Roads & Ports- a defensive play

In this uncertain time, we should look at companies with sustainable business to invest in. Among these companies are those involved in the operation of tolled highways, ports & airports. I have selected 5 stocks for our consideration (see the table below). This is, by no mean, an exhaustive list as some counters have been excluded for various reasons, such as Suria (uncertainty in its decision-making), SunInfra (financial problem) & MTDInfra (perpetual trendless movement).

From the table below, you will see that both Litrak & NCB are attractively priced at PE of about 7.4-7.6 times as well as giving a dividend yield of 10-12%.



I have appended below their monthly charts, plus the various support levels.
- Airport (Uptrend support at RM2.20 & horizontal support at RM2.20 & RM1.80)
- Biport (Uptrend just broken. Horizontal support at RM5.00 & RM4.50)
- Litrak (Uptrend just broken. Horizontal support at RM1.60 & RM1.30)
- NCB (Horizontal support at RM2.20 & RM1.80)
- PLUS (Uptrend just broken. Horizontal support at RM2.60 & RM2.40)


Chart 1: Airport's monthly chart as at October 21, 2008 (source: Quickcharts)



Chart 2: Biport's monthly chart as at October 21, 2008 (source: Quickcharts)



Chart 3: Litrak's monthly chart as at October 21, 2008 (source: Quickcharts)



Chart 4: NCB's monthly chart as at October 21, 2008 (source: Quickcharts)



Chart 5: Plus' monthly chart as at October 21, 2008 (source: Quickcharts)

Based on fundamental reasons, Litrak & NCB looks more attractive than the other stocks. Both stocks have weaknesses when viewed from the technical angle. NCB share price tends to be range-bound, with a glacial upward bias over the past 5 years. This "uptrend" has since been violated this month. On the other hand, Litrak was in an uptrend that was violated two months ago. I guess the breakdown of all uptrend lines are to be expected in the current bear market.

In conclusion, Litrak & NCB are the top picks. I have a slight preference for Litrak over NCB, for the simple reason that I expect Litrak to move faster once the recovery set in.