Astino: Earnings dropped q-o-q

Result Update

In QE31/7/2019, Astino's net profit dropped 35% q-o-q but rose 131% y-o-y to RM5.5 million while its revenue rose 8% q-o-q or 19% y-o-y to RM153 million. Revenue increased q-o-q primarily due to increase in local market demand. The Group registered a profit before taxation of RM7.3 million, a decrease of RM3.6 million as compared to QE3/4/2019, which was recorded at RM10.9 million, mainly due to allowance for diminution in value of inventories was RM5.0 million higher than the immediate preceding quarter.


Table: Astino's last 8 quarters' results


Graph: Astino's last 49 quarters' results

Financial Position

Astino's financial position as at 31/7/2019 is deemed healthy with current ratio at 2.1x and gearing ratio at 0.4x.

Valuation

Astino (closed at RM0.71 last Friday) is now trading at a trailing PER of 8.2x (based on last 4 quarters' EPS of 8.7 sen). At this PER, Astino is deemed fairly valued.

Technical Outlook

Astino has broken above its downtrend line at RM0.65 in early September.


Chart: Astino's weekly chart as at Sep 27, 2018 (Source: Malaysiastock.biz)

Conclusion

Despite the weaker financial performance, Astino could be a good stock for long-term investment based on satisfactory financial position and fair valuation. The stock has a mildly bullish technical outlook after it broke above its downtrend line.

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.

Scientx: Earnings Soared

Result Update

For QE31/7/2019, Scientx's net profit rose 83% q-o-q or 51% y-o-y to RM133 million while revenue was rose 13% q-o-q or 28% y-o-y to RM939 million. The increase in revenue and profits were contributed by better sales performance from both the manufacturing and property divisions.


Table: Scientex's last 8 quarterly results


Graph: Scientex's last 56 quarterly results

Financial Position

As at 31/7/2019, Scientex's financial position is deemed satisfactory with current ratio at 1.3 times and gearing ratio at 0.7 time.

Valuation

Scientex (closed at RM8.89 yesterday) is now trading at a trailing PE of 13.4 times (based on last 4 quarters' EPS of 66.26 sen). At this PER, Scientex is deemed fairly attractive.

Technical Outlook

Scientx was in an uptrend line, SS with support at RM8.00. Its upside is capped by the intermediate downtrend line, RR at RM9.20. An upside breakout above RM9.20 could signal the continuation of its uptrend.


Chart: Scientex's weekly chart as at Sep 26, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance, strong financial position, fairly attractive valuation and positive technical outlook, Scientex remains a good stock for medium to 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.

AEONCR: Hit by Compliance with MFRS 9

Result Update

For QE31/8/2019, AEONCR's net profit dropped 42% q-o-q or 39% y-o-y to RM49 million while revenue rose 7% q-o-q or 21% y-o-y to RM404million. Pre-tax profit dropped 41% q-o-q to RM67 million mainly due to higher impairment losses of RM154.692 million recorded for the quarter ended 31 August 2019 as compared to RM93.338 million for the immediate preceding quarter in compliance with MFRS 9 requirements.

There is no comment made as to whether loan quality has deteriorated. The company continued to pay the same amount of dividend of 22.25 sen as last quarter (QE31/8/2018). Thus, we can conclude that it is likely that the profit drop is purely due to change in accounting practice. (Note: MFRS 9 requires banks or finance companies to change the way they make loan loss provisions. They will have to make provisions in anticipation of future losses rather than the current practice of making provisions only when loans have been classified as impaired. For more on MFRS 9, go here.)


Table: AEONCR's last 8 quarterly results


Graph: AEONCR's last 53 quarterly results

Financial Position

AEONCR's financial position is deemed acceptable with current ratio at 1.1 times while gearing ratio is elevated 4.2 times.

Valuation

AEONCR (closed at RM14.96 yesterday) is now trading at a PE of 13 times (based on last 4 quarters' EPS of 115 sen). At this PER, AEONCR is deemed fairly valued. In addition, it pays a decent dividend with DY of 2.98% (based on last year dividend of  44.60 sen).

Technical Outlook

AEONCR is in an uptrend. Its immediate support is the horizontal line at RM14.50. Due to the sharp drop in reported profits, it is likely that AEONCR may break the uptrend line. If so, we can look to the support at the horizontal line at RM13.50-13.70.


Chart: AEONCR's weekly chart as at Sep 26, 2019 (Source: Malaysiastock.biz)

Conclusion

Despite the drop in reported profits, AEONCR is still a good stock for long-term investment in view of its fair valuation and still positive technical outlook. However, I would revise to rate to REDUCE in view of negative market perception that may accompanied its sharply lower profits reported.

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 September 26, 2019

FBMKLCI has been hovering around 1600 for the past 4-5 weeks. As MACD line looks set to cross below the MACD signal line, it may coincide with FBMKLCI breaking below the horizontal line at 1585-1590. If that were to happen, FBMKLCI may go down to 1550.

Chart 1: FBMKLCI's daily chart as at 26 Sep 2019, 10:30am (Source: Malaysiastock.biz)

In the next 2 weeks, the market will be focusing its attention on the likely beneficiaries from new measures to be proposed in the 2020 budget. Looking at the weekly chart, the last 3 budgets had failed to stimulate the market after their tabling. If the Government failed to announce any measure to boost the economy, then the market will likely drift lower in the next 1-2 months.

Our economy has been growing at less than 5% for the past 2 years. At this low rate of growth - some economists called it the stall speed - businesses and consumers will begin to tighten their belt. Together with our Government belt-tighten measures, due to high borrowing (thanks to profligate spending in the past) as well as its self-imposed fiscal deficit ceiling, our economy has only one way to go: Down!!


Chart 2: FBMKLCI's weekly chart as at 26 Sep 2019, 10:30am (Source: Malaysiastock.biz)

This morning, Malaysiakini carried the story of United Nations Conference on Trade and Development ('UNCTAD') issuing a warning that the world economy is in deep trouble and could well be heading into a recession in 2020. According to UNCTAD, the signs are all there; trade wars, currency movement, inverted yield curve, Brexit and the list goes on. (here). 

***

Under normal circumstances, any economy after a massive crisis would need to have a strong injection of stimulus to restart its growth engine. We saw that in 2009 when the world economy was hit by the Global Financial Crisis. 

After a period of sustained growth, the stimulus should be slowly withdrawn so that the economy can continue to grow at its own pace. Over the past few years, governments around the world have been slowly withdrawing their expansionary policies in order to achieve balanced growth. 

The withdrawal of these expansionary policies would also serve another purpose; to keep some measures or policies in reserve for deployment in the rainy days. An example of the rollback of expansionary policies is the tapering of Quantitative Easing ('QE') carried out by the US Fed since October 2017.  

Executing a withdrawal of expansionary policies after a crisis is a fine balancing act. Too little and too slow, the withdrawal will not achieve the objective. Too much and too fast, the withdrawal will send the economy in a tailspin. That's what's happening when the US Fed resorted to interest rate cut in order to cushion the slowdown in the US economy.

The job of the US Fed to engineer a slow exit from QE without crashing the economy is made more difficult because US politicians have other ideas. I am not talking about Trump's trade war but his massive tax cut, which complicates matters. The tax cut has pushed the US Government budget deficit to nearly USD1 trillion (here). 

With massive tax cuts done and QE measures substantially still in place, the US arsenals for a fight against recession are nearly fully deplored today. What else can the US government deplore if and when a recession were to show up at its door step. 

MFCB: Broke Above the Recent High of RM4.03

MFCB broke above the psychological level at RM4.00 as well as the recent high of RM4.03 today. Volume increased to nearly 2 million shares.

Chart 1: MFCB's weekly chart as at Sep 23, 2019_3.40pm (Source: Malaysiastock.biz)

Its warrant, MFCB-WA also broke above its downtrend line at RM1.80.


Chart 2: MFCB-WA's weekly chart as at Sep 23, 2019_3.40pm (Source: Malaysiastock.biz)

Why are these securities breaking upward? That question will remain unanswered for now. If you look at its financial performance over the past 24 quarters, you will see that its profit dipped in the last 2 quarters.


Graph: MFCB's financial performance for the last 24 quarters

Based on the upside breakout for MFCB and its warrant, MFCB-WA, both securities may go higher in the near term. Thus, both securities could be for trading BUYs.

DLady: Attractive Enough?

DLady reported a poor set of result in QE30/6/2019. Its net profit dropped 49% q-o-q or 44% y-o-y to RM17 million. This was accompanied by revenue decline of 8% q-o-q or 4% y-o-y to RM244 million. The q-o-q profit decline was due to lower revenue, category product mix changes, coupled with strategic pricing, increase in raw material prices, negative forex changes and investment in advertising and promotional spend.

Table: DLady's last 8 quarters' financial performance

Following the poor results, DLady's share price began to tumble. As at yesterday, DLady has dropped nearly RM8 over  the past 2 weeks to RM56.70. The next strong support is at the horizontal line at RM50.00-51.00. 

Chart 1: DLady's weekly chart from 2012 to Sep 18, 2019 (Source: Malaysiastock.biz)

I have overlaid 3 extreme moving average lines, i.e. the 100-week, 200-week and 250-week SMA lines (see Chart 1). The last time DLady went as low as the 250-week SMA line was during the Global Financial Crisis of 2008 (see Chart 2). DLady is now slightly below the 250-week SMA line (see Chart 1). 

Chart 2: DLady's weekly chart from 2003 to 2011 (Source: Malaysiastock.biz)

If you owned this stock or planned to invest in it, the current price level is quite tempting. Among the reason given for the decline in profits is "investment in advertising and promotional spend". This item can be a wild card that has exaggerated its profit decline, and its absence could also help to swing the profits the other way. 

Based on past strong financial performance and steady market leadership, I believe DLady could be a good stock for long-term investment. To be on the safe side, we should wait for the results for the next quarter before taking an oversize position in the stock.

Genting: Approaching Long-term Uptrend Line

For the past 2 weeks, Genting has been struggling to stay around the RM5.90 level which was the low recorded in December 2018. It traded to intra-day lows of RM5.81 before closing at around RM5.85.

However, Genting broke below the RM5.80 level yesterday to an intraday low of RM5.73. It managed to climb back up to close at RM5.80 in the last hour of trading.

If Genting failed to stage a strong rebound in the next 1-2 days, it may continue to go lower. However, if you look at the monthly chart, we can draw a tentative long-term uptrend line where the support is at RM5.40-5.50.

Based on this technical analysis, Genting's near-term outlook is negative as the share price has now convincingly broken below the last low of RM5.90-5.91. If Genting continued to slide, then the next support at the tentative long-term line at RM5.40-5.50 would be critical. We will have to wait and see how Genting will fare in the weeks ahead.

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


Chart 2: Genting's monthly chart as at Sep 18, 2019 (Source: Malaysiastock.biz)

BAUTO: Earnings Dipped

Results Update

For QE31/7/2019, BAuto's net profit dropped 16% q-o-q but up slightly by 0.5% y-o-y to RM50.5 million while revenue dropped slightly by 0.6% q-o-q but rose 10% y-o-y to RM535 million.

Group revenue dropped marginally by 0.6% or RM3.3 million q-o-q mainly attributed to lower sales volume recorded from the Philippine operations because of supply constraint from Mazda Japan for the new Mazda3 and affected demand for Mazda CZ-3 due to the launch of the facelift model in the next quarter. Revenue growth from the domestic operations was flattish as its sales volume was comparable to the preceding quarter.

Group pre-tax profit dropped RM12.6 million or 16.2% q-o-q mainly due to compressed gross profit margin from the domestic operations following the Mazda CX-5 run-out promotion where more sales incentives were given to hasten the sale of this model to clear the inventories as the upcoming launch date of the facelift model draws closer.


Table: BAuto's last 8 quarters' financial performance

Graph: BAuto's last 31 quarters' financial performance  

Financial position

As at 31/7/2019, BAuto's financial position is deemed satisfactory with current ratio at 2.37 times and total liabilities to total equity at 0.87 time.

Valuation

BAuto (closed at RM2.39 last friday) has a fair PER of 10.4 times (based on last 4 quarters' EPS of 22.88sen). BAuto paid quarterly dividends which totaled 22 sen over the past 4 quarters. This translates to a dividend yield of 9.2%. Based on the above, BAuto is an attractive stock.

Technical Outlook

BAuto has been moving in sideways manner between RM1.90 and RM2.40 from late 2015 until middle of 2019. In June 2019, BAuto broke above the RM2.40 resistance and rose to RM2.75 in July. After peaking at RM2.78, the share price dropped back into the trading range again in late August. 


Chart: BAuto's weekly chart as at Sep 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.

Oil & Gas Stocks May Rally This Week

On Saturday, Saudi oil processing facility at Abqaiq and the nearby Khurais oil field were attacked by drones. These attacks knocked out 5.7 million barrels of daily crude production or 50% of Saudi's oil output (here). The tighter supply of crude oil led to prices soaring more than 10% today (here). Brent crude oil price was trading at USD65.45 as at 6:42 AM EDT on Sep 16. The attack will lead to increased geopolitical risk of a war in the Middle East, as the U.S. has already pointeda finger at Iran (here).

Prior to the attack, Brent crude oil was drifting lower- pressed by an intermediate downtrend line, RR with resistance at USD68. The downside would not valid the longer term uptrend line, SS with the support at USD55. This morning, Brent crude oil price shot to a high of USD71.95 but it has since dropped back below the intermediate downtrend line, RR. As the situation in the Middle East will remain fluid, the crude oil price may retest the downtrend line again in the days ahead.


Chart 1: Brent's daily chart as at Sep 13, 2019 (Source: Stockcharts.com)

Our Energy index has been trending higher ever since it broke above its downtrend line at the start of the year. I expect the index to test its recent high at 1130 tomorrow.


Chart 2: Bursa Energy index's daily chart as at Sep 13, 2019 (Source: Kenanga BTX)

I have short-listed a few O&G stocks that are rated as Out-perform by Kenanga for your consideration.

Table: Selected Kenanga Oil & Gas stocks

ASTRO: Earnings Rebounded

Results Update

For QE31/7/2019, Astro's net profit rose 9 folds y-o-y to RM169 million on the back of a 13%-drop in revenue to RM1.24 billion. Compared to the immediate preceding quarter (QE30/4/2019), net profit dropped 4% while revenue rose marginally by 0.2%.

Revenue was lower by RM180 million or 13% against corresponding quarter mainly due to a decrease in subscription revenue and licensing income. EBITDA margin improved by 15.0% against corresponding quarter, due to lower content costs and marketing and distribution expenses. Net Profit increased by RM153 million or 10 folds compared with the corresponding quarter mainly due to increase in EBITDA and lower net finance costs, offset by higher tax expenses.


Table: Astro's last 8 quarterly results


Graph: Astro's last 32 quarterly results

Financial Position

Astro's financial position improved slightly with current ratio of 0.98 time and gearing ratio of 6.6 times.

Valuation

Astro (closed at RM1.39 in the morning session) is now trading at a trailing PE of 11 times (based on last 4 quarters' EPS of 11.83 sen). In addition, Astro paid out dividend quarterly which amounted to 6 sen for the last 4 quarters; giving the stock an attractive DY of 4.3%. Based on these PER and DY, Astro is deemed fairly attractive.

Technical Outlook

Astro is trapped in a triangle, with the upside capped at RM1.45 and downside supported at RM1.30. Until Astro can break out of this triangle, it will likely be around the RM1.40 level.


Chart 1: Astro's daily chart as at Sep 13, 2019_12.30 (Source: Malaysiastock.biz)


Chart 2: Astro's weekly chart as at Sep 13, 2019_12.30 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, I believe Astro is still a good stock for long-term investment based on 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.

Magni: Earnings Continued to Rise

Results Update

In QE31/7/2019, Magni's net profit rose 40% q-o-q or 39% y-o-y to RM30.5 million while revenue rose 40% q-o-q or 20% y-o-y to RM327 million.

Revenue rose 40% q-o-q due to 45%-increase in Garment revenue mainly due to higher sale orders received while packaging revenue slipped by 5.9% amid lower sale orders received.

PBT increased by 50% q-o-q due to 59%-increase in Garment PBT mainly due to higher revenue, better gross profit margin mainly driven by the improvement in operational efficiency, and the lower foreign exchange loss of RM0.011 million versus foreign exchange loss of RM1.126 million in QE30/4/2019. Packaging PBT was 37.9% lower mainly due to weaker revenue, gross profit margin and dividend income.

Table: Magni's last 8 quarterly results


Graph: Magni's last 50 quarterly results

Financial Position

As at 31/7/2019, Magni's financial position was very healthy with current ratio at 5.3 times and gearing ratio at only 0.21 time.

Valuation

Magni (closed at RM5.40 yesterday) has a trailing PE of 7.9 times (based on last 4 quarters' EPS of 68.3 sen). At the same time, Magni  paid quarterly dividend which totaled 23 sen; giving the stock a DY of 4.26%. Overall, Magni is still fairly attractive.

Technical Outlook

Magni has been gradually rising in the past 9 months. It has now surpassed the resistance from the horizontal line at RM5.25 as well its July high at RM5.38. It may continue to climb higher and test the resistance at the horizontal line at RM5.65


Chart: Magni's weekly chart as at Sep 10, 2019 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance and position, attractive valuation and mildly bullish technical outlook, 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.

Axiata & Telenor: Merger Deal off

Axiata and Telenor (DIGI's parent company) have just called off their merger deal (here and here). This should bring down the share prices of Axiata & DIGI to the levels just preceding the announcement on 6 May (here and here). If we were to factor in the unwinding of any position built-up after the merger announcement, then the price levels may go down a bit more (say, another 10 sen lower). Thus, if you want to buy into the selldown of Axiata and DIGI, the good price to aim for would be RM3.85-4.00 for Axiata and RM4.30-4.40 for DIGI.

Chart 1: Axiata's daily chart as at Sep 10, 2019_9.15am (Source: Malaysiastock.biz)


Chart 2: DIGI's daily chart as at Sep 10, 2019_9.15am (Source: Malaysiastock.biz)

Market Outlook as at August 30, 2019

Last Friday, our market had a decent rally ahead the Merdeka holiday. The index, which was hovering at 1602 around 3:00 pm, was pushed up to close at 1612 in the last 1 hour. Coupled with the morning gain, FBMKLCI rose nearly 17 points last Friday. 

Chart 1: FBMKLCI's daily chart as at Sep 2, 2019 (Source: Malaysiastock.biz)

Given the hour push-up, I expect the index to cede easily 10 points on opening Tuesday. However, if you were to take a closer look at the FBMKLCI chart, the index is poised for recovery after a long decline from 1690 in late July. Thus I believe the index will likely trade around 1600 next week.


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

Market will remain lethargic next week. Cautious buying of attractive good stocks, is still advisable. Of those stocks which had announced their results last week, CIMB and Maybank look quite attractive, and worth buying on weakness. Good luck!

BURSA BEGINNER WEBINAR: THE POWER OF EARNINGS

I will be presenting a webinar entitled The Power of Earnings under Bursa Beginner Webinar series.

I will cover the following topics:

•          Underlying assumptions

•          How to assess a stock’s earnings

•          Finding stocks with earnings breakout

•          Finding stocks with rising earnings

•          Earning trend and Price trend

•          Using PEG ratio

•          How to assess a loss-making stock

Click here to register for the webinar.