Another education group has proposed a Bonus Issue. This time, it's HELP International Corporation Berhad ('HELP'), which has just proposed a bonus of 3-for-5 today. The market may have gotten wind of the proposed bonus issue as HELP share price was bidden up from RM1.20 to an intra-day high of RM4.80 today.
Chart: HELP's daily chart as at July 20, 2010_9.30am (Source: Quickchart)
Based on its closing price at the end of the morning session of RM4.34, HELP is now trading at a trailing PER of 21 times (based on last 4 quarters' EPS of 20.6 sen). While not as exorbitantly over-priced as SEG, HELP is still fully valued.
Table 1: HELP's last 8 quarterly results
Based on demanding valuation, HELP is a stock is to avoid.
Hi Alex,
ReplyDeleteFajar has almost 10M units of shares in its treasury. What's your opinion of the possibility of they giving out these as BI to the shareholders and how will the price be affected which has been slowly inching up lately.
Thnaks.
Hi Avatar,
ReplyDeleteThe situation that you have envisaged is not a bonus issue. It would more likely to lead to a dividend-in-specie where the company may distribute the Treasury shares to its shareholders. The company may alternatively choose to cancel the shares, which would boost the EPS & NTA per share.
Bonus Issue is a situation where a company has sufficient reserves, whether retained profit or capital reserves, and chose to capitalize the reserves & distribute the newly-created shares to the shareholders.
A share split is simply a sub-division of the existing shares into more shares but with lower par value. Example: 1 unit of share with par value of RM1.00 can be split into 2 units of share with par value of 50 sen each.
Hi! Alex,
ReplyDeleteMay I consult with you whether TGPFFS a good counter to invest ?
Thank you
Desmond Chong
Hi Desmond Chong
ReplyDeleteTGOFFS is a marginally profitable Oil & Gas company. Its fortune may change as it has taken delivery of three new anchor handling tug and supply vessels which will be chartered to Petronas Carigali Sdn Bhd for tenures of 3-6 years commencing March 2010. The contracts are reported to be worth RM150 million. With the new vessel deliveries, Tanjung will be operating 14 offshore support vessels.
TGOFFS's next horizontal resistance is at RM1.50 and then at RM1.65.
Finally, there is a unconfirmed report that Equinas may acquire a 20% stake in TGOFFS. The report says that this could be a precursor for Ekuinas to take TGOFFS private. Link given below:
http://webcache.googleusercontent.com/search?q=cache:9rkqjKUZD70J:www.theborneopost.com/%3Fp%3D39203+equinas+malaysia+investing+in+tanjong+offshore&hl=en&client=firefox-a&gl=my&strip=1
This comment has been removed by a blog administrator.
ReplyDeleteneed ur comment on titan should i advise client to hold or wait for higher price ?
ReplyDeleteHi Alex,
ReplyDeleteMany thanks for the explanation on the share dividend thingy. I read that Fajar had done distribution of treasury shares in Nov last year. I just wonder whether Fajar will repeat it again this financial year end qtr results to boost its turtlish share price movement.
Hi kian,
ReplyDeleteTitan has announced that a Korean company, Honam will be acquiring 72.32% of the issued share capital of the Company from 2 major shareholders, PNB and the Chao family of Taiwan.
Honam is required to make an unconditional take-over offer (or, MGO) to the remaining shareholders of the Company at a cash consideration of RM2.35 per share. At the press conference held, there was no announcement that Honam will seek a waiver of the need to carry out a MGO.
Under this circumstances, it looks like a MGO is very likely. The estimated time frame to completion is 4 months.
Normally, the share will trade at discount to the GO price is about 3-4% or at RM2.25-28. Your client will have to decide whether to wait for the MGO and receive additional 15 sen (above the current market price of RM2.20). A 6.8% return for a 4-month holding is quite of good deal.
Hello Alex,
ReplyDeleteHow to judge the stock over value and undervalue?
Hi dipankara
ReplyDeleteYour question- How to judge the stock over value and undervalue?- goes to the heart of a very wide study called Fundamental Analysis. I don't think we can do justice to such a big topic via a comment alone. It may take an entire website or blog to do so. A good place to start is Investopedia University (link given below).
If I may stab at the beast, the general rule is a stock may trade at a Price to Earning (PE) of 10-15 times. You should make allowance for the following:
1. the outlook of stock market (bullish or bearish?)
2. company's size (big-cap vs small-cap);
3. company's growth track record (the higher the better); and
4. company's financial position.
For cyclical stocks, you should use Price to Book when at their earning approaches either historical low or high. For stocks which derive predictable earning from one or a few assets (such as highway or shopping mall), DCF is the preferred valuation method.
http://www.investopedia.com/university/?viewed=1
hi alex,
ReplyDeleteis cocoland fully valued ? or more upside ?. may i know where to find the fbmklci,dow & s&p500 index pe & its history pe charts
Hi Alex good morning. thanks for your call on lonbisc. It is surging now.thanks.:)
ReplyDeleteHi ks,
ReplyDeleteI don't know where you may find the fbmklci,dow & s&p500 index pe & its history pe charts. I don;t have any of them.
I was asked about Cocoland yesterday and this was my comment:
"At RM2.46 now, Cocoland is trading at a trailing PER of 15 times (based on FY2009 EPS of 16.4 sen). For a small-cap, albeit one with a promising outlook, Cocoland is deemed fully valued.
Chartwise, the stock is at an all-time high. A stock in such situation tends to go higher until it can go no more. Then the sharp pullback would set in.
You have to choose whether to go with the fundamental analysis or the technical analysis. If you are not a nimble trader (who can cut loss without patting an eyelid), I would advise you to give this a miss".
Since then (less than 24 hours later), Cocoland has moved up by about 30 sen (to RM2.73 now). My comment/take remains unchanged.
Hi CK,
ReplyDeleteNo problem. Lonbisc has just crossed the horizontal resistance at RM1.30. The next horizontal resistance at RM1.40 will be tougher.
hi bro alex. please comment on another biscuit stock "KHEESAN". no much move compared to COCOLAND,OFI and LONBISC. will it come and what it target ??
ReplyDeleteanother stock is SAPIND, how its technical ??
thx alots bro
Hi Alex
ReplyDeleteMind to comment on Tchong. Seems TIV is going to be better on 2H.
JJ
sounds like biscuit companies in focus...
ReplyDeletethanks
maxwealth88
This comment has been removed by the author.
ReplyDeleteHi Yap
ReplyDeleteTChong may do better in the current quarter based on increased car sales as reported. Being a cyclical stock, we cannot value TChong using what may be its peak earning. Similarly, when its earning plunged during the recession, one also cannot ignore its book value. We have seen how enthusiastic analysts & pundits were about cyclical stocks when their earning went skyhigh & they got carried away by the fact that these same companies can show hugely disappointing results the following year. Remember the steel stocks?
Nevertheless, the technical outlook for TChong is still positive. If it can surpass the recent June high of RM4.57-60, it may rally to test its all-time (April 2010) high of RM5.12. Take a small position, if you wish, but don't bet your farm on this stock.
Hi wong said...
ReplyDeleteKHEESAN is a very quiet stock. It may have broken above its downtrend but one cannot be too sure as the volume is too thin to suggest any commitment on the part of the buyers. Its immediate resistance is at RM0.75 & then RM0.90.
SAPIND is on the verge of a breakout. It is pushing hard against the strong horizontal line at 80 sen. If it can break through it, its next resistance is at RM1.00.