TM & BAT: Different Strokes for Different Stocks

During the lunch break, TM announced its results for QE31/3/2019. Its net profit rose 342% q-o-q or 96% y-o-y to RM308 million. Revenue dropped 10% q-o-q or 2% y-o-y to RM2.779 billion. As at 3.30 pm, TM share price rose 61 sen (or 22%) to RM3.33.

Table 1: TM's 8 quarters' P&L

Looking at the slightly weaker revenue and the big jump in profits which came after a big drop 2 quarters ago, the excitement about TM's performance looks unjustified.


Graph 1: TM's 45 quarterly P&L

On the other hand, BAT has undergone the opposite treatment when it announced its result for QE31/3/2019 after market close on May 28. On opening the next day (May 29), BAT (closed at RM33.44 the day before) started dropping. As at 3.30 pm today, BAT was trading at RM28.94. In total, BAT lost 13.5%.


Table 12; BAT's 8 quarters' P&L


Graph 2: BAT's 45 quarterly P&L

In my opinion, TM is over-rewarded for the "good" result while BAT is over-punished for the "bad" result.

Market Outlook as at May 28, 2019

FBMKLCI has managed to stay above the 1600 psychological level in the past 2 weeks. With each passing day, it looks more likely that this psychological level can withstand the selling. Thus the index and market may have a decent chance of recovery from here.

Chart 1: FBMKLCI's weekly chart as at May 28, 2019_9.20am (Source: Malaysiastock.biz)

When we compare FBMKLCI with S&P500, we can see that when S&P500 rallied strongly and FBMKLCI went the opposite direction (in September to November 2017), the subsequent pullback in S&P500 coincided with a strong rally in FBMKLCI. If this were to repeat, a possible pullback in S&P500 in the weeks ahead could be followed by a decent recovery rally in FBMKLCI.


Chart 2: S&P500 and FBMKLCI's weekly chart as at May 27, 2019 (Source: Stockcharts.com & Malaysiastock.biz) 
Update: I have subsequently added in the arrows to highlight the above comment.

Let's wait & see how our market will perform in this tumultuous time of trade war between the US and China.

US Market Outlook as at May 24, 2019

DJIA has made a temporary top and turned mildly bearish based on the following:

1) 20-day SMA line has crossed below the 50-day SMA line,

2) MACD has gone below the zero line, and

3) -DMI is above the +DMI coupled with ADX above the 20-mark. 

 

Chart 1: DJIA's daily chart as at May 24, 2019 (Source: Stockcharts.com)

Nasdaq & S&P500 indices are also turning bearish though their 20-day SMA lines have yet to cut below the 50-day SMA lines.

Chart 2: Nasdaq's daily chart as at May 24, 2019 (Source: Stockcharts.com)


Chart 3: S&P500's daily chart as at May 24, 2019 (Source: Stockcharts.com)

Watch out for US markets this week!

Kossan: Earnings Improved y-o-y

Result Update

For QE31/3/2019, Kossan's net profit declined 1% q-o-q but rose 30% to RM59 million while revenue dropped 5% q-o-q but rose 16% y-o-y to RM561 million.

Group’s revenue dropped 5% q-o-q to RM561 million while profit before tax (PBT) rose 5% q-o-q to RM75.08 million. The higher PBT was attributable to the improved earnings of the Gloves division. The Gloves division recorded a 4.3%-decline in revenue q-o-q to RM497 million but its PBT rose 8.7% to RM68 million due to continued strong demand for the Group’s glove products, with higher volume sold (+4.68%) as compared with 4Q18.

The TRPs division recorded a 7%-decline in revenue to RM47 million, while PBT decreased 19%  to RM7 million mainly due to lower deliveries and increase in raw material prices (SMR10 +8.16%). The Cleanroom division recorded lower revenue and lower PBT of RM17 million and RM0.6 million respectively in 1Q19, as compared with RM19 million and RM1.1 million in 4Q18.


Table: Kossan's last 8 quarterly results

Graph: Kossan's last 51 quarterly results

Financial Position

Kossan's financial position as at 31/3/2019 is deemed healthy with current ratio at 1.7 times while gearing ratio was at 0.6 time.

Valuation

Kossan (closed at RM3.82 last Friday) is now trading at a PE of 22.6 times (based on last 4 quarters' EPS of 16.9 sen). At this PER, Kossan is deemed fairly valued.

Technical Outlook

Kossan is in a long-term uptrend line, SS with support at RM3.65. In addition, it is trading very close to its 40-month SMA line (about equivalent to the 200-day SMA line). Its immediate resistance is the psychological RM4.00 mark.


Chart: Kossan's monthly chart as at May 24, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and financial position, fair valuation & positive technical outlook, Kossan 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.

MPI: Earnings plummeted

Result Update

For QE31/3/2019, MPI's net profit dropped 57% q-o-q or 35% y-o-y to RM17 million while revenue dropped 17% q-o-q or 10% y-o-y to RM330 million. PBT dropped 58% q-o-q due to lower overall revenue which dropped across the board as follows: 11% in Europe segment, 19% in Asia segment and 22% in the America segment.


Table: MPI's last 8 quarterly results


Graph: MPI's last 44 quarterly results 

Financial Position

As at 31/3/2019, MPI's financial position is deemed healthy with current ratio at 4.2 times and gearing ratio at only 0.2 time.

Valuation

MPI (closed at RM8.80 last Friday) is now trading at a trailing PER of 12 times (based on last 4 quarters' EPS of 72 sen). At this PER, MPI is deemed fairly valued.

Technical Outlook

MPI is in a long-term uptrend line, SS at RM8.80. If this uptrend line is broken, MPI's next support will be at the horizontal line at RM8.30.


Chart: MPI's weekly chart as at May 24, 2019 (Source: Malaysiastock.biz)  

Conclusion

Despite the weaker financial performance, I would rate MPI as a HOLD based on healthy financial position, fairly attractive valuation & still positive technical outlook. However, if the share price were to breach the uptrend line, my rating will be revised from 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.

MBMR: Earnings rose y-o-y

Results Update

For QE31/3/2019, MBMR's net profit dropped 17% q-o-q but rose 51% y-o-y to RM50 million while revenue rose 7% q-o-q or 15% y-o-y to RM532 million. Revenue increased mainly due to better performance from both the Motor Trading and Auto Parts Manufacturing Divisions, as well as better results for both the joint venture and the associates. The Group's share of results in its joint venture increased by RM0.5 million or 16.3% to close at RM3.9 million mainly due to higher demand. The Group's share of associates' results increased by RM6.0 million or 16.4% against the corresponding quarter to close at RM42.8 million.


Table: MBMR's last 8 quarterly results


Graph: MBMR's 52 quarterly results

Financial Position

As at 31/3/2019, MBMR's financial position is healthy with current ratio at 2.4 times and gearing ratio at 0.15 time.

Valuation

MBMR (closed at RM2.80 yesterday) is now trading at a PER of 6 times (based on EPS of 46.7 sen). At this PER, MBMR is fairly attractive.

Technical Outlook

MBMR broke above its downtrend line, RR at RM2.30 in January 2019. It rallied all the way to test the horizontal line at RM3.00 before pulling back. Now it is resting on the horizontal line at RM2.80.


Chart 2: MBMR's weekly chart as at May 23, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance & healthy financial position and positive technical outlook, MBMR 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.

Allianz: Earnings rose y-o-y

Result Update

For QE31/3/2019, Allianz's net profit dropped 1% q-o-q but rose 13% y-o-y to RM99 million while revenue rose 3% q-o-q or 6% y-o-y to RM1.344 billion. The Group's operating revenue rose q-o-q  due to a 7%-increase in operating revenue from life insurance segment brought on by higher premiums generated from bancassurance and employee benefits channel. This offset the 1.5%-drop in operating revenue from the general insurance segment mainly due to lower gross earned premiums. The Group’s profit before tax rose 18.3% q-o-q due mainly to higher profit contribution from life insurance segment.


Table: Allianz's last 8 quarterly results


Graph: Allianz's last 53 quarterly results

Valuation

Allianz (closed RM13.18 yesterday) is now trading at a PE of 11.8 times (based on last 4 quarters' EPS of 112 sen). At this PE, Allianz is deemed fairly attractive.

Technical Outlook

Allianz is in a long-term uptrend line, SS with support at RM11.80. Its immediate resistance is at the horizontal line at RM14.70.


Chart: Allianz's weekly chart as at May 23, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance, fairly attractive valuation and positive technical outlook, Allianz remains 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.

N2N: Earnings Rebounded on Lower Provision for Trade Debts

Result Update

In QE313/2019, N2N's net profit rose 99% q-o-q but dropped 16% y-o-y to RM5.6 million while its revenue dropped 2% q-o-q but rose 6% y-o-y to RM27 million. The Group’s revenue dropped marginally q-o-q due to a one-time implementation fees recorded in the previous quarter. Compared to the immediate preceding quarter, the Group’s core profits improved by 53.72% to RM4.45 million (Q4 2018: RM2.89 million) mainly due to lower provisions for trade receivables and other non-recurring administration costs.


Table: N2N's last 8 quarters' P&L


Graph: N2N's last 22 quarters' P&L

Latest Financial Position

As at 31/3/20198, N2N's financial position is very healthy, with current ratio of 6.4x and gearing ratio of 0.19x.

Valuation

N2N (closed at RM0.745 last Friday) is now trading at a PER of 34x (based on annualized core EPS 2.18 sen). At this PER, N2N is deemed fully valued.

Technical Outlook

N2N is in a long-term uptrend line (SS) with support of RM0.73 (previously stated at RM0.80).


Chart: N2N's weekly chart as at May 17, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory, albeit weaker, financial performance, healthy financial position and positive technical outlook, N2N could be a good stock for long-term investment. It may benefit from a pick-up in equities trading in the region this year.

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.

Kotra: Earnings Improved on Better Cost Control

Result Update

In QE31/3/2019, Kotra's net profit rose 7% q-o-q or 41% y-o-y to RM5.2 million while its revenue dropped 10% q-o-q or 9% y-o-y to RM41 million. The Group's revenue dropped q-o-q mainly due to lower sales of health supplement products to both the local and export markets and decrease in tender supply to local markets in current quarter. The Group's profit before tax rose q-o-q mainly due to rationalization of selling and administration expenses and lower advertisement & promotional expenses incurred in current quarter.


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


Graph: Kotra's last 49 quarters' P&L

Latest Financial Position

As at 31/3/2019, N2N's financial position is satisfactory, with current ratio of 2.4x and gearing ratio of 0.48x.

Background

Kotra is involved in manufacturing & trading of pharmaceutical and healthcare products. 

Kotra's MD, Jimmy Piong Teck Onn & the group's range of products

You can read about this group 's plan in 2018 (here). I post about Kotra once in October 2006 (here).

Valuation

Kotra (closed at RM1.71 last Friday) is now trading at a PER of 11x (based on last 4 quarterly EPS of 15.62 sen). At this PER, Kotra is deemed fairly attractive.

Technical Outlook

Kotra has been range-bound between RM1.60 & RM1.80 for the past 2 years. An upside breakout of the range at RM1.80 could set the stage for an upswing in the share price. Alas, there is no sign yet that this is about to happen.


Chart: Kotra's monthly chart as at May 17, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on satisfactory financial performance, satisfactory financial position and fairly attractive valuation, Kotra 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.

Carlsbg: Earnings boosted by CNY promotions

Results Update

In QE31/3/2019, Carlsbg's net profit increased 30% q-o-q or 8% y-o-y to RM88 million while revenue rose 26% q-o-q or 20% y-o-y to RM660 million.

The Group's revenue increased q-o-q mainly due to higher sales in Malaysia following the successful execution of Chinese Near Year promotions. The Group’s profit from operations increased q-o-q mainly due to higher revenues in Malaysia partly offset by the increase in commercial investments.


Table: Carlsbg's last 8 quarterly results

From Chart 1 below, we can see that Carlsbg's quarterly revenue and profits are all at all-time high.



Graph: Carlsbg's last 54 quarterly results

Valuation

Carlsbg (closed at RM24.24 yesterday) is now trading at a PE of 26 times (based on an annualized EPS of 92.86 sen). At this PER, Carlsbg is deemed fairly valued. In addition, it has an attractive dividend yield of 4.2%.

Technical Outlook

From the monthly chart, it looks like Carlsbg may continue with its prior uptrend. As the MACD has crossed above its MACD signal line, it is likely that Carlsbg may experience near term weakness.


Chart 1: Carlsbg's weekly chart as at May 15, 2019(Source: Malaysiastock.biz))


Chart 2: Carlsbg's monthly chart as at May 15, 2019(Source: Malaysiastock.biz))

Conclusion

Based on satisfactory financial results, fair valuation & constructive technical outlook, I would rate Carlsbg a HOLD for now.

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.

CMSB: Earning Remained Stable

Results Update

For QE31/3/2019, CMSB's net profit dropped 29% q-o-q but rose 5% y-o-y to RM41 million while revenue was mixed, down 16% q-o-q but up 18% y-o-y to RM418 million. All Divisions except the Strategic Investment Division reported higher revenue in PE2019 compared to PE2018. The Strategic Investment Division reported higher losses in PE2019 due to higher losses from the education subsidiary and losses from Malaysian Phosphate Additives (S) Sdn. Bhd. (MPAS). Previously, MPAS was classified under associates.

However, all Divisions except the Construction & Road Maintenance Divisions reported higher profits in PE2019 due to higher revenue and gross profit margin. The higher gross profit margin was attributable to a land sale by the Property Development Division. However, this has been partially negated by lower share of results of associates and joint ventures.


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

Graph: CMSB's last 23 quarters' P&L

Valuation

CMSB (closed at RM3.30 yesterday) has a PER multiple of 13 times (based the last 4 quarters' EPS of 24.96 sen). At this PER, CMSB is deemed fairly attractive.

Technical Outlook

CMSB is moving in a downward channel, with resistance at RM3.60-3.70. Due to the presence of a rising intermediate uptrend line (within the downward channel), CMSB will have good support at RM3.00.


Chart: CMSB's weekly chart as at May 15, 2019(Source: Malaysiastock.biz)

Conclusion

Based on good financial performance, exciting prospect, fairly attractive valuation and positive technical outlook, CMSB 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.

Penta: Earnings Continued to Grow

Results Update

For QE31/3/2019, Penta's PBT increased by 4% q-o-q or 171% y-o-y to RM19.6 million while revenue rose 6% q-o-q or 20% y-o-y to RM119 million. Group revenue rose q-o-q due to increase in sales from automated equipment operating segment. Group profit before taxation rose by 9% q-o-q which was in tandem with the increase in revenue.


Table: Penta's last 8 quarterly results

 
Graph: Penta's last 25 quarterly results 

Financial Position

Penta's financial position is satisfactory, with current ratio at 3.6 times and gearing ratio at 0.3 time. In addition, it is noted that Penta has a net cash balance of RM373 million or RM1.18 per share!!

Valuation

Penta (closed at RM4.20 yesterday) is now trading at a PER of 19 times (based on last 4 quarters' EPS of 21.9 sen). Based on an earning CAGR of 42% over the past 3 years, PENTA's PEG ratio is at 0.5 time. At this PEG ratio, Penta is deemed a very attractive growth stock.

Technical Outlook

Penta is rising in a long term uptrend (in blue). However the current rally may be hitting the resistance from the line connecting its recent peaks (in red). Unless there is a breakout above the red line (at RM4.50), Penta's upside will be limited.

Chart: Penta's weekly chart as at May 15, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance & financial position and attractive valuation, Penta 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.

Construction & Building Material Stocks Uptrend Intact

Construction stocks, such as Gamuda and IJM, had a strong rally over the past 4-5 months. They too underwent correction in the past 2 weeks. It is good to see that their uptrend lines are still intact. 

 
 Chart 1: Gamuda daily chart as at May 15, 2019_10.45am (Source: Malaysiastock.biz)


Chart 2: IJM daily chart as at May 15, 2019_10.45am (Source: Malaysiastock.biz)

The same goes for building material stocks such as Annjoo and Tasek. Tasek reported another loss-making quarter for QE31/3/2019 (here).


 Chart 3: Annjoo daily chart as at May 15, 2019_10.45am (Source: Malaysiastock.biz)


 Chart 4: Tasek daily chart as at May 15, 2019_10.45am (Source: Malaysiastock.biz)

Despite weaker market sentiment, construction & building material stocks still gather buying support as the revival of ECRL and Bandar Maalysia will spur recovery for both sectors going forward.

Market Outlook as at May 15, 2019

FBMKLCI has managed to climb back above 1600. The index may continue to go higher in the next few days though it may be interrupted by the public holidays on next Monday & Wednesday. After the short rebound - which may touch 1630-1635 - the market will likely drift sideways for a while due to global uncertainties such as geopolitical problems between US & Iran (impacting crude oil prices) as well as continuing trade war rhetoric between US and China (impacting global trade). 

Chart 1: FBMKLCI daily chart as at May 15, 2019_10.54am (Source: Malaysiastock.biz)

It is worth noting that USD-MYR has broken above the 4.15 mark, and it could rally quickly to 4.19-4.20. A break above 4.20 will bring out fear of economic problem in the country, which would depress the market sentiment.


Chart 2: USD-MYR daily chart as at May 15, 2019_11:00am (Source: Investing.com)

There will always be winners and losers if the ringgit were to weaken. The usual winners will be the exporters, and none would benefit more than the glove makers. You can see Harta has once again broken above its intermediate downtrend line today.


Chart 3: Harta daily chart as at May 15, 2019_10.45am (Source: Malaysiastock.biz)

As always, a sharp plunge in the market after a prolonged decline has a cathartic effect on the market players. We are seeing a relief rally today and we can adjust our position accordingly so that we will be better position for the next move. Good luck!

US Stock Markets Outlook as at May 14, 2019

Yesterday, DJIA plunged 617.4 points (or, 2.4%) to 25222.5 while S&P500 plunged 69.5 points (or, 2.4%) to 2811.9. That came after China gave a reply to US tariff hike from 10% to 25% for goods imported by US from China totaling USD200 billion. The reply is a Chinese tariff hike to 25% for goods imported by China from US totaling USD60 billion. 

To be fair, the signs of a potential temporary top in US stock markets was present for the past 1-2 weeks. The MACD indicators for both DJIA and S&P500 show bearish divergence despite going higher from February to April. In early May, the -DMI crossed above +DMI signaling a potential reversal for both DJIA & S&P500. With these indices breaking below the 50-day SMA lines, the temporary top is in, and we will likely see a decline to at least 24000 for DJIA and 2650 for S&P500.

 
Chart 1: DJIA daily chart as at May 13, 2019 (Source: Stockcharts.com)

Chart 2: S&P500 daily chart as at May 13, 2019 (Source: Stockcharts.com)

Meanwhile, FBMKLCI tested the lower boundary of a downward wedge formation (aka a bullish wedge!) at 1600 yesterday. It is likely the index will break thru this level today. The next support level will be at 1550.


Chart 3: FBMKLCI daily chart as at May 13, 2019 (Source: Malaysiastock.biz)

Market Outlook as at May 13, 2019

Our market has been declining for the past 4-5 days. Pressured by foreign funds selling, FBMKLCI continued its loosing streak which stretches back to May 2018. The decline takes the shape of a downward wedge. FBMKLCI may soon test the lower line of the wedge at 1605, and hopefully this will probably a rebound for the index.

Chart 1: FBMKLCI daily chart as at May 10, 2019 (Source: Malaysiastock.biz)

The other indices have been rising for the past 4 months but they all broke their medium-term uptrend lines last week.


Chart 2: FBM70 daily chart as at May 10, 2019 (Source: Kenanga's BTX chart)


Chart 3: FBMSCAP daily chart as at May 10, 2019 (Source: Kenanga's BTX chart)


Chart 4: FBMACE daily chart as at May 10, 2019 (Source: Kenanga's BTX chart)


Chart 5: FBMFLG daily chart as at May 10, 2019 (Source: Kenanga's BTX chart)

Based on the simultaneous breakdown of all the 2nd and 3rd liner stock indices, our market will likely go lower in the near future. Trading in this market will be very tricky and not advisable. Investors will have to accept a longer time horizon for their investment.