I REGRET TO ADVISE THAT EMIVEST IS THE SUBJECT OF A PRIVATIZATION EXERCISE WITH THE BUY-OUT OFFER AT RM0.90. SINCE THE STOCK IS NOW TRADING AT RM0.88-0.89, THERE IS NO UPSIDE TO THIS STOCK. AS SUCH, THIS POST IS NOT ACTIONABLE.
Emivest broke above its horizontal resistance at RM0.87-0.88 yesterday. It could potentially go to RM1.10 as its previous two upside breakouts in 1H2009 & 2H2010 had resulted in gain of about RM0.20. On weakness, the stock may pull back to its support levels at RM0.83-0.85 (from the 10, 20 & 40-week SMA lines).
Chart: Emivest's weekly chart as at January 16, 2012 (Source: Quickcharts)
Emivest reported an impressive 264%-jump in its net profit to RM12 million on the back of a 35%-increase in its turnover to RM196 million for QE30/9/2011 (here). The increased turnover was attributed to the commencement of operation of 2 new feedmill plants at Port Klang & Vietnam. However, we must note that the increased plant capacity has resulted in higher gearing of 1.3 times as at 30/9/2011 as compared to 0.96 time as at 31/12/2010. Based on its closing price of RM0.885 yesterday, Emivest is now trading at a current PE of 2.2 times (based on annualized EPS of 40 sen).
Based on technical consideration & attractive valuation, Emivest could be a good trading BUY as well as a good long-term investment stock (albeit with a medium risk profile).
Hi Alex
ReplyDeleteI think Emivest is now in the midst of take over by its major shareholder at 90sen. It already granted approval for takeover and are now pending for another EGM approval of its sister company, LHH which is conditional deal at takeover price of 1.90. The only goodies for both deal are once LHH EGM approve for takeover deal, both company will be declare 4 and 5sen dividend respectively without further adjust to their take over price. Therefore, both stocks upside potential limited to 5%.
Hi Alex
ReplyDeleteCan you comment on share exchange deal between YTL cement and YTL corp?
The share exchange is at 1 YTL cement: 3.17 YTL corp. Based on current share price, YTL cement stand to arbitrage gain of 7-8%. The first closing date is on 10 Feb.
Hi Hng,
ReplyDeleteThanks for the hat tip on Emivest. I forgot all about the privatization of this stock.
On the exchange of YTLCement & YTLCorp, the differential of 7% is an arbitraging opportunity. YTLCorp has good medium-term uptrend line support at RM1.44-1.45 while YTLCement's long-term uptrend line support is at RMRM4.25-4.30. With these, you can calibrate your entry when YTLCement takes a dip.
Good luck.
Hi Alex
ReplyDeleteI just happen to know Emivest and LHH as i have Emivest in my portfolio at 86.5sen, still waiting for its dividend of 4sen.
Frankly, I thanks for your generous to share your vast experience in stock investment.
Hi Alex
ReplyDeleteI think current gap between YTL cement and exchange value of YTL corp will narrow once the deal become unconditional.
To recap, YTL corp control about 47.8% of YTL cement, but Yeoh family control another 3-4%, thus, the exchange for certain will be happen as the threshold of 50% is definitely exceeded.
There are also no EGM required by both stocks: YTL cement (due to the exchange is voluntary); YTL corp (due to the exchange involve issue share no more than 10% of current share capital. 5.3% is actual share number to be issue to exchange all YTL cement). Therefore the whole exchange may take shorter than expected time. I expecting SC and bursa to grant approval within a month, that is before the closing date on 10 Feb.
The only problem is post exchange, YTL corp may under selling pressure from former YTL cement to cash out. However, YTL aggressive share buyback may pare down these pressure. In addition, the exchange should have bring more advantage to YTL corp as it boost YTL corp EPS and further improve YTL corp balance sheet as its now able to direct assess to YTL cement net cash pile of 508m (cash: 1.375b vs. debt: 866.2m)