Monday, June 16, 2014

NARRA: A limit-up in a quiet market!

NARRA score a limit-up today when it zoomed to an intra-day high of RM2.70. Its powerful rally began after it broke above its flag formation at RM1.80 last week (see Chart 1). The limit-up price is near the first target of RM2.60 (see Chart 2). At the time of writing, NARRA has eased back to RM2.50.


Chart 1: NARRA's daily chart as at June 13, 2014 (Source: Tradesignum)



Chart 2: NARRA's weekly chart as at June 13, 2014 (Source: Tradesignum)

NARRA is in the midst of a restructuring which will turn it into an attractive cement stock.

The proposed restructuring of NARRA Industries Bhd involves:

1) A 2-to-1 capital reduction to be followed a 2-to-1 share consolidation
2) Acquisition of 100%-stake in Hume Cement from HL Manufacturing Group and 175m ICPS in Hume Cement & 100%-stake in Hume Industries from HLInd. These acquisitions will be settled by issuance of 448m new shares.

By owning 100%-stake in Hume Cement, NARRA will become a cement stock. Hume Cement currently owns a cement plant in Gopeng, Perak which commenced operation last year. It has clinker capacity to 1.5 mtpa and cement grinding capacity of 1.8 mtpa. It has recently received Environmental Impact Assessment approval for its next phase of expansion which would double its output.

Based on RHB report in February, NARRA’s earning is expected to jump in FY15 when the full impact of the acquisition of Hume Cement & Hume Industries will be booked in. Its total revenue will increase to RM743m while PBT & PAT will increase to RM97m & RM72.5m, respectively.

RHB valued NARRA at RM2.27 basing on a PE of 15x FY15E (which is at a discount of 15% to its West Malaysia peers).

Based on RHB's valuation and technical projection, NARRA is deemed a good trading SELL for those fortunate enough to get in earlier. 


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, NARRA.
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8 comments:

  1. ahtooMonday, June 16, 2014 2:30:00 PM

    Hi Alex,

    I would like to seek for your opinion on MNRB.

    Personally i think MNRB is a good stock for long term investment. The NTAB, earning and also dividend given is quite impressive.

    I am surprised to see that with MNRB strong earning and also it's whole package, the current price still below RM5 comparing with others.

    I think it fair value should be ~ Rm8-9, what is your thought?

    Thanks
    Ahtoo

    ReplyDelete
  2. Alex LuWednesday, June 18, 2014 10:01:00 PM

    Hi ahtoo,

    This stock, MNRB has been cooking for a long while. Your target of RM9 looks farfetched now but I won't rule that out. I think RM6.00 is a more likely target but we will see.

    Good luck.

    ReplyDelete
  3. ahtooThursday, June 19, 2014 10:56:00 AM

    Hi Alex,

    Thanks for your feedback.
    Let's wait and see.

    Have a good day.

    Thanks
    Ahtoo

    ReplyDelete
  4. UnknownThursday, June 19, 2014 2:07:00 PM

    So what your comment for narra as it fall back afterward,do u thk Narra still got space to rise?or save to hold?
    Thx u>>>

    ReplyDelete
  5. Alex LuThursday, June 19, 2014 4:24:00 PM

    Hi Alan Khaw

    I doubt Narra will go higher. It may just hang around the present price (RM2.00-2.30) and then goes into the restructuring exercise. As I said, it is a SELL at RM2.50 or there about.

    ReplyDelete
  6. UnknownThursday, June 19, 2014 9:44:00 PM

    Thx Alex,so how bout Mas3786 from your experience?can it reach 0.30?
    Thx u~~

    ReplyDelete
  7. Alex LuFriday, June 20, 2014 8:53:00 AM

    Hi Alan Khaw

    We will always be fascinated by planes and, of course, MAS. The longer you look at it, the more tempting it becomes. My advice is to walk away.

    Technically speaking, MAS is a trading SELL at RM0.28-0.30, if it ever reaches that level. If it doesn't, it is still a stock to be avoided.

    ReplyDelete
  8. UnknownFriday, June 20, 2014 2:25:00 PM

    Thx alex
    talk about Narra,i bought it at rm2.49,should i cut loss by nw or juz waiting as it keep falling down this few day,need ur opinion,thx~~

    ReplyDelete