3 Asian Markets with Different Outlook

The last 6 months, we saw Shanghai's SSEC, Mumbai's BSE and Tokyo's Nikkei trending in different directions. SSEC was in a downtrend line and in the past few days, it rallied to test that line. The question is whether SSEC can break above this downtrend line in the face of a nonsensical trade war between China and U.S.


Chart 1: SSEC's daily chart as at Sep 26, 2018 (Source: Stockcharts.com)


Chart 2: SSEC's weekly chart as at Sep 26, 2018 (Source: Stockcharts.com)

Nikkei was moving sideways until it broke out of the range to revisit its January 2018 high near 24000. Can it break above that high? We will have to wait and see.


Chart 3; NIKK's daily chart as at Sep 26, 2018 (Source: Stockcharts.com)


Chart 4: NIKK's weekly chart as at Sep 26, 2018 (Source: Stockcharts.com)

Lastly, BSE - which was in an intermediate uptrend- broke that uptrend line, S1-S1 last week. Hopefully it can find support from its long-term uptrend line, SS at 35500.


Chart 5: BSE's daily chart as at Sep 26, 2018 (Source: Stockcharts.com)


Chart 6: BSE's weekly chart as at Sep 26, 2018 (Source: Stockcharts.com)

My wish is for SSEC to break above its intermediate downtrend line at 2800. If it can do that, it may serve to draw back in international funds and some of these funds  amy re-look at our market too.

Haio: Earnings Continued to Drop

Result Update

For QE31/7/2018, Haio's net profit dropped 32% q-o-q or 38% y-o-y to RM11 million while revenue dropped 28% q-o-q or 36% y-o-y to RM80 million. Overall revenue dropped q-o-q mainly attributable to lower revenue generated from the MLM division of 26.6% which was only partially offset by the increase in revenue for Wholesale and Retail divisions of 20.0% and 44.5% respectively.

Revenue for the MLM division was lower mainly attributable to the distributors had slowdown business activities during Ramadan fasting month and Hari Raya festive season coupled with lower member recruitment rate post GE14 which has resulted the dropped in revenue for the 1 st quarter ended 31 July 2018. The revenue for the Wholesale division dropped  due to lower sales in Chinese medicated tonic and tea amid to the weaker consumer sentiment. The revenue for the Retail division dropped after the sales promotion period of 4Q2018 plus subdued consumer sentiment remains despite the 3-months tax free holiday effective 1 June 2018.

In line with lower overall revenue, the company's net profit dropped 32.4% q-o-q.


Table: Haio's last 8 quarterly results 


Graph: Haio's last 54 quarterly results

Financial Position 

Haio's financial position as at 31/7/2018 is deemed healthy with current ratio at 4.0 times and total liabilities to total equity at 0.2 times.

Valuation

Haio (closed at RM4.04 yesterday) is trading at a trailing PE of 17.3 times (based on last 4 quarters' EPS of 23.42 sen). Haio paid out dividend totaling 17 sen in the past 4 quarters- giving the stock a decent dividend yield of 4.0%. Based on these, Haio is deemed fairly valued.

Technical Outlook

Haio peaked at RM5.60 in late 2017. A strong rally in May this year sent the share price to a high of RM5.39. Since then, Haio has been sliding and even broke the horizontal line at RM4.50. The next support will be the psychological level at RM4.00 and the horizontal line at RM3.80.


Chart: Haio's weekly chart as at Sep 26, 2018  (Source: Malaysiastock.biz)

Conclusion

Despite weaker financial performance and negative technical outlook, Haio is a good stock for long-term investment based healthy financial position and fair valuation. I revise my rating from Underperform (or, SELL) to a 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.

Astro: Earnings Plunged

Results Update

For QE31/7/2018, Astro's net profit dropped 91% q-o-q or 93% y-o-y to RM17 million while revenue was mixed- up 8% q-o-q but down 0.2% y-o-y to RM1.42 billion.

Revenue dropped y-o-y mainly due to a decrease in subscription and advertising revenue, offset by higher merchandise sales, licensing income and sales of program broadcast rights. The decrease in subscription revenue was mainly due to lower package take-up and the decrease in advertising revenue was due to lower spending over festivities as compared to corresponding quarter. The increase in merchandise sales was due to increase in number of products sold, mainly driven by the tactical campaigns executed for the current quarter.

Net profit decreased y-o-y mainly due to higher content costs from FIFA World Cup and higher cost of merchandise sales and higher net finance costs. Higher net finance cost was mainly due to unfavorable unrealized forex movement arising from unhedged finance lease liabilities and vendor financing and increase in interest expenses from borrowings. The drop was partially offset by lower tax expenses.


Table: Astro's last 8 quarterly results


Graph: Astro's last 28 quarterly results

Financial Position

Astro's financial position is weak with current ratio of 0.9 time and gearing ratio of 9 times. I believe that the investment community accepts these weak ratios because of the concession-like income stream. Will the faster and cheaper broadband affect this assumption in the future? We will ahve to wait and see.

Valuation

Astro (closed at RM1.66 yesterday) is now trading at a trailing PE of 16 times (based on last 4 quarters' EPS of 9.97 sen). In addition, Astro paid out dividend quarterly which amounted to 11.50 sen for the last 4 quarters; giving the stock an attractive DY of 6.9%. Based on these PER and DY, Astro is deemed fairly attractive.

Technical Outlook

Astro dropped from RM2.90 in October last year to a low of RM1.31 in May this year. After a rebound to RM1.97 in August, the share price is again on the retreat. It may re-test the low- hopefully giving us a double bottom!


 Chart: Astro's weekly chart as at Sep 26, 2018 (Source: Malaysiastock.biz)

Conclusion

Despite the weaker financial performance, I believe Astro is still a good stock for long-term investment based on fair valuation. For those who like to buy into Astro, you can afford to wait for lower prices before accumulating.

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.

VS: Earning Recovery Has Not Begun

Result Update

For QE31/7/2018, VS's profit before tax rose 83% q-o-q or 4% y-o-y to RM38 million while revenue rose 15% q-o-q or 3%  y-o-y to RM1.01 billion. Meanwhile, profit before tax decreased 48% y-o-y or RM22.8 million to RM25.0 million due to RM16.9 million loss on disposal of a subsidiary, net forex loss of RM5.3 million (as compared to gain of RM2.5 million previously) impairment loss on properties of RM3.0 million and share of loss of associates of RM7.0 million.


Table 1: VS's last 8 quarterly results


Table 2: VS's quarterly results contribution by geographical segments

From the graph below, we can see that VS's revenue rebounded after the lull in calendar 1st quarter. However profits still remained soft.


Graph: VS's last 54 quarterly results

Financial Position

As at 31/7/2018, VS's financial position has improved slightly with current ratio at 1.5 times and gearing ratio at 0.9 time.

Valuation

VS (closed at RM1.62 yesterday) is trading at a trailing PE of 15 times (based on last 4 quarters' EPS of 10.92 sen). At this PER, VS is deemed fairly valued.

Technical Outlook

From its peak of RM2.50 in early 2018, VS has declined to a recent low of RM1.26. It is trying to form a base of around RM1.50-1.60, which is below the long-term uptrend line.


Chart: VS's weekly chart as at Sep 25, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance & financial position and reasonable valuation, VS is still a good stock for long-term investment. I maintain my rating for VA as a 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.

D&O: Bullish Breakout

Technical Outlook

D&O broke above the line connecting its recent high at RM0.80 yesterday. With this upside breakout, the stock is likely to go into an upleg. The potential target is RM1.00. This breakout would be invalid if the share price were to brop back below RM0.80.


Chart: D&O's weekly chart as at September 25, 2018_12.30 (Source: Malaysiastock.biz)

Recent Quarterly Result

In QE30/6/2018, net profit rose 58% q-o-q or 119% y-o-y to RM8.1 million while revenue was unchanged q-o-q but rose 11% y-o-y to RM113 million. Pre-tax profit rose 19.5% to RM11.8 million, lifted by a RM2.2 million government grant, a RM3.2 million net gain from the settlement of a civil suit (refer the note below) and RM0.7 million foreign exchange gain (versus RM1.6 million loss in QE31/3/2018), which partially offset by higher inventory write offs and higher R&D expenses (which doubled to RM8.9 million from RM4.4 million).

Note: D&O lost a suit in the Melaka High Court in May 2018. The suit was brought by Geepar Enterprise Sdn Bhd where the judgement awarded was RM18,964,923.38. Subsequently, D&O accepted an offer of a full and final settlement amount of RM10,156,000, including cost, from Geepar Enterprise Sdn Bhd.

Table: D&O's last 8 quarterly results

Graph: D&O's last 14 quarterly results

Valuation

D&O (closed at RM0.84 in the morning session) is now trading at a trailing PER of 31 ttimes (based on last 4 quarters' EPS of 2.65 sen). At this PER, D&O is deemed fully valued.

Conclusion

Based on bullish technical breakout, D&O could be a good trading BUY.

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.

Magnum: A Final Settlement?

Magnum has a full and final settlement of its hefty tax bill after judicial review. Instead of having to pay RM476 million as per the May announcement (here), its tax liabilities will amount to only RM100 million (here). Surprisingly, the market is not reacting to the positive news. I feel that Magnum should be trading at a higher price with this good news.

Chart: Magnum's daily chart as at Sep 20, 2018 (Source: Malaysiastock.biz)

Scientx: Earnings Picked Up

Result Update

For QE31/7/2018, Scientx's net profit rose 44% q-o-q or 22% y-o-y to RM88 million while revenue was rose 22% q-o-q or 13% y-o-y to RM733 million. Profit before taxation rose 39% q-o-q due to better sales performance from both the manufacturing and property divisions as well as contribution from Klang Hock Plastic Industries Sdn Bhd (KHPI). From the date of acquisition (on 2 May 2018), KHPI has contributed approximately RM96,622,000 of revenue and net profit of RM5,685,000 to the Group.


Table: Scientex's last 8 quarterly results

It is encouraging that Scientx achieved a new high in term of PBT and revenue in the last quarter.


Graph: Scientex's last 52 quarterly results

Financial Position

As at 31/7/2018, Scientex's financial position is deemed satisfactory with current ratio at 1.1 times and gearing ratio at 0.83 time.

Valuation

Scientex (closed at RM8.57 yesterday) is now trading at a trailing PE of 14.4 times (based on last 4 quarters' EPS of 59.58 sen). At this PER, Scientex is deemed fairly attractive.

Technical Outlook

Scientx has broken above its intermediate downtrend line, RR at RM8.25 in August 2018. Despite the upside breakout, the share price refused to launch into an upleg. With the new high for revenue and profits, Scinetex may finally continue its uptrend again. We will have to wait and see.


Chart: Scientex's daily chart as at Sep 20, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance, fairly attractive valuation and mildly positive technical outlook, Scientex remains a good stock for medium to long-term investment. The new high for revenue and profits may be the catalyst for continuation of its prior uptrend.

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.

SCGM: Tentative Earning Recovery

Results Update

In QE31/72018, SCGM's net profit rose 6 folds q-o-q on the back of a 16%-increase in revenue to RM56 million. When compared to same quarter last year, net profit dropped 81% while revenue rose 4%. Revenue increased q-o-q, mainly due to higher sales from local and overseas markets. PBT rose q-o-q in line with higher revenue achieved for the current quarter. PBT dropped y-o-y due to higher resin prices, higher finance costs, higher electricity costs, higher depreciation charges, higher labor cost and foreign exchange losses incurred

 
Table: SCGM's last 8 quarterly results

 
Graph: SCGM's last 38 quarterly results

Financial Position

SCGM's financial position is deemed adequate with current ratio at 1.25 times while gearing ratio is elevated at 0.96 time.

Valuation

SCGM (closed at RM1.42 yesterday) is now trading at a PE of 23X (based on last 4 quarters' EPS of 6.16  sen).  At this PE, SCGM is deemed fully valued. However, PE will improve once earning starts to increase.

Technical Outlook

After a steady decline, SCGM seems to have found support at RM1.30-1.40.


Chart: SCGM's weekly chart as at Sep 20, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on tentative recovery in earnings, adequate financial position and possible bottoming of the share price, vised my rating for SCGM from a SELL to a 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.

Superln: Earning Rebounded

Result Update

In QE1/7/2018, Superln's net profit rose 106% q-o-q but dropped 20% y-o-y to RM2.8 million while its revenue rose 1.4% q-o-q but declined 2.3% y-o-y to RM26 million. Despite a relatively stagnant revenue, Superln registered a recovery in its gross profit to about 30% as compared to 23% in the preceding quarter as a result of a more favorable exchange rate environment and better efficiency. On the back of a better gross profit margin, the group registered an increase of 178% in profit before tax to RM3.9 million in the current quarter as compared to RM1.4 million in the preceding quarter. Correspondingly, its profit after tax for the group increased by RM1.4 million to RM2.8 million as compared to the preceding quarter.

Table: Superln's last 10 quarters' results

Graph: Superln's last 22 quarters' results

Financial Position

As at 31/7/2018, Superln's financial position is deemed healthy with current ratio at 3.9 times and gearing ratio at 0.25 time.

Valuation

Superln (closed at RM1.20 yesterday) is now trading at a trailing PER of 16x (based on last 4 quarters' EPS of 7.3 sen). At this PER, Superln is deemed fully valued.

Technical Outlook

Superln has been moving sideways for the past 6 months. If the share price can go above RM1.50, the next upleg may begin.


Chart: Superln's weekly chart as at Sep 18, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, healthy financial position and fair valuation, I revise my rating for Superln from a SELL to a 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.

BAuto: Earnings Dipped Slightly Q-o-Q

Results Update

For QE31/7/2018, BAuto's net profit dropped 12% q-o-q but rose 149% y-o-y to RM50 million while revenue dropped 15% q-o-q but rose 24% y-o-y to RM485 million.

Group revenue dropped q-o-q mainly due to lower sales volume from both the domestic and the Philippines operations. Although domestic demand for the new CX-5 model was very strong for the quarter under review but its sales volume was down against preceding quarter because of supply constraint from MMSB. The Group did not anticipate the Government to revise the GST from the standard rate of 6% to 0% in June this year which caused the surge in demand for passenger cars and thus affected the production plan of MMSB which required time to step up its production volume. Group pre-tax profit for the current quarter under review dropped by RM6.4 million or 8.7% primarily due to lower share of profit contribution from MMSB as a result of lower production volume on the new CX-5 mode.


Table: BAuto's last 8 quarters' financial performance

Graph: BAuto's last 25 quarters' financial performance  

Current Year Forecast

With the implementation of SST on 1 September 2018, the Group is absorbing the SST for customers who have placed their bookings for Mazda cars prior to 1 September 2018, for which the delivery of the cars will take place after the said date. This is to build customer loyalty and is expected to increase costs and reduce the Group’s profitability in the coming quarter. The impact may be mitigated, however, through lower sales volatility after August this year with potentially higher sales volume, reduced marketing and advertising expenses as well as dealer incentives.

Financial position

As at 31/7/2018, BAuto's financial position is deemed satisfactory with current ratio at 2.55 times and total liabilities to total equity at 0.62 time.

Valuation

BAuto (closed at RM1.99 last Friday) has a fair PER of 13.5 times (based on last 4 quarters' EPS of 14.69 sen). At this PER, BAuto is deemed fairly valued. However if its earning for next quarter were to decline due to lower sales in Malaysia, the PER will rise. We will have to wait and see how much sales volume will normalize in the current quarter.

Technical Outlook

BAuto has been moving in sideways manner - with slight upward bias - for the past 3 years. For now, the range is between RM1.85 and RM2.40.


Chart: BAuto's weekly chart as at Sep 14, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance, fair valuation and mildly positive technical outlook, I maintain the rating for BAuto from as a 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.

CSCSTEL: An Attractive Steel Stock

CSCStel share price has dropped 43% from an intraday of RM2.08 in January 2017 to its current price of RM1.19. Is this steel stock worth buying?

Results Update

For QE30/6/2018, CSCStel's net profit dropped 2% q-o-q or 28% y-o-y to RM10 million while revenue was mixed - down 1.5% q-o-q or up 6.9% y-o-y to RM343 million. The Group’s revenue dropped slightly q-o-q mainly due to overall decrease in sale volume despite marginal increase in prices of all steel products. In spite of the lower sale volume, the Group’s profit before tax of RM13.5 million this quarter is marginally lower than that achieved in the previous quarter due to marginal increase in overall production cost. [Note: CSCTEL's result for QE30/6/2018 was announced on August 17.]


Table: CSCStel's last 8 quarterly results


Graph: CSCStel's P&L for last 43 quarterly results

Financial Position

As at 30/6/2018, CSCStel's financial position is deemed very healthy with current ratio at 8.8 times and gearing ratio at 0.11 time. It has net cash of RM194 million which is equivalent to RM0.53 per share.

Interestingly, CSCStel announced in May this year that its wholly-owned subsidiary, Group Steel Corporation (M) Sdn Bhd ('GSCM') has proposed to undertake a capital reduction and repayment to cancel RM139 million of its share capital and to distribute the credit amount back to CSCStel (here). The shareholders will be very interested to know what CSCStel will do with this cash balance once it has received it from GSCM. Will it be reinvested in a new project that will generate additional earning or will it be distributed partially to its shareholders?

Current Year Prospect

The company expects “the steel market to face micro price fluctuation till the year end due to trade measure issues and price factor in iron ore and coking coal. On the domestic steel market, (the company is) facing threat from the influx of low priced steel imports. The Ministry of International Trade and Industry has been made aware of the situation and is now taking appropriate actions including initiating anti-dumping investigation on imports of galvanised steel from China and Vietnam to minimize the harm to the local manufacturers.”

The company is not very inspiring when it states that it's “cautiously optimistic to achieve profitability for the rest of the year.”

Valuation

CSCStel (closed at RM1.19 yesterday) has a PER of 8.8 times (based the last 4 quarters' EPS of 13.5  sen). If the cash balance of RM0.53 per share is deducted from the share price, CSCStel's PER will be reduced to 4.9 times. At this PER multiple, CSCStel is deemed very attractive. In addition, CSCstel has an attractive dividend yield of 8.4% based on current price of RM1.19.

Technical Outlook

CSCStel peaked at RM2.08 in January 2017, and declined steadily in a downward channel.


Chart 1: CSCStel's daily chart as at Sep 6, 2018 (Source: MalaysiaStock.Biz)

If you look at the monthly chart, CSCtel price decline may bring the share price to its long-term uptrend line support at RM0.90-1.00.


Chart 2: CSCStel's monthly chart as at Sep 6, 2018 (Source: MalaysiaStock.Biz)

Conclusion

Based on satisfactory financial performance, strong financial position and attractive valuation, CSCStel is 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.

KIMLUN: Better Value at Lower Price

Kimlun has tumbled about 36% from RM2.00 in early May to RM1.27 yesterday. Is this stock worth investing?

Results Update

For QE30/6/2018 (2Q2018), Kimlun’s net profit dropped 22% q-o-q or 33% y-o-y to RM10 million while revenue was mixed - dropped 1% q-o-q but rose 12% y-o-y to RM218 million.

Revenue dropped 1.3% q-o-q but profit after tax dropped 22% or RM2.76 million due to sharp drop in Group’s gross profit of RM3.34 million or 12.2% due to lower gross profit margin achieved by the construction division due to projects mix with higher composition of lower margin projects. The impact of a declined construction gross profit margin was partly offset by the improvement in the M&T GP margin. The improvement in manufacturing & trading ('M&T') gross profit was mainly due to the better margin precast concrete products contributed a higher proportion of M&T sales during in 2Q2018. [Note: Kimlun's result for QE30/6/2018 was announced on August 29, 2018.]


Table: Kimlun's last 8 quarters' P&L accounts


Graph: Kimlun's last 22 quarters' revenue, profits & profit margins

Financial Position

Kimlun's financial position is deemed adequate with good liquidity position (current ratio was at 1.7 time) but gearing ratio was elevated at 1 time.

Current Year Prospects

This is taken from the Notes to the latest Financial Statements:

The Group has an estimated construction and manufacturing balance order book of approximately RM1.7 billion and RM0.4 billion respectively as at 30 June 2018, contributed by numerous construction contracts and supply contracts. The balance order book provides a good earnings visibility to the Group and is expected to keep the Group busy for the next 2 years. (Emphasis mine)

Valuation

Kimlun (closed at RM1.27 yesterday) is now trading at a PER of 6.8 times (based on last 4 quarters’ EPS of 18.8 sen). At this PER, Kimlun is deemed fairly attractive.

Technical Outlook

Kimlun has dropped very near to its long-term uptrend line support at RM1.20.


Chart: Kimlun's weekly chart as at Sep 6, 2018_4.00pm (Source: Malaysiastock.biz)

Conclusion

Despite a slightly weaker financial performance, Kimlun is a good stock for long-term investment based on clear earning visibility, reasonably healthy financial position and fair valuation.

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.

AEONCR: Bullish Breakout

AEONCR broke above the line connecting the peaks for the past 9 months, denoted as "AB" at RM15.30. As at 4.25pm, AEONCR is now trading at RM15.40. If it can stay above the line, AB, AEONCR will likely to continue with its prior uptrend. Its potential target based on a 1-to-1 extension will be RM17.50-18.00.

Chart: AEONCR's daily chart as at Sep 4, 2018_4.25pm (Source: Malaysiastock.biz)

Based on bullish breakout, AEONCR could be a good trading BUY.

Hibiscus: Strong Earning but Minor Hiccup Ahead

Last Thursday, Hibiscus dropped 14 sen to RM0.96 after it announced a good set of result for QE30/6/2018. Its net profit rose 19% q-o-q or 10-fold to RM99 million while revenue rose 145% q-o-q or 148% y-o-y to RM185 million.


Table 1: Hibiscus's last 8 quarterly result

Hibiscus's strong performance was due to good selling prices of its output which boost its PAT for its North Sabah and Anasuria segments.

Table 2: Hibiscus's segmental result for QE30/6/2018, QE30/6/2017 & QE31/3/2018

We can see Hibiscus's strong financial performance for the past 4-5 years in the graph below.


Graph: Hibiscus's last 19 quarterly result

In the notes accompanying its financial statements, Hibiscus mentioned that it will be ramp-up planned maintenance activities for the North Sabah segment in the next 2 quarters (see Note 19). This will reduce its uptime and output for the 2 quarters; thus affecting its PAT. For an idea of the impact of this planned maintenance activities, you can refer to the earlier planned shutdown of the Anasuria FPSO in mid-September 2017 to mid-October 2017 which reduce its uptime to 70 days and 57 days for the quarter of Jul-Sep 2017 and Oct-Dec 2017 respectively.


Table 3: Anasuria's last 4 quarterly production operation

If the planned maintenance for North Sabah were to be carried out in September and October, then the impact will be "shared out" between the next 2 quarters; thus avoiding a lump sum impact on the bottom-line. For an idea of the North Sabah segment, see the table below.

Table 4: North Sabah's last 4 quarterly production operation

The sharp drop in share price last Thursday brought the share price near its intermediate uptrend line, SS at RM0.93. This could be a good level to get into a stock that will benefit from rising crude oil prices.


Chart: Hibiscus's daily chart as at Sep 3, 2018 (Source: Malaysiastock.biz)

Good luck!

Supermx: Earning Plummeted

Result Update

For QE30/6/2018, Supermx's net profit dropped 71% q-o-q but rose 18% y-o-y to RM9.8 million while revenue rose 1% q-o-q or 5% y-o-y to RM329 million. The company did not give much explanation on the decline in its profit. Its revenue increase was attributed to capacity increase from its 2 newest plants, i.e. Plants #10 and #11.


Table 1: Supermx's last 8 quarters' P&L


Table 2: Sipermx's revenue, EBITDA and PBT changes as compared to last year & immediate preceding quarter

Graph: Supermx's last 47 quarters' P&L

In place of an explanation for its weaker bottom-line, Supermx gave the readers something interesting - the amount owing by the government in term of GST & Tax refund.


Table 3: Amount owing by the government to Supermx for GST & Tax refund

This is more a political statement. I can't imagine every other listed companies giving similar information on the financial statements which would cast negative light on the government. In my opinion, this information is adequately presented in its Balance Sheet as at 30/6/2018.

Table 4: Supermx's Balance Sheet as at 30/6/2018

Financial Position

Supermx's financial position as at 30/6/2018 is deemed adequate with current ratio at 1.1 times while gearing ratio was at 0.6 times.

Valuation

Supermx (closed at RM3.36 last week) is now trading at a PER of 21x (based on last 4 quarters' adjusted EPS of 16.16 sen). At this PER, Supermx is deemed fully valued.

Technical Outlook

Supermx broke above its large and rising trading range at RM3.70 in June this year. Last week, it dropped back into the trading range. This trading range will likely cap its upside for the bear term.


Chart 1: Supermx's weekly chart as at Aug 20, 2018 (Source: Malaysiastock.biz)


Chart 2: Supermx's daily chart as at Aug 20, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on weaker financial performance, fully valuation and near-term technical weakness, I am revising my rating for Supermx from a BUY to a REDUCE or SELL INTO STRENGTH.

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.