CIMB: Better Profits?

This morning, I called a trading BUY on CIMB based on technical breakout. After lunch, CIMB announced its result for QE30/6/2018, which shows net profit increased to RM1.98 billion from RM1.10 billion a year ago.

However, the increase is attributable to two large exceptional gains totalling RM928 million that came from the sale of 20% of CIMB-Principal and 10% of CIMB-Principal Islamic. If these one-off gains were excluded, CIMB’s net profit would drop to RM1.05 billion from RM1.10 billion a year ago. See accompanying tables and graphs.

Table: CIMB's last 8 quarters' P&L

Graph: CIMB's last 28 quarters' P&L

Presently, CIMB share price is going higher on the news as reported. Tomorrow the share price may change course after the newspaper reports which should include analysts’ comment, highlighting the actual performance of CIMB.

At RM6.17, CIMB is10 sen higher than yesterday close. The positive technical outlook as stated in my note yesterday will remain as long as CIMB share price stays above RM6.00.

If you feel that CIMB share price may decline tomorrow, you should consider selling or reducing your position. If you want to go with the positive technical outlook, then you can hold onto the stock.

Spritzr: Earnings Remained Stable

Result Update

For QE30/6/2018, Spritzer's net profit dropped 1.5% q-o-q but rose 30% y-o-y to RM6.7 million while revenue rose 1.3% q-o-q or 6.5% y-o-y to RM84 million. The Group revenue increased due to increase in sales volume. Sales volume increased partly as a result of various sales campaigns carried out and also due to customers taking advantage of the special discount offered by the Group on bottled water.

The Group profit before tax increased by 23% y-o-y mainly contributed by the stabilisation and control of the selling and distribution costs for market exploration, product advertising and promotion in China market coupled with the implementation of cost control measures to manage overhead costs in China operations and investment revenue received from short term money market funds with unutilised Private Placement proceeds.

Table: Spritzer's last 8 quarterly results

Spritzr' top-line has been rising steadily for the past 12 years but its bottom-line has formed plateau and moved sideways for the past 3 years.


Graph: Spritzer's last 49 quarterly results

Valuation

Spritzer (closed at RM2.33 yesterday) is now trading at a PE of 15.7 times (based on last 4 quarters' EPS of 14.76 sen). At this PER, Spritzer is still deemed fairly valued for a consumer stock. Its dividend yield is on the low side at 2.4%.

Technical Outlook

Spritzr is in a long-term uptrend. We can use the 40-month SMA line as the proxy to determine its uptrend support.


Chart 1: Spritzer's monthly chart as at Aug 28, 2018  (Source: Malaysiastock.biz)

Spritzer has been moving sideways for the past 2.5 years. If it can break above the intermediate downtrend line, RR at RM2.45, it may continue on its prior uptrend.


Chart 2: Spritzer's weekly chart as at Aug 28, 2018  (Source: Malaysiastock.biz)

Conclusion

Despite satisfactory financial performance, fair valuation and positive long-term technical outlook, Spritzer is a good stock to consider for long-term investment.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

CIMB: Next Upleg Starting Soon?

CIMB finally broke above the resistance from the horizontal line at RM6.00 yesterday. The breakout may signal an upswing to RM7.00 price level again. The immediate resistance will be the horizontal lines at RM6.20 and RM6.40 while the immediate support will be the horizontal lines at RM6.00 and RM5.80.

Chart 1: CIMB's weekly chart as at Aug 28, 2018 (Source: Malaysiastock.biz)

If you look at the next chart, you will see that CIMB - weighed down by negative news after GE14 - tested its intermediate uptrend line, SS at RM5.20 in July. Its lagging indicators (MACD & DMI) are either positive or may soon turn positive.


Chart 2: CIMB's daily chart as at Aug 28, 2018 (Source: Malaysiastock.biz)

Those who are very bullish on CIMB and wish to take a leveraged bet on this stock, may consider CIMB-C37. One good warrant screener to use for picking warrants that fit your requirement is KLSE Warrant Screener (here). All you have to fill in the blanks as follows:
1. Select Stock (CIMB)
2. Type (Call)
3. Maturity (more than 90 days)
4. Premium (less than 10%)

The result is shown below.


Table: CIMB's CWs (Source: klsescreener.com/v2/screener-warrants)

UPDATE: KLSE Warrant Screener has one shortcoming of not including the warrants' conversion ratio in the table. This omission does not affect the premium computed by the website as it is still correct based on my cross checking. However, as a user, I like to have all the terms on one page for my own computation. In the case of CIMB-C37, the conversion ratio is 6-to-1 which means you need 6 units of C37 to "convert" to 1 unit of CIMB share in theory. In practice, all CWs are cash settled instead of going thru the hassle of physically settlement. I hope the publisher of KLSE Warrant Screener will look into this omission soon. Despite this omission, it is an excellent tool for investors and traders to use. 

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

REACH: Good News is not Enough

Yesterday, REACH announced its result  for QE30/6/2018 when it chalked up its first quarterly pre-tax profit of RM12.6 million thanks to higher crude oil prices. 

Table 1: REACH's last 6 quarterly result

Since its share price was in the dumpster, you would expect the stock to rally. As at 9.45am, REACH is up only 2 sen to 27 sen.


Chart: REACH's weekly chart as at Aug 27, 2018 (Source: Shareinvestor.com)

The underwhelming price movement is due mainly to REACH's poor financial position.


Table 2: REACH's current & gearing ratios

REACH has indicated that it will be approaching its shareholders to raise its capital in order to finance its expansion into new oil field. If you look at the price performance of another O&G stock that has announced a Rights Issue lately, i.e. Sapnrg, you will understand why REACH shareholders are less than keen on a Rights Issue now even though the money will be used for a very good purpose. That's the sad state of our stock market today, which makes one wonders: What's so good about having a stock market when you can't raise fund to finance productive investment?!

Apollo: Earning Rebounded

Result Update

For QE31/7/2018, Apollo's pre-tax profit dropped rose 207% or 11% y-o-y to RM4.2 million on the back of lower revenue which dropped 6% q-o-q or 8% y-o-y to RM43 million. Revenue dropped y-o-y mainly due to decrease in sales orders by export markets. PBT rose y-o-y due to lower operating expenses incurred in this quarter.


Table: Apollo's last 8 quarterly results

Apollo's revenue, profits and profit margins have been on a steady decline for the past 3 years. The improvement in the profits and profit margins last quarter may be a sign that the prudential measures to raise its operational efficiency may be starting to bear result.


Graph: Apollo's last 44 quarterly results

Financial Position

As at 30/6/2018 31/7/2018, Apollo's financial position is very healthy with current ratio of 15.6 times and gearing ratio of 0.09 times. Its cash balance stood at RM101 million or RM1.27 per share.

Valuation

Apollo (closed at RM4.36 yesterday) is now trading at a PE of 30 times (based on last 4 quarters' EPS of 14.36 sen). Excluding the cash balance of RM1.27 per share, Apollo would improve to 22 times. While its PER is fairly demanding, it pays good dividend of 20 sen last year, which translates to a dividend yield of 4.6%.

Technical Outlook

Despite the price decline for the past 2 years, Apollo is in a long-term uptrend with support at RM3.90-4.00.


Chart 1: Apollo's monthly chart as at Aug 27, 2018 (Source: ShareInvestor.com) 

Apollo is still in an intermediate downtrend line, RR with resistance at RM4.40.


Chart 2: Apollo's weekly chart as at Aug 27, 2018 (Source: ShareInvestor.com) 

Conclusion

Based on improved financial performance and strong financial position, Apollo is a good stock to consider for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Padini: Earning Soared

Result Update

for QE30/6/2018, Padini's net profit rose 44% q-o-q or 45% y-o-y to RM57 million while revenue rose 12% q-o-q or 4% y-o-y to RM478 million. Revenue increased mainly due to increased number of outlets, which increased by 5 Padini Concept stores and 7 Brands Outlet stores opened during the twelve-month period under review.  Profit before tax also increased as a result of the impact from the increase in revenue and improvement in GP margin, counter balance by the increase in selling & distribution expenses.


Table: Padini's 8 quarterly results

We can see clearly that Padini's net profit was way above the net profit achieved in QE31/12/2016. The acceleration in net profit could herald a new phase of earning growth for Padini.


Graph: Padini's P&L  for last 18 quarterly results

Financial Position

Padini's financial position is deemed satisfactory as at June 30, 2018 with current ratio at 2.9x and gearing ratio at 0.4x. Net cash balance was RM414 million or RM0.63 per share.

Valuation

Padini (closed at RM6.04 yesterday) is now trading at a trailing PER of 22x (based on last 4 quarters' EPS of 27.11 sen). Excluding the net cash of RM0.63, Padini's PER would improve slightly to 20x. At either one of these PERs, Padini is fairly attractive.

Technical Outlook

Padini is in a long-term upward channel. It is now pressing against the upper line, which is likely to cap its upside in near term.


Chart 1: Padini's monthly chart as at Aug 27, 2018 (Source: Shareinvestor.com)

The weekly chart shows potential weakness ahead but the share prices will be well-supported by the intermediate uptrend line, SS at RM5.00-5.20.


Chart 2: Padini's weekly chart as at Aug 27, 2018 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance and satisfactory financial position, and positive technical outlook, Padini is a good stock to buy for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Deleum: Earnings Soared

Results Update

For QE31/3/2016, Deleum's net profit jumped 5-fold q-o-q or 37% y-o-y to RM9 million while its revenue rose 28% q-o-q or 31% y-o-y to RM139 million. Revenue rose q-o-q due to the revenue growth recorded across all segments sustained by higher activity level as customers’ works orders picks up from the traditionally slow activities in the first quarter. Overall pre-tax profit rose due to higher PBT reported by Power & Machinery segment and Oilfield Services segment plus lower pre-tax loss incurred by Integrated Corrusion Solution segment.


Table 1: Deleum's last 8 quarterly results

 
Table 1: Deleum's segmental performance for QE30/6/2018 and QE31/13/2018

Deleum's top-line and bottom-line peaked in FY2014, and since then they have been drifting lower. I believe top-line and bottom-line had already made a trough, and they are poised for recovery.


Graph: Deleum's last 47 quarterly results

Financial Position

Deleum's financial position is deemed healthy as at 30/6/2018. Its current ratio stood at 1.9 times while total liabilities to equity was manageable at 0.6 times. It has a net cash of RM80.7 million or approximately RM0.20 per share.

Valuation

Deleum (closed at RM0.94 yesterday) is now trading at a PE of 10.8 times (based on EPS of 8.7 sen for the past 4 quarters). At this PER, Deleum is deemed fair. Dividend payment has risen from 3.25 sen to 4.5 sen- giving the stock a decent dividend yield of 4.8%.

Technical Outlook

Deleum share price is still finding its bottom after a long decline from the peak at RM2.60 in 2016. The upside breakout above the 30-month moving average line could not sustain (see the month chart).


Chart 1: Deleum's monthly chart as at Aug 21, 2018 (Source: Shareinvestor.com)

The intermediate uptrend line, SS was also violated in late May. Immediate support and resistance are at RM0.90 and RM1.05, respectively.


Chart 2: Deleum's weekly chart as at Aug 21, 2018 (Source: Shareinvestor.com)

Conclusion

Based on decent financial performance & position and reasonable valuation, Deleum is good stock for long-term investment. However its technical outlook is negative- a problem which may take sometimes to work out. Rating kept at HOLD.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Kianjoo: Earnings Dropped Sharply

Result Update

For QE30/6/2018, Kianjoo's net profit dropped by 60% q-o-q or 70% y-o-y to RM4.6 million while revenue dropped by 4% q-o-q or 3% y-o-y to RM429 million. Revenue dropped y-o-y due to decrease in demand for some of the Group's products and offset by upward adjustments of selling price to absorb the increase in cost of direct material. Gross profit declined to RM43.9 million from RM61.2 million in QE30/6/2017 due to decrease in revenue and increased cost of tin plate, aluminium and paper rolls. Consequently, profit before tax decreased to RM5.2 million from RM18.9 million in QE30/6/2017. During the quarter, the Group incurred pre-operating loss of RM3.4 million from a new cartons factory in Myanmar- which is expected to incur losses in the remaining quarter of the year due to pre-operating cost incurred.


Table: Kianjoo's last 8 quarterly results


Graph: Kianjoo's last 47 quarterly results

Financial Position

As at 30/6/2018, Kianjoo's financial position is deemed satisfactory with current ratio at 1.6 times and gearing ratio at 0.7 times.

Valuation

Kianjoo (closed at RM2.62 last Tuesday) is now trading at a PE of 16 times (based on last 4 quarters' EPS of 16.3 sen). At this multiple, Kianjoo is deemed fairly valued.

Technical Outlook

Kianjoo broke its long-term uptrend line, SS at RM3.10 in June 2016. Since then, it has been drifting lower. Its immediate support is at RM2.50 and the next support will be at RM2.10.


Chart 1: Kianjoo's monthly chart as at Aug 21, 2018 (Source: Shareinvestor.com)



Chart 2: Kianjoo's weekly chart as at Aug 21, 2018 (Source: Shareinvestor.com)

Conclusion

Based on continued weaker financial performance and full valuation, I revise my rating for Kianjoo a HOLD to REDUCE.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Kossan: Financial Performance Letdown by Glove Division

Result Update

For QE30/6/2018, Kossan's profit before tax rose 4% q-o-q on the back of a 3%-increase iin revenue to RM497 million. When compared to the same quarter last year, profit before tax dropped 2% while revenue increased by 1%.. The improved q-o-q performance was mainly attributable to the improved performance in the Technical Rubber division. How did the Gloves division perform?


Table 2: Kossan's last 8 quarterly results

You can see from Table 2 below that Kossan's Glove division had suffered decline in revenue and pre-tax profit in the past 2 quarters! That's a serious blow for Kossan because its competitors, such as Harta, Topglove and Supermx had been done very well in the past 2 quarters. Kossan has announced plan to invest RM1.5 billion to build new plants on its recently acquired land in Bidor, Perak (here). 

Table 2: Kossan's segmental performance for 1Q2018 & 2Q2018  

Kossan's top-line, bottom-line and profit margin have been moving sideways for the past 4-5 quarters.


Chart: Kossan's last 48 quarterly results

Valuation

Kossan (closed at RM4.43 last friday) is now trading at a PE of 31.6 times (based on last 4 quarters' EPS of 14.04 sen). At this PER, Kossan is deemed fully valued.

Technical Outlook

In late July, Kossan surpassed its December 2015 high of RM4.61 when it made a new all-time high of RM4.72. This failed breakout could be a set-up for a reversal. Be careful!


Chart 1: Kossan's monthly chart as at Aug 17, 2018 (Source: ShareInvestor.com)


Chart 2: Kossan's weekly chart as at Aug 17, 2018 (Source: ShareInvestor.com)

Conclusion

Kossan's relatively healthy financial performance belied its weakened position in the glove industry. Notwithstanding the under-performance, Kossan share price was able to make a new all-time high momentarily- probably induced by a share split exercise that was completed in July. I believe this situation cannot persist for long, and the likely outcome would be a price rollback. Thus, I revised my rating for Kossan from a BUY to a SELL.

Note: 

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Penta: Earning Stayed Strong

Results Update

For QE30/6/2018, Penta's PBT increased by 46% q-o-q or 105% y-o-y to RM24.1 million while revenue rose 2.9% q-o-q or 87% y-o-y to RM102 million. Revenue rose q-o-q mainly due to increase in sales from automated manufacturing solution operating segment. The Group recorded a higher profit before taxation of RM24.1 million in the current quarter as compared to the profit before taxation of RM16.5 million in the immediate preceding quarter- the latter does not include the non-recurring expenses of RM7.1 million. If the non-recurring expenses were included, profit before taxation recorded an increase of 2.1% which was in tandem with the increase in revenue of 2.9%.


Table: Penta's last 8 quarterly results

 
Graph: Penta's last 22 quarterly results 

Valuation

Penta (closed at RM3.10 last Friday) is now trading at a PER of 25 times (based on last 4 quarters' EPS of 12.4 sen). At this PER, Penta is deemed fully valued.

Technical Outlook

Last week, Penta surpassed its January high of RM3.14, and made a new all-time high of RM3.26. However this breakout could not sustain and the share price corrected on Friday. This could lead to further correction in the days ahead.


Chart 1: Penta's weekly chart as at Aug 17, 2018 (Source: ShareInvestor.com)


Chart 2: Penta's monthly chart as at Aug 17, 2018 (Source: ShareInvestor.com)

Conclusion

Despite the good financial performance, it is advisable to take some profit on Penta after the sharp rally in the past few weeks. Thus I revised my rating from a BUY to a TAKE PROFIT.

Note: 

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

KPJ: Tentative Signs of Earning Expansion

Result Update 

For QE30/6/2018, KPJ's net profit dropped 0.3% q-o-q but rose 32% y-o-y to RM42 million while revenue dropped 2.6% q-o-q but rose 1.1% y-o-y to RM801 million. Revenue rose y-o-y mainly contributed by the increase in number of patient episodes and complex cases per inpatient particularly for KPJ Rawang, KPJ Bandar Maharani and KPJ Pasir Gudang. Besides, increased activities at the support companies also contributed to the revenue growth. In current quarter, KPJ Perlis has commenced its operation on 17 May 2018.

Profit before zakat and tax has increased to RM62.0 million during this quarter, an increase of 26% from RM49.1 million in the same quarter in 2017, contributed by the cost optimisation initiatives by the hospitals mainly the new hospitals which were under gestation period.


Table: KPJ's last 8 quarterly results

KPJ's quarterly revenue has been on a steady uptrend for the past 10 years. Its earning has been flattish in the past 5-6 years due to expansion program which led to lower profit margin as higher administrative expenses were not fully absorbed by revenue from the newly hospitals opened. However profits & profit margins seem to be curving upward. If these trends persist, we may see a breakout in profits next few quarters.


Graph: KPJ's last 46 quarterly results

Valuation

KPJ (closed at RM1.14 yesterday) is now trading at a PE of 23.4 times (based on last 4 quarters' EPS of 4.87 sen). At this PER, KPJ is fully valued.

Technical Outlook

KPJ has been moving sideways for the past 5-6 years. If it can break above the red band between RM1.15-1.20, KPJ's uptrend will continue.


Chart 1: KPJ's monthly chart as at Aug 16, 2018 (Source: ShareInvestor.com)


Chart 2: KPJ's weekly chart as at Aug 16, 2018 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance and exposure to a growing consumer service sector, KPJ could be a good stock for long-term investment.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

TCHONG: Earning Recovery Hasn't Begun Yet

Result Update

For QE30/6/2018, TChong's net profit increased by 190% q-o-q to RM12 million while revenue rose 5% q-o-q to RM1.088 billion. Revenue rose q-o-q mainly due to higher number of vehicles sold and EBITDA & net profit rose q-o-q due to improvement in the margins with the favourable sales mix.


Table: TChong's last 8 quarterly results

TChong's revenue, profits and profit margins appear to have turn the corner in the last few quarters.


Graph: TChong's last 47 quarterly results

Financial Position

As at 30/6/2018, TChong's financial position is deemed satisfactory with current ratio at 1.4 times and gearing ratio at 0.9 time.

Valuation

TChong (closed at RM1.69 yesterday) is now trading at a PBR of 0.4 times (based on NTA of RM4.28 as at 30/6/2018). As the group has yet to make a profit on cumulative basis for the 4 quarters to 30/6/2018, TChong is unable to give out any PER.

Technical Outlook

TChong appears to be making a base at around RM1.60.


Chart 1: TChong's monthly chart as at Aug 14, 2018 (Source: ShareInvestor.com)


Chart 2: TChong's weekly chart as at Aug 14, 2018 (Source: ShareInvestor.com)

Conclusion

Based on improved financial performance & adequate financial position, TChong could be a good stock for recovery play.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Market Outlook as at August 13, 2018

Our market declined broadly yesterday in line with decline in global markets. This global decline is brought on by uncertainty and confusion generated by reckless action in Washington- the latest being tariff to be levied against Turkey. We will never be able to keep up with a madman, and we will do more harm to ourselves if even tried to match. For that reason, we must avoid being suck into the fear-and-greed cycle and keep calm in this man-made storm. 

Looking at the major indices in our market, I believe that FBMKLCi & FBM70 are merely consolidating after a sharp rally while FBMSCAP & FBMACE are getting ready to follow in the footsteps of FBMKLCI & FBM70. This period of uncertainty could be a time for us to slowly buy into beaten down stocks.


Chart 1: FBMKLCI's daily chart as at Aug 13, 2018 (Source: Shareinvestor.com)


Chart 2: FBM70's daily chart as at Aug 13, 2018 (Source: Shareinvestor.com)

Chart 3: FBMSCAP's daily chart as at Aug 13, 2018 (Source: Shareinvestor.com)

Chart 4: FBMACE's daily chart as at Aug 13, 2018 (Source: Shareinvestor.com)