLCI's daily chart as at Sep 2, 2019 (Source: Malaysiastock.biz)

Market will remain lethargic next week. Cautious buying of attractive good stocks, is still advisable. Of those stocks which had announced their results last week, CIMB and Maybank look quite attractive, and worth buying on weakness. Good luck!

BURSA BEGINNER WEBINAR: THE POWER OF EARNINGS

I will be presenting a webinar entitled The Power of Earnings under Bursa Beginner Webinar series.



I will cover the following topics:
          Underlying assumptions
          How to assess a stock’s earnings
          Finding stocks with earnings breakout
          Finding stocks with rising earnings
          Earning trend and Price trend
          Using PEG ratio

          How to assess a loss-making stock

Click here to register for the webinar.

Friday, August 30, 2019

Maybank: Steady as she goes

Results Update

For QE30/6/2019, Maybank's net profit rose 7% q-o-q but dropped 1% y-o-y to RM1.94 billion while revenue was up 1% q-o-q or 13% y-o-y to RM13.05 billion. The increase in net profit was attributable to increase in Other Operating Income of RM302 million - the biggest item is net investment income of RM219 million - and (wait for this) decrease in impairment losses on loans, advances, financing and other debts of RM212 million. The latter would be a positive development as the market has been holding its breath- expecting Maybank to take a big hit from Hyflux and other big names.


Table: Maybank's last 8 quarterly results


Graph: Maybank's P&L for last 55 quarterly results

Valuation

Maybank (closed at RM8.57 yesterday) has a PER of 11.8 times (based the last 4 quarters' EPS of 72.79  sen). In addition, it is trading a price to book of 1.2 times (based on NTA of RM7.07 as at 30/6/2019). It has a dividend yield of 6.7%. At these multiples, Maybank is deemed fairly attractive, especially for income-seeking investors.

Technical Outlook

Maybank tested the line connecting the troughs/lows for the past 2 years at RM8.50. It came fairly close to the "uptrend line" SS, where the support would be at RM8.30. Maybank is likely to find support at these prices unless some terribly bad events happened.


Chart: Maybank's weekly chart as at Aug 29, 2019 (Source: MalaysiaStock.Biz)

Conclusion

Based improved financial performance, fairly attractive valuation and long-term positive technical outlook, Maybank remains 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.

CIMB: A Better Performance Actually

Results Update

For QE30/6/2019, CIMB reported a net profit which dropped 24% y-o-y but rose 27% q-o-q to RM1.51 billion. As reported (above), PBT & NP dropped about 20-24% 40% y-o-y due to two exceptional one-off items booked into the account last year (QE30/6/2018): RM928 million gain on sale of 20% of CPAM and 10% of CPIAM. If these 2 items are excluded, the Group operating income rose 13.5% y-o-y, "emanated from the stronger capital market-driven NOII, reflected in the 78.2% y-o-y jump in Wholesale Banking PBT. Consumer Banking PBT was 74.2% lower y-o-y from reduced NII, higher operating expenses and provisions. Commercial Banking improved 89.0% y-o-y from reduced provisions. GVPF improved 229.9% y-o-y from the improved performance in the Group’s fixed income portfolio in 2Q19, which contributed to the Group’s 43.3% y-o-y growth in 2Q19 net profit.


Table 1: CIMB's last 8 quarterly results


Table 2: CIMB's results for QE30/6/2019 cf. QE30/6/2018


Graph: CIMB's P&L for last 32 quarterly results

Valuation

CIMB (closed at RM4.94 yesterday) has a PER of 7.7 times (based the last 4 quarters' EPS of 63.96  sen). In addition, it is trading a price to book of 0.9 time. It has a dividend yield of 5.3%. At these multiples, CIMB is deemed very attractive.

Technical Outlook

CIMB is now resting on the strong support from the horizontal line at RM5.00.


Chart: CIMB's daily chart as at Aug 29, 2019 (Source: MalaysiaStock.Biz)

Conclusion

Based improved financial performance and attractive valuation, CIMB is an excellent 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.

Wednesday, August 28, 2019

Pestech: Earnings Soared

Background

Pestech International Bhd ("Pestech") is involved in:
  • Turkey Substation EPCC
  • Transmission line engineering & construction
  • Underground cables for electricity transmission & distribution
  • SCADA

For more on this company, go here.

Results Update

For QE30/6/2019, Pestech's net profit rose 58% q-o-q or 89% y-o-y to RM34 million while revenue rose 28% q-o-q or 139% y-o-y to RM285 million.

The Group’s revenue rose 139% y-o-y which reflects the stage of on-going transmission, distribution and rail electrification projects. As of 30.6.2019, its order book balance stood at RM1.63 billion, which will be realized progressively over the contract periods. Other income of the Group mainly arose from concession asset and unwinding discount of suppliers for 2 years credit term in current financial year.

The Group’s profit before tax rose 136% y-o-y from RM17.6 million to RM41.5 million due to higher revenue. The PBT margin remained unchanged at 15% for QE30/6/2019.


Table: Pestech's last 8 quarterly results


Graph: Pestech's last 30 quarterly results

Financial Position

As at 30/6/2019, Pestech's financial position is deemed fair with adequate liquidity as reflected in a current ratio of 1.6 times but elevated leverage as reflected in a gearing ratio of 2.8 times.

Valuation

Pestech (closed at RM1.43 yesterday) is now trading at a trailing PER of 13.6x (based on last 4 quarters' EPS of 10.49 sen). At this PER, Pestech is deemed fairly valued. However, if the earnings continue to improve, PER will drop and the stock will be more attractive.

Technical Outlook

Pestech has broken above its intermediate downtrend line, RR at RM1.05 in June this year. It is now hanging onto the horizontal line at RM1.40. Its immediate resistance is the horizontal line at RM1.50 while its next support is the horizontal line at RM1.27-1.30.


Chart: Pestech's weekly chart as at Aug 27, 2019 (Source: MAlaysiastock.biz)

Conclusion

Based on improved financial performance and bullish technical outlook, Pestech is 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.

DLady: Earnings Dropped Sharply

Result Update

For QE30/6/2019, DLady's net profit dropped 49% q-o-q or 44% y-o-y to RM17 million while its revenue dropped 8% q-o-q or 4% y-o-y to RM244 million. PBT dropped 42% q-o-q due to lower revenue, category product mix changes, coupled with strategic pricing, increase in raw material prices, negative forex changes and investment in advertising and promotional spend.


Table: DLady's last 8 quarterly results


Chart: DLady's last 45 quarterly results

Valuation

DLady (closed at RM63.90 yesterday) is now trading at a PE of 236 times (based on last 4 quarters' EPS of 181 sen). At this PER, DLady is deemed fully valued.

Technical Outlook

DLady is in a long-term uptrend line (SS), with support at RM63.00. This uptrend line will be severely tested today. A breakdown of the uptrend line would easily send the share prices to RM60.00.


Chart: DLady's monthly chart as at Aug 27, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on weaker financial performance and fully valued proposition, the possibility of a reversal in the price uptrend must not be discounted. I think it is a good idea to take profit on DLady.

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, August 27, 2019

ABMB: A Big Jolt!

Results Update

For QE30/6/2019, Alliance Bank Malaysia Bhd ("ABMB")'s net profit dropped 31% q-o-q or 44% y-o-y to RM77 million. The sharp drop in profits was mainly due to expected credit losses stemming from the impairment of a few large accounts amounting to RM74.9 million, and the continued investment in IT infrastructure to support the Group’s Transformation initiatives.


Table: ABMB's last 8 quarterly results


Graph: ABMB's last 24 quarterly results

Valuation

ABMB (closed at RM2.92 today) is now trading at a trailing PER of 9.4x (based on last 4 quarters' EPS of 30.9 sen) or at a Price to book value of 0.8 time (based on net assets per share of RM3.69). At these multiples, ABMB is deemed fairly valued.

Technical Outlook

ABMB broke below its long-term uptrend line, SS at RM3.70 in May this year. Today, it broke below the psychological support at RM3.00. Its next support is at the horizontal line at RM2.75.

  
Chart: ABMB's weekly chart as at Aug 27, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on the weaker financial performance and the bearish technical outlook, ABMB is a stock to be treated with caution for the next few days or weeks. However, if the share price can form a base, it can be a good stock to consider for recovery play. It is a well-managed niche bank trading at fairly undemanding multiples after this sharp drop.

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.

CSCStel: Earnings Rebounded

Results Update

For QE30/6/2019, CSCStel's net profit rose 174% q-o-q or 21% y-o-y to RM12.6 million while revenue rose 4% q-o-q or less-than 1% y-o-y to RM344 million.


Table 1: CSCStel's last 8 quarterly results

The Group’s revenue increased q-o-q mainly driven by the increase in sales volume of GI and PPGI products which more than offset the decline in sales volume for CRC. On a year-to-year basis, sales volume of GI and PPGI products dropped but was fully offset by increase in sales volume for CRC.

Table 1: CSCStel's sales revenue & volume from various segments

As a result, the Group’s profit before tax increased substantially, registering RM16.1 million in the current quarter compared with RM5.8 million in the preceding quarter. The significant improvement in profit of 176% mainly attributed to higher margin for certain steel products and the lower production cost as a result of lower raw material prices amid an intensely competitive steel market.


Graph: CSCStel's P&L for last 47 quarterly results

Financial Position

As at 30/6/2019, CSCStel's financial position is deemed very healthy with current ratio at 8.4 times and gearing ratio at 0.12 time. It has net cash of RM184 million which is equivalent to RM0.48 per share.

Valuation

CSCStel (RM1.01 yesterday) has a PER of 21 times (based the last 4 quarters' EPS of 4.9  sen). If the cash balance of RM0.48 per share is deducted from the share price, CSCStel's PER will be reduced to 11 times. At this PER multiple, CSCStel is deemed fair. Due to the loss incurred, CSCstel reduced its dividend of 10 sen to 4 sen. As a result, its dividend yield plunged to 4%.

Technical Outlook

CSCStel is now resting on its long-term uptrend line, SS at RM1.00. The MACD seems poised to cross above the signal line. When that happens, the share price should be on an uptrend.


Chart: CSCStel's monthly chart as at Aug 26, 2019 (Source: MalaysiaStock.Biz)

Conclusion

Based improved financial performance & healthy financial position, fair valuation and mildly bullish technical outlook, CSCStel is 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.

Monday, August 26, 2019

Market Outlook as at Aug 23, 2019

Our market ended last week on a slightly bullish note. MACD turned up and crossed above the signal line. The -DMI appears to have peaked and turned back down while +DMI appears to have bottomed and turned back up. While ADX is still at a high, this may drop back in line with a declining -DMI. Lastly, stochastic is beginning to climb up from its oversold position. All in all, our market is poised for a rebound. Alas, that mildly positive set-up may not come to pass...

Chart 1: FBMKLCI's daily chart as at August 23, 2019 (Source: Malaysiastock.biz)

Thanks to the extremely stable genius in Washington, the global economy is in a greater state of uncertainty because he wanted an easy-to-win trade war. Sometimes some people shouldn't get what they wish for. After China decided to up the stake in the trade war last Friday, US markets swooned. DJIA dropped 623 points. This adds to the fear that the US economy will be in a recession a few months down the road after the dreaded inverted yield curve flashed on August 14 and appeared again on August 23 (here). Has DJIA made a slanting triple top? Is it tracing out an inverted head-&-shoulders at the top of the market? Right now, it is wishful to ask for DJIA to climb up to 27500 in order to form the right shoulder of an inverted head-&-shoulders formation. 


Chart 2: DJIA's daily chart as at August 23, 2019 (Source: Stockcharts.com)

The global markets are now held ransom by events that are out of our control. We have to concentrate on stock fundamentals and invest cautiously according to our plan. Good luck!

Friday, August 23, 2019

Deleum: Earnings Recovered

Results Update

For QE30/6/2019, Deleum returned to profitability after it went into the red in the immediate preceding quarter, QE31/3/2019. It reported a net profit of RM8.7 million as compared to a net loss of RM1.80 million reported in QE31/3/2019. As compared to last year, net profit dropped 5.6% on the back of a 52%-increase in revenue to RM212 million.

Net profit rebounded back q-o-q basis due to stronger segment contributions from both Power and Machinery and Integrated Corrosion Solution segments, offset by lower results from Oilfield Services segment due to margins compression for its slickline services. Share of results of joint venture, which was contributed by the overhaul and repairs of gas turbines, dropped slightly from RM394k to RM356k due to higher overhead expenses incurred on repair and maintenance works in the current quarter. Share of results of associates increased by RM0.2 million as a result of stronger contribution recorded from 2MC in both its dry bulk and liquid mud businesses in the current quarter.


Table: Deleum's last 8 quarterly results 


Graph: Deleum's last 51quarterly results

Financial Position

Deleum's financial position weakened as at 30/6/2019, when compared to last year. Its current ratio dropped from 1.9 times to 1.5 times while total liabilities to equity rose from 0.6 time to 0.9 time. The deterioration in financial position warrants greater caution on this stock.

Valuation

Deleum (closed at RM0.82 yesterday) is now trading at a PE of 14 times (based on EPS of 5.85 sen for the past 4 quarters). At this PER, Deleum is deemed fair. Dividend payment has dropped from 4.5 sen to 3.65 sen- giving the stock a still-decent dividend yield of 4.45%.

Technical Outlook

Deleum share price is resting on the line connecting its lows for the past 10 years. The indicators are fairly weak. If this support is broken, Deleum may revisit the low of July 2017 at RM0.75.


Chart 1: Deleum's monthly chart as at Aug 23, 2019_12.30 (Source: Malaysiastock.biz)


Chart 2: Deleum's weekly chart as at Aug 23, 2019_12.30 (Source: Malaysiastock.biz)

Conclusion

With the improved financial performance and fair valuation, balanced against the weaker financial position & poor technical outlook, I would rate Deleum as a 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.

Allianz: Earnings Growth Accelerated

Result Update

For QE30/6/2019, Allianz's net profit rose 19% q-o-q or 31% y-o-y to RM118 million while revenue rose 1.6% q-o-q or 4.5% y-o-y to RM1.366 billion. The Group’s operating revenue rose 1.6% q-o-q to RM1.37 billion due to a 1.8%-increase in general insurance segment’s operating revenue to RM582.1 million [due mainly to higher gross earned premiums in the current quarter] and a 1.5%-increase in  life insurance segment’s operating revenue to RM780.7 million [due mainly to higher investment income in the current quarter].

The Group’s profit before tax rose 17.5% to RM177.7 million due mainly to higher profit contribution from both insurance segments. The profit before tax of general insurance segment rose 6.6% to RM91.7 million, due mainly to better underwriting profit as a result of lower management expenses. Meanwhile, the profit before tax of life insurance segment rose 28.3% to RM88.4 million, due mainly to higher fair value gain arising from change in interest rate. The investment holding segment registered a loss before tax of RM2.5 million as compared to a loss before tax of RM3.3 million in the preceding quarter ended 31 March 2019 due to lower management expenses in the current quarter.


Table: Allianz's last 8 quarterly results


Graph: Allianz's last 54 quarterly results

Valuation

Allianz (closed RM13.80 yesterday) is now trading at a PE of 11.5 times (based on last 4 quarters' diluted EPS of 120 sen). At this PE, Allianz is deemed fairly attractive.

Technical Outlook

Allianz is in a long-term uptrend line, with support at RM11.80. Its immediate resistance is at the horizontal line at RM14.80.


Chart 1: Allianz's weekly chart as at Aug 23, 2019_10.30am (Source: Malaysiastock.biz)


Chart 2: Allianz's daily chart as at Aug 23, 2019_10.30am (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance, fairly attractive valuation and positive technical outlook, Allianz remains 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.