Armada: Cash Call Fright?

Armada announced a 1-for-2 bonus and a 1-for-2 Rights Issue at RM1.35 yesterday and the share went down like a rock. Stranger things had happened before...

From the daily chart, we can see that there is a bullish divergence formed prior to the sudden drop yesterday. However, Armada was well supported today. Nearly 10 million shares changed hand and the stock is only down 2 sen to RM3.02.

I believe this is an over reaction to a cash call for a company with strong management & substantial exposure in the O&G sector. As such, this could be a good buying opportunity.


Chart 1: Armada's daily chart as at Aug 27, 2014 (Source: Tradesignum)


Chart 2: Armada's weekly chart as at Aug 27, 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, Armada.

GENM: Bullish Breakout

GENM has just broken above its horizontal line at RM4.50. With this breakout, GENM is likely to continue with its prior uptrend. Potential target is RM5.00.

Based on technical consideration, GENM is a trading BUY.


Chart 1: GENM's weekly chart as at Aug 26, 2014 (Source: Tradesignum)


Chart 2: GENM's weekly chart as at Aug 26, 2014 (Source: Chartnexus)

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, GENM.

Jobst: Top-line & Bottom-line improved

Result Update

For QE30/6/2014, JOBST's net profit increased by 29% q-o-q or 19% y-o-y to RM19.8 million while revenue increased by 8% q-o-q or 10% y-o-y to RM51.3 million. The q-o-q increase in revenue was mainly due to higher sales from online job posting services and dividends received from quoted investments in Hong Kong. In terms of profitability, pre-tax profit rose by 15.9% q-o-q mainly due to the aforementioned factor and the increase in the share of profit of associates.


Table: JOBST's last 8 quarterly results

 
 Chart 1: JOBST's last 33 quarterly results

Valuation

JOBST (closed at RM2.57 last Friday) is now trading at a PE of 25 times (based on last 4 quarters' EPS of 10.3 sen). At this multiple, JOBST is deemed fully valued.

Technical Outlook

JOBST has been moving sideway for the past 6 months, with support at RM2.40. If we ignore the spike-up in February this year, then we can see that the resistance is at RM2.50-2.55. A breakout above that level could signal the continuation of its prior uptrend.

 
Chart 2: JOBST's weekly chart as at Aug 22, 2014 (Source: Tradesignum)

Conclusion

Based on commanding position in the market & satisfactory financial performance, JOBST is a good stock to hold for long-term investment. However, its valuation is a bit stretched and until there is an upside breakout above RM2.55 (preferably RM2.60), the stock will continue to trade sideways.

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, JOBST.

Vitrox: Bottom-line & Top-line soared

Recent Financial Results

For QE30/6/2014, Vitrox's net profit soared 4-fold q-o-q or 2-fold y-o-y to RM20.0 million. At the same time, revenue jumped 185% q-o-q or 130% y-o-y to RM65 million. The q-o-q increase in revenue and profit were attributed to increase in sales recorded for MVS, ABI and ECS. Sales from MVS, ABI and ECS have recoded an increase of 263%, 137% and 50% respectively against the immediate preceding quarter. The strong growth was due to improving outlook for the semiconductor and electronics industries. While it is encouraging to note that the strongest growth came from MVS - the product with the highest profit margin - the sales came from a single customer. This gives rise to concern about concentration risk.


Table: Vitrox's last 8 quarterly results


Chart 1: Vitrox's last 27 quarterly results 


Chart 2: Vitrox's last 9 years' results

Valuation

Vitrox (closed at RM2.80 on August 22) is now trading at a PE of 16 times (based on last 4 quarters' EPS of 18 sen). At this PE multiple, Vitrox is deemed fairly valued.

Technical Outlook

Vitrox is in an uptrend. If it can surpass the RM2.75, the uptrend may continue.


Chart 2: Vitrox's weekly chart as at Aug 22, 2014 (Source: Tradesignum)


Chart 3: Vitrox's monthly chart August 2014 (Source: Chartnexus)

Conclusion

Based on improving financial performance & bullish technical outlook, Vitrox is a good stock forlong term investment.

 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,Vitrox.

A brief hiatus.

I will be on leave for the next few days & won't be posting anything for the rest of the week.

Star: Bottom-line improved

Result Update

For QE30/6/2014, Star's net profit rose 142% q-o-q or 38% y-o-y to RM39 million while revenue increased by 30% q-o-q or 9% y-o-y to RM275 million. Revenue increased q-o-q due to higher revenue contribution from the Print and Event segment. PBT was higher q-o-q as PBT in 1QFY14 was affected by the holding back of spending from advertisers due to MH370 incident as well as VSS expenses.


Table 1: Star's last 8 quarterly results


Chart 1: Star's last 31 quarterly results

Valuation

Star (closed at RM2.60 yesterday) is now trading at a PE of 13 times (based on last 4 quarters' EPS of 19.5 sen). At this multiple, Star is deemed fairly valued.

Technical Outlook

Star is in a downward channel with resistance at RM2.80. Until it has surpassed the RM2.80 mark, Star will remain within the downward channel.


Chart 2: Star's weekly chart as at Aug 18, 2014 (Source: Tradesignum)

Conclusion

Based on improved financial performance, I revised Star's rating from a SELL to a HOLD.  Those who have bought the stock at the recent low of RM2.20, may take profit at RM2.80 mark.

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,Star.

Gamuda: Uptrend likely to continue

Gamuda broke above its intermediate downtrend line at RM4.87 today. With this breakout, the stock is likely to continue its prior uptrend. In the past 2 upside breakouts (RR & R1-R1), Gamuda rose by about RM1.00. I believe it could do the same in the current developing breakout.


Chart 1: Gamuda's weekly chart as at Aug 15, 2014 (Source: Tradesignum)

Gamuda-WD has also broken above its intermediate downtrend line at RM2.18. It may also put in a gain of RM1.00.


Chart 2: Gamuda-WD's weekly chart as at Aug 15, 2014 (Source: Tradesignum)

Based on the above technical breakout, Gamuda and its warrant could be good trading BUYs. (At the time of writing, Gamuda & Gamuda-WD were trading at RM4.90 & RM2.20, respectively.)

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, Gamuda & Gamuda-WD.

PIE: Bottom-line & top-line dragged down by lower electronic demand

Result Update

For QE30/6/2014, PIE's net profit dropped 13% q-o-q or 17% y-o-y to RM7.9 million while revenue was mixed- dropped 27% q-o-q but rose 6% y-o-y to RM115 million. Revenue declined q-o-q mainly due to lower demand for electronics manufacturing products but partly offset with higher demand for raw wire and cable and wire harness products. Pretax profit reduced by 15% q-o-q mainly due to lower revenue achieved, lower gain from foreign currency exchange and higher provision of doubtful debts. However, the reduction was limited by higher margin of product mix and lower operating expenses.


Table: PIE's last 8 quarterly results


Chart 1: PIE's last 27 quarterly results

Valuation

PIE (closed at RM6.92 last Friday) is now trading at a PE of 13.3 times (based on last 4 quarters' EPS of 52 sen). At this  multiple, PIE is deemed fairly valued.

Technical Outlook

PIE rallied to a high of RM7.23 after it broke above the 2007 high of RM5.00. The indicators show weakness and possible correction ahead.


Chart 2: PIE's weekly chart as at Aug 15, 2014 (Source: Chartnexus)

Conclusion

Despite the poorer financial performance & technical weaknesses, we should continue to reduce our position in PIE.
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, PIE.

DKSH: Uptrend reversal noted!

In March, I called a SELL INTO STRENGTH for DKSH (go here). That's because the share price was rising despite poorer financial results. or a stock that has rallied substantially, we need to be extra careful and in the case of DKSH, I took it would be timely to take profit.

In the past 2-3 days, the stock has made a lower 'low' (as compared to May 'low') after having chalked up a lower 'high' (as compared to April 'high'). This satisfied the definition of a downtrend, where you have a lower 'low' and a lower 'high'.

If you are still having this stock, your chance of a decent exit is for the stock to stage a rebound to the RM8.00 psychological level. You should aim to sell just under the RM8.00 mark.


Chart 1: DKSH's weekly chart as at Aug 13, 2014 (Source: Tradesignum)


Chart 2: DKSH's daily chart as at Aug 13, 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,DKSH.

Tomypak: Profit keeps sliding away

Results Update

For QE30/6/2014, Tomypak's NP dropped 46% q-o-q or 77% y-o-y to RM0.8 million while revenue eased back by 8% q-o-q or 11% yo-y to RM51.3 million.

For 1HFY14, Tomypak recorded a lower PBT of RM3.7 million against the PBT of RM9.7 million in the previous corresponding period, mainly due to lower sales in local market coupled with a decline in profit margin due to competition in the export market and also increased cost of production arising from higher energy and labour cost.


Table 1: Tomypak's last 8 quarterly results


Chart 2: Tomypak's last 27 quarterly results

Valuation

Tomypak (closed at RM1.30 yesterday) is now trading at a demanding PE of 15 times (based on last 4 quarters' EPS of 8.76 sen). Its dividend yield is quite attractive at 5.4%.

Technical Outlook

Tomypak has been trapped within a triangle for the past 1 year. At the time of writing this post, Tomypak was trading at RM1.23. This means that the stock has broken to the downside of the triangle- a bearish development.


  Chart 2: Tomypak's daily chart as at Aug 13, 2014 (Source: Tradesignum)

 
Chart 3: Tomypak's weekly chart as at Aug 13, 2014 (Source: Tradesignum)

Conclusion

Based on poor financial performance, full valuation & bearish technical outlook, Tomypak is now rated a SELL.

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, Tomypak.

RCECap: Recovery in bottom-line halted!

Result Update

For QE30/6/2014, RCECap's net profit dropped 54% q-o-q to RM6.9 million while revenue inched up 1.5% to RM30.4 million. RCECap managed to turnaround from a net loss of RM27.8 million. Net profit dropped q-o-q due to higher loan impairment of RM6.8 million and loss on early redemption of ABS bonds of RM2.6 million that will lead to savings on future coupon payments.


Table: RCECap's last 8 quarterly results


Chart 1: RCECap's last 29 quarterly results

Valuation

RCECap (closed at RM0.345 yesterday) is now trading at a PE of 10.8 times, a Price to Book of 0.6 time and has a dividend yield of 4.3%. At these multiples & DY, RCECap is deemed fairly valued.

Technical Outlook

RCECap broke above its downtrend line, RR at RM0.28 in early part of the year. A short-term uptrend has begun. Its immediate support is the horizontal line at RM0.35 while its immediate resistance is the horizontal line at RM0.40.


Chart 2: RCECap's weekly chart as at Aug 11, 2013 (Source: Tradesignum)

Conclusion

Despite the poorer financial performance last quarter, RCECap is rated a HOLD based on mildly bullish technical outlook. Its valuation indicates limited upside unless its earnings improve significantly.

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.

Market Outlook as at August 11, 2014

Over the past 2 weeks, European stock markets dropped steadily and a few of them broke below their uptrend lines. This can be seen among the bigger stock markets, like DAX, CAC & FTSE. The drop in these markets is probably due to poor economic data.

Business Insiders has a report which quoted Carl Weinberg of High Frequency Economics:

"For Euroland, the big picture is that the economy is in its seventh year of depression. On our estimate of a 0.7% contraction in the second quarter, GDP was still 3.2% lower than it was in the first quarter of 2008, when the depression began".

For more, go here.

Chart 1: DAX's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)


Chart 2: CAC's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)


Chart 3: FTSE's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)

Meanwhile, the US stock markets, which had dropped quite a bit over the past 2-3 weeks, are still above their respective uptrend lines. And that's because the US economy is expected to grow at 3% for the 2nd quarter after contracting by 2.9% in the 1st quarter. Some US economists feel that the growth is more sedate at 1% (here).


Chart 4: DJIA's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)


Chart 5: SPX's weekly chart as at Aug 8, 2014 (Source: Stockcharts.com)

Let's hope that the US stock markets will not join their European brethren by heading south. If that were to happen, then we could see a global equity market correction for the next few months.

Petgas: Bottom-line inched up due to higher top-line

Results Update

For QE30/6/2014, Petgas's net profit increased by 4% q-o-q but dropped by 54% y-o-y to RM435 million while its revenue declined by 5% both q-o-q & 18% y-o-y to RM1.102 billion. The sharp drop in net profit y-o-y was due to recognition of deferred tax assets arising from investment tax allowance granted for Regasification Terminal amounting to RM 592 million in QE30/6/2013.

Compared to the immediate preceding quarter (QE31/3/2014), Revenue increased by RM48 million to RM1.102 billion mainly driven by higher gas transportation & gas processing revenue from new Gas Processing Agreement & Gas Transportation Agreement. PBT rose by RM36 million primarily due to higher revenue but partially offset by higher other operating expenses.


Table: Petgas's last 8 quarterly results


Chart 1: Petgas's last 32 quarterly results

Valuation

Petgas (closed at RM22.20 last Friday) is now trading at a PE of 27x (based on last 4 qusrters' EPS of 82 sen). At this PE multiple, Petgas is deemed fully valued.

Technical Outlook

Petgas is still in a steady uptrend (see Chart 2). A closer look at the daily chart (Chart 3) will revealed that the long-term uptrend line has been violated. Petgas did not stage a quick rebound as it did in August 2013. Technically speaking, Petgas's outlook is now mildly bearish.
 

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


Chart 3: Petgas's daily chart as at August 8, 2014 (Source: Tradesignum) 

Conclusion

Despite the good financial performance, Petgas is rated a HOLD due to its expensive valuation & its mildly negative 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, Petgas.

Market Outlook as at August 8, 2014

The sudden drop in the market took many by surprise. From Chart 1 & 2, we can see that the drop is due primarily to weakness amongst the blue chip stocks. FBMKLCI is now very close to its uptrend line support at 1830-1835. Meanwhile FBMEmas is comfortably above its uptrend line. Despite the 30-point drop in FBMKLCI (at 2:40pm), the market uptrend is still intact.


Chart 1: FBMKLCI's weekly chart as at Aug 8, 2014_3:00pm (Source: BTX)


Chart 2: FBMEmas's weekly chart as at Aug 8, 2014_3:00pm (Source: BTX)

Yesterday, I was looking at the drop in my postings on Nexttrade. I remembered being asked by a reader whether the drop in my postings reflects my concern about the market. I explained that there were other reasons besides being hesitant to make my calls on stocks.

When I plot my postings in chart form & put it next to FBMKLCI chart, I noticed that as the market trends higher, I have a tendency to slowly pullback (by posting less). That happened in late 2007 and early 2011, when the market reached a peak before market reversed or correction set in. I noticed that it has happened again in the past few months.

I wondered how much of the decline in postings in the past few months was due to other reasons (ie. being too busy with my social activities and my other work). My observation is that I would always post when I have something interesting to share. Thus, I believe that the divergence between declining nexttrade postings & the rising index could be a warning sign, like in late 2007 & early 2011. In my opinion, the market is very toppish and we should reduce our exposure to equity.


Chart 3: FBMKLCI's weekly chart as at Aug 7, 2014 & Nexttrade Postings (Source: BTX & Nexttrade)

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, FBMKLCI.

Petdag: Profit improved

Result Update

For QE30/6/2014, Petdag's net profit increased by 20% q-o-q but dropped 6% to RM186 million while revenue inched up 1% q-o-q or 6% y-o-y to RM8.368 billion. 

Revenue increased q-o-q by RM74 million to RM8.368 billion due to 2%-increase in sales volume but partially offset by 1%-drop in selling prices. Group operating profit increased by RM24 million to RM253 million. This is due to higher gross profit margin by RM30 million as a result of lower product cost of RM15 million  & higher volume contribution of RM15 million. Lower product cost was due to favorable timing differences of the MOPS prices compared to previous quarter.

Table: Petdag's last 8 quarterly results


Chart 1: Petdag's last 25 quarterly results

Valuation

Petdag (closed at RM20.00 yesterday) is now trading at a trailing PE of 28 times (based on last 4 quarters' EPS of 72 sen). Based on PE multiple, Petdag is expensive.

Technical Outlook

Petdag broke its uptrend line in early February (here). It failed to hold onto its horizontal support at RM23. It may have better luck with the current horizontal support at RM19.


Chart 2: Petdag's weekly chart as at Aug 7, 2014 (Source: Tradesignum)

Conclusion

Based on high valuation & bearish technical outlook, Petdag is best to be avoided. If you are having the stock, you should try to sell on the current rebound.

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, Petdag.

Taliwrk: Finally, the uptrend continues... I think

Taliworks Corporation is involved in water treatment, waste management, highway concession and construction.

Unlike most stocks that have recovered after the US Financial Crisis, Taliwrk's recovery only began in 2013. See Chart 1 & 2.

Chart 1: Taliwrk's monthly chart as at Aug 6, 2014 (Source: Chartnexus)

Chart 2: Taliwrk's weekly chart as at Aug 6, 2014 (Source: Tradesignum)

Despite the late start, Taliwrk does not seem to be any hurry to rise up. From the low of RM0.75 in April 2013, the stock rose to a high of RM1.25 a few times. The RM1.25 mark has capped the stock for a good 12 months- until today. See Chart 3.

Chart 3: Taliwrk's daily chart as at Aug 6, 2014 (Source: Tradesignum)

Today, Taliwrk broke above the RM1.25 horizontal line. This bullish breakout signals that the stock is likely to continue its tepid uptrend. Currently, the stock is trading at RM1.35.

Taliwrk's financial performance & position over the past 10 years can only be described as unexciting. We can see that Taliwrk's top-line is on a hesitating upward trajectory while its bottom-line is rather flattish.


Chart 4: Taliwrk's last 10-year P&L (Source: Equities Tracker)

Its financial position is deemed fairly satisfactory, with high current ratio (due to high receivables) and elevated gearing ratio.


Chart 5: Taliwrk's Current & Gearig Ratios over the last 10-year (Source: Equities Tracker)

With the water theme play now on full bloom, it's somewhat surprising that punters gave this stock a miss. Well, better late and never, they say. Let's see whether the investors who sold this stock in 2010-2012 knew something that those who bought in 2013-2014 did not.

Based on technical consideration, Taliwrk could be a good trading 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, Taliwrk.

MISC: Bottom-line heading south again?

Result Update

In QE31/3/2014, MISC's net profit dropped by 41% q-o-q or 4% y-o-y to RM288 million while revenue improved by 11% q-o-q & y-o-y to RM2.538 billion. Revenue increased q-o-q due to higher revenue in the Heavy Engineering following progress on projects in hand during the quarter. PBT dropped q-o-q due to an operating losses incurred in Petroleum business due to the decline in freight rates.


Table: MISC's last 8 quarterly results


Chart 1: MISC's last 33 quarterly results


Chart 2: BDI's weekly chart as at Aug 1, 2014 (Source: Investmenttools.com)

Valuation

MISC (closed at RM6.73 yesterday) is now trading at a PE of 13x its FY2013 EPS of 51 sen. Due to renewed weakness in shipping rates and the continued poor performance of its heavy engineering division (under MMHE), MISC's earnings would remain weak for the near term.

Technical Outlook

From the weekly chart, we can see that MISC is in an uptrend. A break below the RM6.30 level could signal a change in the trend, from uptrend to sideways (or even downtrend).


Chart 3: MISC's weekly chart as at Aug 6, 2014 (Source: Tradesignum)

Conclusion

Based on poorer financial performance and challenging operating environment- albeit a still positive technical outlook - MISC is now rated a HOLD. That rating would change to REDUCE if the share price were to breach the RM6.30 mark.

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.