Thursday, December 12, 2013

L&G- has a bullish breakout

Thanks to a very bullish report from Hwang DBS - an extract is published in the Edge - L&G managed to surge through its triangle formation yesterday. The gist of the report is:
1. L&G has RM800 million of unbilled sales from Elements@Ampang & Damansara Foresta Phase 1. These two developments will be completed in 2QCY2014 & 4QCY2015. Thus, L&G will book in profit of RM200 million over the next 3 years.
2. L&G will be launching RM1.5 billion worth of projects in 2014- under Damansara Foresta Phase 2, Elements2@ Ampang & Seremban Phase 1.
3. L&G has cash in hand of RM250 million and likely to pay out dividend next year.
In view of the above, Hwang DBS valued L&G at RM0.65.

Chart: L&G's daily chart as at Dec 11, 2013 (Source: Tradesignum)

Based on technical consideration & reasonable valuation, L&G could be a potentially trading BUY. 

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, L&G.


Jim said...

Hi Alex,

Can you comment on CMMT?
Do you think bright outlook for REITs sector next year 2014?


Alex Lu said...

Hi Jim,

On the whole, I am cautious on REITs and income-based securities. The reason is that interest rates are expected to increase. This will lead to higher yield and lower value (as yield and securities are inversely related).

The result for CMMT is still fairly satisfactory (see link below). If you look at the chart of other REITs, the prices had dropped off. For example, AXReits rose from RM1.00 in Dec 2008 to a high of RM4.00 in May this year. It is now at RM3.00 only, which translates to a retracement of 33%.

CMMT rose from RM1.00 in mid-2010 to RM1.95 in early part of the year. At RM1.33, CMMT has lost 68% of its gain!!

Will the REITs recover? I think it is too early to call for a recovery or even a bottom in the current decline. For one thing, US Fed's tapering exercise - the cause of the reversal in interest rate worldwide - has yet to begin. Secondly, the decline is only 6-7 months old. Since the preceding rally lasted 4-5 years, the decline could last 1-2 years. However, after a sharp drop witnessed so far, further drop could be smaller.

bmYself said...

Hi Alex,

Can you comment on amedia?
Do you think it will bound this year?


Alex Lu said...

Hi bmYself

Amedia? I have not looked at that stock for a while. Having looked at the chart, I can only say "WOW! What a drop!"

The company is still reporting a profit albeit much lower than last year. For 9M to 30/9/2013, net profit dropped to RM8 mil from RM13 mil while revenue dropped from RM34 mil to RM30 mil. Balance sheet is fairly clean, with cash of RM43 mil & shareholders' fund stood at RM136 mil.

But the share price has been dropping. Using a semi-log chart, I can see the stock broke its long-term uptrend line at RM0.12-0.13 in February 2013.

So this is a stock with bearish technical outlook but decent financial statements. One of these must be painting a false picture and I always believe that you put your money in what you believe in. For Amedia, the directors are not buying the shares despite the low prices. That means the chart is more reliable than the accounts. My gut feeling tells me to avoid the stock. See my earlier post (link below).