Chart 1: Jerneh's 60-min chart as at Dec 4, 2009_9.20am (Source: Quickcharts)
Looking at the monthly chart (Chart 2), we can see that Jerneh has very strong horizontal resistance at RM2.17-20. This morning, the share price went to a high of RM2.16 before correction set in. This could be a good level to take your profit on this stock. I still believe that Jerneh will be hard pressed to repeat its flying performance achieved in QE30/9/2009 (see my earlier post).
Chart 2: Jerneh's monthly chart as at Dec 3, 2009 (Source: Quickcharts)
Based on data provided by the Companies Commission of Malaysia, JIB’s net assets for the financial year ended Dec 31, 2008 (FY08) amounted to RM236.17 million or RM2.36 per share. Assuming that JIB is priced from 1.2 times to 1.8 times net asset, the general insurer could fetch between RM283 million and RM425 million. (The Edge) Based on Jerneh Asia Berhad 180,720,605 shares issued, and assuming selling price at 1.5 times (middle point), Jerneh Asia will get sales proceeds of RM 1.96 a share. And after the sale, Jerneh Asia Berhad still has net asset value per share of RM 1.94 a share.
ReplyDeleteIf the deal goes through, maybe some further upside for the stock
Hi Ooi,
ReplyDeleteThank for the tip. I missed this announcement.
Assuming that Jerneh managed to dispose of its 80%-stake in Jerneh Insurance Bhd (JIB) for 1.5 times net asset, it would book in an extraordinary gain of RM94 million. In addition, it would have converted a Non-current Assets to cash, which amount to RM283 million. What would Jerneh do with the cash? Distribute it to shareholders? Invest it in another business? Who knows...
What if the disposal failed to materialize? The rolling back of the discount in the Net Assets value over the past 2 weeks would evaporate (read: the share price would drop back). One thing I that have noticed when I looked through the many quarterly results announcement over the past few weeks is that there are many companies that are trading at less than their Book Value. Some were trading as low as 0.5 times their Book Value. In fact, Jerneh was one of them when I looked at the stock on November 19.
http://www.theedgemalaysia.com/business-news/154411-jerneh-paramount-rise-to-52-week-high.html
There are 3 parties interested in JIB, of which 2 parties have working relationship with Jerneh Asia before.
ReplyDeleteI tend to think the chance of the deal going through is high.
It seems Robert Kuok is quiting business in Malaysia after selling Pelangi, sugar mill, land etc. Likely the sales proceeds will be returned to shareholders
HI Ooi, Alex, good day to you both.
ReplyDeleteI would like to ask for your kind advice if now is still safe to buy jerneh and jerneh WA at 2.98 and 1.54 respectively? Assuming that the deal to sell Jerneh insurance will go through in the near future, do you think there is still upside in the price for both counters? thank you very much in advance.CK