Topglov: Attractive Enough?

Results Update

Topglov released its result for QE28/2/2019 on March 22. Its net profit dropped 4% q-o-q or 3.0% y-o-y to RM106 million while revenue was mix - down 8% q-o-q but up 21% y-o-y to RM1,16 billion. Revenue dropped q-o-q largely owing to lower average selling price arising from downtrend in raw material costs and some pricing pressure. Revenue dropped despite sale volume increased by 1% compared with 1QFY19.

Meanwhile, Profit Before Tax dropped 11.6% q-o-q mainly due to more competitive environment and weakening of USD. Raw material prices were lower compared with 1QFY19, with average natural rubber latex and nitrile latex prices easing by 4.2% to RM3.62/kg, and 14.3% to USD1.08/kg respectively.

 
Table 1: Topglov's last 8 quarterly results


Graph: Topglov's last 50 quarterly results

Financial Position

Topglov's financial position is deemed satisfactory with adequate current ratio at 1.04 times while gearing ratio is elevated at 1.12 times.

Rapid Expansion Ahead

Like other glove manufacturers, Topglov will increase its production capacity aggressively over the few years. It has outlined its planned expansion in the notes to the financial statement. I have appended the table below, which shows clearly Topglov will increase capacity by 33.7% to 80.9 billion gloves by end 2020. Can the market absorb the increased output? We will have to wait and see.

Table 2: Topglov's Planned Expansion for 2019 & 2020

Valuation

Topglov (closed at RM4.50 yesterday) is now trading at a trailing PE of 26 times (based on last 4 quarters' EPS of 17.11 sen). At this PER, Topglov is deemed fairly valued.

Technical Outlook

Topglov has declined from its recent high of RM6.31 recorded on November 29 last year to a low of RM4.30 recorded on March 13. The share price seems to have found support at the "horizontal line" AB at RM4.30. The developing recovering may set up an uptrend line for the stock going forward.


Chart: Topglov's daily chart as at Mar 26, 2019_10.00am (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and financial position and mildly positive technical outlook, Topglov is a good stock for long-term investment. The drop of RM2.00 from the recent high could well have fully-factored in the market's concern about over-capacity in this sector.

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 March 21, 2019

Yesterday, FBMKLCI lost 17 points to close at 1663. It opened with a 10-point gain which quickly frizzled out by 9:30 am this morning. It looks set to test the horizontal line at 1650 soon.

Chart 1: FBMKLCI's daily chart as at Mar 21, 2019 (Source: Malaysiastock.biz) 

As mentioned in my last market outlook piece, FBMKLCI is hanging onto the line connecting the lows (or, troughs) since 2010. I drew 2 uptrend lines (SS & S1-S1) to show how well the index is supported by these 2 uptrend lines. In 2011 & 2015, the lower uptrend line S1-S1 were tested and a strong rebound kicked in. Last year, the uptrend line S1-S1 were tested 3 times; the first test elicited a decent rebound, the 2nd test elicited a timid rebound and the last test led to a breakdown. After a 2-month struggle, the index climbed back above the lower uptrend line S1-S1 but failed to cross above the higher uptrend line, SS. Three weeks ago, it broke the lower uptrend line S1-S1 again.


Chart 2: FBMKLCI's weekly chart as at Mar 21, 2019 (Source: Malaysiastock.biz) 

We have to watch how the index will fare on testing the horizontal support at 1650. If FBMKLCI were to break below the 1650 support, then it may continue to go lower. The next support will be at 1600. For the next few days, we better play it safe and watch from the sideline.

PBBank: Another Banking Stock Took a Knock

PBBank Maybank is down 54 sen to RM23.92 as at 11:59am. From the monthly chart, we can see that the MACD has curved down this month. With the exception of the MACD cross-under in 2011, past few bearish signals have brought PBBank share price to at least its 40-month SMA line. If the same were to happen this time, PBBank may touch RM21.00. I think it is advisable to avoid PBBank for now.

Chart: PBBank's monthly chart as at Mar 21, 2019_11.40am (Source: Malaysiastock.biz)

Maybank: A Sudden Selldown

Maybank is down 15 sen to RM9.32 as at 11:51am. From the monthly chart, we can see that the MACD has curved down since May 2018 (courtesy of GE14). In the past, such bearish MACD cross-under merely brought down the share price to the 40-month SMA line. It was only when the share prices went below the 40-month SMA line - in 2008 and 2015 - that Maybank price decline went into overdrive. Let's see whether Maybank can stay above RM9.00-9.10 in the current decline. If it can stay above that price level (equivalent to 40-month SMA line) not, this would be a good level to accumulate Maybank.

Chart: Maybank's monthly chart as at Mar 21, 2019_11.40am (Source: Malaysiastock.biz)

Redtone: Higher Earning Due to Higher MTNS Revenue

Result Update

For QE31/1/2019, Redtone's net profit increased by 116% q-o-q or 7-fold to RM5.4 million while revenue rose 52% q-o-q or 66% y-o-y to RM45.4 million. Revenue rose q-o-q due to higher revenue from Managed Telecommunication Network Services ("MTNS") segment. The Group's profit before tax rose q-o-q due to higher revenue in the MTNS segment (see Table 2 below).


Table 1: Redtone's last 8 quarterly results

Table 2: Redtone's segmental results for QE31/1/2019 

From Table 3 below, we can see that MTNS segment is now catching up with the Telecommunication Services segment. If MNTS segment can match the performance of the Telecommunication Services segment, Redtone's bottom-line will be much better than what's it like today.


Table 2: Redtone's 9-mth segmental results 


Graph: Redtone's last 32 quarterly results

Financial Position

As at 31/1/2019, Redtone's financial position is healthy with current ratio at 2.5 times and gearing ratio at 0.4 time.

Valuation

Redtone (closed at RM0.26 yesterday) is now trading at a trailing PE of 14 times (based on last 4 quarters' EPS of 1.79 sen).  At this PE, Redtone is still deemed attractive for a turnaround stock with room for further growth.

Technical Outlook

Redtone has broken above its downtrend line at RM0.24 on March 13. If it can also take out the immediate downtrend line, RR with resistance is at RM0.32-0.33, Redtone's uptrend may begin.


Chart: Redtone's weekly chart as at Mar 19, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on the turnaround story, exciting future prospects, healthy financial position and mildly bullish technical outlook, Redtone 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.

Dayang's Correction: Nothing Out of the Ordinary

I read Mr. Koon's article entitled Dayang: Devious Tricks to Buy at Cheaper Prices (here) with amusement just before the market re-opened in the afternoon. I re-read the article 5 minutes ago and was simply stunned by the concluding remark:

Unless the author, editor, directors and Kenanaga (sic) Investment Bank can confirm that they do not have Dayang share, I will not believe the published article is not another skilful use of underhand trick to buy Dayang at cheaper prices.      

That was a very strong statement from Mr. Koon. He was referring to this report by Kenanga entitled Dayang Enterprise Holding- Take Profit From This Rally (here).

Mr. Koon has rightly called a BUY on Carimin earlier and followed up on that success with a buy call on Dayang. Both calls were spot on, and he moved in quickly to build up a big position which proved to be very profitable.

I do not agree with his strongly-worded attack on Kenanga. Kenanga is in the business of advising the clients on maximizing their profit- be that short-term or long-term. Any one with a few years of investing experience can tell you that Dayang has overshot its fair value past few days and was due for a correction. The Kenanga analyst, who I have not met even though we are "colleagues", merely pointed out that the risk of a correction may out-weigh the risk of further price gain. Thus, it is sensible to take some profit and wait for a lower price to re-enter the stock or to re-deplore the sale proceed to another stock which may give a better return.

Having said that, I'm always a big fan of Mr. Koon. His analysis are both sharp and incisive, and most importantly he put his money where his mouth is. I wish Mr. Koon continued success in his investment, and look forward to more sharing from him.

O&G Play to Take a Break

The first sign that O&G play was long in the tooth was when Perdana -which is related to current champion of the O&G, Dayang - started to moe move up on Mar 13.

Chart 1: Perdana's daily chart as at Mar 19, 2019_10.43am (Source: Malaysiastock.biz)

Today we saw the champion, Dayang breaking its "psychological level" of RM1.50.


Chart 2; Dayang's daily chart as at Mar 19, 2019_10.43am (Source: Malaysiastock.biz)

There will be technical rebound here and there as those who missed out on the play will try to get. I think this correction can be very deep and bloody. It is better to ignore the temptation to buy into the falling O&G stocks for next few days.

Market Outlook as at March 19, 2019

Albeit a minor break in December last year, FBMKLCI has consistently remained above the line connecting the lows since 2010 

Chart 1: FBMKLCI's weekly chart as at Mar 18, 2019(Source: Malaysiastock.biz) 

FBMKLCI is in an intermediate downtrend line, RR. This downtrend line and the line connecting the lows since 2010 (as shown in the weekly chart above) are about to converge, thus providing us with the answer to the perennial question: What's next?! Shall it be an upside breakout or a downside breakout or more of the same sideways movement? Looking at the weak ADX in the DMI, I will not be surprised that we may see more sideways movement ahead. 

Chart 2: FBMKLCI's daily chart as at Mar 18, 2019(Source: Malaysiastock.biz)

Notwithstanding this lackadaisical market outlook provided by the FBMKLCI, our market will still serve up regular bouts of rotational play depending on the flavor of the market players. January was the month for construction stocks. February & March have been kind to O&G stocks. Will building material and property stocks be the next hot things? We will have to wait & see.

Magni: Profits Rose Despite Lower Revenue

Results Update

In QE31/1/2019, Magni's net profit rose 54% q-o-q or 14% y-o-y to RM36 million while revenue was mixed- up 21% q-o-q but down 1.4% y-o-y to RM309 million.

Revenue receded slightly by 1.4% y-o-y due to lower revenue from the garment segment (dropped by 1.1% mainly due to lower sale orders received) and lower revenue for the packaging revenue (dropped by 4.2% mainly due to lower sale orders received). Profit before tax improved by 7.7% y-o-y due to 6.4%-increase in PBT from the Garment segment (mainly due to higher foreign exchange gain by RM2.992 million and lower operating expenses incurred) and 46.4%-increase in PBT from the packaging segment (mainly due to lower operating expenses incurred).

Table: Magni's last 8 quarterly results


Graph: Magni's last 48 quarterly results

Financial Position

As at 31/1/2019, Magni's financial position was very healthy with current ratio at 5.4 times and gearing ratio at only 0.14 time.

Valuation

Magni (closed at RM4.66 yesterday) has a trailing PE of 7.5 times (based on last 4 quarters' EPS of 62.15 sen). At the same time, Magni  paid quarterly dividend which totaled 23 sen; giving the stock a DY of 4.9%. Overall, Magni is still fairly attractive.

Technical Outlook

Magni has been trading sideways for the past 1 years, mostly in a range between RM4.00 and RM5.00. Until a breakout of this range has happened, Magni would remain range bound.


Chart: Magni's weekly chart as at Mar 18, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and position plus attractive valuation, Magni 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.

BJFOOD: Better Earnings Reported

Results Update

For QE31/1/2019, BJFood reported a net profit of RM9.0 million as compared to a net loss of RM11 million incurred in the same quarter last year. The net profit was 28% higher than the net profit reported in the immediate preceding quarter (QE31/10/2018). Revenue rose 8% q-o-q or 10% y-o-y to RM181 million.

Revenue rose q-o-q mainly due to the calendar year end festive promotions, school holidays and the Christmas season during the third quarter, which contributed positively to the higher profit from operations and pre-tax profit for the quarter under review.


Table: BJFood's last 8 quarterly results

If we exclude the extraordinary gain of RM158.6 million recognized in QE31/10/2014, the improved performance in the last quarter became quite clear. This gain was from the recognition of the gain arising from re-measurement of the 50% equity interest in BStarbucks.


Graph: BJFood's last 37 quarterly results 

Valuation

BJFood (closed at RM1.60 at end of morning session) is now trading at a PE of 30 times (based on last 4 quarters' EPS of 5.25 sen. At this PER, BJFood is deemed overvalued.

Technical Outlook

BJFood may have broken above its downtrend line, RR at RM1.55.


Chart: BJFood's weekly chart as at Mar 15, 2019_2.50 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance and mildly positive technical outlook, I revise BJFood's rating to a HOLD. Upside maybe limited due to demanding 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.

Timecom: Uptrend Resumed

Timecom has been valued at around RM10.00 by BIMB Securities and Hong Leong Investment Bank (here and here). When it was trading at around RM7.50-8.00 in the second half of 2018, I have been keeping an eye on the stock. 

Chart 1: Timecom's weekly chart as at Mar 13, 2019 (Source: Malaysiastock.biz)

On March 4, it broke above the horizontal line at RM8.50, and consolidated around that price level for the next 3-4 days. On March 8, it began rising cautiously. Today it surpassed the intraday high of RM8.66 recorded on Mar 4, and closed at RM8.70.

Chart 2: Timecom's daily chart as at Mar 13, 2019 (Source: Malaysiastock.biz)

Based on the technical analysis, Timecom is poised to continue with its prior uptrend.

BAUTO: Another bumper quarter

Results Update

For QE31/1/2019, BAuto's net profit rose 10% q-o-q or 100% y-o-y to RM81 million while revenue rose 13% q-o-q or 39% y-o-y to RM778 million.

Group revenue rose q-o-q mainly due to higher sales volume from both the domestic and the Philippine operations. Domestic sales continues to be strong post GST tax holiday period as the Group is still anchored to meeting unfulfilled customers booking comprising mostly of the CX-5 and CX-3 models as a result of the Group's offer to absorb the SST for bookings received prior to 1 September 2018 but vehicle delivery made after the re-introduction of SST.

The Group pre-tax profit improved by RM8 million or 9% mainly due to increase in the Group's revenue, partly offset by lower gross profit margin from both the domestic and the Philippine operations.


Table: BAuto's last 8 quarters' financial performance

Graph: BAuto's last 27 quarters' financial performance  

Financial position

As at 31/1/2019, BAuto's financial position is deemed satisfactory with current ratio at 2.2 times and total liabilities to total equity at 0.8 time.

Valuation

BAuto (closed at RM2.24 yesterday) has a fair PER of 10 times (based on last 4 quarters' EPS of 22.61sen). BAuto paid quarterly dividends which totaled 15.75 sen over the past 4 quarters. This translates to a dividend yield of 7.0%. Based on the above, BAuto is a fairly attractive stock.

Technical Outlook

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


Chart: BAuto's weekly chart as at Mar 13, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance & financial position and fair valuation, BAuto 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.

SAPNRG: A Rising Tide Lifts All Boats

The developing play for Oil & Gas sector soon lifts up even a stranded aircraft carrier, SAPNRG. This stock, which had a massive rights issue of RM4 billion in December last year, which was under-subscribed (here). It has an outstanding shares issued of 15.979 billion units, and yet today the sign is that the stock may join in the O&G rally. 

SAPNRG just broke above its recent high of RM0.335. This will be its immediate support while its immediate resistance will be RM0.40. For the less technically inclined, you just need to know that the rights issue was done at RM0.30 apiece. It is very likely that this rights issue price will provide a very strong support, thus minimizing your downside.

Based on the upside breakout of the immediate resistance, SAPNRG is a trading BUY. Good luck!

Chart: SAPNRG's daily chart as at Mar 13, 2019 (Source: Malaysiastock.biz)

UNIMECH: Poised for Recovery

Background

Unimech Group Berhad, an investment holding company, engages in the system design, fabrication, installation, and maintenance of boilers, combustion equipment, engineering equipment, and piping systems worldwide. For the range of products that Unimech distributes, go here.

Historical Financial Performance

In FY2018, Unimech's revenue rose 12% while pre-tax profit rose 63%.


Graph 1: Unimech's last 19 yearly results

The improved performance was due to better sales & profit contribution from two segments; Valves, instruments and fittings and Electronic.

Table: Unimech's segmental performance for FY2018 compared to FY2017

Recent Financial Results

In QE31/12/2018, revenue rose 2.6% due to higher demand in valves, instruments and fittings segment but the profit before tax decreased by 16.3% during the current quarter was due to impairment in receivables and inventories of approximately RM1.6 million.


Graph 2: Unimech's last 21 quarterly results

Financial Position

As at 31/12/2018, Unimech's financial position is deemed satisfactory with current ratio at 2.0x and gearing ratio at 0.6 time. The only concern is the high level of inventories, with clocked in at a holding period o 385 days. 

Valuation

Unimech (closed at RM1.16 yesterday) is now trading at a PER of 8.3 times. At this PER, the stock is fairly valued.

Technical Outlook

Unimech has found a bottom at RM0.90-0.95. It has just moved above the 30-month SMA line, which may signal the beginning of its price recovery.


Chart: Unimech's monthly chart as at Mar 12, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and position as well as mildly positive technical outlook, Unimech may 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.

JAKS: Bullish Fadeout

I regret to advise that the Trading Buy call on JAKS was a washout. The stock dropped below the breakout level of RM0.60-0.62 yesterday. JAKS closed at RM0.56 yesterday. 

Yesterday, JAKS announced its result for QE31/12/2018 after the market close. It reported a net loss of RM13 million after it booked in the forfeiture of the RM50 million performance bond by Star Media for the PJ development. For the result, you can go here.

Chart: JAKS's daily chart as Feb 28, 2019 (Source: malaysiastock.biz)

QL: Quarterly Profits at New High

Results Update

For QE31/12/2018, QL's net profit increased by 14% q-o-q or 16% y-o-y to RM69 million while revenue increased by 6% q-o-q and 10% y-o-y to RM979 million.


Table 1: QL's last 8 quarterly results

When compared to the result for QE31/12/2017, the higher revenue was mainly due to a 21%-increase in revenue from Integrated Livestock Farming (from RM522 million to RM629 million) while higher PBT was mainly due to a 32%-increase in PBT from Marine Product Manufacturing (from RM39 million to RM52 million).


Table 2: QL's Segmental Results

From the graph below, we can see that QL's quarterly revenue is fast approaching the RM1 billion mark while quarterly profits are at the new high!!


Graph: QL's last 43 quarterly results

Valuation

QL (closed at RM6.90 yesterday) is now trading at a PE of 50 times (based on last 4 quarters' EPS of 13.55 sen). Like Nestle, QL's overvaluation is simply mind-boggling. Some investors are probably waiting for the Family Mart's profits to show up in QL's books. We will have to wait and see.

Technical Outlook

QL is hanging onto its uptrend line, SS at RM6.90.


Chart: QL's weekly chart as at Feb 28, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance, QL can be a good stock for long-term investment if its valuation is not so demanding. It is tough but I have to say I just could not rate QL any batter than a HOLD if you have the stock. If you don't have the stock, you should wait for the price to retreat.

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.