Merry Christmas & Happy New Year 2019

I like to wish everyone Merry Christmas and a Happy New Year 2019.

Market Outlook as at December 24, 2018

Our FBMKLCI is approaching the year-end below the middle line of the upward channel. As noted in my past market outlook posts, a break of this middle line had pointed the way forward for market for the past 18 years. Can the market overcome this reliable market signal?


Chart 1: FBMKLCI's monthly chart as at Dec 24, 2018 (Source: Malaysiastock.biz)

I have also highlighted in the last market outlook post that FBMKLCI had enjoyed fairly strong rallies in the first quarter of the year, especially after a sharp decline. This had happened in every year since 2013. This type of medium-term rally -or, better known as CNY rally - may not be able to overcome the bearish signal given by the breakdown of the middle line (within the long-term upward channel). If it were to come again early next year, it may bring FBMKLCI up to the confluence of the medium-term downtrend (in red) and the middle line of the long-term upward channel at 1720-1725. If FBMKLCI can go above 1720-1725, then the damage done by the breakdown of the middle line may be rectified. If that were to happen, then FBMKLCI may be able to avoid the trip down to the lower line of the long-term upward channel at 1400.


Chart 2: FBMKLCI's weekly chart as at Dec 24, 2018 (Source: Malaysiastock.biz)

Meanwhile, the whole world is watching with both amazement and disgust as the US Government is once again going down the road to perdition. It has become too shamefully obvious to any independent observer that the greatest nation on earth is now led by a man-child President, who insists on burning down the house if he doesn't get what he wants for Christmas. The old saying that a people deserves the leader they chose, applies aptly to America today. How very sad! 

DJIA broke the horizontal support at 23400 last week. It looks like it is heading to its next horizontal support at 21000. If that support were also violated, DJIA may test the psychological 20000 support. I hesitate to think that it may even have to test the clustered support area at 18000.


Chart 3: DJIA's weekly chart as at Dec 22, 2018 (Source: Stockcharts.com)

In light of the numerous economic and political challenges ahead, one would likely recoil and withdraw from the market. While that may not be a bad idea for investors in the US markets, our Malaysian market has been down for so long that it is probably worthwhile looking thru the long list of badly beaten stocks selling at attractive prices. If you take a long-term view, some of the bargains in the market today could well be on the A-list tomorrow. Good luck!

UPDATED: Check out this article in Business Insider which highlighted about a corner of the equity market that has held up relatively well in the current sell-down: Emerging Market. The reason for this is attractive valuation as this sector has been under-performing for the past 3 years. Last week alone, the amount of fund flowing into EM stocks was USD4.5 billion or USD21.0 billion over the past 10 weeks. Sooner or later, the outflow of foreign fund will stop and the inflow will begin. 

AEONCR: Earnings rose 23.5% y-o-y

Result Update

For QE30/11/2018, AEONCR's net profit rose 8.1% q-o-q or 23.5% y-o-y to RM87 million while revenue rose 4.6% q-o-q or 11.6% y-o-y to RM349 million. Pre-tax profit rose 10.1% q-o-q to RM118.072 million mainly due to lower impairment loss on financing receivables of RM61.514 million for the current quarter and RM95.263 million for the immediate preceding quarter.


Table: AEONCR's last 8 quarterly results


Graph: AEONCR's last 46 quarterly results

Financial Position

AEONCR's financial position is deemed acceptable with current ratio at 1 time while gearing ratio is elevated 4.3 times.

Valuation

AEONCR (closed at RM14.84 yesterday) is now trading at a PE of 11 times (based on last 4 quarters' EPS of 134.68 sen). At this PER, AEONCR is deemed fairly attractive. In addition, it pays a decent dividend with DY of 2.85% (based on last year dividend of  42.25 sen).

Technical Outlook

AEONCR is in an uptrend. Its immediate support is the horizontal line at RM14.70.


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

Conclusion

Despite satisfactory financial performance, AEONCR is still a good stock for long-term investment in view of its fairly attractive valuation and still positive technical outlook.

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.

GenM: Outdoor Theme Park to Open in Jan 2019

Genting Group Chairman and CEO Lim Kok Thay told Singapore's Business Times that they plan to open the outdoor theme park by January 2019. For more, go here. For regular update of the construction work on the theme park, go here.

Over the past 2 months, GenM had been hit by 3 negative news; namely, increased casino tax, fallout with 20th Century Fox on the development of the outdoor theme park and huge impairment provision of RM1.49 billion (here). The latest news is a breath of fresh air for this badly beaten stock, which may provide the catalyst for a possible upward re-rating of the stock.


Chart 1: GenM's daily chart as at dec 17, 2018 (Source: Malaysiastock.biz)

The positive vibe may also help Genting, which had also dropped significantly over the past 3 & 1/2 months.


Chart 2: Genting's daily chart as at dec 17, 2018 (Source: Malaysiastock.biz)

For those who have been waiting patiently for a sign to get into these 2 stocks, this one maybe just what a good doctor would recommend. However, given the weak market sentiment, you would do well to buy slowly. Good luck!

VS: Earning Mixed

Result Update

For QE31/10/2018, VS's profit before tax rose 81% q-o-q but dropped 8% y-o-y to RM45 million while revenue rose 6% q-o-q but dropped 0.9%  y-o-y to RM1.08 billion. Revenue dropped marginally y-o-y due to lower revenue achieved by the Indonesian operation (as result of the weakening of Indonesian Rupiah) and Chinese operation (due to lower sales orders completed). These had more than offset the 9.4%-increase in revenue for the Malaysian operation which was mainly due to higher sales orders from key customers.

Profit before tax, meanwhile, decreased 8% y-o-y due to LBT incurred by the Indonesian operation and higher LBT incurred by the Chinese operation as a result of lower-than-optimal utilization rate coupled with a loss on disposal of a subsidiary amounting to RM5.4 million. These again more than offset the improved PBT for the Malaysian operation which was in line with higher revenue achieved.


Table 1: VS's last 8 quarterly results


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


Graph: VS's last 54 quarterly results

Comment on Current Year Prospect

VS's comment on its prospect turned decidedly negative in the last quarter. I have appended below the comment for QE31/10/2018 & QE31/7/2018, with the Board's outlook highlighted.

Comment on Prospect in Notes to the FS for QE31/10/2018

Comment on Prospect in Notes to the FS for QE31/7/2018

This change in the outlook was also highlighted in analysts' briefing. A sample of that is given here. This explained the limit-down drop in its share this morning.

Financial Position

As at 31/10/2018, VS's financial position is unchanged, with current ratio at 1.5 times and gearing ratio at 0.9 time. I consider this to be adequate.

Valuation

VS (closed at RM0.82 at end of morning session) is trading at a trailing PE of 9 times (based on last 4 quarters' EPS of 9.7 sen). At this PER, VS is deemed fairly valued.

Technical Outlook

VS is in a downtrend after it broke its uptrend line at RM1.70. It then broke below the horizontal line at RM1.15 and is now resting at the horizontal line at RM0.80-0.82. If this support is also violated, it may go to RM0.55-0.60. I believe that the current support should hold unless there is something terribly wrong with the company, which we do not know about.


Chart: VS's weekly chart as at Dec 17, 2018_112.30pm (Source: Malaysiastock.biz)

Conclusion

Notwithstanding the weaker financial performance and negative outlook on its current year prospect, I feel that VS deserves to be rated as a HOLD based on sharply lower share price and reasonable 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.

Market Outlook as at December 17, 2018

On opening, FBMKLCI lost 16 points to make a low of 1645. By 10:40 a.m. FBMKLCI recovered back to ~1655. From Chart 1, we can see that FBMKLCI should have support at 1650, which is both the horizontal line as well as the line connecting the lows in the past 8 years (ignoring the low made in 2015). If this support failed, then the index may drop to 1600-1605.

Chart 1: FBMKLCI's weekly chart as at Dec 17, 2018_12:30 p.m. (Source: Malaysiastock.biz)

Meanwhile, the market may benefit over the next few months from the usual CNY rebound. My clients asked me whether this positive effect will emerge again given the preponderance of negative factors in the market. I will let you form your own opinion on that. Just look at Chart 2 below.


Chart 1: FBMKLCI's weekly chart as at Dec 17, 2018_9:30 a.m. (Source: Malaysiastock.biz)

Based on past market behaviors, I think that we can expect some positive sentiments at the start of next year. If you are looking to reduce your position in the market, I think you can defer that to early next year. Good luck!

Tenaga: Broke Its Long-term Uptrend Line

Tenaga broke its long-term uptrend line, SS at RM14.00 on December 5. In the past 3 days, Tenaga struggled to stay above the horizontal line at RM13.50. At 10:15am this morning, Tenaga once again broke below the RM13.50 horizontal line.

The last time Tenaga dropped significantly below RM13.50 was on December 10 when it made an intraday low of RM13.30. A few minutes ago, Tenaga made a low of RM13.24. If Tenaga cannot recover above the RM13.50 horizontal line again, then it may see further downside. Its next strong support will be at RM12.00.


Chart: Tenaga's monthly chart as at Dec 13, 2018_10.30 (Source: Malaysiastock.biz)

Superln: Earnings Continued to Rise

Result Update

In QE31/10/2018, Superln's net profit rose 48% q-o-q or 16% y-o-y to RM4.2 million while its revenue rose 5% q-o-q but declined 12% y-o-y to RM27 million. The higher revenue coupled with an increase in gross profit to about 36% as compared to 30% in the preceding quarter (due to more favorable exchange rate environment and better efficiency) led to an increase of 46% in profit before tax to RM5.7 million. Correspondingly, profit after tax for the group increased by RM1.4 million to RM4.2 million as compared to the preceding quarter.

Table: Superln's last 8 quarters' results

Graph: Superln's last 23 quarters' results

Financial Position

As at 31/10/2018, Superln's financial position is deemed healthy with current ratio at 3.4 times and gearing ratio at 0.26 time.

Valuation

Superln (closed at RM1.26 yesterday) is now trading at a trailing PER of 16x (based on last 4 quarters' EPS of 7.7 sen). At this PER, Superln is deemed fully valued. Superln paid out dividend totaling 3.5 sen for FYE30/4/2018. I think it may do the same for FYE30/4/2019. This will give the stock a dividend yield of 2.8%.

Technical Outlook

Superln has been moving sideways for the past 9 months. If the share price can go above RM1.50, the next upleg may begin.


Chart: Superln's weekly chart as at Dec 12, 2018 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, healthy financial position and fair valuation, Superln 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.

Market Outlook as at December 9, 2018

With each passing week, the global equity market looks more and more dicey. Same goes for our market. Our FBMKLCI is poised to break below the middle line (at 1680-1690) of the long-term upward channel. At the time of writing this post, FBMKLCI is down 16 points to 1664. Unless there is a quick recovery, the breakdown of this middle line will bring the index to the lower line at 1400. Be very careful!

Chart: FBMKLCI's monthly chart as at December 7, 2018 (Source: Malaysiastock.biz)

TM: A Bullish Breakout

TM broke above its downtrend line, RR at RM2.35 on November 29. After that breakout, TM remained at that price level for 2 days. Yesterday, TM broke above the horizontal line at RM2.47 as well as the psychological RM2.50 mark.

With these breakouts, TM is likely to begin its recovery provided it does not drop back below RM2.47-2.50. Based on technical consideration, TM could be a good stock for a recovery play. If you choose to get into the stock now, please exercise careful discretion in view of current market weakness.
.

Chart: TM's daily chart as at Dec 4, 2018 (Source: Malaysiastock.biz)

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: Earnings Plunged

Result Update

In QE30/9/2018, Padini's net profit dropped 69% q-o-q or 42% y-o-y to RM18 million while revenue was mixed- down 31% q-o-q but rose 5% y-o-y to RM330 million. Revenues and profit before taxation for this quarter decreased by approximately RM148 million (31.0%) and RM54 million (66.9%) respectively compared to the immediate preceding period. This was mainly due to Hari Raya festival sales which fall in June 2018 and the nationwide 4 days special sales promotion held in the last quarter.


Table 1: Padini's 8 quarterly results

The Hari Raya festival sales and the nationwide 4 days special sales promotion must have been so successful as it came after the ending of GST in Malaysia in June. The following quarter, QE30/9/2018 has traditionally been a slower quarter, and it did not benefit from the tax-free period after the end of GST and before the start of SST in September. It could be a reflection of the slowdown in consumer spending.

Below I have compared the decline in revenue and profits for QE30/9/2018 with those of QE30/9/2018. While revenue dropped q-o-q buy rose y-o-y for both periods under review, profits dropped more severely for QE30/9/2018 compared to QE30/8/2017. The reason for the bigger drop in profits are attributable to:

a) a drop in gross profit margin from 43% to 40%, which was mainly due to the reversal of inventories written off and inventories written down in the previous financial year, and
b) an increase in staff cost, rental and some other store operating expenses.

Table 2: Padini's QE30/9/2018 compared to QE30/9/2017 


Graph: Padini's P&L  for last 25 quarterly results

Financial Position

Padini's financial position is deemed satisfactory as at Sept 30, 2018 with current ratio at 3.7x and gearing ratio at 0.3x. Net cash balance was RM314 million or RM0.48 per share.

Valuation

Padini (closed at RM4.30 in the morning session) is now trading at a trailing PER of 17x (based on last 4 quarters' EPS of 25 sen). Excluding the net cash of RM0.48 per share, Padini's PER would improve slightly to 15x. At either one of these PERs, Padini is fairly attractive.

Technical Outlook

Padini broke its horizontal line at RM5.30 as well as the psychological RM5.00 mark on November 30. Its immediate support is at the horizontal line at RM4.10-4.15. If this support is broken, Padini may test its uptrend line at RM3.70.

Chart: Padini's weekly chart as at Dec 4, 2018_11.30 (Source: Malaysiastock.biz)

Conclusion

Despite the sharp drop in profits, Padini is still a good stock to buy for long-term investment based on its steady & well-established track record of financial performance and healthy financial position.

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.

Armada: Down But Not Out Yet

Background

Bumi Armada Bhd ("Armada") is an oilfield services company whose business can be grouped into 2 segments: the Offshore Marine Services (OMS) with a fleet of 44 OSVs and 3 SC vessels and Floating Production & Operation (FPO) with 1 LNG FSU and 8 FPSOs.  

Result Update

In QE30/9/2018, Armada reported a smaller net loss of RM503 million as compared to a net loss of RM585 million in the immediate preceding quarter (QE30/6/2018). At the same time, revenue dropped to RM588 million from RM654 million. Armada's finacnial performance in the last 2 quarters was badly affected by impairment made for its FPO segment which amounted to RM479 million in QE30/6/2018 and RM502 million in QE30/9/2018.

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


Graph: Armada's last 18 quarters' P&L

Financial Position & Loan Repayment/Extension

Armada's financial position is quite tight, with current ratio at 0.47 time and total liabilities totital equity at 2.70 times. The tight financial position is reflected in its need to extend part of its loans of USD500 million that fell due in October. Armada settled USD120 million and the remaining USD380 million is now subject to negotiation for extension. For more on the loan outstanding and its status, go here.

Valuation

Armada (closed at RM0.18 in the morning session) is now trading at a Price-to-Book of 0.2 time (based on NTA per share of RM0.81 as at 30/9/2018). We cannot compute its PER as it has a net loss of RM976 million in the past 4 quarters.

Technical Outlook

Armada broke below the RM0.50 horizontal line in early October. This launched the share price into a deep dive, with a short pause at RM0.38 and RM0.32. The indicators show the stock is oversold. With the huge volume of 447 million shares transacted on Thursday and Friday last week as well as 147 million shares traded this morning, we may show be seeing a bottom for the stock. Whether it will be the final bottom or just a temporary bottom will be decided latter.


Chart 1: Armada's monthly chart as at Dec 3_12.30pm (Source: MalaysiaStock.Biz)


Chart 2: Armada's daily chart as at Dec 3_12.30pm (Source: MalaysiaStock.Biz)

Conclusion

Despite the weak financial position and poor financial performance, Armada still has a decent chance of pulling through in view of its strong management. This is helped by signs of recovery in the oilfield services sector- despite recent weakness in crude oil prices. Due to the sharp drop in share price, Armada could be a good stock to a recovery play. However, given the uncertainty involved, you should not take an oversize position in the stock just yet. Slow accumulation will be safer. Good luck!

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.

GenM: Huge Loss Due to Impairment

Results Update

In QE30/9/2018, GENM reported a huge net loss of RM1.49 billion mainly due to an impairment loss on the group's investment in the promissory notes issued by the Mashpee Whampanoag tribe (a native American tribe) for the development of an integrated gaming resort in the US on a piece of tribal land. 

The reason for the provision for the impairment loss was the uncertainty of recovery of the group’s investment following the US Federal Government’s decision against the tribe for the proposed development. The decision concluded the tribe did not satisfy the conditions under the Indian Reorganisation Act that allow the tribe to have the land in trust for an integrated gaming resort development. The Genting group would continue to work closely with the tribe on options which include a legislation being introduced in the US Congress which, if passed, will entail the US Federal Government to reaffirm the land in trust for the benefit of the tribe. If the proposed legislature is passed, the impairment loss can be reversed when the promissory notes are assessed to be recoverable.

Table 1: Genm's last 8 quarterly results

If we exclude the provision for impairment loss for the investment in promissory notes for the development on US tribal land, Genm's operating profit rose 120% q-o-q or 23% y-o-y to RM661.6 million. This improved performance is on the back of higher revenue, which rose 7% q-o-q or 15% y-o-y to RM2.60 billion.


Table 2: Genm's quarterly results for QE30/9/2018

Below is the graph of Genm's last 50 quarterly P&L. The top graph shows revenue and profits as reported while the lower graph shows profits excluding extraordinary gains or losses. From the lower graph, we can see that Genm's revenue is rising steadily while profits, which have been flattish for past 6 years, are now swinging up.


Graph: Genm's last 50 quarterly results 

Valuation

Genm(closed at RM2.86 last Friday) is now trading at a Price-to-Book of 0.9 times. We cannot compute its PER as Genm made a loss for the past 4 quarters.

Technical Outlook

Genm's share price has been dropping like a stone in the past 2 months. The decline was due to fear of new/ increased taxes (which came true) and theme park problem. This morning, it will have to withstand any sharp drop due to the huge impairment loss.

I believe that the stock is oversold going into today's trading. A drop to the long-term uptrend line at RM2.50 or the horizontal line at RM2.20 may bring out buying support.


Chart 1: GenM's daily chart as at Nov 30, 2018  (Source: Malaysiastock.biz)


Chart 2: GenM's monthly chart as at Nov 30, 2018  (Source: Malaysiastock.biz)

Conclusion

Despite the poor financial performance and earlier 2 bad news (increased casino tax by 10% and theme park hiccup), Genm is a good stock for long-term investment in view of its unique business and strong management.

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 Dec 3, 2018

The news that Trump and Xi has agreed to a truce in the trade war, whereby the US will postpone the raising of its tariff from 10% to 25% for USD200 billion import from China in exchange for the Chinese buying more soya bean from US as well as raising the ownership cap for the financial sector.

This should be well-received in China as well its neighboring countries, such as Hong Kong.

We can see the Shanghai's SSEC index is still below its downtrend line as well as its 50-day SMA line.


Chart 1: SSEC's daily chart as at Nov 30, 2018 (Source: Stockcharts.com)

Singapore's STI is still below its downtrend line but above its 50-day SMA line.


Chart 2: STI's daily chart as at Nov 30, 2018 (Source: Stockcharts.com)

Hong Kong's HSI is still above its downtrend line and its 50-day SMA line.


Chart 3: HSI's daily chart as at Nov 30, 2018 (Source: Stockcharts.com)

Our market will likely to join in the rally. Our index is well below the intermediate downtrend line, RR. Before it can test that downtrend line, it will have to surpass the psychological 1700 mark and the horizontal lines at 1725.


Chart 4: FBMKLCI's daily chart as at Nov 30, 2018 (Source: Stockcharts.com)

BIMB: Earnings Rose

Results Update

In QE30/9/2018, BIMB's net profit rose 32.5% q-o-q or 4.7% y-o-y to RM199 million while revenue rose 9.8% q-o-q or 19.4% y-o-y to RM1090 million. BIMB's PBZT increased by RM59.0 million or 24.9% q-o-q. The increase came from:

1) Bank Islam Msia Bhd which reported an increase in PBZT of RM31.5 million or 16.3%, due to increase in total income of RM54.1 million which was partly offset with higher IATD (increased by RM14.1 million) and increased net allowance charged for impairment on financing and advances (increased by RM11.3 million); and

2) Syt Takaful Msia Bhd which reported an increase in PBZT of RM26.4 million or 43.0%, which was attributable to higher net wakalah fee income.


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


Graph: BIMB's last 26 quarters' P&L

Valuation

BIMB (closed at RM3.75 in morning session) is now trading at a PER of 9.4x (based on last 4 quarters' EPS of 40 sen). At this pER, I believe BIMB is a fairly attractive.

Technical Outlook

BIMB has been declining gradually from a high of RM4.40 in early January to a recent low of RM3.40. Its immediate support is at RM3.40-3.50 while its immediate resistance is at RM3.75-3.80. Until BIMB has broken above its downtrend line at RM3.85, it is likely to remain in its diwnward channel.


Chart 1: BIMB's monthly chart as at Nov 29, 2018_12.30pm (Source: MalaysiaStock.Biz)

Chart 2: BIMB's daily chart as at Nov 29, 2018_3.30pm (Source: MalaysiaStock.Biz)

Conclusion

Based on tsatisfactory financial performance and fair valuation, BIMB 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.

Topglov: Breaking Above All-time High

On July 2, Topglov made an all-time high of RM6.24 (or, unadjusted for 1-for-1 bonus high of RM12.48). After that the share price plunged due to the Adventa acquisition saga. Topglov recovered substantially when it finally implemented its bonus issue in October.

Yesterday, Topglov broke to the upside of its triangle, ABC at RM6.00. This morning, it went above the July high of RM6.24. These consecutive bullish breakouts are exceptional in a weak market. Something big is going to land soon.

Based on technical analysis, Topglov could be a trading BUY. If you choose to trade these breakout, please do so with caution given the many headwinds we are facing now. Good luck!


Chart: Topglov's daily chart as at Nov 29, 2018_9.50am (Source: Malaysiastock.biz)

PPB: A Bullish Breakout

PPB broke above its horizontal line at RM17.30 this morning. As at 9.31am, PPB was trading at RM18.08 with volume traded of 147,000.

Based on technical analysis, PPB can be a good trading BUY. Its immediate potential target is RM19.00. 

Chart: PPB's daily chart as at Nov 29, 2018_9.25am (Source: malaysiastock.biz)

Johotin: Profits Roared Back

Results Update

For QE30/9/2018, Johotin's net profit jumped 265% q-o-q or 56% y-o-y to RM12.6 million while revenue was mixed- up 7.7% q-o-q but down 6.4% y-o-y to RM124 million. Its PBT rose y-o-y mainly due to:

1) Higher PBT for the F&B Industry, which increased by RM7.69 million from RM4.95 million to RM12.64 million), mainly due to increase sales in higher margin products mix and no allowance for doubtful debts in the current quarter under review as compared to RM3.59 million in the preceding year corresponding quarter; and

2) Higher PBT for the Tin Manufacturing Industry which increased by RM0.28 million from RM3.80 million in the preceding year corresponding quarter to RM4.08 million as a result of higher sales in the edible oil industry, paint industry and the printing of tin-plate services.

Table: Johotin's last 8 quarterly results

From the graph below, you can see that Johotin's quarterly PBT is now at an all-time high. This may be the start of a period of higher profit. The cause of the higher profit is the weakening of our MYR.


Graph: Johotin's last 36 quarterly results 

Valuation

Johotin (closed at RM0.91 yesterday) is now trading at a trailing PE of 11.4 times (based on last 4 quarters' EPS of 8 sen). At this PER, Johotin is deemed fairly attractive.

Technical Outlook

Johotin peaked at RM1.70 in May 2017. It has dropped nearly to its long-term uptrend line. With the good result, the share price will likely rebound. Its immediate resistance is at RM0.95-1.00. Its immediate support is at RM0.85-0.90.


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


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

Conclusion

Based on improved financial performance, fairly attractive valuation and positive technical outlook, Johotin 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.