Allianz- Top-line & bottom-line improved further

Result Update

For QE30/6/2013, Allianz's net profit increased by 16% q-o-q or 8% y-o-y to RM62 million while revenue increased by 4% q-o-q or 16% y-o-y to RM893 million. Bottom-line improved q-o-q due to higher profit before tax from the life insurance operations. Top-line improved due to higher earned premium from life insurance operation of 5.3% as well as from the general insurance operation of 2.2%.


Table: Allianz's last 8 quarterly results


Chart 1: Allianz's last 30 quarterly results

Valuation

Allianz (closed RM9.62 yesterday) is now trading at a PE of 14.3 times (based on last 4 quarters' EPS of 67.5 sen). At this PE, Allianz is deemed fairly attractive.

Technical Outlook

Allianz is still in an uptrend, with immediate support at the 20-week SMA line at RM9.33. Its immediate ressitance would be its recent high at RM10.58.


Chart 2: Allianz's weekly chart as at Aug 28, 2013 (Source: quickcharts)

Conclusion

Based on satisfactory financial performance, fairly attractive valuation & positive technical outlook, Allianz is expected to continue to rise.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Allianz.

APM announced a big dividend payout

Result Update

For QE30/6/2013, APM's net profit increased by 26% q-o-q or 20% y-o-y to RM36 million while revenue increased by 19% q-o-q or 22% y-o-y to RM388 million.  The improved financial performance was due to higher sales volume, which is attributable to the "weakening of Japanese Yen against Ringgit at end of 2012 resulted to devaluation of Japanese Yen denominated inventory in 4Q12".

APM announced an interim dividend of 10 sen less tax plus a special dividend of 30 sen in the latest quarter. This is a continuation of a trend of increasing dividend payout. See Chart 1 below.


Table: APM's last 8 quarterly results


Chart 1: APM's last 21 quarterly results

Valuation

APM (closed at RM5.40 yesterday) is now trading at a PE of 9.3 times (based on last 4 quarters' EPS of 58 sen). In term of PE multiple, APM is deemed almost fully valued.

Inclusive of the special dividend of 30 sen, APM's total dividend for the past 1 year is 62 sen. This gives a dividend yield of 11.5% (or, 5.9% excluding the special dividend). With its sttractive dividend yield, APM can be considered an income stock.

Technical Outlook

APM broke below the horizontal line at RM5.50. Its next support is at the horizontal line RM5.00 and thereafter the long-term uptrend line at RM4.90-4.95.


Chart 2: APM's weekly chart as at Aug 28, 2013 (Source: quickcharts)

Conclusion

Based on good financial performance, reasonably attractive valuation & positive technical outlook, APM is deemed a good stock for long-term investment. In the present poor sentiment, APM may pullback to RM5.00, which would be ab attractive entry to the stock.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, APM.

DLady- bottom-line rebounded

Result Update

For QE30/6/2013, DLady's net profit increased by 19% q-o-q or 15% y-o-y to RM35 million while its revenue increased by 21% q-o-q or 15% y-o-y to RM250 million. The improved in top-line and bottom-line was contributed by higher sales of powder and liquid products.


Table: DLady's last 8 quarterly results


Chart 1: DLady's last 21 quarterly results

Valuation

DLady (closed at RM46.20 yesterday) is now trading at a PE of 23 times (based on last 4 quarters' EPS of 202 sen). With the earning growth rate of 18%, DLady's PEG ratio is at 1.2 times. As such, Dlady is deemed fully valued.

Technical Outlook

DLady broke its uptrend line, SS and is now moving in a sideway. Its immediate support is at the horizontal line at RM45. The next support is at the horizontal line RM41.00.


Chart 2: DLady's weekly chart as at Aug 28, 213 (Source: Quickcharts)

Conclusion


Despite good financial performance, DLady's outlook is dimmed due to mildly negative technical outlook and unattractive valuation. As such, I maintained the rating SELL INTO STRENGTH for now.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, DLady.

Market Outlook as at August 27, 2013 (UPDATED)

UPDATE

As at 3.35pm, FBNKLCI is down 19 points to 1702. The number of losers outnumbered gainers by 1003 to 43. Volume traded was 1.7 billion units. When the number of losers is substantially 99% of the number of issues in the market, that's a sign that the market selling has gone too far. This could lead to a snap back the next day or the day after that. I would advise investors to hold back on their selling. I am not recommending that you buy into the market now unless you are a very experienced trader with good money management skills. 

******************************************************************************

If we looked at the chart below, we can see that the rise of our index is well-traced out in two uptrend lines. The first uptrend line was S-S1 which kicked in right after the US Financial Crisis had ended. The recovery could be due to many factors; one of which would be the flood of liquidity from the US. Then in 2011, the global financial markets were rocked by the upheaval in Europe. Another round of quantitative easing followed and the equity markets again recovered. For Malaysia, that recovery takes the form of an uptrend line, S-S2.

We can see that the market moved up in two waves, which were brought on two rounds of tsunami of liquidity (courtesy of the Fed).  

The most gut-wrenching tale of that apocalyptic day (when tsunami hit Sri Lanka) was that of the Queen of the Sea Line, the train that plies the coast, running from Colombo to Galle. At Telwatta, waves charged 200m inland, catching the train laden with nearly 2,000 passengers and thrashed it about like a rag doll before dragging it out to sea.  

When the waves of liquidity have subsided or financial distress returned, the value of stocks would pullback. This is akin to the rollback on the beach after the incoming wave has run its course.

The torrent of water, said to have reached 30m in height, was so powerful it ripped the tar off the roads, rails off the tracks and sucked 90 city buses out into the ocean. 

Over the weekend, I read a supposedly nice travel tale entitled Isle of Delight Beckons, about the beautiful island of Sri Lanka. The part of the story that really shook me was the story of the impact of the Tsunami in 2004 (extracts are included in italics). Suddenly, I was transported back from a leisurely Sunday to the present depressing financial markets. I saw the money printing machines- thousand miles away- pumping waves of liquidity that boosted the value of our investment assets, from equity to realty, to great heights. Now, there are signs that the men-in-charge of this money printing machines may decide to slow down their activities. Who knows whether they may one day bring out the money vacuuming machines. Like the poor people of Sri Lanka, the whole world is now at the mercy of these money men.

Looking back at the chart, it is important that we stay above the 1700 mark, which is both the horizontal line as well as the uptrend line, S-S2. This line on the sand would determine whether we would stay dry or end up in deep trouble for the next few months. A break of the 1700 mark could easily send the market to the 1600 mark or 1500 mark. The latter would represent a 12%-correction from the breakdown of the crucial 1700 mark. This would match a similar 12%-drop in 2011 when the market breached the horizontal line, B.


Chart: FBMKLCI's weekly chart as at August 27, 2013_10.00am (Source: quickcharts)

In the current uncertainty, it is prudent to take precaution not to be sucked into the developing maelstrom. Capital protection will be the order of the day.

Market Outlook as at August 23, 2013

The FBMKLCI lost 83 points in the past six days, from 1793 at the close of 1793 to 1710 yesterday. In the process, many stocks were heavily sold down and losses about 5-10% were quite common. Before we contemplate the possible reasons for the sell-off, let's look at the chart.

From the chart, we can see that the index is now resting at the horizontal support of 1720. I consider this support and the psychological 1700 mark to be the line on the sand which is critical for the future of our market. If this first line of defense is violated, then the index could drop to the next support level, which is the horizontal line at 1650. Beyond that, we have the long-term uptrend line support at 1630.

A closer look at the chart may show possible signs of distribution in the market over the past 3 months. One may come to this conclusion with the presence of negative divergence in two indicators (MACD & RSI) as the market (or index) trading sideway (with slightly upside bias). However, this is not a hard and fast rule as the presence of negative divergences in the past 3-4 years had failed to check the market's relentless upward march. This has caused many technicians to be more lenient as they adopt the attitude of not-fighting-the-Fed. Even if you read the signs correctly, this possible distribution is rather short- a mere 3 months. Compared this with an earlier distribution in 2010-2011 which lasted 10 months.

In my view, the index must hold above the 1700 mark. A break of this level could easily send the index to the long-term uptrend support of 1630. From the strong selling that we had witnessed in the past few days, I believe many in the market have concluded that the index is likely to break 1700 level- which is a bit presumptuous. Then again, they may be taking some chips off the table or merely realizing some paper profit after a long rise.


Chart 1: FBMKLCI's daily chart as at August 22, 2013 (Source: quickcharts)

Looking at the monthly chart below, we can see that our market has been rising for the past 4 & 1/2 years. This is a very long uptrend, which nearly equal the long uptrend in 2003-2007. With many investors sitting on their substantial gain, profit-taking is inevitable in uncertain times, especially by foreign funds.


 Chart 2: FBMKLCI's monthly chart as at August 22, 2013 (Source: quickcharts)

There are a few reasons why foreign funds may pull money out of emerging markets. Firstly, the prospects for economic growth is improving in developed economies appears more exciting than the emerging economies. Secondly, as the developed economies recover, their central bankers may start to roll back their loose monetary policies- the same policies that caused money to slosh around the global earlier. The smaller pool of investable funds means that fund managers would have to be more selective and in this beauty contest, emerging markets are now losing favor fast.

However, the global economy is not out of the wood yet. Extraction from unconventional monetary policies has never been done successfully before. Japan tried a few times and fell back into the recession or deflation. The latest attempt to revive the Japanese economy is from Prime Minister Abe. Some pundits are calling this desperate attempt, the last throw of the dice.

Meanwhile, Fed has signaled that it could begin to taper down on its monthly USD85 billion bond-buying program as economic data improve. The mere tapering of the bond-buying program was enough to cause havoc in the stock market. If the market fears tapering, which is defined in Wikipedia as "the practice of reducing exercise in the days just before an important competition", what would happen when the Fed actually begins to extract from unconventional monetary policies. It would be like the end of a war, creating huge financial disruptions. Interest rate may shot up. Stock market may tank.

Meanwhile there are some reports that Malaysia may be hit by serious financial problems. One such report entitled, Malaysia will be hit: Another Asian Financial Crisis may be brewing, this time from India appeared in Malaysian Chronicle on August 21. As you well know, I do not like to criticize other people's work. Nevertheless, I have to say that the aforementioned report was highly speculative. The Malaysian economy & fiscal position is in a better shape than in late 1990s and it is unlikely that we would be hit by a financial crisis like 1998. Such reports, coming after the Fitch downgrade, would cause fear in some investors; thus prompting them to act irrationally.

MEGB- losses increased

Result Update

MEGB has just reported its result for QE30/6/2013. Its net loss increased by 41% q-o-q or 267% y-o-y to RM18 million while its revenue dropped by 33% q-o-q or 64% y-o-y to RM14 million. This double whammy could well spell the death knell for MEGB. The factors that contributing to this situation are:
1. Reduction in student loans from PTPTN (as many of MEGB students are from lower income group)
2. Higher entry requirement which caused a drop in student enrollment
3. Higher depreciation charges; and
4. Higher staffing cost due to requirement stipulated by Malaysian Quality Agency

Though it was not stated in the account, I believe that the private education sector is now facing tremendous competition due to excessive supply and this put pressure to cut prices which may cause the profit margin to compress further.

All in all, the prospect for MEGB is quite grim. The company took the first step to restructure its operation by disposing 10 properties in Negeri sembilan in May for RM58.9 million.


Table 1: MEGB's last 8 quarterly results


Chart 1: MEGB's last 17 quarterly results 

Stamford College revisited

The problem in MEGB reminds me of Stamford College Bhd ('SCB'), a private education group that was listed from 1999 to 2012. SCB started to report losses in 2003 and returned to breakeven operation in 2009. It ran fool of PN17, GN 3 (for more, go here) and was delisted in early 2012. The chart below shows the top-line and bottom-line of SCB for those year as well as the Net Assets p.s. The stock was last traded at 24 sen or 46% of its Net Assets. This may be a guide to where MEGB share price may bottom once its operation has ceased to bleed. Today MEGB is trading at 51 sen or 53% of NTA.


Chart 2: SCB's last 15 yearly results 

Note: I can't find the chart for SCB. The data on share prices is available at KL Data (here).

Technical Outlook

MEGB's share price is still in a downtrend, albeit dropping at a much gradual rate.


Chart 3: MEGB's weekly chart as at Aug 19, 2013  (Source: Quickcharts)

Conclusion

Due to poor market positioning and tough operating environment, MEGB's poor financial performance is expected to persist for sometime. As such, MEGB's existing rating of AVOID is maintained.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MEGB.

MAS- a swift end to a sharp rally?

This morning, one of my clients wrote to me about whether he should keep his MAS. This was my reply:

MAS had a huge Rights Issue of 4-for-1 in April at RM0.23 each. The current shareholders would have a lot of shares at much lower prices to sell in the event of a strong run-up.

The huge Rights issue has ballooned up MAS's issued shares to 16.7 billion units. This means that its market cap is now at RM6.3 billion (based on current price of RM0.38). You may compare that with Airasia with outstanding shares of 2.78 billion & share price of RM3.17; thus a market cap of RM8.8 billion. Airasia makes a net profit of RM1.9 billion (partly due to recognition of the value of Airasia Thailand after its listing on the SET which yielded a gain of disposal of 4%-interest of RM120 mil & fair value gain on remaining 45% of RM1.040 billion). Mas incurred a net loss of RM433 million last year.

The chart shows that the stock is still in a downtrend. In the past, it has attempted to break above the downtrend line but there were two instances of bull trap. My concern is that this may also be a bull trap.

Based on the above, you may want to take profit at RM0.40.

Chart: MAS's daily chart as at August 19, 2013_11.00am (Source: Quickcharts)

At 2:00pm, Najib announced that the government has no plan to privatize MAS. With that announcement, MAS play should come to a swift end.

 

Note: In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MAS.

SKPetro- a cautious recovery in the work?

When Yinson announced a tie-up with Kencana Capital, a private company belonging to Mokhzani Mahathir, to acquire control of a Norwegian company with exposure in the FPSO & FSO sectors, two things happens- Yinson rose and SKPetro swooned. From the charts below, we can see how badly SKPetro has declined while Yinson was much better off.



Chart 1: Yinson's daily chart as at August 15, 2013_4.15pm (Source: Quickcharts)


Chart 2: SKPetro's daily chart as at August 15, 2013_4.15pm (Source: Quickcharts)

SKPetro had broken below the strong horizontal support of RM3.80 in the past few days. It made an intra day low of RM3.69 yesterday. This afternoon, the stock has recovered back above the RM3.80. If it can go back above the RM3.80 level, SKPetro may continue to recover. However, its prices have been moving lower within a downward channel with the upper boundary at RM4.00. A breakout above the RM4.00 mark could signal the continuation of its prior uptrend.

As for Yinson, if the stock can break above the RM5.16-5.20 level, it may continue with its uptrend too. However, I am more cautious with regards to Yinson due to its sharp run-up in the past 2 months. I prefer SKPetro to Yinson.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, SKPetro & Yinson.

Scable- has a bullish breakout

Sarawak Cable Bhd ('Scable') is a profitable Sarawak-based company involved in manufacturing of power cables & wires, hybrid power converters, steelworks, builder of mini hydro power plants & general construction.

Its net profit had dropped sharply in FYE31/12/2012 from RM15.6 million to RM6.4 million while revenue had also declined from RM368 million to RM269 million. For 1Q2013, net profit continued to decline from RM1.9 million previous year to RM1.3 million while revenue slipped RM66 million to RM59 million.

Scable's share prices had benefited from the post-GE13 rally which saw the stock rose from RM1.15 in April to an intra-day high of RM2.05. The sharp rally means that the stock has broken above the horizontal line at RM1.95 (its previous high) as well as reclaim its previous uptrend line (SS). Based on these, the stock is expected to continue its prior uptrend.

As such, a trading BUY call on this stock is quite appropriate. However, we must bear in mind that its valuation is very high with PE at 76 times.


Chart: Scable's weekly chart as at August 14, 2013  (Source: Quickcharts)

UPDATE: There was a newspaper report that Scable is "the frontrunner to secure the 500kV Sarawak power transmission line job worth some RM1billion" (here). However this is not something hew as the company has been telling analysts that they are expecting to secure more jobs in the near future. 

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Scable.

FRB- a strong rally after a huge Right Issue!

Formis Resources Bhd ('FRB') is a loss-making company which had incurred a net loss of RM40 million for FYE31/3/2013 on a revenue of RM339 million. This is a deterioration from FYE31/3/2012 when it reported a net profit was RM11 million on a revenue of RM295 million.

In the past 4 years, FRB has completed a Bonus Issue of warrant (1-for-1), a distribution of a subsidiary shares (ISS) [again 1-for-1] and recently a Right Issue of 2 shares at RM0.50 each with 1 free warrant for every 2 shares owned.

The share price rallied strongly over the past 6 weeks from 45 sen to an intra-day high of 80 sen today. In view of the poor financial performance and the recent doubling of its outstanding shares, a gain of 70% over 6 weeks looks excessive unless there is an exciting project ahead. The share price may soon test the upper boundary of the irregular downward channel at about 85 sen.

Based on the above, I believe those holding the stock should consider taking profit on the shareholding.


Chart: FRB's weekly chart as at August 14, 2013-11.00am (Source: Quickcharts)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, FRB.

Supermx- may have a bullish breakout

Technical Breakout

Supermx broke above its strong horizontal resistance at RM2.28 as well as the psychological resistance at RM2.30. With this breakout, Supermx may go higher & possibly test its nest resistance at RM2.78-2.80.


Chart 1: Supermx's daily chart as at Aug 12, 2013_10.30am (Source: Quickcharts)

Recent Financial Result

The latest quarterly result for Supermx is for QE31/3/2013. Its net profit was marginally lower q-o-q by 1% but rose 14% y-o-y to RM32 million while revenue was similarly down marginally q-o-q by 1% but up 29% y-o-y to RM321 million. The bottom-line was given a boost by reinvestment allowance claimed in that quarter which lowered its effective tax rate to 13% from 25% in QE31/12/2012. From Chart 2 below, we can see that Supermx's profit margin has been sliding for the 3 quarters.


Table: Supermx's last 8 quarterly results


Chart 2; Supermx's last 26 quarterly results

Valuation

Supermx (at RM2.33 as at 11:00am) is now trading at a PE of 13 times (based on last 4 quarters' EPS of 18.46 sen). At this PE, Supermx is deemed relatively cheaper than Harta, Topglov and Kossan.

Conclusion

Based on cheaper valuation & technical breakout, Supermx could be a good stock for a trading BUY. Like Topglov, Supermx needs to tackle the problem of its deteriorating profit margin in order to get investors to jump into this stock.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Supermx.

GASMSIA- uptrend to continue

GASMSIA broke above the horizontal line at RM3.43 today. If it can sustain this breakout, it may continue with its uptrend. Based on technical consideration, GASMSIA is a good trading BUY.


Chart: GASMSIA's daily chart as at August 7, 2013-11.00am (Source: Quickcharts)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, GASMSIA.

RCECap- More provision made

Result Update

For QE30/6/2013, RCECap's bottom-line continued to be dragged down by loan impairment arising from the "refinement and enhancement in the classification of NPLs in its personal loan financing segment". It reported a net loss of RM28 million which is marginally better than a net loss of RM29 million incurred in QE31/3/2013.


Table: RCECap's last 8 quarterly results


Chart 1: RCECap's last 25 quarterly results

Other Commentary

RCECap, which was the forerunner of the 'civil-servant financier', could be the canary in the coal mine for subsequent champions such as Bank Rakyat & MBSB. If RCECap had to make provision for its lending to this sector, how much would Bank Rakyat & MBSB have to provide since their portfolios are much bigger than RCECap? Some may argue that Bank Rakyat & MBSB are mitigated because they have automatic salary deduction arrangement in the case of lending to civil servants. What about the lending to non-civil servants?

In a larger sense, this problem is a social problem where those in the lower income group are using borrowing as 'income' for consumption. We have seen this problem in America before the Financial Crisis and we are seeing the same problem in the rest of the world. This type of consumption has been criticized by economists as unhealthy and those who engage in it are criticized as being foolhardy.

I am sure there are some who are indeed foolhardy but there are also a large majority who are having great difficulty surviving on their present income. Our rising cost of living is hidden by a badly constructed CPI. The under-measured rising cost of living weakens the bargaining power of labor. In addition, the elephant in the room that all policy makers and central bankers refuse to acknowledge is rampant asset inflation and its impact on consumers. I truly pity the poor trying to buy a home today. How much of a home can you buy with an income of RM2000 a month with 4 or 5 or 6 mouths to feed? A RM200,000 home is beyond their reach and yet anything less would be a hut in a shanty town.

At the same time, we hear economists - aided and abetted by investment bankers and rating agencies - making strong arguments for the removal of subsidies and lowering taxes; all in the name of free enterprise, fiscal discipline and greater competitiveness. The Brazilians and Turks will tell you that fiscal health built on a foundation of unequal sharing would lead to social problem & unrest. Free enterprise without a heart will be doomed- just like socialism wearing a mask. I hope Malaysia will move in the direction of a fair & equitable sharing of the economic pie.

Valuation

RCECap (closed at RM0.29 yesterday) is now trading at a Price to Book of 0.54 time and has a dividend yield of 5.2%. All in all, RCECap is a cheap stock. If the wind blows at the right direction, it may begin to sail higher.

Technical Outlook

RCECap is in a downtrend line (RR) with resistance at RM0.30 and thereafter at the horizontal line at RM0.33. Its immediate support is the line, AB wt RM0.23.


Chart 2: RCECap's daily chart as at Aug 6, 2013 (Source: Quickcharts)

Conclusion

Despite a net loss in the latest quarter, RCECap is a stock worth tracking. It is trading at an undemanding Price to Book of 0.54 time and pays a decent dividend yield of 5.2%. I would reiterate my earlier rating for this stock as a HOLD.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, RCECap.

F&N- bottom-line continued to improve

Result Update

For QE30/6/2013, F&N's net profit jumped 26% q-o-q or 33% y-o-y to RM69 million while revenue inched up marginally by 3% q-o-q or 1% y-o-y to RM910 million. The jump in profitability was mainly due to increased contribution from Dairies Thailand on the back of higher sales & the recognition of the business interruption insurance claim of RM18 million. If the insurance claim of RM18 million is excluded, the pre-tax profit would still increase by 8% q-o-q or 30% y-o-y to RM71 million.


Table: F&N's last 8 quarterly results


Chart 1: F&N's last 27 quarterly results

Valuation

F&N (closed at RM18.46 yesterday) is now trading at a PE of 26.4 times (based on last 4 quarters' EPS of 70 sen). At this PE multiple, F&N is deemed fully valued.

Technical Outlook

F&N has been range-bound for the past 2 years between RM17.30 & RM18.50. There were a few failed break-ups (in August-September 2012, November 2012 & recently in June 2013) as well as one failed break-down in August-September 2011. Any trading based on breakout must take cognizance of this history of failures.


Chart 2: F&N's daily chart as at August 6, 2013 (Source: quickcharts)

Conclusion

Based on satisfactory financial performance & strong management, F&N remained a good stock for long-term investment. However, F&N's demanding valuation & neutral technical outlook would argue against a BUY at current level. It deserves at best a HOLD rating.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, F&N.

Harta- Top-line & bottom-line inched up marginally

Result Update

For QE30/6/2013, Harta's net profit rose only 1% q-o-q or 18% y-o-y to RM63 million while revenue was up 3% q-o-q or 12% y-o-y to RM278 million. The q-o-q increase in revenue and profit before tax for the current quarter is basically due to increase in sales volume.


Table: Harta's last 8 quarterly results


Chart 1: Harta's last 23 quarterly results

Valuation

Harta (closed at RM6.79 yesterday) is trading at a PE of 20.6 times (based on last 4 quarters' EPS of 33 sen). At this PE multiple, Harta is deemed fully valued.

Technical Outlook

Harta is in an upward channel. Its immediate resistance is its recent high at RM6.85.


Chart 2: Harta's daily chart as at Aug 6, 2013 (Source: quickcharts)

Conclusion

Based on satisfactory financial performance & positive technical outlook, Harta remained a good stock for long-term investment. Its valuation is demanding and this may put a lid on its upside for the near term. I prefer Kossan to Harta.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Harta.

Selamat Hari Raya

I like to wish all the Muslim readers a Happy & Peaceful Hari Raya.


 (Source: zaktihandyman) 

MISC- "If I can't have you, I'll buy my own ships!"

The latest move by Petroliam Nasional Bhd (Petronas) to procure its liquefied natural gas (LNG) tankers directly rather than from MISC Bhd would have very negative implication on MISC. This means that MISC's top-line & bottom-line will unlikely to grow or more likely to drop in the future. In addition, this in-your-face move that follows so shortly after the unsuccessful privatization attempt by Petronas would mean that Petronas may make another attempt at privatization in the near future. It would certainly like to see the share price moves lower so that its next offer, when it comes, will be well-received. This tantamount to shareholders' bullying- something which many did not expect from Petronas.

Under such circumstances, the only thing to do is to dispose of the stock and move on.

 

Chart: MISC's weekly chart as at Aug 6, 2013_9.45am (Source: Quickcharts)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MISC.

NTPM- to continue with its uptrend?

NTPM broke above its resistance at RM0.57 with substantial volume today. With this breakout, NTPM is likely to continue with its prior uptrend.

Based on technical consideration, NTPM could be a good trading BUY. Please exercise careful discretion in all trading activity in the present weak market condition.


Chart: NTPM's daily chart as at Aug 5, 2013_4.30pm (Source: Quickcharts)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, NTPM.

Hohup may revisit the high recorded in 2010

There has been a fair bit of news regarding Hohup over the past few weeks. The news revolves around its development in Bukit Jalil where a piece of 50 acres will be jointly-developed with Malton into the Pavilion  2. In addition, it still has another 10 acres next oor which Hohup will develop on its own.

Chartwise, Hohup has broken above its strong horizontal resistance at RM0.88-0.90 as well as the psychological level of RM1.00. If Hohup can stay above the RM1.00 level, it may rally to test its next resistance at RM1.50.

Based on technical consideration, Hohup could be a good trading BUY. Please exercise careful discretion in your trading activity given the present weak market sentiment.


Chart: Hohup's weekly chart as at August 5, 2013_4.00pm (Source: Quickcharts)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Hohup.

MBSB- Stepping Out of the Shadow?

Result Update

For QE30/6/2013, MBSB reported a net profit of RM165 million- unchanged from the immediate preceding quarter (of RM166 million) but a big jump from the same quarter last year (of RM94 million). The company attributed the q-o-q improvement in bottom-line to the profit contribution from Islamic operations, lower amortisation cost associated to the personal financing disbursement and was partially set off by higher operating expenses and impairment allowance.


Table: MBSB's last 8 quarterly results


Chart 1: MBSB's last 36 quarterly results


Concern about 'Shadow Banking'?

Bank Negara has recently acted to oversee the 'shadow banking' industry with the newly enforced Financial Services Act (FSA). By 'shadow banking', BNM was referring to "non-banking financial institutions (NBFIs) (which) gave out RM43bil in new personal financing facilities, up from 63.7% previously according to Bank Negara’s Financial Stability and Systems Report 2012. This is more than two times the loans disbursed by banks for personal loans at RM19.4bil for 2012. The central bank notes that such loans extended by the three largest NBFIs grew at a faster rate of 23.1% in 2012 versus 17.1% a year ago. That growth is faster than the 10.4% recorded by the entire banking sector. For more, go here.

While this action is viewed positively, it will have a negative impact on MBSB's operation & earning in the near term. For more, go here.

Valuation

MBSB (at RM3.10 yesterday) is now trading at a PE of 8.4 times (based on last 4 quarters' EPS of 36.74 sen). At this PE, MBSN is still deemed very attractive.

Technical Outlook

MBSB is in a steady uptrend since breaking above the strong horizontal line at RM0.85 in March 2011. Its immediate resistance is at the horizontal line at RM3.20 while its immediate support is at the psychological RM3.00 mark.


Chart 3: MBSB's monthly chart as at July 31, 2013 Source: quickcharts)

Conclusion

Based on improving financial performance & relatively attractive valuation, MBSB is still a good stock for long-term investment. However, regulatory changes are coming to the NBFIs and this will certainly restrict the ability of MBSB to report continued growth in its earning. We must keep a close watch on this development and take action if the need arises. For now, the rating for MBSB should be lower from BUY to HOLD.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MBSB.

Redtone- bottom-line jumped due to huge write-back!

Result Update

For QE31/5/2013, Redtone reported a net profit of RM15.3 million- a huge improvement over the net prfoti of RM3.9 million reported in the immediate preceding quarter, QE28/2/2013.  was mainly due to the reversal of expenses over-captured in previous quarter (about RM11.7 million) and higher data revenue (about 7%-increase). While the higher data revenue is a definite positive, the fact that 76% of the improvement in net profit came from accounting entry would certainly takes the excitement out of the jump in Redtone's bottom-line.


Table: Redtone's last 8 quarterly results


Chart 1: Redtone's last 9 quarterly results

Valuation

Redtone (closed at RM0.82 yesterday) is now trading at a trailing PE of 15.5 times (based on last 4 quarters' EPS of 5.28 sen).  At this PE, Redtone is still deemed attractive for a turnaround stock with room for further growth. Again, I have to emphasize that the good profit for the latest quarter must be taken a pinch of salt and it will affect the perception of most analysts looking at this stock in a slightly negative way.

Technical Outlook

Redtone has been rising gradually for the past two years. It doubled up since May this year. It is now pressing again the strong resistance at the horizontal line at RM0.80-0.85. A convincing breakout of the RM0.80-0.85 resistance would lead to the continuation of the uptrend, with the next resistance at RM1.40.


Chart 2: Redtone's monthly chart as at July 31, 2013(Source: quickcharts)

Conclusion
Based on the turnaround story and exciting future prospects, Redtone could be a good stock for long-term investment. However, it had a strong rally in the past two months and it now faces the strong resistance of RM0.80-0.85. For now, I would rate Redtone as a HOLD.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Redtone.