Thursday, February 25, 2010

APM rising to the occasion?

In the past 12 months, we had seen a sharp rise in the price of TChong (from a low of RM1.00 to a recent high of RM3.50). At the same time, its sister company, APM has also enjoyed a strong rally (from a low of RM1.30 to a recent high of RM3.30). Today, APM rose to a high of RM3.83 (from yesterday's close of RM3.30), surpassing its all-time high of RM3.78 recorded in 2002. TChong has also rallied today to hit a high of RM3.22 from overnight close of RM3.10. Why the sharp rally in APM?

APM & TChong are both controlled by Dato' Tan Heng Chew, mainly through Tan Chong Consolidated Sdn Bhd ('TCC'). As at 31/3/2009, Dato' Tan & TCC together owned 52.8% & 50.85% of APM & TChong, respectively. TCC is a private company owned by the two brothers who founded the Tan Chong empire years ago. The two families were at logger heads up until recently when a solution was reached on how to divide up their interests in TCC.

A corporate exercise involving APM & TChong either in the form of the takeover of APM by TChong or the merger of the two companies or the sale of the business of both companies to a Newco could be in the final leg. Looking at the fact sheet below, I think it may involve a share exchange between APM & TChong at a ratio of 5 APM shares for either 6 or 7 TChong shares, if the exercise is a takeover of APM by TChong or a merger between APM & TChong. If it's a sale of the their business to a Newco, the valuation of the business/shares of APM & TChong may reflect the same ratio of either 5:6 or 5:7 in favor of APM.


Table: APM & TChong's Fact Sheet


Chart 1: TChong's weekly chart as at Feb 24, 2010 (Source: Tradesignum)


Chart 2: APM's weekly chart as at Feb 24, 2010 (Source: Tradesignum)
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6 comments:

  1. ronnieFriday, February 26, 2010 11:20:00 PM

    Dear Mr Lu, Thank you for your kind advice on which shares to buy & sell. Keep up the excellent work.

    ReplyDelete
  2. solomonSaturday, February 27, 2010 8:26:00 PM

    Good day Alex,

    How do you see MEASAT and Transmile on technical viewpoints?

    ReplyDelete
  3. playboy1010Sunday, February 28, 2010 3:39:00 AM

    hi~
    i am newbie of the observer of stock market...
    i had joined the rhbinvest challenge which start from 1/3 - 31/3/10.
    i would like to ask that any shares that i could buy for it which can have a high return within a month.
    Is that buying a low price share better than a higher price share??
    thanks ^^

    ReplyDelete
  4. Alex LuMonday, March 01, 2010 4:20:00 PM

    Hi Solomon,

    Measat is still in a downtrend where the breakout level is at RM2.20-30.

    Tranmil is a new all-time low. It is a good practice to avoid going 'long' on a stock trading at all-time low, just as it is a good practice to go 'short' on a stock trading at all-time high. The uncertainties surrounding this stock look too formidable to overcome. Best to go this stock a miss.

    ReplyDelete
  5. Alex LuMonday, March 01, 2010 4:21:00 PM

    Hi ronnie,

    Thank you.

    ReplyDelete
  6. Alex LuMonday, March 01, 2010 4:32:00 PM

    Hi 1010,

    As a rule, you make profit only by selling stocks at prices higher than what you've paid for them. So, buying at low price is a start. You need also to consider whether you can sell at a higher price.

    What if you buy a stock at a low price, only to see it goes lower? The opposite may also happen- you may buy a stock at a high price & it goes higher.

    If you are making a start in investment, then do some reading on this field. Try to read up on fundamental analysis and also technical analysis. Be prepared for a few lean years as you learn the rope. The rewards will come, when you are ready.

    ReplyDelete