MBSB: At the Tipping Point

Result Update

For QE31/12/2014, MBSB's PBT dropped 67% q-o-q or 65% y-o-y to RM87 million while its revenue dropped by 12% q-o-q or 18%  y-o-y to RM594 million. The q-o-q decrease in PBT was mainly due to lower operating income and higher impairment losses on loans, advances. These were partly set off by higher other operating income.

On the other hand, MBSB's net profit rose 104% q-o-q or 90% y-o-y to RM393 million mainly due to recognition of deferred tax of RM366 million in relation to origination & reversal of temporary differences.


Table: MBSB's last 8 quarterly results


Chart 1: MBSB's last 42 quarterly results

Valuation

MBSB (at RM2.22 yesterday) is now trading at a current PE of 5.6 times (based on the annualized EPS of 39 sen). However, the last 4 quarters' EPS was boosted by a one-off deferred tax recognition of RM366 million. If this one-off item is excluded, the 4 quarters' EPS would be lowered to 25 sen and PE would increase to 8.9 times. Going forward, there is a concern that the company's earning will slide further due to competitive pressure as reflected in the drop in revenue.

Technical Outlook

MBSB could have made a double top reversal at RM2.60. If it slid further (say below RM2.00), the stock could be entering into a downtrend.

 
Chart 2: MBSB's monthly chart as at Feb 17, 2015_12.30pm (Source: ShareInvestor.com)

Conclusion

Based on poorer financial performance & mildly negative technical outlook, I believe it is advisable to reduce our position in MBSB.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MBSB.

O&G: Riding the Crude Oil Recovery

It is becoming clearer that crude oil prices could have touched the bottom. This position was highlighted here in early January & again in February. The premise was purely technical, i.e. the crude oil prices would find support at the tentative uptrend line at USD50. (Note: WTIC made an intra-day low of USD43.58 in January).


Chart 1: WTIC's monthly chart as at Feb 16, 2015 (Source: Investorshub)

Assuming that crude oil will begin to recover from here, what can we expect for O&G stocks. Obviously, they will continue to rise- albeit at a less than spectacular rate as compared to the past 3-4 weeks.. We can see that in the way Coastal & Dialog's share prices rose from the low in 2009 (see Chart 2 below).


Chart 2: Coastal & Dialog's monthly chart as at Feb 17, 2015 (Source: ShareInvestor.com)

Would higher crude oil prices affect the share prices of aviation stocks? We can see from Chart 3 below that Airasia & Airport continued to rise from its low in 2009 despite higher crude oil prices.


Chart 3: Airasia & Airport's monthly chart as at Feb 17, 2015 (Source: ShareInvestor.com)

From the above, I think that we can slowly accumulate O&G stocks and hold onto aviation stocks in an environment of rising crude oil prices. However, the rise in crude oil prices will not be in a straight line. I expect volatility to rein given the excess supply but at the same times, geopolitical factors (like Ukraine & Middle East problem) may cause an uptick in prices.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, COASTAL, DIALOG, AIRASIA & AIRPORT.

Mitra: Showing the way?!

Recently, Mitra  broke above the upper line of its expanding triangle and then rallied higher. It is in a correction mode today.


Chart 1: Mitra's weekly chart as at Feb 17, 2015_9.30am (Source: ShareInvestor.com)

Expanding triangles are not common. In fact, they are fairly rare. More often, we will come across triangles or pennants where the prices would tend to converge in the future. This is simply a function of price discovery- as the buyers and sellers would slowly agree on the equilibrium price. Expanding triangles, on the other hand, are the opposite of a market where the buyers and sellers are moving towards a state of equilibrium. In fact, they are getting far & farther apart until there is a breakout. In the case of Mitra, the buyers "won" and the share price rose.

Now we can see the same pattern forming in two stocks: SKPRes and Penta. Both stocks have not yet achieved a breakout. The correct approach is to regard the upper line as a resistance and to sell at this line. Only on breakout above the line, should you open a position in the stock.


Chart 2: SKPRes & Penta's weekly chart as at Feb 17, 2015_9.30am (Source: ShareInvestor.com)

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Mitra, SKPRes & Penta.

Sign: An attractive stock

Background

Signature International Bhd ('Sign') is involved in the design, manufacture and retail of kitchen and wardrobe systems segment, marketing and distribution of white goods segment, and manufacture of glass and aluminum products segment.

Recent Financial Results

From the Chart 1 below, we can see that Sign's top-line and bottom-line have been trending higher since QE30/6/2011. Its profit margin is also rising- a very healthy sign.

Table: Sign's last 8 quarterly results

 
Chart 1: Sign's last 28 quarterly results

Valuation

Sign (closed at RM1.80 on Friday) is now trading at a trailing PE of 6.7 times (based on last 4 quarters' EPS of 26.7 sen). It is trading at a PB of 1.5 times (based on NTA of RM1.17 per share as at
31/12/2014). Based on PER & PB, Sign is deemed fairly attractive.

Technical Outlook

Sign is in an uptrend since 2012. Its immediate support is at the horizontal line of RM1.70. That coincides with the 10-month SMA line.


Chart 2: Sign's monthly chart as at Feb 13, 2015 (Source: ShareInvestor.com)

(Updated) I have appended below Sign's monthly chart adjusted for the 1-for-2 Bonus in July 2010. The stock has just broken to a new high.


Chart 3: Sign's monthly chart as at Feb 16, 2015_9.35am (Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance, fairly attractive valuation & positive technical outlook, Sign is rated a good stock for long-term investment.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of,Sign.

PMetal: Bottom-line dragged down by unrealized forex losses

Results Update

For QE31/12/2014, PMetal's net profit dropped by 49% q-o-q to RM42 million on the back of a 10%-drop in revenue to RM1.134 billion. For QE31/12/2013, PMetal incurred a net loss of RM29 million on a revenue of RM807 million.

PBT dropped y-o-y from RM116 million to RM61 million after accounting for forex losses of RM81 million & RM23 million respectively. If forex losses are excluded, PBT would be adjusted to RM142 million & RM139 million for QE31/12/2014 & QE31/12/2013, respectively.


Table 1: PMetal's last 8 quarterly results


Chart 1: PMetal's 29 quarterly results

Current Expansion & Aluminium Price Trend

PMetal is reported to be operating at full capacity. It is in the midst of an expansion program that would raise its capacity by 73% to 760,000 MT by end of 2015. The plant expansion would drive its earning growth. For more, go here.

However, aluminium is still in a long-term downtrend despite rebounded in the second half of 2014. If aluminium can surpass USD2000/MT, it could turn bullish. Currently, aluminium is trading at USD1820-1830/MT.


Chart 2: Aluminium's monthly chart as at Feb 12, 2015 (Source: Tradingeconomics.com)


Valuation

PMetal (closed at RM3.01 yesterday) is now trading at a PER of 14 times (based on last 4 quarters' EPS of 21.3 sen). At this PER, PMetal is deemed fairly valued.

Technical Outlook

PMetal has been rising in an irregular upward channel. It tested the upside boundary at RM3.60-3.70 in September 2014. Until it has surpassed this mark, the price is likely to trade within the price channel.


Chart 3: PMetal's monthly chart as at Feb 12, 2015 (Source: ShareInvestor.com)

Conclusion

Based on reasonable valuation & positive technical outlook, PMetal is considered a good stock for medium-term investment. However, its upside is likely to be capped at RM3.60-3.70.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of,  Pmetal.

Petdag: Barely Profitable

Result Update

For QE31/12/2014, Petdag's net profit dropped by 99.7% q-o-q & y-o-y to RM445k while revenue also dropped 9% q-o-q or 11% y-o-y to RM7.45 billion. 

Revenue dropped q-o-q due to 9%-drop sales volume and 1%-drop in selling prices. Group operating profit decreased by RM214.5 million to RM16.2 million due to lower gross profit (dropped by RM153.5 million) & higher operating expenditure (increased by RM55.8 million). Gross profit margin dropped due to margin compression brought on by sharp decline in selling price in line with the fall of MOPS prices.Operating expenditure increased due to higher planned repair & maintenance activities at petrol stations and terminals and higher IT expenses.

Table: Petdag's last 8 quarterly results

Petdag's margin has been sliding since 2009. While the margin may rebound back in the current quarter, the margin will remain weak. Bottom-line will remain depressed.

 
Chart 1: Petdag's last 27 quarterly results

Valuation

Petdag (closed at RM17.00 yesterday) is now trading at a trailing PE of 34 times (based on last 4 quarters' EPS of 50 sen). Based on PE multiple, Petdag is overvalued.

Technical Outlook

Petdag broke its long-term uptrend line at RM18.50 in November 2014. It managed to stage a rebound from the horizontal support of RM15.00-16.00.


Chart 2: Petdag's monthly chart as at Feb 12, 2015 (Source: ShareInvestor.com)

Conclusion

Based on poor financial performance, high valuation & bearish technical outlook, Petdag is rated a SELL.

Note: 
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Petdag.

Latitud: Reaching high altitude

Results Update

For QE31/12/2014, Latitud's net profit rose 65% q-o-q or 44% y-o-y to RM27.4 million while revenue increased by 7.6% q-o-q or 2.5% y-o-y to RM189 million. Revenue grew y-o-y due to higher orders received, strengthening of US Dollar against Ringgit Malaysia; and overall higher production output by all the factories of the Group. PBT increased y-o-y due to the substantial increase in gross profit due to better gross profit margin; lower finance costs due to decrease in total bank borrowings; and increase in unrealised foreign exchange gain


Table 1: Latitud's last 8 quarterly results


Chart 1: Latitud's last 38 quarterly results 

Valuation

Latitud (closed at RM5.23 this morning) is now trading at a PE of 7.8 times (based on last 4 quarters' EPS of 67.4 sen). At this PE, Latitud is deemed fairly attractive. However, we have to be wary not to fall into the trap of buying into (or holding onto) a stock with its earning at a cyclical high. That happens when all the good positives are in and the share price reflects that.

Technical Outlook

Latitud had rallied ever since it broke above its intermediate downtrend line in December 2012 (see my earlier post). It had surprised me by exceeding the February-March 2010 high of RM1.75 (see my follow-up post). If we do a projection using the monthly chart below, we can argue that the potential target could be as high as RM5.30-5.50.


Chart 2: Latitud's monthly chart as at Feb 12, 2015  (Source: ShareInvestor.com)

Conclusion

Based on better financial performance & attractive valuation, Latitud is a good stock for long-term investment. However, I think that Latitud is due for some profit-taking. I would rate it a SELL INTO STRENGTH.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Latitud.

Tenaga: Nothing Fishy at All!

Yesterday, Tenaga dropped to a low of RM13.20 on "news" that the Government is planning to cut tariff rate in March as a result of the lower cost of crude oil. For more, go here.

The adjustment in Tenaga's tariff rates should not be a surprise. We know this will come under the Incentive-based Regulation ('IBR'). In brief, IBR involves:

• For 1-year trial period, from Jan 1, 2014 to Dec 31, 2014
• Then the first 3-year regulatory period, from Jan 2015 to Dec 2017

Tariff adjustment consists of:

• Fuel Component that accounts for 82% of the tariff hike
• Fuel Component is made up of 3 sources of fuel: domestic gas, imported LNG & coal
• Fuel Component Cost will be reviewed every six months
• Non-Fuel Component (base tariff hike) that accounts for 18%
• Non-Fuel Cost will be reviewed every three years

Tariff adjustment will be carried out every 6 months, presumably at Jan 1 and Jul 1 of each calender year.  For more, go here.

Based on the above, the news of the tariff rate coming in March is rather unusual. It maybe due to the fact that this adjustment should have been made on Jan 1. Nevertheless, the selldown for Tenaga is rather excessive. After all, Tenaga cannot expect to have the cake and eat it. If the cost of input is lower, then surely the selling price must be adjusted lower.

From the chart below, we can see that Tenaga is at the uptrend line. If this uptrend line is not violated, this is a good entry level to the stock.


 Chart: Tenaga's daily chart as at Feb 12, 2015_10.30am (Source: ShareInvestor.com)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Tenaga.

Tenaga: Something fishy is going on...

On the 1st day of trading in February, Tenaga was pushed to an intra-day high of RM16.90 on opening. Today Tenaga was pushed to an intra-day low of RM13.20. Something fishy is going on. Bursa should investigate who is behind this manipulation.

 
 Chart 1: Tenaga's intra-daychart as at Feb 11, 2015_4.45pm (Source: ShareInvestor.com)


 Chart 2: Tenaga's daily chart as at Feb 11, 2015_4.45pm (Source: ShareInvestor.com)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Tenaga.

Market Outlook as at February 11, 2015

With a shortened week ahead, our market is likely to see some selling pressure. Thus I believe that any rally between now and next week will unlikely to break above the intermediate downtrend line, RR at 1830.

The immediate support level for FBMKLCI will be at 1800. I think the psychological 1800 level is not likely to be violated. If it happens, then the index may test the 1770 mark. That would be the maximum downside in the current market.


Chart: FBMKLCI's weekly chart as at Feb 11, 2015_11.00am (Source: ShareInvestor.com)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of FBMKLCI.

Amway: Impact by the strengthening of USD-MYR

Results Update

For QE31/12/2014, Amway's net profit dropped by 7% q-o-q or 20% y-o-y to RM23 million while turnover increased by 5% q-o-q or 16% y-o-y to RM230 million.

Revenue increased q-o-q mainly due to higher sales generated by sales and marketing programs and higher productivity driven by Nutrilite 80th Anniversary programs. The Group’s profit before tax decreased by 0.6% q-o-q, mainly due to higher operating expenses.


Table: Amway's last 8 quarterly results

From the Chart 1 below, we can see that profit margins have declined in the past 2 quarters, probably due to the strengthening of the USD vis-a-vis the Ringgit. Unless Ringgit recovers, I expect Amway's profit margin to remain weak.


Chart 1: Amway's P&L, Profit Margins & Dividend Payout last 30 quarterly results

Valuation

Amway (traded at RM11.10 yesterday) is trading at a trailing PE of 18 times (based on last 4 quarters' EPS of 61 sen). Dividend yield remains strong at 5.0%. Despite the high PER, Amway will still stay firm at the present price due to its healthy DY.

Technical Outlook

Amway is in a long-term uptrend line. Immediate support is at RM10.40 while its immediate resistance is at RM11.50.


Chart 2: Amway's monthly chart as at Feb 10, 2015 (Source: ShareInvestor.com)

Conclusion

Based on high dividend yield & positive technical outlook, Amway is a good stock for long-term investment, especially for income purpose.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Amway.

Takaful: Profit margin weakened

Results Update

For QE31/12/2014, Takaful's net profit dropped by 11% q-o-q or 28% y-o-y to RM30 million while revenue inched up 2% q-o-q or 6% y-o-y to RM401 million.

Revenue increased y-o-y mainly attributable to higher sales generated by General Takaful business and higher net investment income. For the quarter under review, the Group recorded profit before zakat and taxation of RM44.2 million, decreased by 17.7% as compared to RM53.7 million in the same period last year. The drop in profit before zakat and taxation is due to lower surplus transfer in the quarter under review from Family Takaful (of M4.4 million as compared to RM29.7 million in the same period last year) which more than offset the higher surplus transfer from General Takaful (of RM20.3 million as compared to RM17.0 million in the same period last year).


Table: Takaful's last 8 quarters' results

From the Chart 1 below, we can see that the uptrend for the revenue is intact but the uptrend for the profit margin is broken. Going forward, I expect profits to be flattish at best.


Chart 1: Takaful's last 35 quarters' results

Valuation

Takaful (closed at RM11.30 yesterday) is now trading at a PE of 13 times (based on the last 4 quarters' EPS of 86.3 sen). It has a Dividend Yield of 3.5%. At this PER & DY, Takaful is deemed fairly valued.

Technical Outlook

The stock has been in an uptrend. It is resting on the 20-month SMA line at RM11.30. A break of this support could send the stock to the important psychological level of RM10.00.


Chart 2: Takaful's weekly chart as at Jan 10, 2015 (Source: ShareInvestor.com)

Conclusion

Based on fairly reasonable valuation & bullish technical outlook, Takaful is still a good stock for long-term investment. However, the financial performance has begun to weaken and this could lead to further price weakness ahead. If the share price were to breach the RM11.30 mark, you should consider reducing position on this stock.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Takaful.

RCECap: Slow Recovery Ahead

Result Update

For QE31/122014, RCECap's net profit increased 45% q-o-q to RM3.1 million after deduction of preference share dividends of RM9.4 million paid for FY31/3/2014. PBT increased from RM7.5 million to RM30.4 million due to RM4.7 million loss on early redemption of ABS bonds in the preceding quarter.


Table: RCECap's last 8 quarterly results

Looking at the Chart 1 & Diagram below, we can see that RCECap's financial performance, which had been sliding for the past 3 years, had made a bottom. There are early signs that its financial performance may improve going forward.


Chart 1: RCECap's last 31 quarterly results


Daigram: RCECap's last 10-Y P&L & 6-Y CF (Powered by ShareInvestor.com)

Valuation

RCECap (closed at RM0.31 yesterday) is now trading at a PE of 11.7 times, a Price to Book of 0.62 time and has a dividend yield of 4.8%. At these multiples & DY, RCECap is deemed fairly valued.

Technical Outlook

RCECap broke above its downtrend line, RR at RM0.28 in early part of 2014. A short-term uptrend has begun with support at RM0.31.


Chart 2: RCECap's monthly chart as at Feb 9, 2015 (Powered by ShareInvestor.com)

Conclusion

Based on improved financial performance, fair valuation & mildly positive technical outlook, RCECap is good stock for long-term investment.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, RCECap.

CPO: Indonesian's Biodiesel Subsidy Boost

CPO had a good rally at the end of last week before correction set in yesterday. The correction is not surprising given the sharp rally. I expect CPO prices to find support at RM2200, though a retest of the recent low at RM2100 cannot be ruled out.


 Chart: CPO's weekly chart as at Feb 9, 2015 (Source: iFS.marketcenter.com)

Last week's rally in CPO prices could have been driven by news that the Indonesian Government proposed to raise its biodiesel subsidy & biodiesel allocation. However, it is now reported in the Jakarta Post that "in the deliberation on the proposed revision to the 2015 State Budget, the House of Representative Commission VII overseeing energy, has cut the biodiesel allocation to Rp6.8tr (US$544m), from the earlier proposal by the Energy and Mineral Resources Ministry of Rp17tr (US$1.4bn)". This was picked up by CIMB Research yesterday.

The lower budget allocation reflects the lowered biodiesel subsidy of Rp4,000 per litre from Rp5,000 per litre. On top of this, the volume of subsidised diesel is lowered to 1.7m kilolitres (kl) from the earlier proposed 3.41m kl. This is because the subsidy will only be given to the public through the public service obligations scheme (PSO or the subsidised transport diesel). For more, go here.

All is not lost. The lowered biodiesel subsidy of Rp4,000 per litre is still higher than the current biodiesel sales subsidy of Rp 1,500 per liter. And, despite the cut in the volume of subsidised diesel from the earlier proposed 3.41m kl to 1.7m kilolitres (kl), the lower target may not be fully utilized by the public. See the table below.

Table 1: Indonesia's Biodiesel Production & Distribution from 2006-2014 (Source: USDA's GAIN Report entitled: Indonesia Biofuels Annual 2013)

From the latest USDA report entitled "Oilseed: World Market & Trade", we can see that palm oil supply/production and distribution/usage have risen steadily by 29% & 28%, respectively over the past 4  years. The slightly faster increase in supply/production has led to an increase in inventory from 6.1 million MT in 2010 to 7.8 million MT in 2014. Unless usage picks up, the increased supply will put downward pressure on CPO prices going forward.


Table 2: Palm Oil: World Supply & Distribution from 2010-2014 (Source: USDA's Oilseeds: World Markets & Trade Report for Jan 2015)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, CPO or plantation stocks.

Sasbadi: Poised for higher prices?

It was reported in the Edge newsletter that Sasbadi - involved in print publication, digital publication & applied learning- is in the midst of acquiring a company. This news might explain the recent rise in the share price to about RM1.50. If the share price can surpass this level, this stock may rise further. The immediate resistance is at RM1.50 and beyond that, the next resistance levels are RM1.60, RM1.65 & RM1.72-1.74.


Chart: Sasbadi's weekly chart as at Feb 6, 2015 (Powered by ShareInvestor.com)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Sasbadi.

Salcon: Broke above its downtrend line

Salcon has finally broken above its intermediate downtrend line at RM0.68 last week. It also broke above the psychological resistance at RM0.70. With these double-breakout, Salcon is likely to enter into its next upleg.


Chart: Salcon's weekly chart as at Feb 6, 2015 (Powered by ShareInvestor.com)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Salcon.

Orna: Upside breakout

Orna may have a bullish breakout of an irregular flag formation at RM1.36-1.37. As at 4.45pm, Orna was traded at RM1.42- its high in early 2014.

If Orna can stay above the RM1.42 mark, the stock may continue its prior uptrend. Possible target is RM1.70-1.80.


Chart: Orna's weekly chart as at Feb 4, 2015 (Powered by Tradesignum)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Orna.

QL: Continuation of Prior Uptrend

QL may have broken above its irregular flag formation at RM3.55. If it can also surpass the high of RM3.59 recorded in June 2014, the stock is likely to continue its prior uptrend.


Chart: QL's weekly chart as at Feb 4, 2015 (Powered by Tradesignum)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, QL.

MEGB: Final kitchen-sinking?

Result Update

For QE31/12/2014, MEGB reported a net loss of RM39.9 million on the back of a revenue of RM7.2 million. The net loss was attributable to the impairment of assets & trade receivables amounting to RM9.2 million & RM 13.2million respectively and fee waiver recognized in the current quarter and a gain on Hong Kong investment disposal was realized in the preceding quarter. If you exclude the exceptional gain from disposal of HK investment in QE30/9/2014, MEGB has been a loss-making concern since QE31/12/2011.


Table 1: MEGB's last 8 quarterly results


Chart 1: MEGB's last 23 quarterly results 

Valuation

MEGB (closed at RM0.66 last Friday) is now trading at a PB ratio of 1.27X. PER is not available as the company is a loss-making concern. The current price is 10% higher than the price paid by the new shareholders, Creador 11 LLC & SMRT to acquire a stake of 30.75% in MEGB. This acquisition will raise Creador 11 LLC's stake to 27.02% while SMRT (an educational group) will take a 23%-stake in MEGB. The new shareholders planned to revamp the company to return it to profitability.

Technical Outlook

On the news of the arrival of new shareholders & management, MEGB's share price has finally broken above its downtrend line. The new management team, led by the SMRT CEO Dr Palan, will certainly face a tough task of turnaround MEGB. I expect the share price to test the horizontal support at RM0.65 & possibly RM0.55 before the long road to recovery can begin.


Chart 2: MEGB's weekly chart as at Feb 2, 2015  (Source: ShareInvestor.com)

Conclusion

Based on new management, I would rate MEGB a HOLD. The record of investment success by the Creador team could work its magic again.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, MEGB.

Crude Oil: The bottom?!

Crude oil prices jumped 11% after 2 days of rally after data showed a steep drop in the number of rigs drilling for oil in US. This is read as a sign that crude production may begin to decline.

From the monthly, weekly & daily composite charts, we can see that a bottom may be forming. If the crude oil price bottom in 2008-2009 can be a guide, we can expect prices of crude oil to see volatile trading for the next few weeks or even months before a recovery kicks in.

Based on technical consideration, O&G stocks could be a good bet for long-term investment.


Chart: WTIC's monthly, weekly & daily chart as at Feb 2, 2015 (Source: Investorshub)

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, O&G stocks.