Supermx in a super rally

Supermx recently announced its results for QE30/9/2009. Its net profit increased by 56% q-o-q or 155% y-o-y to RM40 million. Its turnover increased by 26% q-o-q to RM238 million but was 2.7% lower than the previous corresponding quarter, QE30/9/2008.


Table 1: Supermx's 8 quarterly results

From the chart of the last 12 quarterly results, we can see the improvement in Supermx's performance for the past 3 quarters. This sharp recovery in its bottom-line should lead to further re-rating of this stock.


Chart 1: Supermx's 12 quarterly results

In August, I have posted on Supermx's long-term expanding triangle pattern which might capped the rise in the share rise (go here). However the strong rally in the past 3 weeks has blown away the resistance posed by that pattern (see Chart 2 below).


Chart 2: Supermx's daily chart from 2000 to Oct 21, 2009(source: Tradesignum)

From Chart 3 below, we can see that the strong rally since March this year can be viewed as an imperfect upward channel. The share price is now pushing against the resistance from the upper boundary of that channel at RM4.00. Can Supermx surpass this medium-term resistance?


Chart 3: Supermx's daily chart as at Oct 22, 2009_10.50am (Source: Quickcharts)

For traders, you may take the opportunity to take some profit on this stock after a strong rally from RM2.50 to RM4.00 over the past 3 weeks. Long-term investors can choose to hold onto this stock as this stock may still have more upside.

Note: CIMB has a year-end target of RM6.40 for Supermx which pegged the stock to a PE of 10.5 times its 2010 earning. The date of the report is Oct 21.

Penergy has a bullish breakout...

Petra Energy Bhd ('Penergy') has broken to the upside of its triangle in early September at the RM1.80 level. Penergy is a fairly profitable Oil & Gas stock. For the 6-month ended 30/6/2009, it reported a net profit of RM13.8 million on the back of a turnover of RM228 million. Its 6-month EPS is 7.1 sen while NTA per share as at 30/6/2009 stood at RM1.56.


Chart 1: Penergy's 1-year daily chart as at Oct 20, 2009(source: Tradesignum)

The stock has broken above its downward channel in May (see Chart 2 below). After that breakout, the share price consolidated in a triangle pattern. With the recent breakout of the triangle pattern, the stock's next up-leg may have started. Its upcoming resistance will be at RM2.20 (its May high); RM2.50-60; and RM3.00.


Chart 2: Penergy's daily chart from July 2007 to Oct 20, 2009 (source: Tradesignum)

Masteel may have a bullish breakout

Masteel broke to the upside of its triangle at RM0.97. It is presently trading at RM1.04 as at 3.50pm. The next resistance for the stock is at RM1.10 & thereafter at RM1.20. There is a news report that the company had secured a deal to export steel worth millions of ringgit to Australia. Overall, the steel sector is expected to benefit from the government’s pump-priming efforts in 2010 and 2011.


Chart: Masteel's daily chart as at Oct 20, 2009 (source: Tradesignum)

Lonbisc- an attractive consumer stock

Background

London Biscuit Bhd ("Lonbisc") is involved in the manufacture & sale of confectionery and other related foodstuffs.

Lonbisc has a 23.49%-stake in Lay Hong Bhd, a listed company involved in poultry farming. The rationale for the acquisition is to gain control and ownership of a major supplier to ensure adequate, regular and continuous supply of liquid eggs at "controlled prices" to meet its ongoing expansion plans. In addition, Lonbisc has a 32.97% in Khee San Berhad, another listed company, which is engaged in dealing and manufacturing of sweets and confectionery products.

Recent Financial Results

Lonbisc reported a good set of results for QE30/62009. Its net profit increased by 47% q-o-q or 112% y-o-y to RM6.7 million while turnover was up 15% q-o-q or 37% y-o-y to RM55 million. The increased turnover was attributable to the incorporation of the turnover of its associate, Khee San Berhad into Lonbisc's P&L account. This also helped to boost Lonbisc's steady top-line growth (see Chart 1 below).


Table 1: Lonbisc's 8 quarterly results


Chart 1: lonbisc's 18 quarterly results

Valuation

If Lonbisc can maintain the same results as achieved in QE30/6/2009, then its full year EPS can be as high as 34 sen (derived by annualizing its EPS of 8.58 sen for QE30/6/2009). Lonbisc (closed at RM1.10 today) is trading at a trailing PE of 3.2 times. Its Price to Book is also very attractive at 0.5 times (based on NTA per share of RM2.23 as at 30/6/2009). All in all, Lonbisc is an attractive consumer stock worth considering.

Technical Outlook

Lonbisc is still in a long-term downtrend line, with resistance at RM1.30-35 (based on the weekly chart, Chart 2). The share price is rising in a short-term upward channel, with support at RM1.00 (see the daily chart, Chart 3).


Chart 2: Lonbisc's weekly chart as at Oct 20, 2009 (Source: Quickcharts)


Chart 3: Lonbisc's daily chart as at Oct 20, 2009 (Source: Quickcharts)

Conclusion

Lonbisc is an attractive consumer stock worth tracking. For those with a long-term investment horizon, you may accumulate this stock now (or, preferably at RM1.00 level). Trading BUY may be initiated if the stock broke above the downtrend line at RM1.30-35.

Suncity- uptrend to continue

Suncity will continue with its medium-term uptrend since breaking above its short-term downtrend line resistance at RM3.26 last week (see Chart 1 below). Its overhead resistance will come from its recent high of RM3.50 as well as the horizontal resistance of RM4.00 (see Chart 2 below).


Chart 1: Suncity's daily chart as at Oct 19, 2009_12.30noon(source: Quickcharts)


Chart 2: Suncity's weekly chart as at Oct 19, 2009_12.30noon(source: Quickcharts)

HLInd- worth a closer look

HLInd broke above its long-term downtrend line resistance at RM3.70 in August. Despite the breakout, the share price did not rise much. It merely floated higher. With investors scouting around for cheap stocks, HLInd may have come under the radar & some buying may have started. The technical reading suggests that the stock may rally soon like what it did in April-November 2006. Watch out for increased volume! If that happened, the game would have started. Upside resistance can be seen at RM4.40-50, RM5.00 & RM5.80-6.00.


Chart 1: HLind's weekly chart as at Oct 19, 2009_11.00am(source: Quickcharts)

From the monthly chart below, we can see that the longer-term downtrend line would act as resistance at RM5.30-40.


Chart 2: HLind's monthly chart as at Oct 19, 2009_11.00am(source: Quickcharts)

GenM- what are we waiting for?

There have been a number of research reports touting the strong points for Genting Malaysia, such as its solid Balance Sheet with Cash reserves of RM5 billion and its attractive valuation as it trades only at PE multiple of 13 times. Technically speaking, we are all wanting for an upside breakout of its long-term downtrend line at RM2.90. If you want to be ahead of the curve, then buy when this stock pulled back to RM2.70-80 level. The fact that this stock still hasn't broken above its downtrend line is hard to fathom.


Chart 1: GenM's weekly chart as at Oct 19, 2009_11.00am(source: Quickcharts)

HAPPY DEEPAVALI

Here's wishing all Malaysians of the Hindu faith a HAPPY DEEPAVALI.

Cenbond may have a bullish breakout

Cenbond has a nice bullish breakout yesterday. Before this, it was consolidating in a triangle with the upside resistance at RM0.72.


Chart 1: Cenbond's daily chart as at Oct 15, 2009 (Source: Quickcharts)

The RM0.72 level happened to be a very strong horizontal resistance too. With yesterday's breakout, this will become a strong horizontal support.


Chart 2: Cenbond's weekly chart as at Oct 15, 2009 (Source: Quickcharts)

Today, Cenbond shed RM0.07 to close at RM0.76. Look out for this stock. I think it is a good trading BUY when it comes closer to RM0.72. Hat tip to reader Solomon for alerting me on this stock. I have posted on Cenbond a long time ago (go here).

Freight may have a bullish breakout

Freight Management Holdings Bhd ("Freight") has broken to the upside of its ascending triangle yesterday- made a high of RM0.715 before closing at the breakout level of RM0.675. Today it gained RM0.125 to close at RM0.80- thus achieving a clear bullish breakout. Its next resistance levels are RM0.85, RM0.90 & RM0.95.


Chart: Freight's daily chart as at Oct 15, 2009 (Source: Tradesignum)

Tenaga may have a bullish breakout

Tenaga has just broken to the upside of its symmetrical triangle at RM8.43-44. It closed at RM8.48 today. The next resistance will be RM8.50 & thereafter RM9.00.


Chart: Maybank's daily chart as at Oct 15, 2009 (Source: Tradesignum)

Besides buying into Tenaga, you can also consider its CWs. From the table below, you can choose from 3 CWs. My preference is for Tenaga-CL & Tenaga-CM.


Table: Tenaga's CWs terms & valuation

Crude Oil rally to continue

Crude Oil is expected to rally after it achieved a bullish breakout of its triangle formation yesterday. You can see from Chart 1 that WTIC has broken to the upside of the triangle at USD75.


Chart 1: WTIC's daily chart as at Oct 15, 2009 (Source: Stockcharts.com)

To gain direct exposure to the Crude Oil price rally, one may consider buy into an Oil funds or ETF, such as United States Oil Fund LP ETF (or USO).


Chart 2: USO's daily chart as at Oct 15, 2009 (Source: Stockcharts.com)

We have a CW for USO listed on Bursa, called USO-C1. The main terms are:

Expiry Date: April 7, 2010
Exercise Price: USD36.70
Exercise Ratio: 200:1

Based on yesterday's closing price for USO-C1 at RM0.125 & USO at USD39.91 and an exchange rate of USD1=RM3.40, USO-C1 is now trading a reasonable premium of 10%.


Chart 3: USO-C1's daily chart as at Oct 15, 2009 (Source: Quickcharts)

If you do not fancy buying into a thinly traded security such as USO-C1, you can look at the oil services stocks listed on our exchange. My preference is for Dialog (go here). I am sure more stocks in this sphere will join in the rally soon. Good luck

CPO broke above its medium-term downtrend line

CPO has broken above its downtrend line at RM2150 on Oct 12. The MACD indicator has also put in a positive crossover. With these 2 signals or readings, the recovery in CPO prices should be more assured in the weeks ahead.


Chart: CPO's daily chart as at Oct 14, 2009 (Source: ifs.marketcenter.com)

Based on this, you can expect plantation stocks to rise in the weeks ahead.

Second & third-liners poised to rally?

FBM-KLCI is back above its uptrend line again. There is very little that I can add to what you can see from Chart 1 below.


Chart 1: FBM-KLCI's daily chart as at Oct 14, 2009 (Source: Quickcharts)

What's interesting is the movement in the following indices- FBM-SCAP, FBM-ACE & FBM-FLG. Before going into my observation, let's see what are these indices?
1. FBM-SCAP- comprises all small cap stocks on the Main Board which are not constituents of FBM-Emas
2. FBM-ACE- comprises all stocks on the ACE Board (formerly, the MESDAQ Board)
3. FBM-FLG- comprises all stocks on the Main Board which are not constituents of FBM-Emas nor FBM-SCAP

So, all the stocks in the above indices are the smaller and usually weaker companies listed on the exchange. Over the past few days, many stocks that fall into this category are starting to inch up. As a result, FBM-FLG has now broken to the upside of its ascending triangle while FBM-ACE may soon follow. FBM-SCAP is slowly catching up.

The last time we saw a strong play in this category of stocks was in early 2007 when the volume traded in the market hit high of 3-4 billion a day. Are we heading there soon? Are the retailers punting in the market again? I think so.


Chart 2: FBM-SCAP's weekly chart as at Oct 14, 2009 (Source: Quickcharts)


Chart 3: FBM-ACE's weekly chart as at Oct 14, 2009 (Source: Quickcharts)


Chart 4: FBM-FLG's weekly chart as at Oct 14, 2009 (Source: Quickcharts)

Media to cut loss on its Philippines TV operations

Media Prima Bhd has announced that it is currently in talks to divest its loss-making TV operations in the Philippines, Primedia to the Philippine Long Distance Telephone Co (PLDT). This was reported in the Star newspaper today (go here).

“The company is in the final stage of the disposal. It will happen very soon,” a source said. “Media Prima will recover its investment. No more exposure. No more losses. Clean cut.”

The bleeding Philippine operations, referred to by some as Media Prima’s “Achilles’ heel”, has been a major drag on the group’s bottom line.

Thus far, Media Prima has recognised accumulated losses of RM68.1mil – RM45.3mil in financial year 2008 and RM22.8mil in the first half ended June 2009.

This news has triggered a strong rally in Media today. The other possible reason for the rally is its expected takeover of NSTP, which also rallied strongly today. From the technical perspective, Media appears to have broken above its downtrend line at RM1.60 level. Media (closing at RM1.77 today) has also surpassed its horizontal resistance at RM1.75. Its next resistance is at RM2.00.


Chart: Media's weekly chart as at Oct 14, 2009_4.35pm (Source: Quickcharts)

Based on the bullish breakout, Media is a trading BUY.

Maybank's uptrend continued

Maybank has just broken above its symmetrical triangle at RM6.80. It has also surpassed its August 5 high of RM6.86. As at 11.45 am this morning, it was trading at RM6.94. This is the third bullish breakout of a continuation pattern since the stock recovery begun in March this year. I have denoted this pattern as "C" and the earlier patterns as "A" and "B".


Chart: Maybank's daily chart as at Oct 13, 2009 (Source: Tradesignum)

Besides buying into Maybank, you can also consider the CWs. From the table below, you can choose from 4 CWs. My preference is for Maybank-CJ and Maybank-CK.


Table: Maybank's CWs terms & valuation

Topglove's results justified its high share price

Results Update

Topglove has just announced its results for 3Q2009 ended 31/8/2009. Its net profit increased by 35% q-o-q or 126% y-o-y to RM56.8 million while turnover increased by 15% q-o-q or 17% y-o-y to RM427 million.


Table 1: Topglove's 8 quarterly results

The improved bottom-line is attributable to higher sales and higher pre-tax profit margin, which increased to 18.5% in 3Q2009 from 14.6% in 2Q2009 or 10.4% in 3Q2008. For a good idea of Topglove's past 9 years' performance, see Table 2 below. I have also appended a chart showing Topglove's last 13 quarters' track record which shows the growth rate of its top-line & bottom-line are accelerating.


Table 2: Topglove's 9 yearly results


Chart 1: Topglove's 13 quarterly results

Valuation

Topglove (closed at RM8.23 today) is now trading at a trailing PE of 14.4 times (based on last 4 quarters' EPS of 57 sen). We can also compute its Price/Earnings To Growth ('PEG') ratio using the top-line growth rate of about 12% over the past 3 years (instead of bottom-line growth rate) and a dividend yield of 1.9% today [based on total dividend of 16 sen (excluding special dividend of 6 sen) for FY2009]. Topglove's PEG ratio is about 1.04 times. While a PEG ratio of less than 1 means that the stock is attractive, Topglove's present PEG ratio is not excessive despite its recent strong run-up.

The computation of PEG ratio is carried out as follows:

PEG ratio = PE / (Growth Estimate + Dividend Yield)
= 14.4 / (12 + 1.9)
= 1.04 times

Technical Outlook

From the chart below, we can see that Topglove's next resistance is at the horizontal line of RM8.50. It is possible that Topglove may re-test its all-time high at RM10.00 recorded in Dec 2006.


Chart 2: Topglove's weekly chart as at Oct 9, 2009 (Source: Quickcharts)

Conclusion

Based on good results and bullish technical outlook, I believe Topglove's present rally may still continue.

Dialog may have a bullish breakout

Dialog may have broken above its strong horizontal resistance at RM1.30, with good volume. As at 11.50am, it is trading at RM1.32 with volume traded at 77k board lots (equivalent to 7.7 million units). If Dialog can maintain this bullish breakout, then the stock may rally further & test the congested resistance area at RM1.55-65. Dialog broke above its medium-term downtrend line at RM1.25 last week.


Chart: Dialog's weekly chart as at Oct 8, 2009_11.45am (Source: Quickcharts)

Based on bullish technical breakout, Dialog may be good for a trading BUY.

Ajiya testing its downtrend line

Ajiya Bhd ('Ajiya'), which is involved in the manufacture and supply of materials used in the construction and building based industries, has just announced its results for QE31/8/2009.

Results Update

Its net profit increased by 49% q-o-q or 6% y-o-y to RM7.5 million. Turnover at RM83 million was up 3.6% when compared to the preceding quarter but down 4.5% when compared to the previous corresponding quarter.


Table 1: Ajiya's 8 quarterly results

From the chart below, we can see that Ajiya's top-line & bottom-line to the level achieved in QE31/8/2008.


Chart 1: Ajiya's 12 quarterly results

Valuation

Ajiya (last traded at RM1.59 as at 11.00 am today) is now trading at a trailing PE of 5.5 times (based on last 4 quarters' EPS of 29 sen). Price to Book is about 0.6 times (based on NTA per share of RM2.53 as at 31/8/2009). As such, Ajiya is fairly attractive.

Technical Outlook

Ajiya has just surpassed its long-term downtrend line at RM1.50-55. If it can maintain above the downtrend line, then the outlook for Ajiya will be fairly bullish.


Chart 2: Ajiya's daily chart as at Oct 7, 2009 (Source: Tradesignum)

Conclusion

Based on attractive valuation & good financial performance, Ajiya is a good stock for long-term investing. If it can break above the downtrend line, it will become a trading BUY.

Axiata- to test its uptrend line support at RM3.00 soon

Axiata has come under heavy selling pressure today & yesterday. Looking at the 60-min chart (Chart 1), we can see that the technical indicators are fairly weak, with MACD going into negative territory; RSI oversold but not rebounding; and -DMI crossing above +DMI plus ADX trending higher.


Chart 1: Axiata's 60-min chart as at Oct 7, 2009 (Source: Quickcharts)

Despite the negative reading on the 60-min chart, we can take some comfort that Axiata should find good support at RM3.00, which is its medium-term uptrend line. If the uptrend line failed, the next support would be the horizontal line support at RM2.85-90. However, a break of the uptrend line support of RM3.00 (without a quick recovery) would change the technical outlook for Axiata from positive to negative.


Chart 2: Axiata's daily chart as at 6/10/2009 (Source: Tradesignum.com)

If the uptrend line support at RM3.00 holds, you may accumulate Axiata at or near its uptrend line.

KSeng- a trading BUY

KSeng broke to the upside of its ascending triangle at RM3.94 (see Chart 1). At the same time, it also broke above its medium-term downtrend line at RM4.00 (see Chart 2). KSeng is involved in the following businesses:

- Manufacturing
- Property development
- Property Investment
- Plantations
- Operation of golf club
- Operation of hotels

It is a profitable company which recorded a net profit of RM49.4 million on a turnover of RM451 million for 1H2009 ended 30/6/2009. The improved performance is partly due to write-back of impairment on quoted investments.

KSeng (closed at RM4.04 at the end of the morning session today) is now trading at a trailing PE of 10 times (based on the annualized EPS of about 41 sen). Price to book is about 0.8 times (based on NTA per share of RM4.83 as at 30/6/2009).

Based on the bullish technical breakout, KSeng could be a good trading BUY. The upcoming horizontal resistance for the stock is at RM4.90-5.00.


Chart 1: KSeng's daily chart as at Oct 7, 2009_12.05noon (Source: Quickcharts)


Chart 2: KSeng's weekly chart as at Oct 7, 2009_12.00noon (Source: Quickcharts)

Genting SP- more CWs issued

Today, we have the listing of the 3rd CW for Genting SP. It is called Gens-C3 and it was issued by CIMB. Five days earlier, we saw the listing of Gens-C2 which was issued by OSK. The first CW for Genting SP, Gens-C1 was issued by CIMB on September 4th.

Why the flurry of new issue of CWs for this stock? Why are these CWs trading at such high premium, ranging from 21% to 43%? As you may already known by now, Genting SP is having a large Rights Issue of 1-for-5 at S$0.80 each which will close on October 12th. For some reason, Genting SP is currently trading at nearly the same price as it did on the last cum date for the entitlement for the Rights Issue, i.e. September 17th. There are two ways of looking at this development: It is either a very positive development for the stock, which may justify the high premium commanded by 3 CWs or the share price is being held at the current level. I would not want to say more on the later scenario, but I think it is interesting to note the flurry of new CWs issued based on Genting SP. These "smart moneys"- CIMB & OSK- are not too enamored by Genting SP's medium-term share price performance & thought issuing or writing CWs for Genting SP is a rewarding exercise. Who is right? The "smart moneys" or the retailers buying these CWs?


Table: Gens-CWs' main terms & their premium computation

I have appended below the chart of Genting SP for your easy viewing.


Chart: Genting SP's weekly chart as at Oct 5, 2009 (source: Yahoo Finance)

Topglove- leading the rubber glove theme play

Topglove broke to the upside of its pennant formation two days at RM7.30 (see Chart 1 below). This may be spurred by re-rating of the stock by two brokering firms, Affin & HDBS (as reported by Business Times [here] & the Edge [here], respectively). Investors may also be drawn to the rubber glove manufacturers due to recent reports that the H1N1 flu may have mutated.

The previous upside breakout for Topglove in June saw the stock gaining RM1.20 from RM6.30 to RM7.50. If the stock put in a similar gain in the present breakout, then Topglove may go as high as RM8.50. Topglove is presently trading at RM7.86 (as at 11.41 am).


Chart 1: Topglove's daily chart as at Oct 6, 2009_11.20am (Source: Quickcharts)

From the weekly chart, we can see that Topglove has broken above its long-term downtrend line, which stretches back to its all-time high of RM10.00 recorded in December 2006. Its upcoming overhead horizontal resistance level is at RM8.00 & RM8.50.


Chart 2: Topglove's weekly chart as at Oct 6, 2009_11.15am (Source: Quickcharts)

The breakout in Topglove has spurred strong buying for other rubber glove manufacturers. In the present cautious market, the rubber glove theme play looks like the only game in town. This should draw in cashed-out traders who are looking for a punt. I expect this theme play to last from a few days to 1 or 2 week(s).

Market Outlook as at October 1, 2009

Our KLCI (that's short for FBM-KLCI) is now resting on its medium-term uptrend line support at 1208. That uptrend line was violated yesterday but the recovery today has managed to safe the KLCI.


Chart 1: KLCI's daily chart as at Oct 1, 2009_4.45pm (Source: Quickcharts)

Similarly, the Emas index (again, short for FBM-Emas index) broke below its medium-term uptrend line marginally yesterday. The recovery today has not pushed it above the uptrend line. For both KLCI & the Emas, the MACD indicator has hooked down, while the RSI is resting on its uptrend line.


Chart 2: Emas' daily chart as at Oct 1, 2009_4.40pm (Source: Quickcharts)

Based on the non-confirmation between the two main indices, one should adopt a cautious stance in this market. It is possible that the market may resume its uptrend again after a few days of listless trading. On the other hand, if the KLCI were to weaken significantly in the days ahead (say, breaking below the 1200 level), I believe the uptrend for our market has ended. In such situation, you would be well served by reducing your exposure in the market until clearer signs emerge again.

Put Warrants- Is it the right time to look at them?

Today, we have the listing of 3 new Put Warrants ('PW') which were issued by OSK Investment Bank Bhd. I have tabulated the comprehensive list of all PWs listed on our exchange.

If you are having a bearish view on a market or a stock, you may consider buying a PW. For example, if you are bearish on Axiata, you may buy 5 units of Axiata-HA to acquire an exposure equivalent to 1 share of Axiata. This will cost you RM0.775 (i.e. 5 x RM0.155) and in return you have the right to put (or, sell) 1 share of Axiata to the writer of Axiata-HA (i.e. OSK) at the exercise price of RM3.40. When would you make money? When/If Axiata share price dropped to RM2.625 (i.e. RM3.40 - RM0.775). That means you would only make money if Axiata declined by 16.67% from its present price of RM3.15. On the other hand, if Axiata share price rose to RM3.40 or higher, the PW would be worthless & you would lose the entire sum of RM0.775. Finally, if Axiata share price is between RM3.40 & RM2.625, you would lose money but not the entire sum of RM0.775.

The question to ponder is whether Axiata going to drop to RM2.625 or lower on its expiry date. Not likely in my opinion. What if Axiata-HA declined to RM0.08? Is it worth considering? I think so. By spending RM0.40 on 5 units of Axiata-HA, you would have acquired an exposure equivalent to 1 share of Axiata. If Axiata were to drop below RM3.00, your 5 units of Axiata-HA acquired at RM0.08 each would be profitable bet.