Ecowld: Broke the Strong Horizontal Support (UPDATED)

In the past 6 months, Ecowld (formerly, Focal Aim) took the stock market by storm. After breaking above the RM1.00 mark, this stock has literally flown away. For many market watchers who loved rags-to-riches story - and none came more impressively than Liew Kee Sin - Ecowld represents an opportunity to ride a sure winner. Or, is it?

As I read the story in the Star newspaper (here), I was stunned by audacious rise of this company, which in a mere 6 months time, has built up a landbank of 4433 acres with a GDV of RM43.5 billion. The title of the article "Old Soldier says he will rise and shine again" make me feel a bit uneasy. The words of wisdom from my old boss, P. H. Ling that new moneys who did not cash in at the peak of a cycle will drown in debts in a downturn. Liew is new money and he has just doubled down after the property market has risen so much. Is this a wise move or is it an ego trip? (UPDATED: One way to avoid the debt trap is to pay for land acquisition with shares: a case of over-priced shares in exchange with over-priced land. That may explain the meteoric rise in the share price of Ecowld.)

Meanwhile, I like to point out that Ecowld broke its intermediate uptrend line (SS) support at RM5.00, to close at the strong horizontal line at RM4.85 yesterday. This morning, it broke below RM4.85 and at the time of writing this post, it is down to RM4.60. Unless a strong recovery happens soon, the rise of Ecowld may have just ended.

Based on technical consideration, Ecowld is now a trading SELL.


Chart: Ecowld's daily chart as at Apr 29, 2014 (Source: Tradesignum)

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, Ecowld.

TAS: Top-line and bottom-line spiked up!

Recent Financial Result

For QE28/2/2014, TAS's revenue increased 133% q-o-q or 178% y-o-y to RM114 million while net profit rose 44% q-o-q or 99% y-o-y to RM10.4 million. The increased revenue is due to the completion & delivery of 2 units of anchor handling tug supply vessels, 1 units of harbor tug and 2 units of tugboats.

TAS commented that the high price of crude oil will spur oil majors to increase their offshore deep sea oil exploration & production activities; thus increasing the demand for offshore support vessels, the main stay of TAS's business operation. TAS's build-to-stock model has placed the company in an advantageous position in the current environment as vessel owners require shorter delivery period for their vessels.


Table 1: TAS's last 8 quarterly results


Chart 1: TAS's last 27 quarterly results 

Valuation
TAS (closed at RM1.36 yesterday) is now trading at a current PE of 8 times (based on annualized EPS of 16.6 sen). TAS may trade up to PER 9-10x, thus giving the stock a potential upside of 12-25%.

Technical Outlook

TAS has been trapped in a flag formation for the past 5-6 months. A breakout of this formation will point the way forward for the stock.


Chart 2: TAS's weekly chart as at Apr 23, 2014 (Source: Tradesignum)

Conclusion

Based on satisfactory financial performance and attractive valuation, TAS is still rated 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, TAS.

AEONCR: Bottom-line improved

Result Update

For QE20/2/2014, AEONCR's net profit increased by 11% q-o-q or 23% y-o-y to RM48 million while revenue increased by 6% q-o-q or 43% y-o-y to RM188 million.

The Company's top-line increased by 9.5% and 31.4% for 4Q2014 & FY2014 due to increased financing transaction volume for the vehicle financing and personal financing operations.

The increased revenue plus lower funding cost - with average funding cost in February 2014 marginally lower compared to February 2013 - led to increase of 15% & 29% in pretax profit for 4Q2014 & FY2014. More importantly, the company's bottom-line- which was sputtering for past 2 quarters- had finally regained its upward trajectory. This goes against conventional wisdom that AEONCR's financial performance would be weaker due to weaker consumer sentiment and higher finance cost.


Table: Aeoncr's last 8 quarterly results


Chart 1: Aeoncr's last 27 quarterly results

Valuation

AEONCR (closed at RM15.16 yesterday) is now trading at a PE of 12.4 times (based on last 4 quarters' EPS of 122 sen). Based on past 2-year historical CAGR of 35%, AEONCR's PEG ratio is about 0.4 times. At this low PEG ratio and doubt of faltering growth momentum banished for now, AEONCR looks like an attractive growth stock again!

Technical Outlook

I have redrawn AEONCR's trendlines below. AEONCR has broken below its long-term uptrend line, SS at RM15 in late 2013. An intermediate downtrend line, RR formed but the stock broke above that downtrend line at RM14.50 in March 2014. Since then, it has been trading sideways with immediate resistance at the horizontal line at RM15 & immediate support at the psychological level of RM14.


Chart 2: Aeoncr's weekly chart as at April 16, 2014 (Source: Tradesignum)

Conclusion

Based on good financial performance, attractive valuation & mildly positive technical outlook, AEONCR's rating is now revised from a HOLD to a BUY. 

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, AEONCR.

Zhulian: Bottom-line improved slight but top-line dropped further!

Result Update

For QE28/2/2014, Zhulian's net profit rose 25% q-o-q but dropped 42% y-o-y to RM17.2 million while revenue dropped 15% q-o-q & 39% y-o-y to RM66 million. The company attributed the q-o-q drop in revenue to decrease in market demand from Thailand, offset by higher revenue from Indonesia market. Net profit increased q-o-q due to lower expenses incurred and increase in share of profit of equity accounted investee (to RM7.0 million from RM3.7 million in QE30/11/2013). In addition, the company's net profit was boosted by forex gain of RM1.8 million as compared to a forex loss of RM2.7 million in QE30/11/2013. If the impact of forex gain or loss were excluded, the company's net profit would be lower q-o-q.


Table: Zhulian's last 8 quarterly results


Chart 1: Zhulian's last 30 quarterly results 

Valuation

Zhulian (closed at RM2.84 today) is now trading a PE of 12 times (based on last 4 quarters' EPS of 23.6 sen). However, if we computed the full-year EPS based on the new EPS for the past 2 quarters, the figure would be 13.4 sen. This would give the stock a PE of 21 times- which is very high. 

Technical Outlook

Zhulian has corrected back significantly since it announced its 3Q2014 results. The stock is nevertheless above its long-term uptrend line, with support at RM2.50-2.60.


Chart 2: Zhulian's weekly chart as at Apr 16, 2014 (Source: Tradesignum)

Conclusion

Despite the weak financial performance & expensive valuation, Zhulian's rating is revised from STRONG SELL to REDUCE because the stock has dropped off significantly. It may find support at the long-term uptrend line at RM2.50-2.60 and may begin to form a bottom. At the price of RM2.50-2.60, the stock would be rated 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, Zhulian.

Dsonic: Where is the support?

Dsonic broke its strong horizontal support at RM3.50 this morning. It broke its psychological support at RM3.00 this afternoon. It is now rebounding off the horizontal support at RM2.70. Is the worst over or has it begun? Who knows...

If you are really nimble and you can take the risk, the RM2.40 level is a good level to take a punt on this stock. Still I would be quite surprise if the stock would break through 2 support levels in one day. Thus I believe the RM2.70 support will hold for now.

My earlier caution for not-so-good traders still remain. Be careful with Dsonic.


Chart: Dsonic's daily chart as at Apr 14, 2014 (Source: Tradesignum)

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, Dsonic.

Carlsbg: Leading the Way?

The market has been focusing on O&G stocks for quite a while and lately the focus is shifting to water-related stocks. At the same time, we have seen many smallcap stocks outperforming bigcap stocks. In such a market, the darlings of yesterday have become the rejects of today.

When you look at Carlsbg, GAB and Orient, you will see that they have retraced 50% of their gain in the past 2-5 years. In addition, they are trading near strong horizontal support. In the case of Carlsbg, it rebounded from the horizontal line at RM11.50. GAB and Orient are also trading near strong horizontal support. If these support levels hold, these stocks will form a base and they may recover after a period of consolidation.

Investors, who are wary of the fast action among the smallcap stocks, may consider buying these beaten down bigcap stocks. Don't be discouraged if your friends tell you that investing in bigcap stocks is so passe! You know better: Making reasonable return by taking calculated risk will never go out fashion!


Chart 1: Carlsbg's weekly chart as at Apr 9, 2014 (Source: Tradesignum)


Chart 2: GAB's weekly chart as at Apr 9, 2014 (Source: Tradesignum)


Chart 3: Orient's weekly chart as at Apr 9, 2014 (Source: Tradesignum)

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, Hibiscus.

Unisem: Poised to rally?

Unisem broke above its strong horizontal resistance at RM1.13 this morning. I hesitated a bit because this stock has been quite hard to call just right. In fact, I will be the first to admit that I got it wrong many times. However, the upside breakout of the strong horizontal resistance at RM1.13 could be the start of better days ahead for Unisem.

Based on technical breakout - the recent financial result has been a disappointment - Unisem could be a trading BUY. First target could be RM1.65.


Chart: Unisem's weekly chart as at Apr 8, 2014 (Source: Tradesignum)

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, Unisem.

LPI: Top-line & bottom-line dipped sequentially

Result Update

For QE31/3/2014, LPI's net profit increased by 20% y-o-y but dropped 3% q-o-q to RM51 million. Its revenue was similarly mixed; increased by 7% y-o-y but dropped 6% q-o-q to RM278 million.  the Star newspaper reported that LPI Capital founder and chairman Tan Sri Dr Teh Hong Piow said the group would continue to strengthen its agency force and increase its distribution network in order to have a stronger foothold nationwide (here). The strengthening of its network is probably necessary as the group's revenue has for the first time dipped significantly- by dropping below the 4-quarter simple moving average (see Chart
 1 below).



Table 2: LPIs last 8 quarterly results


Chart 1: LPI's last 33 quarterly results

Valuation

LPI (closed at RM16.60 yesterday) is now trading at a PE of 17.5 times (based on last 4 quarters' EPS of 95 sen). At this PE multiple, LPI is deemed fairly valued.

Technical Outlook

LPI has pulled back to its 40-week EMA line support at RM16.30. LPI is likely to stay above this support for now. However, if this support is violated, the next strong support level is at RM15.00. 

Chart 2: LPI's weekly chart as at Apr 8, 2014 (Source: Tradesignum)

Conclusion

Despite the weaker q-o-q financial performance, LPI is still rated a HOLD due to reasonable valuation & positive technical outlook.

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, LPI.

Spritzr: Bullish breakout

Spritzr has just broken above its flag formation at RM1.85 this morning. Wuth this breakout, Spritzr is likely to continue with its prior uptrend. First target is RM2.17.

Based on technical breakout, Spritzr could be a good trading BUY.


Chart: Spritzr's weekly chart as at April 4, 2014 (Source: Tradesignum)
 
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, Spritzr.

Astro: A new high!

Astro has broken above the horizontal resistance at RM3.20. If it can stay above the RM3.20 mark for next 1-2 day(s), it is likely to continue to rise slowly to a possible target of RM3.60.

Based on technical breakout, Astro could be a trading BUY.


Chart: Astro's daily chart as at April 1, 2014 (Source: Tradesignum)

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, Astro.

Dialog: Uptrend to continue

Dialog broke above its recent high of RM3.60. This breakout could send the stock to RM4.00 (based on simple projection). The surprising thing was this breakout was actually preceded by a bullish breakout by Dialog-WA at RM1.33 on March 21. I wonder why the share didn't lead the breakout this time around??

Anyway, a breakout is a breakout and Dialog is now good a trading BUY. Since Dialog-WA has run up quite a bit, I prefer the share to the warrant in this play. Good luck...


Chart 1: Dailog's daily chart as at Mar 31, 2014 (Source: Tradesignum)


Chart 2: Dailog-WA's daily chart as at Mar 31, 2014 (Source: Tradesignum)

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, Salcon.