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)

N2N: A Potential Fintech Play

Result Update

In QE31/12/2018, N2N's net profit rose 27% q-o-q but dropped 47% y-o-y to RM2.8 million while its revenue rose 10% q-o-q or 0.5% y-o-y to RM27.8 million. N2N's net profit y-o-y dropped mainly due to lower unrealised forex gain in the current quarter. However, the core profit of the Group increased by 46.6% from RM1.99 million to RM2.91 million mainly due to the combination of lower operating cost and improved margins.

N2N's profit after tax rose q-o-q but the core profit of the Group declined 4.8% from RM2.91 million to RM3.06 million mainly due to provisions for trade receivables. The q-o-q increase in profits was mainly attributed to the higher revenue and better margins for the current quarter in comparison to the preceding quarter. Revenue increased by 10.2% from RM25.24 million in the preceding quarter to RM27.80 million in the current quarter. [Note: The result for QE31/12/2018 was announced on 25 February.]


Table: N2N's last 8 quarters' P&L


Graph: N2N's last 49 quarters' P&L

Latest Financial Position

As at 31/12/2018, N2N's financial position is satisfactory, with current ratio of 5.2x and gearing ratio of 0.23x.

Corporate Development

In December last year, Japanese online broker SBI Japannext Co Ltd has acquired a strategic investment stake in N2N from its founder and managing director Andrew Tiang Boon Hwa in a deal worth RM91.4 million. SBI Japannext Co. Ltd purchased 65.276 million N2N shares at RM1.40 each from N2N's MD. This strategic investment is expected to lead to collaboration between Japannext and N2N, which will open up new opportunities for both entities through the promotion of more trading activities in the region, while encouraging greater uptake of cross border trading. For more, go here.

Valuation

N2N (closed at RM0.815 last Friday) is now trading at a PER of 32x (based on last 4 quarterly EPS of 2.53 sen). At this PER, N2N is deemed fully valued.

Technical Outlook

N2N is in a long-term uptrend line (SS) with support of RM0.80.


Chart: N2N's weekly chart as at Apr 5, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory, albeit weaker, financial performance, healthy financial position and positive technical outlook, N2N could be a good stock for long-term investment. It may benefit from a pick-up in equities trading in the region this year.

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.

GenM: Sailing Into a Storm?

Many Malaysians are overjoyed to hear the news that the infamous luxurious yacht, Equanimity was successfully sold off for USD126 million (or, RM514.6 million). The buyer is a wholly-owned subsidiary of GenM. For more, go here.

Equanimity in Calm Water (Source:Malaysiakini)

Now, the shareholders of GenM must ask the question: How much return would an investment of RM514.6 million in a luxurious yacht generate?

Samples of Super Luxurious Yachts for Rent (Source: Charterworld)

Let's assume that the yacht was acquired for rental purpose. A quick check on Charterworld's website shows the rental rate for a luxurious yacht comparable to Equanimity to be more than USD300,000 a week. Assuming Equanimity is rented out at USD500,000 a week for 20 weeks in a year, then the revenue would be USD10 million a year. Will it turn in a profit? Let's see...

It was reported that the maintenance cost of Equanimity for 5 months when it docked at the Royal Malaysian Navy's HQ in Langkawai to be RM11 million (here). This sum may be understated as some costs may be waived by our navy. Assuming that it was the true figure, then the total maintenance cost for a full year would be RM26.4 million (or, USD6.5 million). On top of this, we have to add in the running cost of the yacht (with additional crew, food & fuel supplies) for 20 weeks when it is on rental. If we assumed these additional costs to be about 30% of the rental rate, then the operating cost would be USD150,000 a week or USD3 million a year.

Now we can compute the profit of this investment:

Profit = Income of USD10 m - [Maintenance cost of USD6.5 m + Running cost of USD3 m].

Profit = @#$%& (My calculator is not working!!)

Disclaimer: I am not an expert in luxury yacht rental. The above projection could have under-estimated the rental rate & over-estimated the maintenance costs. On the other hand, the projection could have over-estimated the rental period & under-estimated the running costs. If we want to be generous, it is possible that Equanimity could turn in a tidy profit of USD3-5 million if the variances are all positive. Alternatively, GenM can always operate Equanimity as an exclusive high roller casino yacht. No license is needed if it sailed into international water.


Chart: GenM's weekly chart as at April 3, 2019 (Source: Malaysiastock.biz)

The uncertainty of this enormous investment reinforce my preference for Genting over GenM.

BJFOOD: Better Earnings Reported

Results Update

For QE31/1/2019, BJFood reported a net profit of RM9.0 million as compared to a net loss of RM11 million incurred in the same quarter last year. The net profit was 28% higher than the net profit reported in the immediate preceding quarter (QE31/10/2018). Revenue rose 8% q-o-q or 10% y-o-y to RM181 million.

Revenue rose q-o-q mainly due to the calendar year end festive promotions, school holidays and the Christmas season during the third quarter, which contributed positively to the higher profit from operations and pre-tax profit for the quarter under review.


Table: BJFood's last 8 quarterly results

If we exclude the extraordinary gain of RM158.6 million recognized in QE31/10/2014, the improved performance in the last quarter became quite clear. This gain was from the recognition of the gain arising from re-measurement of the 50% equity interest in BStarbucks.


Graph: BJFood's last 37 quarterly results 

Valuation

BJFood (closed at RM1.60 at end of morning session) is now trading at a PE of 30 times (based on last 4 quarters' EPS of 5.25 sen. At this PER, BJFood is deemed overvalued.

Technical Outlook

BJFood may have broken above its downtrend line, RR at RM1.55.


Chart: BJFood's weekly chart as at Mar 15, 2019_2.50 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance and mildly positive technical outlook, I revise BJFood's rating to a HOLD. Upside maybe limited due to demanding 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.

GenM: Outdoor Theme Park to Open in Jan 2019

Genting Group Chairman and CEO Lim Kok Thay told Singapore's Business Times that they plan to open the outdoor theme park by January 2019. For more, go here. For regular update of the construction work on the theme park, go here.

Over the past 2 months, GenM had been hit by 3 negative news; namely, increased casino tax, fallout with 20th Century Fox on the development of the outdoor theme park and huge impairment provision of RM1.49 billion (here). The latest news is a breath of fresh air for this badly beaten stock, which may provide the catalyst for a possible upward re-rating of the stock.


Chart 1: GenM's daily chart as at dec 17, 2018 (Source: Malaysiastock.biz)

The positive vibe may also help Genting, which had also dropped significantly over the past 3 & 1/2 months.


Chart 2: Genting's daily chart as at dec 17, 2018 (Source: Malaysiastock.biz)

For those who have been waiting patiently for a sign to get into these 2 stocks, this one maybe just what a good doctor would recommend. However, given the weak market sentiment, you would do well to buy slowly. Good luck!

GenM: Huge Loss Due to Impairment

Results Update

In QE30/9/2018, GENM reported a huge net loss of RM1.49 billion mainly due to an impairment loss on the group's investment in the promissory notes issued by the Mashpee Whampanoag tribe (a native American tribe) for the development of an integrated gaming resort in the US on a piece of tribal land. 

The reason for the provision for the impairment loss was the uncertainty of recovery of the group’s investment following the US Federal Government’s decision against the tribe for the proposed development. The decision concluded the tribe did not satisfy the conditions under the Indian Reorganisation Act that allow the tribe to have the land in trust for an integrated gaming resort development. The Genting group would continue to work closely with the tribe on options which include a legislation being introduced in the US Congress which, if passed, will entail the US Federal Government to reaffirm the land in trust for the benefit of the tribe. If the proposed legislature is passed, the impairment loss can be reversed when the promissory notes are assessed to be recoverable.

Table 1: Genm's last 8 quarterly results

If we exclude the provision for impairment loss for the investment in promissory notes for the development on US tribal land, Genm's operating profit rose 120% q-o-q or 23% y-o-y to RM661.6 million. This improved performance is on the back of higher revenue, which rose 7% q-o-q or 15% y-o-y to RM2.60 billion.


Table 2: Genm's quarterly results for QE30/9/2018

Below is the graph of Genm's last 50 quarterly P&L. The top graph shows revenue and profits as reported while the lower graph shows profits excluding extraordinary gains or losses. From the lower graph, we can see that Genm's revenue is rising steadily while profits, which have been flattish for past 6 years, are now swinging up.


Graph: Genm's last 50 quarterly results 

Valuation

Genm(closed at RM2.86 last Friday) is now trading at a Price-to-Book of 0.9 times. We cannot compute its PER as Genm made a loss for the past 4 quarters.

Technical Outlook

Genm's share price has been dropping like a stone in the past 2 months. The decline was due to fear of new/ increased taxes (which came true) and theme park problem. This morning, it will have to withstand any sharp drop due to the huge impairment loss.

I believe that the stock is oversold going into today's trading. A drop to the long-term uptrend line at RM2.50 or the horizontal line at RM2.20 may bring out buying support.


Chart 1: GenM's daily chart as at Nov 30, 2018  (Source: Malaysiastock.biz)


Chart 2: GenM's monthly chart as at Nov 30, 2018  (Source: Malaysiastock.biz)

Conclusion

Despite the poor financial performance and earlier 2 bad news (increased casino tax by 10% and theme park hiccup), Genm is a good stock for long-term investment in view of its unique business and strong management.

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.

GENM: Twentieth Century Theme Park in Trouble

This morning, a second "earthquake" hit Genting Malaysia Bhd ("Genm"). Genm announced that it has filed legal proceedings against the 20^th Century Fox group (the Fox group) and the Walt Disney Company in response to a notice issued by the Fox group, in which it terminated the agreement to develop the Twentieth Century Fox World theme park in Genting Highland. In addition, the Fox group has claimed approximately USD46.2 million (or the equivalent of approximately RM193.6 million) in accelerated payments.

GENM denies that the Fox group had grounds to terminate the agreement, and it has pursued cause of action against the Fox group and Disney for inducing breach of contract and for interference with contract. GENM intends to fully enforce its rights under the agreement, claim for the cost of its investments and consequential and punitive damages that in total will exceed USD1 billion. For more, go here.

Genm, which was hit by increased gaming tax in the latest Budget (here), saw its share price plunged to a low of RM3.18 on November 5. It recovered some lost ground over the past 3 weeks and was trading at around RM3.50-3.60. This morning, Genm plunged to a low of RM2.93 on the news of the termination of the agreement to develop the Twentieth Century Fox World theme park. At the time of writing this post, Genm was trading at RM3.18-3.19.

It is hard to see why these 2 giant enterprises would walk away from a profitable business arrangement unless there is a very serious dispute which they couldn't come to an amicable solution. The alternative is a huge loss for either one or both parties which would be the last thing that they would want to suffered from. Let the reality of a huge loss knock some sense into the heads of the management of these groups. 

Meanwhile, you can see that the immediate support for Genm will be around the RM3.00 mark. Its resistance will be RM3.30 while the next support will be about RM2.60.  

Genm is a good investment stock. Its investment horizon is now stretched a lot further ahead while its value is probably more appealing. Those who have the stock, should hold onto it. Those who are waiting to buy, you should do so gradually. Good luck!

Chart: Genm's weekly chart as at Nov 27, 2018_10.00am (Source: Malaysiastock.biz)

GENTING & GENM: Hit by Increased Gaming Tax

The announced Budget for 2019 include increase in gaming tax for casino from 25% to 35%. The last increase in gaming tax for casino was in 1998. In an article in 2016, The Edge entitled "Is Gaming Tax Next to Go Up" an analyst from HLIB opined that a 1%-increase in gaming tax will lower earnings by3% for GENM and 1% for Genting. Thus it is not unreasonable to project that the proposed 10%-increase will lead to a 30%-drop in earnings for GENM and 10% for Genting.

The drop in share price for Genting from RM7.20 to an intra-day low of RM6.35 is about 12%. That nearly mirrors the expected decline in earning of 10%. Its immediate support is at RM6.50.

Chart 1: Genting's monthly chart as at Nov 2, 2018_9.30am (Source: Malaysiastock.biz)

Similarly, the drop in share price for GenM from RM4.54 to an intra-day low of RM3.18 is 30%. That nearly mirrors the expected decline in earning of 30%. Its immediate support is at RM3.30.

Chart 2: GenM's monthly chart as at Nov 2, 2018_9.30am (Source: Malaysiastock.biz)

The trading of these 2 stocks will be very volatile in the next 1-2 days. If you are looking to invest for long-term, you can do so gradually. This huge increase in gaming tax took 20 years to land. It will take another 20 years for the next increase to take place. Thus, this may be a good opportunity to buy into a good growth stock. I believe either one of these stocks are good. However the bigger bang may come from GenM since its Genting Integrated Tourism Plan is expected to be completed in 1H2019 (including the Twentieth Century Fox Theme Park which will be ready in 2Q2019). Good luck.

Magnum: A Final Settlement?

Magnum has a full and final settlement of its hefty tax bill after judicial review. Instead of having to pay RM476 million as per the May announcement (here), its tax liabilities will amount to only RM100 million (here). Surprisingly, the market is not reacting to the positive news. I feel that Magnum should be trading at a higher price with this good news.

Chart: Magnum's daily chart as at Sep 20, 2018 (Source: Malaysiastock.biz)

AAX: Earnings Soared

Results Update

For QE31/12/2017, AAX reported a net profit of RM84 million as compared to a net loss of RM43 million in the immediate preceding quarter. At the same time, revenue rose 8.5% to RM1.22 billion.

When compared to the same quarter last year (4Q16), revenue rose 4% due to 12% growth in passenger volume. Ancillary revenue per passenger increased by 4% to RM142 year-on-year. The seat load factor was at 83% which was 2 percentage point higher than the same quarter last year. Average fare was down by 8% at RM519 as compared to RM565 achieved in 4Q16. Included in other operating expenses in 4Q17 was provision for doubtful debts of RM11.8 million. The profit before tax for the period was RM135.6 million compared to a profit before tax of RM29.9 million in 4Q16; while the net profit for the period was RM84.4 million compared to a net profit of RM39.0 million in 4Q16


Table: AAX's last 8 quarterly results

AAX's top-line, bottom-line and profit margins are all pointing upwards. Things are beginning to look quite positive for AAX.


Graph: AAX's last 13 quarterly results

Technical Outlook

AAX has been moving sideways for the past 17 months. A breakout above RM0.50 or below RM0.35 would point the way forward for AAX.


Chart: AAX's weekly chart as at Feb 21, 2018 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance, AAX could be a good stock to consider for a very 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.

GENM: Poised for Next Upleg?

Technical Outlook

GENM has broken above its downtrend line, RR at RM5.10 in late November. This was followed by a sideways movement with the upside capped by the horizontal line at RM5.30. Yesterday GENM went above the RM5.30 to reach an intra-day high of RM5.33 before it closed at RM5.29. Today it is again trading above RM5.30. Current prices are RM5.34-5.35.


Chart 1: GENM's daily chart as at Dec 12 2017_9.30 (Source: Malaysiastock.biz)

From the weekly chart below, we can see that GENM is in along-term uptrend line, RR with support at RM4.30-4.40. While still below the zero line, the MACD has hooked up and crossed above the MACD signal line. +DMI has also crossed above -DMI. These two signs point to a possible bottom for GENM.


Chart 2: GENM's weekly chart as at Dec 12 2017_9.30 (Source: Malaysiastock.biz)

Recent Financial Result

GENM's profits in the past 3 quarters have normalized after the exceptional profits from forex gains and disposal of investment & properties for the period from QE30/6/2016 to QE31/12/2016.


Table: GENM's last 8 quarterly results


Graph: GENM's last 46 quarterly results

Valuation

GENM (closed at RM5.29 yesterday) is now trading at a PER of 38 times (based on annualized EPS of 14 sen). At this PER, GENM is deemed fully valued.

For those who are keen to following the progress of the construction work on the 20th Century Fox theme park, you can go here.

Conclusion

Based on poorer financial performance and demanding valuation, I rate GENM as a HOLD after the recent correction. The stock could be a trading BUY given the bullish technical outlook. If you choose to trade the stock, please exercise careful discretion.

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.

BJToto: Earning Rebounded

Result Update

For QE31/7/2017, BJToto's net profit rose 2.5% q-o-q or 26.5% y-o-y to RM72 million while revenue was mixed - down 0.4% q-o-q but up 2.5% y-o-y - to RM1.47 billion. Overall revenue dropped q-o-q mainly due to lower revenue reported by Sports Toto and PGMC. The drop was mitigated by higher revenue growth achieved by H.R. Owen which was due to higher revenue achieved from used car sales. The Group registered an increase in pre-tax profit of 15.0% mainly attributable to the improved results reported by Sports Toto and H.R. Owen.


Table : BJToto's last 8 quarterly results

Revenue jumped in QE31/1/2014 due to the consolidation of H.R. Owen's revenue onto the Group's account. Despite the sharply higher revenue, the Group's bottom-line remained flat as the H.R. Owen's profits were not significant.


Graph: BJToto's last 52 quarterly results

Financial Position

BJToto's finaial position as at 31/1/2017 is deemed adequate, with current ratio at 1.03x while gearing ratio at 2.15x.

Valuation

BJToto (closed at RM2.36 last week) is now trading at a PER of 12.4 times (based on last 4 quarters' EPS of 19.06 sen). Its dividend payment for the preceding 4 quarters amounted to 14 sen; giving the stock a dividend yield of 5.9%. At these PER & DY, BJToto is deemed fairly attractive.

TA Securities has valued BJToto at RM3.34 based on Dividend Discount Model, with CAPM rate of 10.20%. This gives the stock a potential upside of 41.5%. If you want to read the report, go here.

Technical Outlook

In April, BJToto broke below the irregular trading range, ABCD at RM2.60 and dropped to a low of around RM2.25. Since the release of the latest quarterly result, BJToto has rebounded back above RM2.30. While the downside momentum has begun to weaken, it is still too early to call a bottom for the stock.


Chart 1: BJToto's weekly chart as at Sep 21, 2017 (Source: Malaysiastock.biz)


Chart 2: BJToto's daily chart as at Sep 21, 2017 (Source: Malaysiastock.biz)

Conclusion

Based on better financial performance and attractive valuation, BJToto is definitely a stock worth considering for long-term investment at this beaten down price.

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.

BJFood: Its First Loss

Results Update

For QE30/4/2017, BJFood's pre-tax profit dropped 86% q-o-q or 87% y-o-y to RM1.0 million while revenue was mixed - down 7% q-o-q but up 9% y-o-y - to RM151 million. Revenue and pre-tax profit in the fourth quarter dropped q-o-q due to the absence of calendar year end festive sales, school holidays and Christmas season. Bottom-line was further exacerbated by the impairment of fixed assets of RM4.433 million and intangible assets of RM0.539 million incurred during the fourth quarter as measures are taken to curtail future losses. As a result, BJFood reported its first quarterly net loss of RM3.366 million!


Table: BJFood's last 8 quarterly results


Graph: BJFood's last 30 quarterly results 

Valuation

BJFood (closed at RM1.53 yesterday) is now trading at a PE of 50 times (based on last 4 quarters' EPS of 3.01 sen. At this PER, BJFood is deemed overvalued.

Technical Outlook

After a false breakout in March, BJFood is once again in its intermediate downtrend line with resistance at RM1.70.


Chart 1: BJFood's monthly chart as at Jun 15, 2017_12.30 (Source: ShareInvestor.com)

Conclusion

Based on weak financial performance & demanding valuation, I revise BJFood's rating from a HOLD to a REDUCE.

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.

Genting: Intermediate Uptrend Has Ended

On June 7, Genting broke its intermediate uptrend line, SS which dates back to December last year. To stay within that uptrend line, Genting must quickly go back above RM9.85. Not only did Genting fail to do so, it also broke below its flag formation yesterday. This means that Genting’s intermediate uptrend has now reversed into a downtrend.

Chart 1: Genting's daily chart as at Jun 13, 2017 (Source: Shareinvestor.com)  

However, Genting still has a chance of not entering into an intermediate downtrend if it can stay above its previous long-term downtrend line, RR at RM9.60 (see the next chart). If Genting can stay above this price level, it has a chance of moving sideways and avoiding an immediate downtrend. 

Chart 2: Genting's monthly chart as at Jun 13, 2017 (Source: Shareinvestor.com) 

I would recommend investors to sell or reduce your position in Genting based on the following:

1) the breakdown of the intermediate uptrend line at RM9.85; thus ending the hope of higher prices, and

2) the downside breakout of the flag formation – which means a bearish reversal & possibly lower prices ahead.

You can choose one of these 2 options:

1) Sell on strength if Genting rose to RM9.70-9.80

2) Postpone your selling with the hope that the long-term downtrend line support at RM9.60 may forestall the further price decline. This may give an opportunity for Genting to recover back into the flag formation or, better still, above the violated intermediate uptrend line (no longer at RM9.85 but at higher prices at RM9.90-9.95). However, if the support at RM9.60 fails, the follow-thru selling can be fast & furious.

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.

Genm: Intermediate Uptrend Has Ended

In late May, GenM broke its intermediate uptrend line, SS (at RM5.85) which dates back to January this year. The breakdown of the uptrend line means that the continued uptrend for GenM has ended and the next phrase of price movement will be either a sideways movement or a downtrend (or a combination of both). GenM has in fact been moving sideways between RM5.60 & RM5.80 for the past 9-10 days.

Chart 1: GenM's daily chart as at Jun 13, 2017 (Source: Shareinvestor.com)

If you look at GenM’s monthly chart, you will see that it has been rising in an upward channel since 1998. During this 18-year period, GenM has touched the upper line thrice and the lower line thrice. Whenever these happened, the share price would move back into the middle of the channel. In May, GenM touched the upper line at RM6.40. Based on previous experience, GenM is likely to move towards the middle of the upward channel.

Chart 2: GenM's monthly chart as at Jun 13, 2017 (Source: Shareinvestor.com) 

I believe that investors should sell or reduce their position in GenM based on the following

1) the breakdown of the intermediate uptrend line at RM5.85; thus ending the immediate prospects of higher prices, and

2) the recent test of the upper line of the upward channel at RM6.40, which is likely to be followed by a price pullback to the middle of the upward channel.

If you choose to sell or reduce your position in GenM, the best price obtainable is RM5.70-5.80.

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.

BJTOTO: A Value Gaming Stock

The hefty tax penalty levied by the Inland Revenue against Magnum has caused investors with BJToto to sell-off their BJToto shares in order to avoid a similar debacle happening in BJToto or simply to swap their BJToto shares for much-cheaper Magnum shares. Is BJToto less attractive as compared to Magnum? Is BJToto worth considering for long-term investment?

Result Update

For QE31/1/2017, BJToto's net profit dropped 23% q-o-q or 18% y-o-y to RM48 million while revenue was mixed - down 6% q-o-q but up 3% y-o-y - to RM1.367 billion. Overall revenue dropped q-o-q mainly due to lower revenue reported by H.R. Owen and International Lottery & Totalizator Systems, Inc (the latter was due to recognition of substantial project contract sales). These were partly mitigated by higher revenue recorded by Sports Toto and Philippine Gaming Management Corporation. As a result of a drop in revenue, the Group's pre-tax profit declined by 9.6% q-o-q. (Note: BJToto's latest result is for QE31/1/2017 which was released on March 16, 2017. Next quarterly result is for QE30/4/2017 and that should be released next week.)


Table : BJToto's last 8 quarterly results

Revenue jumped in QE31/1/2014 due to the consolidation of H.R. Owen's revenue onto the Group's account. Despite the sharply higher revenue, the Group's bottom-line remained flat as the H.R. Owen's profits were not significant.


Graph: BJToto's last 14 quarterly results

Financial Position

BJToto's finaial position as at 31/1/2017 is deemed adequate, with current ratio at 1.05x gearing ratio at 2.19x.

Valuation

BJToto (closed at RM2.56 last Friday) is now trading at a PER of 12.6 times (based on last 4 quarters' EPS of 20.3 sen). Its dividend payment for the preceding 4 quarters amounted to 16 sen; giving the stock a dividend yield of 6.2%. At these PER & DY, BJToto is deemed fairly attractive.

Technical Outlook

BJToto has been sliding for the past 4 years from RM4.00 in mid-2013 to the current price of around RM2.50.


Chart 1: BJToto's monthly chart as at Jun 13, 2017_10.00 (Source: ShareInvestor.com)

BJToto's latest selldown happened after the stock broke below the horizontal line at RM2.90. At the current price level of RM2.50, BJToto appears to have found buying support.


Chart 2: BJToto's weekly chart as at Jun 13, 2017_10.00 (Source: ShareInvestor.com)

Conclusion

Based on its lower price, BJToto is once again trading at fairly attractive valuation. Despite the negative technical outlook, BJToto is a stock worth considering for long-term investment at this beaten down price.

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.

Magnum: Value Appears After A Hard Knock!

On May 19, Magnum announced its result for QE31/3/2017. That announcement was overshadowed by the announcement that it was penalized by the Inland Revenue for an amount of RM476.5 million. Today, The Star newspaper tried to address the question on many investors' mind: Is it time to look at Magnum?

Result Update

For QE31/3/2017, Magnum's net profit dropped 32% q-o-q or 56% y-o-y to RM30.6 million while revenue - up 10% q-o-q but down 7% y-o-y - to RM697 million.


Table 1: Magnum's last 8 quarterly results

This bottom-line does not reflected the tax penalty which would only be taken into the book in QE30/6/2017. If this has been taken into the book for QE31/3/2017, this result would be a huge loss. See the table below. 


Table 2: Magnum's results for QE31/3/2017 (as reported & adjusted)

Over the past 3-4 years, Magnum has experienced a declining profit trend. More importantly, its revenue has also been declining slowly. This is due to competition from the illegal gaming syndicates. Despite introducing new games, Magnum has not been able to stop the slide.


Graph: Magnum's last 14 quarterly results

Valuation

Magnum (closed at RM1.71 last Friday) is now trading at a PER of 16 times (based on last 4 quarters' EPS of 10.7 sen). Magnum's Price to Book is about 1.26x (based on its adjusted NTA of RM1.35 per share as at 31/3/2017 after deducting the tax penalty from net assets). Magnum has suspended its dividend for this quarter. Prior to this, its dividend payment for the preceding 4 quarters was 13 sen. If it can continue to pay this level of dividend again, the dividend yield would be 7.6%.

Hence, Magnum has dropped to a price level that makes the stock fairly attractive.

Technical Outlook

Magnum has dropped close to its long-term uptrend line, SS. The support from that uptrend line at RM1.60 should hold up the stock.


Chart 1: Magnum's monthly chart as at Jun 9, 2017 (Source: ShareInvestor.com)

It is too early to say that Magnum has hit the bottom. However, we see that some buying support has appeared at the RM1.70 mark.


Chart 2: Magnum's daily chart as at Jun 9, 2017 (Source: ShareInvestor.com)

Conclusion

Based on its lower price, Magnum is once again trading at fairly attractive valuation. This coupled with the technical support at RM1.60 level, make Magnum worthwhile 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.

BJFood: Earnings Still Weak

Results Update

For QE31/1/2017, BJFood's net profit dropped by 7% q-o-q or 37% y-o-y to RM4.7 million while revenue rose 10% q-o-q or 11% y-o-y to RM164 million. Revenue & PBT rose q-o-q mainly due to higher contribution from Starbucks operations in Malaysia. PAT however dropped due to disproportionate tax charge for the current quarter as a result of certain expenses or losses being disallowed for tax purposes, different foreign tax rate as well as non-availability of Group tax relief in respect of losses incurred by certain subsidiary companies.


Table: BJFood's last 8 quarterly results


Graph: BJFood's last 29 quarterly results 

Valuation

BJFood (closed at RM1.86 yesterday) is now trading at a PE of 38 times (based on last 4 quarters' EPS of 4.96 sen. At this PER, BJFood is deemed overvalued.

Technical Outlook

As posted earlier, BJFood broke above its intermediate downtrend line at RM1.80. This breakout may be the prelude to the next upleg for the stock.


Chart 1: BJFood's monthly chart as at Mar 15, 2017 (Source: ShareInvestor.com)


Chart 2: BJFood's daily chart as at Mar 15, 2017 (Source: ShareInvestor.com)

Conclusion

Based on weak financial performance & demanding valuation, I would maintain BJFood as a HOLD due to the bullish breakout of the downtrend line.

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.