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.

Thursday, August 22, 2019

SERBADK: Uptrend Continuing

Serba Dinamik Holdings Bhd ("Serbadk") is involved in integrated engineering, contracting and maintenance services. It has wide exposure in the O&G sector. Last week, it announced that it has secured a RM1 billion job in Uzbekistan to build a chlorine processing facility and a 26-MW steam turbine power plant (here). It is valued at an average target price of RM5.65 by Public, Affin, Kenanga & AMInvest.

Yesterday, Serbadk broke above the line connecting its recent highs at RM4.30. This upside breakout signaled the continuation of its prior uptrend. Based on projection, Serbadk may rise to RM5.00.


Chart: Serbadk's daily chart as at August 22, 2019_9.25am (Source: Malaysiastock.biz)

Wednesday, August 21, 2019

TChong: Earnings Improved due to Favorable Sales Mix

Result Update

For QE30/6/2019, TChong's net profit rose 22% q-o-q or 57% y-o-y to RM19 million while revenue dropped 1% q-o-q or 2% y-o-y to RM1.067 billion. The automotive revenue rose 1.3% y-o-y to RM2,096.6 million and EBITDA rose 46.9% y-o-y to RM149.6 million. Automotive division recorded a 1.3%-decline in revenue to RM1,041.7 million, while EBITDA has improved by 16.2% to RM80.4 million. The lower revenue was due to stiff competition in the automotive market. EBITDA improved due to favorable sales model mix.


Table: TChong's last 8 quarterly results


Graph: TChong's last 49 quarterly results

Financial Position

As at 30/6/2019, TChong's financial position is deemed satisfactory with current ratio at 1.4 times and gearing ratio at 1.0 time.

Valuation

TChong (closed at RM1.45 yesterday) is now trading at a trailing PER of 7.9 times (based on last 4 quarters' EPS of 18.37 sen). At this PER, TChong is trading at a fairly reasonable value for a turnaround stock.

Technical Outlook

TChong appears to be making a base at around RM1.30-1.40. Immediate resistance will be at the psychological RM1.50 mark and thereafter at the horizontal line at RM1.65.


Chart 1: TChong's daily chart as at Aug 20, 2019 (Source: Malaysiastock.biz)


Chart 2: TChong's monthly chart as at Aug 20, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, satisfactory financial position and fair valuation, TChong could be a good stock for recovery play.

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 20, 2019

GCB: Earnings Continued to Rise

Results Update

For QE30/6/2019, GCB's net profit rose 15% q-o-q or 42% y-o-y to RM61 million while revenue rose 16% q-o-q or 53% y-o-y to RM753 million. Revenue increased y-o-y mainly due to increase in sales volume of cocoa products while profit before tax rose 42% y-o-y mainly due to higher sales volume achieved.


Table: GCB's last 8 quarterly results


Graph: GCB's last 59 quarterly results

Financial Position

As at 30/6/2019, GCB's financial position is deemed fair while current ratio at 1.4 times and gearing ratio at 1.3 times. The high gearing was due to the suppliers' credit taken to finance purchase of raw material.

Valuation

GCB (closed at RM3.53 yesterday) is now trading at a trailing PER of 7.6 times (based on last 4 quarters' EPS of 46.3 sen). At this PER, GCB is deemed fairly attractive.

Technical Outlook

GCB made a temporary top in April at RM4.24. It then dropped back to find support at the horizontal line at RM3.30. The next support will be from the uptrend line, SS at RM3.10.


Chart : GCB's weekly chart as at Aug 19, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance, attractive valuation and positive technical outlook, GCB 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. 

Friday, August 16, 2019

KKB: Strong Earnings Maintained

Result Update

For QE30/6/2019, KKB's net profit rose 76% q-o-q or 215% y-o-y to RM5.6 million while revenue rose 2% q-o-q or 29% y-o-y to RM120 million. The Group's revenue rose y-o-y due mainly to the increased revenue from the Group’s Engineering Sector, in particular, its Civil Construction and Steel Fabrication divisions. Concurrently, the Group’s pre-tax profit rose 219% y-o-y on the back of higher revenue and improved profit margin recognized from the Engineering sector.

Apart from the on-going major Steel Fabrication jobs i.e the D18 Phase 2 Project for the Provision of Engineering, Procurement, Construction, Installation and Commissioning of Wellhead Platforms for Petronas Carigali Sdn Bhd and the Provision of Procurement & Construction of Wellhead Deck, Piles and Conductors for the Pegaga Development Project, the commencement of the two new pipe laying projects secured in February 2019 from Jabatan Bekalan Air Luar Bandar Sarawak (Package SR1 & Package 1C) implemented under the Sarawak Water Supply Grid Program has started to contribute positively to the Group’s revenue and earnings.


Table: KKB's last 8 quarterly result


Graph: KKB's last 48 quarterly result

Financial Position

KKB's financial position as at 30/6/2019 is deemed satisfactory, with current ratio and gearing ratio stood at 2 times and 0.6 times respectively.

Valuation

KKB (closed at RM1.43 yesterday) is now trading at a trailing PER of 16x (based on last 4 quarters' EPS of 9.02 sen). At this PER, Dufu is deemed fair.

Technical Outlook

KKB has broken above its long downtrend in February 2019 at RM1.00.


Chart: KKB's monthly chart as at Aug 15, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, satisfactory financial position and fair valuation, KKB is still 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.

Wednesday, August 14, 2019

Market Outlook as at August 14, 2019

Our stock market is getting weaker with each passing day. FBMKLCI is now resting at the horizontal line at 1590. With the downtrend gathering strength (see the rising ADX), this support at 1590 may not hold for long. If this support failed, the index may go down to the next support at the lower line of the wedge, ABCD at 1570. 

Chart 1: FBMKLCI's daily chart as at Aug 13, 2019 (Source: Malaysiastock.biz)

Looking at the weekly chart, we can see that FBMKLCI has been moving downward in a wedge formation, ABCD after making a high of 1896 in April 2018 (at the point marked as "A"). This matched the high recorded in July 2014 (at the point marked as "W"). If the index were to break below the lower line of the wedge, ABCD at 1570, it may go down to test the support at the horizontal line at 1530.


Chart 2: FBMKLCI's weekly chart as at Aug 13, 2019 (Source: Malaysiastock.biz)

We will have to wait and see how the stock market will withstand the fresh round of negative news ranging from the weak economic data to persistent trade war rhetoric. To add to the depressing brew, we have nincompoops for political leaders, here and abroad, that are determined to prove their worth only to their narrow constituencies instead of their entire population. These are the times that try the men's souls.

Tuesday, August 13, 2019

GenM: RPT Gone Bad!

After the market close on 7 August, GenM announced that it would acquire a 46%-stake in Nasdaq-listed Empire Resorts Inc from its major shareholder at USD128.6 million (or at a price of USD9.74 apiece) (here). 

On 8 August, GenM share price dropped sharply due to concern about this related party transaction. On 9 August, investors began buying into the stock on the hope that GenM would recover after a few quarters down the road.

Yesterday, Empire Resorts share price plunged 12% to close at USD8.18 on news that the company has highlighted to its shareholders that it is contemplating the option of filing for voluntary bankruptcy during the announcement of its result to enable it to easier restructure its borrowings (here). 

To be fair, bankruptcy filings may be a tactical move which savvy investors and companies would employ in order to regulate their affair. However, normal investors are put off by this move which suggests the company's financial condition is quite bad. Even for a well-read person like myself, the move by the major shareholder to tap his listed vehicle for fund to finance its loss-making company in New York is not appropriate. What makes this transaction even worse are:
1. the announcement was not made with full candor regarding the state of financial condition of Empire Resorts; 
2. the shareholders do not have an option to vote on the acquisition as the purchase consideration is below the 5% asset value threshold; and 
3. the purchase price is now higher than the current market price.
As this seemingly unfair transaction will likely affect market perception about the Genting group, I expect the share prices of the group's listed vehicles will trade at a discount for a while until investors have forgotten about their bad experience. For now, I think it is best to avoid this group unless the share prices have dropped significantly enough as to warrant a trading BUY.


Chart 1: Genm's monthly chart as at Aug 13, 2018_12.30 (Source: Malaysiastock.com)


Chart 2: Genting's monthly chart as at Aug 13, 2018_12.30 (Source: Malaysiastock.com)