Merry Christmas & Happy New Year 2021

 I like to wish everyone a Merry Christmas and a Happy New Year 2021.

POHUAT: Earnings Stayed Firm

Results Update

For QE31/10/2020, Pohuat's net profit rose 91% q-o-q or 49% y-o-y to RM22 million while revenue rose 63% q-o-q or 13% y-o-y to RM217 million. The Group’s turnover increased 63% q-o-q to RM217 million due to the recovery of demand and planned inventory building by US importers for the year end festive seasons, shipment to our US customers from both our Malaysian and Vietnamese operations increased substantially. In Malaysia, turnover grew by more than 40% whereas Vietnam’s turnover grew by a whopping 80%.

Correspondingly, profit before tax grew more than doubled to RM28 million as absolute gross profit grew 82.7% to RM47 million. Gross profit margin improved from 19.2% to 21.5% on the backdrop of stable raw material prices and better overhead absorption from the higher plant utilisation rate. In line with the higher turnover, selling, distribution and administrative expenses were broadly higher but were consistent as a percentage of sales with those in the preceding reporting period under review. The higher gross profit, coupled with the stable operating expenses, the Group’s profit before tax rose more than double from RM13.74 million.

Table: Pohuat's last 8 quarterly results


Graph: Pohuat's last 52 quarterly results

Financial Position

As at 31/10/2020, Pohuat's financial position is very healthy with current ratio at 2.9 times while total liabilities to total equity was at 0.3 time. Net cash in hand was equivalent to 83 sen per share.

Valuation

Pohuat (closed at RM1.78 yesterday) is now trading at a trailing gross PER of 9.3 times (based on last 4 quarters' EPS of 19.14 sen). At this PER, the stock is fairly attractive. In addition, the stock pays dividend totaling 8 sen in last 4 quarter, which translates to an attractive Dividend Yield of 4.5%.

Technical Outlook

Pohuat has recovered from the low of RM0.68 in Mar to a recent high of RM2.06. An intermediate uptrend line, SS will provide support if the share price were to retreat in the near future.

Chart 1: Pohuat's daily chart as at Dec 23, 2020 (Source: Malaysiastock.biz)

Looking at the weekly chart, we can see a line connecting the recent peaks for the stock. This line, denoted as RR, will provide resistance for any near term rally. However, if the share price can surpass this resistance, the ensuing rally can be expected to be strong.

Chart 2: Pohuat's weekly chart as at Dec 23, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance, healthy financial position and fairly attractive valuation, Pohuat 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.

SCGM: Earnings Continue to Rise

Results Update

In QE31/10/2020 (2Q21), SCGM's net profit rose 16% q-o-q or 138% y-o-y to RM9.6 million while revenue increased 7% q-o-q or 14% y-o-y to RM61 million. The group revenue increased 7% q-o-q resulting from higher sales contribution from local market on higher deliveries of F&B packaging. The Group recorded 24% higher profit before tax of RM10.7 million in 2Q21 compared to profit before tax of RM8.7 million in 1Q21, which is in line with higher local sales recorded in 2Q21. In line with the increased revenue, the Group noted 16% higher net profit of RM9.6 million in 2Q21 versus RM8.3 million in the preceding quarter

 
Table: SCGM's last 8 quarterly results

 
Graph: SCGM's last 47 quarterly results

Financial Position

SCGM's financial position is deemed healthy with current ratio at 1.49 times while gearing ratio is elevated at 0.67 time.

Valuation

SCGM (closed at RM2.48 yesterday) is now trading at a PE of 16.6X (based on the last 4 quarters' EPS of 14.92 sen).  At this PE, SCGM is deemed fairly attractive.

Technical Outlook

SCGM peaked at RM3.95 in early August. It has dropped back to around the RM2.50 level in the past few days. Its 200-day SMA line support is not far away at RM2.32.


Chart 1: SCGM's daily chart as at Dec 21, 2020 (Source: Malaysiastock.biz)


Chart 2: SCGM's weekly chart as at Dec 21, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, healthy financial position & fairly attractive valuation, SCGM is a good stock for long-term investment. The current price downtrend is likely to continue until a reversal is achieved, which may come once the share prices have surpassed the RM3.00 mark.

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.

HAIO: Earnings Remained Strong

Result Update

For QE31/10/2020, Haio's net profit was relatively unchanged q-o-q but rose 41% y-o-y to RM10.4 million while revenue dropped 7.2% q-o-q or 3.3% y-o-y to RM66 million. Overall revenue dropped q-o-q mainly attributable to lower revenue generated from the MLM division as members recruitment and renewals have normalized and business activities and delivery service in East Malaysia were impacted by the third wave of COVID-19 pandemic outbreak. Wholesale revenue was maintained while retail revenue rose 4.2%. Profits was maintained partly due to one-off gain from the disposal of vintage tea amounting to RM 0.8 million.


Table: Haio's last 8 quarterly results 


Graph: Haio's last 62 quarterly results

Financial Position 

Haio's financial position as at 31/10/2020 is deemed healthy with current ratio at 4.1 times and total liabilities to total equity at 0.19 time.

Valuation

Haio (closed at RM2.32 last Friday) is trading at a trailing PE of 17.8 times (based on last 4 quarters' EPS of 13 sen). Haio paid out dividend totaling 8 sen in the past 4 quarters- giving the stock a decent dividend yield of 3.4%. Based on these, Haio is deemed fairly valued.

Technical Outlook

Haio seems to have on a recovery path, after its share prices exhibit higher "peaks" and "higher troughs" since Mar this year. Weakly MACD is now above the zero line, which indicates the share prices are likely to go into an uptrend.


Chart 1: Haio's weekly chart as at Dec 18, 2020 (Source: Malaysiastock.biz)


Chart 2: Haio's monthly chart as at Dec 18, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on steadier financial performance, healthy financial position and mildly positive technical outlook, Haio 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 4 December 2020

We had a few days of good market last week. FBMKLCI is now pushing against the horizontal line at 1620. If FBMKLCI can surpass this level, the uptrend in the broader market will begin inearsest.

Chart 1: FBMKLCI's weekly chart as at Dec 4, 2020 (Source: Malaysiastock.biz)

Meanwhile, the small cap & fledgling stocks are racing up. FBMFLEDG has surpassed its immediate downtrend line, RR at 16000. It might revisit its 2017 high of 20100.

Chart 2: FBMSCAP's weekly chart as at Dec 4, 2020 (Source: Malaysiastock.biz)

Similarly, FBMSCAP has gone above the line connecting the recent high, R2-R2 at 14000. It is likely to test the long term downtrend line, RR at 16200.

Chart 2: FBMFLEDG's weekly chart as at Dec 4, 2020 (Source: Malaysiastock.biz)

Based on the above charts, the market is well-suited for trading in small cap & fledging stocks. If FBMKLCI were to break above 1620 convincingly, we will see a broad-based rally in the market. 

Market Outlook as at 1 December 2020

Yesterday, the index plunged in the last minutes of trading- adding 24 points to the earlier 20-point drop. This caused the FBMKLCI to plunge a head-spinning 44 points to end the day at 1563.

Chart 1: FBMKLCI's 15-min intra-day chart as at 30 November 2020 (Source: Malaysiastock.Biz)

The daily chart shows that the index is now resting on the horizontal line at or near 1560.

Chart 2: FBMKLCI's daily chart as at 30 November 2020 (Source: Malaysiastock.Biz)

Everyone with some investment in the stock market would be sitting at the edge of the seat and woul be wondering "what happened?" It does not help if you were to look at The Edge CEO Morning Brief this morning. The headline below is suggesting that there is a reason for the selldown. If that's true, then the selldown might continue. 

That's not the case. Even if MSCI review is taking place- and this happens on a regular basis- no fund manager would selloff his shareholding indiscriminately, like what happened yesterday from 4:45-4:50 pm. The last minutes selldown yesterday- like sudden huge rallies at the last 5 minutes of trading at the month-end- is very likely driven by fund managers to show a different view of their books. It is also possible that it may be carried out to affect the index in order to give a different settlement value to the expiring futures contracts.

At the opening bell this morning, FBMKLCI has rebounded with a 25-point gain. Now, it seems the chase for bargains is on. To everyone who was worried sick last night, I can only wish you a happy hunting today!!

LATITUD: Earnings rebounded strongly

Result Update

In QE30/9/2020, Latitud's net profit rose 39-fold q-o-q or 99% y-o-y to RM13 million while revenue rose 70% q-o-q or 21% y-o-y to RM235 million. The Group revenue increased by 21% y-o-y mainly attributable to higher sales recorded by furniture plants in Vietnam amounting to RM40.2 million; higher orders received by panel board lamination plant amounting to RM2.7 million; strengthening of US Dollar (“USD”) against Ringgit Malaysia (“RM”) by 0.9%; offset with lower orders received by Thailand sawmill plant amounting to RM1.2 million.

Group PBT increased by more than 100.0% from RM7.9 million mainly attributable to 55.4% increase in gross profit; fair value gain on derivatives of RM0.7 million in QE30/9/2021 compared to fair value loss on derivatives of RM0.3 million in QE30/9/2020; offset with foreign exchange loss of RM2.1 million in QE30/9/2021 compared to foreign exchange gain of RM0.1 million in QE30/9/2020. The substantial increase in gross profit was mainly attributable to the increase in revenue; furniture and sawmill plants recorded higher sales of better margin products; and lower production costs due to higher production output across all divisions.

Table: Latitud's 8 quarterly results


Graph: Latitud's P&L  for last 61 quarterly results

Financial Position

As at 30/9/2020, Latitud's financial position is deemed healthy with current ratio at 2.1x and gearing ratio at 0.5x.

Valuation

Latitud (closed at RM3.94 last Friday) is now trading at a trailing PER of 16 times (based on last 4 quarters' EPS of 24.32 sen). While the PER looks fairly reasonable and possibly fully valued the earnings of the last 4 quarters, it must be pointed out that the recovery in earnings has just begun. If Latitud can achieve the same level of earnings in the next few quarters, similar to QE30/9/2020, then its PER will drop to 7 times. This would make the stock exceptionally attractive.

Technical Outlook

Latitud has broken above its downtrend line RR at RM2.50 in October. Its immediate resistance is at the horizontal line at RM4.00.

Chart: Latitud's monthly chart as atNov 27, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance & position, fair valuation and bullish technical outlook, Latitud 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.

KAREX: Time for a Party?

Result Update

For QE30/9/2020, Karex's net profit rose 213% q-o-q to RM4.5 million on the back of a 12%-increase in revenue to RM101.7 million. Compared to the same quarter last year, bottom line has turnaround from a loss of RM167k and revenue was higher by 6%.

Higher revenue was driven by condom sales from the Sexual Wellness segment and record-high contribution from the Medical segment during the quarter. In particular, condom sales to the Americas region in particular continued to expand and contributed positively to the profitability during the current quarter. A favourable sales mix during the quarter coupled with improved cost control initiatives such as incorporation of automation led to better operating efficiency resulting in a profit before tax of RM 7.0 million for the quarter. 


Table: Karex' last 8 quarters' P&L


Graph: Karex' last 28 quarters' P&L

Financial Position

Karex's financial position as at 30/9/2020 is deemed very healthy. Its current ratio stood at 2.3 X while total liabilities to equity stood at only 0.3 X.

Valuation

Karex (closed at RM0.845 yesterday) is now trading at a PER of 176x (based on last 4 quarters' EPS of 0.48 sen). Based on the high PER, Karex is deemed unattractive. However, if the earnings recovery continues, the valuation will be less demanding in the future.

Technical Outlook

Karex appears to have broken above the 2-year base of RM0.30-0.60.

Chart: Karex's weekly chart as at November 24, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, healthy financial position, and mildly positive technical outlook, Karex may be a good stock for a recovery play. However, the valuation is very demanding and a big rally will only spring up if earnings improved substantially.

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.

PETGAS: Better Earnings, Lower Prices

Results Update

For QE30/9/2020, Petgas's net profit increased by 8% q-o-q or 37% y-o-y to RM591 million while revenue rose 0.5% q-o-q or 5.2% y-o-y to RM1.407 billion. The Group maintained its strong performance for plant and facilities reliability across all segments during the quarter under review.  Gross profit improved by 9.0% or RM61.0 million to RM735.8 million on the back of lower operating costs by Regasification and Gas Transportation segments mainly due to lower internal gas consumption cost offset by higher repair and maintenance costs. PBT and profit for the quarter were higher by 13.5% or RM96.2 million and 11.5% or RM65.8 million respectively as higher gross profit was supported by higher unrealised foreign exchange gain, negated by lower share of profit from joint venture. During the quarter, the Group recorded higher unrealised foreign exchange gain on translation of USD assets and liabilities totalling RM92.8 million due to strengthening of RM against USD compared to gain of RM20.5 million in the preceding quarter. Lower share of profit was mainly attributable to scheduled shutdown during the quarter at Kimanis Power Sdn Berhad, the Group's 60% joint venture.

Table: Petgas's last 8 quarterly results


Graph: Petgas's last 57 quarterly results

Valuation

Petgas (closed at RM16.32 in the morning session) is now trading at a PE of 18x (based on last 4 quarters' EPS of 91.6 sen). At this PER, Petgas is deemed fairly attractive.

Technical Outlook

Petgas has dropped back to its long-term uptrend line with support at RM15.20.  


Chart: Petgas's monthly chart as at Nov 19, 2020_12.30pm (Source: Malaysiastock.biz)  

Conclusion

Based on satisfactory financial performance, fairly attractive valuation & mildly positive technical outlook, I think Petgas 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.

Happy Deepavali

I like to wish all my readers of the Hindu faith a very HAPPY DEEPAVALI. May the illuminating lights of Diwali guide you in all paths in your life. 

Kossan: Earnings Soared But Share Price Floored

Result Update

For QE30/9/2020 (3Q20), Kossan's net profit rose 166% q-o-q or 6-fold y-o-y to RM349 million while revenue rose 47% q-o-q or 95% y-o-y to RM1.033 billion.

The improved performance was attributable to the improvement in all its three divisions – Gloves, Technical Rubber Products and Cleanroom. The improvement in the Gloves and the Cleanroom divisions were especially significant. To wit:

The Gloves division’s revenue increased 103.24% to RM946.57 million in 3Q20 from RM465.75 million in 3Q19, with PBT rising 670.80% to RM416.65 million in the current quarter as compared with RM54.06 million from a year ago. The improved performance was mainly attributable to the higher volume sold (+34.9%) and higher average selling price as compared with 3Q19.

The Cleanroom division grew revenue and PBT by 118.82% and 1131.80% respectively to RM40.25 million and RM10.19 million in 3Q20, as compared with RM18.40 million and RM0.83 million in 3Q19. The improved performance was mainly attributable to the increase in the demand for the division’s products as a result of the COVID-19 pandemic.

Table: Kossan's last 8 quarterly results

Graph: Kossan's last 56 quarterly results

Financial Position

Kossan's financial position as at 30/9/2020 is deemed healthy with current ratio at 1.7 times while gearing ratio was at 0.6 time.

Valuation

Kossan (closed at RM6.58 yesterday) is now trading at a trailing PE of 13.9 times (based on last 4 quarters' EPS of 47.36 sen). At this PER, Kossan is deemed fairly attractive. In fact, this PE is lower than the PE multiple assigned by the market in 2019. This shows that investors have begun to discount the impact of the vaccine on the future sales of Kossan as well as other glove makers. If the arrival of the vaccines are delayed or the logistics are too daunting, then there is a likelihood that the strong demand for gloves will persist for a while.

Technical Outlook

Kossan is in a long-term uptrend line, SS with support at RM7.00 yesterday. The breakdown of the uptrend line may lead to further decline unless a quick rebound takes place. In September, Kossan broke its uptrend line, SS but it rebounded the next day. We will have to wait and see how Kossan to fare today.


Chart: Kossan's monthly chart as at November 10, 2020 (Source: Malaysiastock.biz)

Conclusion

Despite the developing negative technical outlook, Kossan is a good stock for long-term investment based on good financial performance and financial position and fairly attractive 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 November 6, 2020

Last Friday, FBMKLCI broke above its medium-term downtrend line, RR at 1500, and rallied to close at 1520. This rally may continue this week as the world celebrates the return of sanity in America (barely). I expect FBMKLCI to challenge the next 2 resistance levels at the horizontal lines at 1540 & 1590 this week. 

 Chart 1: FBMKLCI's daily chart as at Nov 6, 2020 (Source: Malaysiastock.biz)

The same pattern was witnessed in FBMEMAS, which broke above its medium term downtrend line, RR at 10950 last Friday. It may test its next 2 resistance levels at the horizontal lines at 11050 and 11400.

 Chart 2: FBMEMAS's daily chart as at Nov 6, 2020 (Source: Malaysiastock.biz)

In New York, the MSCI Emerging Market ETF broke above the Jan 2020 high at 46 last Wednesday. It rallied to close the week at 47.93. This bullish breakout may signal the shifting of fund to emerging market as the incoming Biden administration is expected to raise taxes to finance its more progressive fiscal policies. 

Chart 3: EEM's weekly chart as at Nov 6, 2020 (Source: Stockcharts.com)

Based on the above, the market is likely to go higher in the near term. You may buy some beaten down blue chip stocks, such as Tenaga, Airport and Genting, if you want to ride on the expected price recovery. 

Market Outlook as at October 30, 2020

Last Friday, FBMKLCI broke below the support from the horizontal line, AB at 1480. If FBMKLCI does not recover quickly over the next 1-2 day(s), it may continue to slide to the next support at the horizontal line, XY at 1415.

Chart 1: FBMKLCI's daily chart as at Oct 30, 2020 (Source: Malaysiastock.biz)

If we are concerned that the fall in FBMKLCI may be caused by month-end closing shenanigans, then you can take a look at FBMEMAS (below). That index has not broken the line, AB connecting the 2 recent troughs. If FBMEMAS were to break below the AB line at 10600, then it may continue to slide down to the next support at the horizontal line, XY at 9860. 

Chart 2: FBMEMASs daily chart as at Oct 30, 2020 (Source: Malaysiastock.biz)

The non-confirmation from FBMEMAS does not take away from the current precariousness of our stock market. Below are the state of the various sectoral indices in our market:

Sectoral indices that are in a downtrend:

• Transportation: https://www.tradingview.com/x/hkVLUTqT
• Telecommunication: https://www.tradingview.com/x/EROQ1PAr
• Property: https://www.tradingview.com/x/WaJMd5Hf
• Financial Services: https://www.tradingview.com/x/dQ5CuMKL
• Construction: https://www.tradingview.com/x/uetgG9Dj
• Energy: https://www.tradingview.com/x/bJGJmkfi

Sectoral indices that have started their downtrend:

• Plantation: https://www.tradingview.com/x/XfSWq2ry
• Consumer prod: https://www.tradingview.com/x/QHNGkusy

Sectoral index that has peaked:

• Industrial Prod: https://www.tradingview.com/x/rfA5IX8b

Sectoral indices that are still in an uptrend:

• Health care: https://www.tradingview.com/x/iVBlmfhm
• Technology: https://www.tradingview.com/x/XCViBOJb

 Based on the above, we have to be very careful in taking large position in the market. 

Harta: Johnny Come Lately!

Result Update

For QE30/9/2020, Harta's net profit rose 148% q-o-q or 425% y-o-y to RM545 million while revenue rose 46% q-o-q or 90% y-o-y to RM1.346 billion. The higher sales revenue was attributed to higher sales volume and increase in average selling price for the quarter. Profit before tax for the quarter increased by RM 410.1 million or 150.3% y-o-y to RM683.0 million due to increase in sales revenue and better production efficiency.

 
 Table: Harta's last 8 quarterly results


Graph: Harta's last 52 quarterly results

Valuation

Harta (closed at RM18.28 yesterday) is trading at a trailing PER of 62 times (based on last 4 quarters' EPS of 29.47 sen). If we annualized the last 2 quarterly EPS of 22.44 sen to arrive at a full-year EPS of  44.88 sen, then its PER will be lowered to 40.7 times. 

Like in the case of Supermx, we are being too generous in using the annualized EPS of 44.88 sen to compute the PER for Harta as we looked ahead to the normalization of profit due to increased supply of gloves (as a result of increased capacity) as well as lower demand if Covid-19 pandemic were to subside. This will be a tough judgement call for analysts and investors.

Financial Position

As at 30/9/2020, Harta's financial position is deemed healthy with current ratio at 2.63x and gearing ratio at 0.44x.

Corporate Exercise Missing!

Unlike Kossan, Supermx and Topglov, Harta has yet to announce its bonus issue. The timing of that announcement will have a direct impact on the price movement in the near term. I expect a 1-for-1 bonus issue from Harta to be proposed in the next 2-3 months.

Technical Outlook

Harta share price has recently broken its short term uptrend line, S2-S2. The technical outlook for Harta will depend on whether it can surpass the intermediate downtrend line, RR at RM19.00. Until that happens, the near term outlook will likely be a sideways movement. 


Chart 1: Harta's daily chart as atOct 27, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, satisfactory financial position and reasonable valuation, I revise Harta's rating to a HOLD.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Supermx: It Gets Better!

 Result Update

For QE30/9/2020, Supermx's net profit rose nearly 100% q-o-q or more than 30 folds y-o-y to RM790 million while revenue rose 46% q-o-q or 266% y-o-y to RM1.352 billion. In the notes to the Financial Statement, the company explained its spectacular financial performance in these words:

"Supermax has again recorded a new record quarterly financial performance, achieving another historical high performance for the 2nd consecutive quarter. Revenue increased to RM1.352 billion from RM369.9 million from the previous year corresponding quarter. This increase translates to a 265.6% or RM982.6 million increase compared to the corresponding quarter a year ago. Profitability also increased sharply with EBITDA, PBT and PAT margins at its highest ever levels of 78.8%, 77.6% and 60.1% respectively. Comparing to the previous year corresponding quarter, the EBITDA, PBT & PAT has increased by 492.5%, 781.8% and 797.0% respectively."

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

Graph: Supermx's last 56 quarters' P&L

Valuation

Supermx (closed at RM9.78 yesterday) is now trading at a PER of 19.7x (based on last 4 quarters' adjusted EPS of 49.74 sen). If we annualized the last 2 quarterly EPS of 46 sen to arrive at a full-year EPS of  92 sen, then its PER will be lowered to 10.6 times. However, I believe to compute PER based on the annualized EPS of 92 sen may be too generous if we looked ahead to the normalization of profit due to increased supply of gloves (as a result of increased capacity) as well as lower demand if Covid-19 pandemic were to subside. This will be a tough judgement call for analysts and investors.

Technical Outlook

Supermx share price is well-supported by the intermediate uptrend line, SS at RM8.80 while the intermediate downtrend line, RR will cap its further upside at RM10.80. Given the strong earnings numbers, I think we may soon see a test of the intermediate downtrend line.

Chart: Supermx's daily chart as at Oct 28, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on excellent financial performance, fairly attractive valuation and still positive technical outlook, Supermx deserved to be upgraded to a BUY.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Glove Stocks: Is That A Temporary Top?

Yesterday, glove stocks dropped sharply. The sell-off came after a 4-day lull in upward price movement for most of the big 4 glove stocks (except for Harta). The price drop yesterday broke the uptrend line in the current rally for most of the glove stocks, which began on 11 September. Unless the share prices can recover above the violated uptrend lines, the glove stocks could well have made a temporary top. 

Chart 1: Harta's daily chart as at Oct 21, 2020 (Source: Malaysiastock.biz)

Chart 2: Kossan's daily chart as at Oct 21, 2020 (Source: Malaysiastock.biz)

Chart 3: Supermx's daily chart as at Oct 21, 2020 (Source: Malaysiastock.biz)

Chart 4: Topglov's daily chart as at Oct 21, 2020 (Source: Malaysiastock.biz)

With increasing news flow of the imminent arrival of vaccines, investors would have to weigh the return from holding onto their glove stocks against the risks that the rally may have peaked. In times like this, investors should consider taking some cash off the table. Redeploying the proceed to some deeply sold-down stocks, like AIRPORT or GENTING, may be a good diversification strategy to benefit from the arrival of the vaccines and the normalization of life as we know. Good luck! 

HTPADU: A bullish breakout

Yesterday, HTPADU broke above the line connecting its recent peaks at RM1.20. The bullish breakout was not accompanied by a huge volume. If the buying support can sustain, the breakout may lead to a new upleg for the stock. Its immediate resistance is its July 2019 high of RM1.45.

The bullish breakout for HTPADU could be due to new development in the award of the immigration job by the government. for more, go here.

 

Chart: HTPADU's daily chart as at Oct 7, 2020 (Source: Malaysiastock.Biz)

Based on the technical breakout, HTPADU could be a good trading BUY.

NTPM: Higher earnings on lower revenue

Result Update

For QE31/7/2020, NTPM's net profit rose 259% q-o-q or 28-fold y-o-y to RM14.6 million while revenue dropped by 11%  q-o-q or 3% y-o-y to RM179 million. Group revenue dropped y-o-y due to the decrease in sales of Tissue paper products. The Group’s PBT increased 527% y-o-y mainly due to the lower raw material cost and overhead cost. The key factors that affect the performance of tissue products include the lower cost in raw material consumed such as virgin pulp and waste paper.

 
Table: NTPM's last 8 quarterly results


Graph: NTPM's last 55 quarterly results

Financial Position

NTPM's financial position as at 31//7/2020 is deemed adequate with current ratio at 0.96 time and total liabilities to total equity at 1.17 times.

Valuation

NTPM (closed at RM0.63 yesterday) is now trading  at a PE of 33.5 times (based on last 4 quarters' EPS of 1.88 sen). At this PER, NTPM is deemed overvalued.

Technical Outlook

NTPM broke above its long-term downtrend line, RR at RM0.40 in September 2019. Due to the sharp selldown in March, the stock revisited the downtrend line again at RM0.32. The 50-week SMA line could be a good support if NTPM share price comes under selling pressure. The breakout of the downtrend line, coupled with the recent upward movement, means that the worst is behind the stock and better days may be here.


Chart 2: NTPM's weekly chart as at Sep 28, 2020 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance and mildly bullish technical outlook, NTPM could be a good stock for recovery play. Its upside potential is still 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.