Jobst poised to make new high

Technical Outlook

Jobst broke about its strong horizontal resistance at RM1.80 earlier this month (see Chart 1). The share price, which was slowly inching higher, has now broken into a galloping run (see Chart 2). However, it should be noted that this breakout occurred after a sharp run-up at the end of February, where the stock soared from RM1.45 to RM1.80.


Chart 1: Jobst's weekly chart as at Mar 15, 2010 (Source: Tradesignum)


Chart 2: Jobst's 60-min chart as at Mar 17, 2010_9.30am (Source: Quickcharts)

Recent Corporate Development

Two recent developments could be the catalyst for the current upleg. Firstly, SEEK Ltd, the market leader amongst employment websites in Australia & New Zealand lifted its shareholding in Jobst to 21.35%. Secondly, Jobst (via its wholly-owned Singapore subsidiary, Jobstreet Singapore) bought out its JV partner, TV18's 50%-stake in the India JV, Jobstreet India.

Recent Financial Results

From the table below, we can see that Jobst's net profit fro QE31/12/2009 soared to RM6.3 million from RM1.7 million last year. The sharply lower net profit recorded in QE31/12/2008 was due to provision for diminution of value of investment of RM5.4 million. However, Jobst's net profit dropped 17.7% q-o-q on the back of a 5.6%-drop in turnover.


Table: Jobst's last 8 quarterly results


Chart 3: Jobst's last 15 quarterly results

Valuation

Jobst (at RM2.00 as at 10.45 am) is trading at a PER of 23 times (based on FY2009 EPS of 8.6 sen). At this PER multiple, Jobst is deemed fully valued.

Conclusion

Based on recent financial performance & valuation, Jobst's upside is deemed limited. However, the stock could be a trading BUY based on technical consideration.

Market Outlook as at March 15, 2010

The FBM-KLCI failed to surpass the resistance posed by the expanding triangle ('ABCD') at 1325-30. The ensuing correction over the past 3 days has been fairly sharp. In fact, when we look at the current bull market which started in March last year, there were only 4 occasions when the market underwent a correction as severe as the current one. They are the correction lasting 3/4 days that started on April 27 & August 17 last year and the market consolidation lasting about 3 weeks that started on June 16 last year & January 22 this year. I believe the current sharp correction falls under the category of correction lasting a few days, which in the past two incidences has found support at the 20-day SMA line. If the same were to recur this time, then we can expect FBM-KLCI to find support at about 1292 level.

However, one would note that the close of FBM-KLCI today (at 1299.67) is fairly bearish as it has broken below the resistance-turned-support of 1308 (accorded by the high recorded on January 21 this year) and the psychological 1300 level (albeit only marginally). Besides the support from the 20-day SMA line, the FBM-KLCI may find support at the resistance-turned-support of 1288 (accorded by the high recorded on November 17 last year) as well as support from the 50-day & 100-day SMA lines at 1280 & 1259, respectively.


Chart: FBM-KLCI's daily chart as at Mar 15, 2010 (Source: Quickcharts)

I believe the current sharp correction (with a loss of about 30-35 points) may not appear too excessive when one consider the prior sharp gain (of about 100 points from February 9 to March 13). The market could have been shaken by comment from BNM that further interest rate hikes is possible after its recent 25-basis-point hike.

Xinquan could be a good value stock

Background

Xingquan International Sports Holdings Ltd ('Xinquan') is involved in the manufacture of shoe soles; outdoor & indoor sports & leisure shoes; outdoor & indoor sports & leisure apparels & accessories.

Recent Financial Results

The results for the 6-month ended 31/12/2009 shows that Xinquan's net profit increased by 20% from RM45.1 million to RM53.9 million, while turnover increased by 53% from RM204 million to RM311 million. I have appended below the results for FY2006 to FY2009 for your perusal. We can see that Xinquan recorded a net profit (before translation forex gain) of RM93.0 million for FY2009. This translates to a full-year EPS of 30 sen (based on issued share capital of 307.33 million shares).


Table: Xinquan's results for FY2006-9

Valuation

Xinquan (now trading at RM1.22) has a PER of 4.1 times. Based on its strong earning growth over the past 3 years (averaging about 90% over 3 years or 41% in the past year alone), Xinquan's low single-digit PER means that the stock is very attractive.

Technical Outlook

From the chart below, we can see that Xinquan has just broken above its downtrend line at RM1.18-20. This breakout could mean that the stock may either move sideway (instead of sliding further) or enter into an uptrend.


Chart: Xinquan's daily chart as at Mar 12, 2010_4.00pm (Source: Quickcharts)

Conclusion

Based on good financial performance, strong earning growth, attractive valuation & positive technical outlook, Xinquan could be a good stock for medium-term investment.
(Warning: Despite the above positive comments, we must be cautious taking long position in Mainland Chinese stocks due to the high incidence of accounting irregularities.)

Gtronic may have broken above its long-term downtrend line

Technical Breakout noted

Gtronic may have broken above its long-term downtrend line resistance at RM1.12-13. Its next resistance is at RM1.25 & thereafter at RM1.50.


Chart 1: Gtronic's monthly chart as at Mar 11, 2010 (Source: Tradesignum)

Recent Financial Results

Gtronic had recently announced its results for FYE31/12/2009, which shows a drop in net profit of 26.7% from RM21.8 million to RM15.9 million. Turnover had similarly declined by 21.1% from RM275 million to RM217 million. The decline is mainly due to the global economy slowdown in 2009 & losses incurred due to the shutdown of its China operations (approximately RM8 million as of to-date) further eroded the net profit of the group.

Financial Position

Gtronic's financial position is very satisfactory with little borrowings and a current ratio of 3 times as at 31/12/2009.


Table: Gtronic's last 8 quarterly results


Chart 2: Gtronic's last 27 quarterly results

Conclusion

Based on technical breakout, Gtronic could be a trading BUY.

Leader- a possible Trading BUY

Leader has just done an upside breakout of its symmetrical triangle at RM0.92. Its next resistance is at RM1.00 & thereafter at RM1.20.


Chart 1: Leader's daily chart as at Mar 11, 2010_9.30am (Source: Quickcharts)


Chart 2: Leader's weekly chart as at Mar 11, 2010_9.30am (Source: Quickcharts)

Time to look at Property stocks

The property market, which staged a steady recovery last year after the slump in 2008, has now gone in overdrive. Some condominiums projects, which were launched in the past few months at exorbitantly high prices, were easily sold off. Properties in desirable location has enjoyed appreciation in value of 15-20% over the past one year. Despite the expected rise in interest rates this year, property developers are fairly confident that their sales will not be seriously impact. In view of this bright outlook, I think it is now time to buy property stocks which have not gone up too much.

From Chart 1, we can see that the Properties index has not moved up by much. I have appended below the charts of my three favorites- Sunrise, Suncity & IGB (the latter has limited exposure to property development). I believe that all three stocks should see decent price appreciation in the months ahead.



Chart 1: Properties' daily chart as at Mar 10, 2010_3.05pm (Source: Quickcharts)


Chart 2: Sunrise's weekly chart as at Mar 10, 2010_3.00pm (Source: Quickcharts)


Chart 2: Suncity's weekly chart as at Mar 10, 2010_3.00pm (Source: Quickcharts)


Chart 3: IGB's weekly chart as at Mar 10, 2010_3.00pm (Source: Quickcharts)

Asia Trader & Investor Convention on March 20-21, 2010

NextVIEW, the financial data vendor, which delivers real-time, in-depth Data and Analytical tools to stock broking firms, futures/forex trading houses, banks, investment management companies, private traders and investors, will be organizing the Asia Trader & Investor Convention (‘ATIC’) on March 20-21 in Kuala Lumpur Convention Centre.

ATIC will feature some distinguished speakers, such as Don Schellenberg, Alan Hull, Brent Penfold, Daryl Guppy, G M Teoh and Benny Lee. While entry to the seminar is free, you have to pay to attend the training courses. For beginners paying RM100, you get to listen to the following courses:



For intermediate or advance traders or investors, you get to attend the following courses for the same fee:



For more on ATIC, go here. For the 2-day program/schedule, go here. You can get a free ticket to the seminar by registering with the organizer.

These courses are very reasonably priced & I am quite confident that you will come away from it with a few good ideas that will more than make up for money & time spent. Personally, I am horrified by the huge sum that people spent on attending courses on technical analysis or trading courses. To spend thousands of ringgit on a training course is not my idea for investing in knowledge. It is wiser to spend RM100-200 on a good book & read it thoroughly. For example, I am presently reading Robert Edwards and John Magee's classic TECHNICAL ANALYSIS OF STOCK TRENDS. I find this book to be especially enjoyable because it is very well written.

Eng & Dufu- the cheaper HDD players

There are a few companies involved in the production HDD components. The biggest company is the recently-listed JCY International Bhd ('JCY'). The next biggest player could be Eng Teknologi Holdings Bhd ('Eng'). Other players include Dufu Technology Bhd ('Dufu') and Notion VTEC Bhd ('Notion') — both produce components for HDD, while the latter also makes components for single-lens reflex (SLR) cameras. For more on technology stocks, go here.

Based on Table 1 below, we can see that Eng is trading at a lower PER than JCY. Between the 2 smaller players, Dufu trades at a lower PER multiple than Notion.


Note: Closing prices as at Mar 9, 2010.
Table: HDD players' results for QE31/12/2009 & QE31/12/2008

The financial position of Eng & Dufu are fairly satisfactory. As at 31/12/2009, Dufu's current ratio & total debts to shareholders' funds stood at 1.9 times & 0.34 time, respectively. At the same time, Eng's current ratio & total debts to shareholders' funds stood at 1.9 times & 0.29 time, respectively. The attractive valuation may explain why Eng has risen sharply for the past one year, from a low of RM0.50 to the present price of about RM2.40. Dufu's price run-up has been a subdued affair, rising from a low of RM0.30 in early 2009 to the present price of RM0.55. Based on the above, I believe Eng & Dufu could continue to see buying support & higher prices ahead.


Chart 1: Eng's monthly chart as at Mar 1, 2010 (Source: Tradesignum)


Chart 2: Notion's weekly chart as at Mar 8, 2010 (Source: Tradesignum)


Chart 3: Dufu's weekly chart as at Mar 8, 2010 (Source: Tradesignum)

Muda may have a bullish breakout

Muda has just broken above its ascending triangle at RM0.905. The immediate resistance is RM0.93, which is the high recorded in June 2008. A breakout above RM0.93 may be the trigger for a trading BUY on this stock. However, it must be noted that the volume traded is still relatively thin at about 1.2 million shares. Muda's next horizontal resistance levels are RM1.00, RM1.20 & RM1.40.


Chart 1: Muda's weekly chart as at Mar 8, 2010_3.10pm (Source: Quickcharts)


Chart 2: Muda's monthly chart as at Mar 1, 2010 (Source: Quickcharts)

Market Outlook as at March 8, 2010

FBM-KLCI gained 22.73 points to touch 1322.51 as at 12.00 noon. We can see from the daily chart that the market may be charting the course of its next upleg soon. Some indicators which have turned positive are:
1) MACD hooking up;
2) RSI entering into the overbought zone; and
3) +DMI swinging upward coupled with -DMI swinging downward. ADX has turned upward.

FBM-KLCI may however face some resistance at the level of 1325-30, as the market will attempt to break out of the expanding triangle ('ABCD').


Chart: FBM-KLCI's daily chart as at Mar 8, 2010_11.40am (Source: Quickcharts)

Based on the above, our market outlook should be bullish.

Why we buy at uptrend line

I received some heat for posting about the possible trading buy on Genting SP when it tested its uptrend line at S$0.86-87. For your information, Genting SP has rebounded today to close at S$0.905. With this rebound, Genting SP may continue to rise to the immediate resistance at the psychological level of S$1.00 and thereafter at the strong horizontal resistance of S$1.05.

The reason why buying at an uptrend line can be a good trading idea is clearly illustrated by one of our top performers today- AEM. This stock dropped to its strong horizontal support of RM0.50, which coincided with its uptrend line support yesterday. Today, it gained RM0.235 (or, 46.5%) to close at RM0.74. Of course, not every stock would give you such a strong rebound, but there are enough such sharp rebounds that its is worthwhile to try catching a falling stock at its strong support, be that a horizontal support or an uptrend line support.


Chart: AEM's daily chart as at Mar 5, 2010 (Source: Quickcharts)

This is not a call to buy AEM. Incidentally, AEM should encounter stiff resistance from its downtrend line at RM0.78-80.

Genting has broken above its downtrend line

Genting has broken above its short-term downtrend line at RM6.40 this afternoon. From Chart 1, you can see that the indicators (MACD, RSI & DMI) have been turning around for the past few days, awaiting a turnaround in the price.


Chart 1: Genting's daily chart as at Mar 5, 2010_3.50pm (Source: Quickcharts)

Below, I have appended the 60-min chart to show the same turnaround in Genting.


Chart 2: Genting's 60-min intra-day chart as at Mar 5, 2010_3.45pm (Source: Quickcharts)

If Genting (presently trading at RM6.54) is too pricey for your limited funds, you may consider Genting-CM or Genting-CN. Genting-CM has an exercise price of RM4.45; exercise ratio of 10-to-1; and expiring in June 2010. Genting-CN has an exercise price of RM3.80; exercise ratio of 4-to-1; and expiring in July 2010. Genting-CM (at RM0.215 now) is now trading at a premium of less than 1%, while Genting-CN (at RM0.685 now) is now trading at a zero premium. The other CWs are trading at premium of between 9% & 33%.

Maybank may have a bullish breakout

Maybank may have finally broken above its horizontal resistance at RM7.00-7.08. Maybank has been enjoying a steady increase in volume traded over the past 2 months, which is a good sign of an accumulation in anticipation of an upside breakout.


Chart 1: Maybank's daily chart as at Mar 5, 2010_9.30am (Source: Quickcharts)

If Maybank (presently trading at RM7.13) is too pricey for your limited funds, you may consider Maybank-CJ which has an exercise price of RM5.119; exercise ratio of 1.7963-to-1; and expiring in August 2010. At the present price of RM1.15, Maybank-CJ is now trading at a premium of 0.8% only.


Chart 2: Maybank-CJ's daily chart as at Mar 5, 2010_9.35am (Source: Quickcharts)

Maybank-CK has a similar premium as Maybank-CJ but it will expire in May 2010, while Maybank-CL & Maybank-CM has premium of 6-8%.

Based on the above, I believe Maybank could be a good trading BUY. Maybank-CJ would be a good proxy to play on this breakout.

Genting SP broke below its medium-term uptrend line

I had posted on March 2 about Genting SP was dropping to its medium-term uptrend line at S$0.86-87. The stock tested the uptrend line on Mar 3, without any sign of rebounding. Yesterday (Mar 4), it broke below the uptrend line. Unless a quick recovery happens today (or, over the next 1-3 days), there is a good chance that the uptrend for Genting SP is over. The end of an uptrend in a stock will be followed by either a sideway movement or a downtrend.


Chart: Genting SP's daily chart as at March 1, 2010 (Source: Yahoo Finance)

Atlan- a case against share buyback

Background

Atlan Holdings Berhad ('Atlan') is involved in trading duty free goods and non-dutiable merchandise; property & investment; provision of hospitality management; and, the manufacturing and marketing exhaust systems and other automotive component parts.

Recent Financial Results

Atlan's latest financial results is 3Q2010 (or, QE30/11/2009). It reported a net profit of RM59.3 million on a turnover of RM03 million. EPS for 9-mth ended 30/11/2009 was 26.3 sen, while NTA per share was at M1.39 as at 30/11/2009.

Financial Position

As at 30/11/2009, Atlan's financial position can be described as be reasonable. Its liquidity position is satisfactory with current ratio at 1.1 times, while its gearing ratio is high with borrowings to shareholders' funds of 0.9 time.

Aggressive Share Buyback

As at 30/11/2009, the amount expended for purchase of Treasury Shares was RM52 million. The latest filing with Bursa dated Feb 25, 2010 revealed that the number of Treasury shares held was 23.5 million units (equivalent to 9.26% of the issued share capital of 253.65 million units of RM1.00 each).

The share buyback program started on October 2007. From that date until this week, there were only 26 weeks where the weekly volume exceeded 400,000 units. The bulk of the active trading happened within the last 6 months. If we add up the volume for these 26 weeks, we can see that the volume traded was 27.3 million. The weekly volume of the remaining 100 weeks, which varies from 100,000 to 400,000 units, is mostly less than 100,000 units. Assuming that all these remaining 100 weeks average volume was 100,000 units, then the total volume traded for the quiet weeks are 10 million units. Based on the above, Atlan's share buyback program accounts for 63% of the volume traded.

From the chart, we can see that the share buyback program could have cushioned the decline of this stock from August 2008 to February 2009 and could have pushed up the share price thereafter. While it is arguable that share buyback may be used to support the price of a stock due to severe downturn, the use of such program to drive up the price of a stock is highly undesirable.

Technical Outlook

Atlan's chart is like an artist's canvass. You can see a downward price channel, a symmetrical triangle and an expanding triangle. This week, the stock has just broken above the expanding triangle as well as the strong horizontal resistance of RM3.40. With these upside breakouts, the stock's outlook is decidedly bullish. But, beware...


Chart: Atlan's weekly chart as at Mar 4, 2010_10.50am (Source: Quickcharts)

Conclusion

A stock making new high due to aggressive share buyback cannot sustain. While you can justify this practice to your shareholders, you cannot justify this to your bankers. They would be wondering why should they stand by this company, with high gearing, while the directors are busily rewarding the shareholders. Sooner or later, the buying will cease. Avoid Atlan!

Konsort- a possible trading BUY

Konsort broke above its medium-term downtrend line at RM1.20 yesterday. Its upleg continued today, where it has surpassed the horizontal resistance lines at RM1.30 & RM1.35.


Chart 1: Konsort's daily chart as at Mar 3, 2010_3.40pm (Source: Quickcharts)

It will soon be testing its long-term downtrend line resistance at RM1.38-40. If it can surpass this level, it could challenge its recent high at RM1.67.


Chart 2: Konsort's weekly chart as at Mar 3, 2010_3.40pm (Source: Quickcharts)

Based on the above, Konsort may be a good trading BUY at present level and especially above the RM1.40 level. For the more risk-averse crowd, you may try to gain entry on pullback towards RM1.35 or RM1.30.

Success- slowly but surely?

Background

Success Transformer Corp Bhd ('Success') is involved in in the manufacture and sale of electrical apparatus and industrial lighting; the production and sale of metal products (focusing on metal stamping parts and metal casings); manufacture and fabrication of process equipment (such as unfired pressure vessels, heat exchangers, tanks, and silos) & other machinery and parts (including mechanical works, maintenance services, and shutdown works); and hiring and servicing of machinery equipment.

New Corporate Development

In late February, Bursa Securities had approved the listing Seremban Engineering Berhad (formerly known as Seremban Engineering Sdn Bhd) ('SEB')on the Industrial Products sector of the Main Market of Bursa Securities. The wholly-owned SEB was acquired for a sum of RM36.408 million, with the first tranche of 60% acquired for RM14.628 million in December 2006 & the second tranche of 40% acquired at RM21.780 million in April 2008. I have appended below the track record of SEB from 2003-2007. For 2007, SEB recorded a net profit of RM6.3 million on the back of a turnover of RM53 million.


Table 1: SEB's financial results from 2003 to 2007

The listing of SEB is likely to include an offer for sale to the shareholders of Success. The exact ratio of SEB shares to be offered to Success's shareholders has not announced yet. The prospectus for SEB IPO has yet to be uploaded onto Bursa's website. Nevertheless, this 'carrot' may be just the catalyst needed for a play in Success.

Recent Financial results

Success has recently announced its results for FYE31/12/2009. For 4Q2009, its net profit increased by 4.4% q-o-q or 20.5% y-o-y to RM6.5 million while turnover increased by 10.3% q-o-q or 25.5% y-o-y to RM52.8 million.


Table 2: Success's 8 quarterly results


Chart 1: Success's 11 quarterly results

Valuation

Success (closed at RM1.21 yesterday) is now trading at a PER of 5.6 times (based on FY2009 EPS of 21.5 sen). At this multiple, Success is deemed fairly attractive. If you valued Success at a PER of 8 times, its fair value is about RM1.72.

Technical Outlook

Success is rising in a gradual uptrend, guided by 50 & 100-day SMA lines. The support given by these SMA lines is around RM1.20. Its immediate horizontal resistance is at RM1.35.


Chart 2: Success's daily chart as at Mar 2, 2010 (Source: Quickcharts)

Conclusion

Based on good financial performance, attractive valuation, positive technical outlook & upcoming listing of its subsidiary (SEB), Success is a good stock for a medium-term investment.

Genting SP to test its medium-term uptrend line

Genting SP lost 4 cent to close at S$0.87 earlier today. Since posting about the double-top reversal for Genting SP (here), the stock has dropped about 18% in value. From the chart below, we can see that the stock is now resting on the medium-term uptrend line (SS) support at S$0.86-87. There is a good chance that this stock may put in a rebound from this level. For those who have been longing to get into Genting SP, I would say that gaining entry into this stock at the uptrend line is worth considering. However, I must say that I prefer Genting Malaysia (GENM) to Genting SP.


Chart: Genting SP's daily chart as at March 1, 2010 (Source: Yahoo Finance)

Astro may have a bullish breakout

Last week, Astro All Asia Network Plc ('Astro') won a ruling containing various awards amounting to US$230 million (about RM786.6 million) in restitution in its arbitration proceedings against a number of entities in the Lippo Group including the public-listed PT First Media. For more, go here.

Despite the favorable decision, the share price of Astro did not jump. The reason is the serious concern on how Astro can enforce the decision. However, it is interesting to note that Astro share price has now surpassed the third fan line of a Trend Fan drawn onto Astro chart. with this breakout, Astro may have turned bullish. Its immediate horizontal resistance is at RM4.20-25 & thereafter at RM4.60-65.


Chart: Astro's weekly chart as at Mar 1, 2010_3.00pm (Source: Quickcharts)

Allianz- a new chapter begins

Results Update

Allianz has just announced its results for FYE31/12/2009. For QE31/12/2009, Allianz's net profit increased by 160% q-o-q or 194% y-o-y to RM60.2 million. It revenue dropped 17% q-o-q but was 7% higher than the previous corresponding quarter.

Allianz attributed its increased net profit to increase in underwriting profit from the general insurance as well as the transfer of surplus of RM12 million from the Life Funds to the Shareholders' Funds. The latter is worth noting because this is the first quarter where Allianz has recognized contribution from its life insurance business. Prior to this, it has been beefing up the Life Insurance' solvency margin to meet Bank Negara's requirement (without recognizing any contribution in its bottom-line).


Table 1: Allianz's 8 quarterly results


Chart 1: Allianz's 16 quarterly results

Valuation

Allianz (closed at RM4.95 at the end of the morning session) is now trading at a PER of 6.4 times (based on last 4 quarters' EPS of 77 sen). At this multiple, Allianz is deemed very attractive.

Technical Outlook

Allianz has broken above its medium-term downtrend at RM4.70-75.


Chart 2: Allianz's weekly chart as at Mar 1, 2010)_12.30pm (Source: Quickcharts)

Conclusion

Based on good financial performance, attractive valuation & bullish technical outlook, Allianz is a good trading BUY as well as a good stock for long-term investment.

MediaC- another attractive media stock

Background

Media Chinese International Limited ('MediaC') is a Hong Kong-based investment holding company. The Company, and its subsidiaries, is engaged in the publishing, printing and distribution of Chinese-language newspapers, magazines and books, and the provision of travel and travel related services in Hong Kong, North America, Mainland China, Malaysia and Southeast Asia.

MediaC is listed on Bursa & Hong Kong Stock Exchange (code: 685).

Recent Financial results

MediaC has just announced its results for 3Q2010 ending 31/12/2009. For QE31/12/2009, its net profit increased by 56% q-o-q or 143% y-o-y to RM53.6 million while turnover increased by 4.8% or 5.8% to RM345 million.


Table 1: MediaC's 8 latest quarterly results

MediaC's abridged results as reported in USD for filing on the HKEx is:


Table 2: MedaiC's financial results (in USD) for QE31/12/2009 compared

The steady recovery in MediaC is clearly seen in the chart below.


Chart 1: MediaC's 8 quarterly results

Valuation

MediaC (closed at RM0.57 on Feb 25) is trading at a PER of 4.5 times (based on the annualized 3Q2010 EPS of 3.19). At this multiple, MediaC is deemed fairly attractive. Its fair value is about RM1.28 (based on PER multiple of 10 times).

Technical Outlook

MediaC is in a bottoming phase for the past 15-16 months, trading at prices between RM0.50 & RM0.65. It has yet to break above its long-term downtrend line, where the resistance is at RM0.60-62.


Chart 2: MediaC's weekly chart as at Feb 22, 2010 (Source: Tradesignum)

Conclusion

Based on a steady recovery in its financial performance & fairly attractive valuation, MediaC could be a good stock for long-term investment. As its technical outlook has yet to turned positive, one can accumulate this stock slowly.

Faber- an attractive growth stock

Background

Faber Group Bhd ('Faber') is an investment holding company, with subsidiaries involved in:
1) the provision of facilities management services to hospitals, and commercial and residential properties in public and private sectors in Malaysia, India, and the United Arab Emirates.
2) the provision of biomedical engineering maintenance, cleansing, clinical waste management, facility engineering maintenance, linen and laundry, and maintenance management information system services.
3) the development of residential and commercial properties.

Recent Financial Results

Faber announced a very good set of results for FYE31/12/2009, For QE31/12/2009, Faber's net profit increased by 124% q-o-q or 138% y-o-y to RM42.6 million while its turnover increased by 54% q-o-q or 106% y-o-y to RM304 million. The improved performance is attributable to an increase revenue from the Integrated Facilities Management division (which jumped from RM132 million for QE31/12/2008 to RM255 million for QE31/12/2009). The improvement came from business expansion in UAE as well as higher variation order, higher bed occupancy rate and additional new facilities at government hospitals within the concession area.


Table 1: Faber's 8 quarterly results


Chart 1: Faber's 12 quarterly results

Valuation

Faber (closed at RM1.66 on Feb 25) is now trading at a PER of 3.5 times (based on annualizing the 4Q2009 EPS of 11.73 sen). If we discount the full-year EPS by 30%, we would get an EPS of 33 sen; giving Faber a PER of 5.0 times. At these multiples, I believe Faber is fairly attractive. Its fair value could be as high as RM3.30 (based on PER of 10 times the discounted annualized EPS of 33 sen).

Technical Outlook

Faber is in an uptrend, with immediate horizontal resistance at about RM1.80 (see Chart 2). If it can surpass this level, its next horizontal resistance is at RM2.30-40 (see Chart 3).


Chart 2: Faber's weekly chart as at Feb 22, 2010 (Source: Tradesignum)


Chart 3: Faber's monthly chart as at Feb 22, 2010 (Source: Tradesignum)

Conclusion

Based on strong financial performance, attractive valuation & positive technical outlook, Faber could be a good stock for long-term investment.