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.
Thursday, October 08, 2009
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.
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.
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.
Wednesday, October 07, 2009
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.
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:
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)
- 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)
Tuesday, October 06, 2009
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)
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).
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).
Thursday, October 01, 2009
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.
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.
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.
Wednesday, September 30, 2009
Shanghai's SSEC index at the tipping point
Shanghai's SSEC index tested its medium-term uptrend line again yesterday (see Chart 1). As at 2.20am ET today, SSEC index was up 30.2 points (or, 1.1%). Will SSEC index recover from here on?
Chart 1: SSEC's daily chart as at 29/9/2009 (Source: Stockcharts.com)
A look at the weekly chart below revealed the following:
1. The 10-week SMA has curved downwards while the 20-week SMA is now flattening out.
2. The weekly MACD has done a negative cross-under.
3. RSI has pulled back significantly & is now below 50.
4. The -ve DMI is attempting to cross above the +ve DMI, which could signal the beginning of a new downtrend.
The last time we saw the congruence of the same signals was in November & December 2007, which was the top for SSEC. Can the same thing happen again? Yes, especially if SSEC index break below the 2700 level.
Chart 2: SSEC's daily chart as at 29/9/2009 (Source: Stockcharts.com)
Chart 1: SSEC's daily chart as at 29/9/2009 (Source: Stockcharts.com)
A look at the weekly chart below revealed the following:
1. The 10-week SMA has curved downwards while the 20-week SMA is now flattening out.
2. The weekly MACD has done a negative cross-under.
3. RSI has pulled back significantly & is now below 50.
4. The -ve DMI is attempting to cross above the +ve DMI, which could signal the beginning of a new downtrend.
The last time we saw the congruence of the same signals was in November & December 2007, which was the top for SSEC. Can the same thing happen again? Yes, especially if SSEC index break below the 2700 level.
Chart 2: SSEC's daily chart as at 29/9/2009 (Source: Stockcharts.com)
Haio- the new King of MLM?
Haio has just announced a fantastic set of results for QE31/7/2009. Its net profit increased by 26% q-o-q or 36% y-o-y to RM18.5 million while turnover increased by 12% q-o-q or 32% y-o-y to RM149 million.
Table 1: Haio's 8 quarterly results
Haio's steady growth in both the top-line & bottom-line is clearly shown in the chart below. We can see that its turnover for QE31/7/2009 surpasses the previous high recorded in QE30/4/2008. Nevertheless, the record high net profit for QE30/4/2008 remained intact.
Chart 1: Haio's 18 quarterly results
Haio's latest results compared very favorably to the other two major listed MLM companies, Amway & Zhulian. In term of valuation, Haio has the lowest PE but Zhulian trades at a lower Price to Book. Over the last 4 quarters, Amway's pre-tax profit dropped from RM41.3 million in QE30/9/2008 to RM22.2 million in QE30/6/2009 while Zhulian's pre-tax profit also dropped from RM30.7 million in QE31/8/2008 to RM19.7 million in QE30/5/2009. Haio has seen its pre-tax profit increased from RM15.3 million in QE31/10/2008 to RM26.3 million in QE31/7/2009.
Table 2: Haio, Amway & Zhulian's latest quarterly results compared
Haio (traded at RM5.94 as at 11.00 am) is now trading at a PE of 8.7 times (based on last 4 quarters' EPS of 68 sen). For a well-managed company with a steady growth track record, Haio's valuation is undemanding. (Note: Haio's PE in Table 2 is based on the annualized EPS of 22.2 sen from the last quarterly results.)
Chartwise, Haio is in a long-term uptrend. Its upside seems to be capped by the line connecting its peaks. This "resistance" may again act to cap its current strong rally at about RM7.00-7.50.
Chart 2: Haio's weekly chart as at Sept 29, 2009 (Source: Quickcharts)
Based on improved financial performance & relatively attractive valuation, Haio remained a good stock for long-term investing.
Table 1: Haio's 8 quarterly results
Haio's steady growth in both the top-line & bottom-line is clearly shown in the chart below. We can see that its turnover for QE31/7/2009 surpasses the previous high recorded in QE30/4/2008. Nevertheless, the record high net profit for QE30/4/2008 remained intact.
Chart 1: Haio's 18 quarterly results
Haio's latest results compared very favorably to the other two major listed MLM companies, Amway & Zhulian. In term of valuation, Haio has the lowest PE but Zhulian trades at a lower Price to Book. Over the last 4 quarters, Amway's pre-tax profit dropped from RM41.3 million in QE30/9/2008 to RM22.2 million in QE30/6/2009 while Zhulian's pre-tax profit also dropped from RM30.7 million in QE31/8/2008 to RM19.7 million in QE30/5/2009. Haio has seen its pre-tax profit increased from RM15.3 million in QE31/10/2008 to RM26.3 million in QE31/7/2009.
Table 2: Haio, Amway & Zhulian's latest quarterly results compared
Haio (traded at RM5.94 as at 11.00 am) is now trading at a PE of 8.7 times (based on last 4 quarters' EPS of 68 sen). For a well-managed company with a steady growth track record, Haio's valuation is undemanding. (Note: Haio's PE in Table 2 is based on the annualized EPS of 22.2 sen from the last quarterly results.)
Chartwise, Haio is in a long-term uptrend. Its upside seems to be capped by the line connecting its peaks. This "resistance" may again act to cap its current strong rally at about RM7.00-7.50.
Chart 2: Haio's weekly chart as at Sept 29, 2009 (Source: Quickcharts)
Based on improved financial performance & relatively attractive valuation, Haio remained a good stock for long-term investing.
Tuesday, September 29, 2009
Spritzr- a not-so fizzy stock
Background
Spritzer Bhd ('Spritzr') is involved in the manufacturing and distribution of natural mineral water, sparkling natural mineral water, distilled drinking water, carbonated fruit flavoured water, carbonated fruit flavour isotonic water, teas, toothbrushes, preforms and packaging bottles.
Recent Financial Results
Spritzr has announced its results for QE31/8/2009. Its net profit increased by 54% q-o-q or 29% y-o-y to RM3.1 million while turnover increased 11% both q-o-q & y-o-y to RM31.2 million.
Table 1: Spritzr's 8 quarterly results
Over the past 13 quarters, Spritzr's quarterly turnover has risen from RM19 million to RM31 million. Quarterly net profit has risen slowly from about RM1.0 million to above RM3.0 million. Due to the increased demand, Spritzr has announced plan to "set up a new bottling plant in Shah Alam to facilitate its supply of bottled water to Klang valley and central Malaysia. The new plant is expected to commence operations in the fourth quarter of the current financial year. The strategic location of this plant will enable the Group to reduce delivery cost and boost its sales tremendously". Spritzr has already signed a S&P agreement to acquire a piece of land in Shah Alam costing RM32.5 million for this purpose.
Chart 1: Spritzr's 13 quarterly results
Valuation
Spritzr (clsoed at RM0.685 yesterday) is now trading at a trailing PE of 10 times (based on last 4 quarterly EPS of 6.8 sen). However, Spritzr should command a higher PE multiple in view of its steady growth rate & low base. Assuming we used a PE multiple of 12 times, Spritzr's fair value is about 82 sen.
Technical Outlook
Spritzr has a strong price run-up after breaking above its downtrend line at RM0.45 in early 2008. In a matter of 15 months, it gained 66% to reach its July 2009 high of RM0.75. The share price may pull back after this rally. A good entry level is about RM0.60-65.
Chart 2: Spritzr's daily chart as at Sept 28, 2009 (Source: Tradesignum)
Conclusion
Based on steady financial performance & positive technical outlook, Spritzr is a good stock for long-term investing. Accumulate on weakness at RM0.60-65 level.
Spritzer Bhd ('Spritzr') is involved in the manufacturing and distribution of natural mineral water, sparkling natural mineral water, distilled drinking water, carbonated fruit flavoured water, carbonated fruit flavour isotonic water, teas, toothbrushes, preforms and packaging bottles.
Recent Financial Results
Spritzr has announced its results for QE31/8/2009. Its net profit increased by 54% q-o-q or 29% y-o-y to RM3.1 million while turnover increased 11% both q-o-q & y-o-y to RM31.2 million.
Table 1: Spritzr's 8 quarterly results
Over the past 13 quarters, Spritzr's quarterly turnover has risen from RM19 million to RM31 million. Quarterly net profit has risen slowly from about RM1.0 million to above RM3.0 million. Due to the increased demand, Spritzr has announced plan to "set up a new bottling plant in Shah Alam to facilitate its supply of bottled water to Klang valley and central Malaysia. The new plant is expected to commence operations in the fourth quarter of the current financial year. The strategic location of this plant will enable the Group to reduce delivery cost and boost its sales tremendously". Spritzr has already signed a S&P agreement to acquire a piece of land in Shah Alam costing RM32.5 million for this purpose.
Chart 1: Spritzr's 13 quarterly results
Valuation
Spritzr (clsoed at RM0.685 yesterday) is now trading at a trailing PE of 10 times (based on last 4 quarterly EPS of 6.8 sen). However, Spritzr should command a higher PE multiple in view of its steady growth rate & low base. Assuming we used a PE multiple of 12 times, Spritzr's fair value is about 82 sen.
Technical Outlook
Spritzr has a strong price run-up after breaking above its downtrend line at RM0.45 in early 2008. In a matter of 15 months, it gained 66% to reach its July 2009 high of RM0.75. The share price may pull back after this rally. A good entry level is about RM0.60-65.
Chart 2: Spritzr's daily chart as at Sept 28, 2009 (Source: Tradesignum)
Conclusion
Based on steady financial performance & positive technical outlook, Spritzr is a good stock for long-term investing. Accumulate on weakness at RM0.60-65 level.
GCorp- a value stock
Background
General Corporation Bhd ('GCorp') is principally involved in construction, property development & investment, tyre manufacturing, shoe trading, confectionery manufacturing, hotel operation & quarrying. In the past few years, GCorp has benefited from strong contribution from its 52%-owned subsidiary, Low Keng Huat (Singapore) which experienced big jump in construction activities.
Recent Financial Results
GCorp has just announced its results for QE31/7/2009. Its net profit increased by 113% q-o-q or 438% y-o-y to RM24.5 million while turnover increased by 86% q-o-q or 134% y-o-y to RM418 million. The improved performance is attributable to increased contribution from Low Keng Huat (Singapore).
Table 1: GCorp's 8 quarterly results
I have appended below the chart of GCorp's top-line & bottom-line for the past 10 quarters which shows steady growth, except for a net loss attributable to the shareholders in QE31/1/2009 after netting off Minority Interest of RM21.2 million.
Chart 1: GCorp's 10 quarterly results
Valuation
GCorp (closed at RM1.10 at the end of the morning session) is now trading at PE of 8.1 times (based on last 4 quarters' EPS of 13.5 sen). As a mid-size diversified group with a good growth track record, GCorp deserves to be valued at a higher PE multiple, say 10-12 times. Assuming a PE multiple of 10 times, GCorp's fair value is about RM1.35.
The present market capitalization of GCorp is only RM327 million. This is derived at as follows: Outstanding share capital of 297.1 million units at RM1.10 per unit. Its 52%-stake in Low Keng Huat (Singapore) alone is worth RM343.5 million today. The present market capitalization of Low Keng Huat (Singapore) is S$269.7 million or RM660.7 million This is arrived at as follows: Outstanding share capital of 738.8 million units, valued at S$0.365 per unit and then converted to RM at an exchange rate of RM2.45:S$1.00. As such, GCorp is now trading at about the value of its stake in Low Keng Huat (Singapore), with no consideration given to its other businesses.
Technical Outlook
from the weekly chart below, we can see that GCorp has broken above its medium-term downtrend line at RM1.00 in July. Its immediate horizontal support is at RM1.10 while resistance is at RM1.20.
Chart 2: GCorp's weekly chart as at Sept 28, 2009 (Source: Quickcharts)
Conclusion
Based on steady financial performance, attractive valuation & positive technical outlook, GCorp is a good stock for medium-term investing.
General Corporation Bhd ('GCorp') is principally involved in construction, property development & investment, tyre manufacturing, shoe trading, confectionery manufacturing, hotel operation & quarrying. In the past few years, GCorp has benefited from strong contribution from its 52%-owned subsidiary, Low Keng Huat (Singapore) which experienced big jump in construction activities.
Recent Financial Results
GCorp has just announced its results for QE31/7/2009. Its net profit increased by 113% q-o-q or 438% y-o-y to RM24.5 million while turnover increased by 86% q-o-q or 134% y-o-y to RM418 million. The improved performance is attributable to increased contribution from Low Keng Huat (Singapore).
Table 1: GCorp's 8 quarterly results
I have appended below the chart of GCorp's top-line & bottom-line for the past 10 quarters which shows steady growth, except for a net loss attributable to the shareholders in QE31/1/2009 after netting off Minority Interest of RM21.2 million.
Chart 1: GCorp's 10 quarterly results
Valuation
GCorp (closed at RM1.10 at the end of the morning session) is now trading at PE of 8.1 times (based on last 4 quarters' EPS of 13.5 sen). As a mid-size diversified group with a good growth track record, GCorp deserves to be valued at a higher PE multiple, say 10-12 times. Assuming a PE multiple of 10 times, GCorp's fair value is about RM1.35.
The present market capitalization of GCorp is only RM327 million. This is derived at as follows: Outstanding share capital of 297.1 million units at RM1.10 per unit. Its 52%-stake in Low Keng Huat (Singapore) alone is worth RM343.5 million today. The present market capitalization of Low Keng Huat (Singapore) is S$269.7 million or RM660.7 million This is arrived at as follows: Outstanding share capital of 738.8 million units, valued at S$0.365 per unit and then converted to RM at an exchange rate of RM2.45:S$1.00. As such, GCorp is now trading at about the value of its stake in Low Keng Huat (Singapore), with no consideration given to its other businesses.
Technical Outlook
from the weekly chart below, we can see that GCorp has broken above its medium-term downtrend line at RM1.00 in July. Its immediate horizontal support is at RM1.10 while resistance is at RM1.20.
Chart 2: GCorp's weekly chart as at Sept 28, 2009 (Source: Quickcharts)
Conclusion
Based on steady financial performance, attractive valuation & positive technical outlook, GCorp is a good stock for medium-term investing.
Friday, September 25, 2009
Worrying sign of weakness in crude oil & transportation demand
In Naked Capitalism, you will find an interesting article entitled "Railroad Traffic Decline Accelerates". To wit:
Table: Weekly Traffic of Major US Railroads for week ending Sept 12, 2009 (Source: Naked Capitalism)
Another sign of the weakness in the real economy can be seen from the slide in the crude oil prices, which did not benefit at all from the weakness in the USD (unlike gold). From Chart 1 below, we can see that WTIC has broken below its 100-day SMA line yesterday.
Chart 1: WTIC's daily chart as at 24/9/2009 (Source: Stockcharts.com)
Finally, it is worth noting that BDI has broken below its short-term uptrend line (see Chart 2 below). While we have noted in an earlier post that the poor performance of BDI is partly attributable to the capacity glut, the breakdown of the uptrend line for BDI could signal slowdown in international trades & a possible relapse of the current timid economic recovery.
Chart 2: Baltic Drybulk Rates' daily chart as at September 24, 2009 (courtesy of Investment.tools.com)
One indicator of commercial activity is shipments, such as train and truck traffic.
Reader Marshall Auerback provided this sighting which shows that the decline in shipments is accelerating. Note that one of the general reasons for optimism is that many indicators are getting worse less quickly and some appear to be stabilizing.
Now this is merely a one-week shift and may be noise, but the change was pretty dramatic, and in the wrong direction. As Marshall noted:
The latest data out of the Association of American Railroads has been released. While a month ago the weekly YoY decline hit a very troublesome -17.1%, the last weekly decline added another almost 3% to the deterioration, and is now down -19.8% for Week 36. Cumulative traffic decline is flat at -18.4%. Including intermodal traffic or ton-miles in the calculation does nothing to improve the conclusion. Not a single “carload originated” category has improved, and in fact even the relatively stable ones from the prior update have slumped.
Table: Weekly Traffic of Major US Railroads for week ending Sept 12, 2009 (Source: Naked Capitalism)
Another sign of the weakness in the real economy can be seen from the slide in the crude oil prices, which did not benefit at all from the weakness in the USD (unlike gold). From Chart 1 below, we can see that WTIC has broken below its 100-day SMA line yesterday.
Chart 1: WTIC's daily chart as at 24/9/2009 (Source: Stockcharts.com)
Finally, it is worth noting that BDI has broken below its short-term uptrend line (see Chart 2 below). While we have noted in an earlier post that the poor performance of BDI is partly attributable to the capacity glut, the breakdown of the uptrend line for BDI could signal slowdown in international trades & a possible relapse of the current timid economic recovery.
Chart 2: Baltic Drybulk Rates' daily chart as at September 24, 2009 (courtesy of Investment.tools.com)
Tanjong coming to its medium-term uptrend line
Tanjong is undergoing some correction after its failed attempt to challenge its recent high of RM16.00. Currently it is resting on its immediate uptrend line (S1S1) support at RM15.00. If this support failed, Tanjong might test its medium-term uptrend line (SS) support at RM14.50. It could also enjoy support from the horizontal line at RM14.60. However, a breakdown below RM14.50-60 could be very bearish for Tanjong.
Chart: Tanjong's daily chart as at Sept 25, 2009_3.38pm (Source: Quickcharts)
Notwithstanding the above, I believe Tanjong is not likely to go below the RM14.50-60 level. At that level, Tanjong will be a good trading & long-term BUY.
Chart: Tanjong's daily chart as at Sept 25, 2009_3.38pm (Source: Quickcharts)
Notwithstanding the above, I believe Tanjong is not likely to go below the RM14.50-60 level. At that level, Tanjong will be a good trading & long-term BUY.
Thursday, September 24, 2009
Insas rallied. Can BJCorp & BJLand join in?
Insas has announced today that the Securities Commission has approved the admission of M&A Securities Sdn Bhd (“M&A”), its wholly-owned subsidiary, to the Approved List of Principal Advisers which will enable M&A to act as a principal adviser for initial public offerings, reverse take-overs, restructurings and all type of other corporate proposals except for those involving private debt securities, Islamic securities and structured products. Together with the existing stockbroking services, M&A is now poised to play a more active role in the Capital Market.
The corporate finance activities will further provide M&A with a new income stream which is in tandem with its plan to diversify its income base and signify the beginning of M&A’s transformation into a full-fledged financial services outfit of Insas.
Following this announcement, the share price of Insas broke to the upside of its triangle formation and rallied sharply. I have appended a composite chart showing the price movement of Insas & another two stocks controlled by Vincent Tan, i.e. BJCorp & BJLand which have achieved similar bullish breakouts, albeit without increased volume. Unlike Insas, there were also no significant announcement for the latter two stocks and the bullish breakout for these stocks could be coincidental. However, these three stocks have moved in tandem in the past & it is possible that they will do the same again. If the volume picked up for BJCorp & BJLand, they could turn out to good candidates for trading BUY.
Chart 1: Insas, BJCorp & BJLand's daily chart as at Sept 24, 2009 (Source: Quickcharts)
The corporate finance activities will further provide M&A with a new income stream which is in tandem with its plan to diversify its income base and signify the beginning of M&A’s transformation into a full-fledged financial services outfit of Insas.
Following this announcement, the share price of Insas broke to the upside of its triangle formation and rallied sharply. I have appended a composite chart showing the price movement of Insas & another two stocks controlled by Vincent Tan, i.e. BJCorp & BJLand which have achieved similar bullish breakouts, albeit without increased volume. Unlike Insas, there were also no significant announcement for the latter two stocks and the bullish breakout for these stocks could be coincidental. However, these three stocks have moved in tandem in the past & it is possible that they will do the same again. If the volume picked up for BJCorp & BJLand, they could turn out to good candidates for trading BUY.
Chart 1: Insas, BJCorp & BJLand's daily chart as at Sept 24, 2009 (Source: Quickcharts)
Ingress to test the strong resistance at RM0.90?
On September 17, Ingress announced that its 70% subsidiary, Ingress Technologies Sdn Bhd (ITSB) has won a RM196 million contract from Perodua Manufacturing Sdn Bhd (PMSB) for the supply of components comprising rear modules, door surrounding modules and fuel lids to PMSB for the new model starting in the first half of the financial year ending Jan 31, 2012, for five years. The investment in equipment and toolings for this project was estimated to total RM17.7 million.
Following the announcement, Ingress' share price broke to the upside of its symmetrical triangle formation at the RM0.40 on the same day. We still saw Ingress made a high of RM0.815 this morning- four days after the aforesaid announcement. How much profit can the PMSB project contribute? Based on a gross profit margin of 14% (as per its quarterly results for QE31/7/2009), we can expect a profit contribution of RM28 million over five years or RM5.6 million per annum. With generous tax incentive available, I believe that the whole amount could be added to the net profit; thus adding 7.3 sen to its EPS.
However, Ingress' results for FY2008 & FY2007 are fairly disappointing as it had recorded net losses of RM40 million & RM11 million, respectively. The huge net loss for FY2008 was attributable to write-down of RM45.6 million in the Automotive division due to a change in depreciation methods & impairment of tooling equipment in order to comply with FRS 108. In addition, its Other division also wrote off RM9.8 million for provision for bad debts & impairment of equipment. Ingress' 1H2010 results is more encouraging as it reported a net profit of RM3.5 million- giving a 6-mth EPS of 4.6 sen or a full-year EPS of 9.2 sen. Thus, Ingress (closed at RM0.81 at the end of the morning session) is now trading at PE of 8.8 times. This is fair value for stock in the Automotive sector. For example, Tan Chong which closed at RM2.10 this morning, is now trading at 9 times its annualized EPS 23.2 sen. Many would prefer Tan Chong to Ingress since they are both trading at the same PE multiple.
Chart 1: Ingress' daily chart as at Sept 24, 2009_11.00am (Source: Quickcharts)
From the weekly chart, Ingress' upside will be severely tested soon as it approaches the horizontal resistance at RM0.90 & thereafter at RM1.10 & RM1.30. It is advisable to take some profit at the RM0.90 level.
Chart 2: Ingress' weekly chart as at Sept 24, 2009_11.00am (Source: Quickcharts)
Following the announcement, Ingress' share price broke to the upside of its symmetrical triangle formation at the RM0.40 on the same day. We still saw Ingress made a high of RM0.815 this morning- four days after the aforesaid announcement. How much profit can the PMSB project contribute? Based on a gross profit margin of 14% (as per its quarterly results for QE31/7/2009), we can expect a profit contribution of RM28 million over five years or RM5.6 million per annum. With generous tax incentive available, I believe that the whole amount could be added to the net profit; thus adding 7.3 sen to its EPS.
However, Ingress' results for FY2008 & FY2007 are fairly disappointing as it had recorded net losses of RM40 million & RM11 million, respectively. The huge net loss for FY2008 was attributable to write-down of RM45.6 million in the Automotive division due to a change in depreciation methods & impairment of tooling equipment in order to comply with FRS 108. In addition, its Other division also wrote off RM9.8 million for provision for bad debts & impairment of equipment. Ingress' 1H2010 results is more encouraging as it reported a net profit of RM3.5 million- giving a 6-mth EPS of 4.6 sen or a full-year EPS of 9.2 sen. Thus, Ingress (closed at RM0.81 at the end of the morning session) is now trading at PE of 8.8 times. This is fair value for stock in the Automotive sector. For example, Tan Chong which closed at RM2.10 this morning, is now trading at 9 times its annualized EPS 23.2 sen. Many would prefer Tan Chong to Ingress since they are both trading at the same PE multiple.
Chart 1: Ingress' daily chart as at Sept 24, 2009_11.00am (Source: Quickcharts)
From the weekly chart, Ingress' upside will be severely tested soon as it approaches the horizontal resistance at RM0.90 & thereafter at RM1.10 & RM1.30. It is advisable to take some profit at the RM0.90 level.
Chart 2: Ingress' weekly chart as at Sept 24, 2009_11.00am (Source: Quickcharts)
Friday, September 18, 2009
UMcca- watch closely
One of the best performing Plantation stocks over the past 12 months is United Malacca ('UMcca'). The stock made a low of RM4.62 in October 2008 before staging a strong rally to a high of RM8.55 in July this year. It has since corrected back to its accelerated uptrend line (S1S1) support at RM8.00. With the MACD now deep inside the negative territory & the 10-day SMA crossing under the 30-day SMA; UMcca may violate the immediate uptrend line. A break of this uptrend line could send the stock to its medium-term uptrend line (SS) with support at RM6.80-7.00.
Chart 1: UMcca's daily chart as at Sept 18, 2009 (Source: Quickcharts)
From the weekly chart, we can see that UMcca came close to its January 2008 high of RM8.65 recently. The on-going correction has seen the share price beginning to go below the 10-week SMA of RM8.00-8.10. Weekly MACD has also just hooked down.
Chart 2: UMcca's weekly chart as at Sept 18, 2009 (Source: Quickcharts)
Based on the above, you may want to avoid buying UMcca at the immediate uptrend line, S1S1. Instead, if UMcca were to violate this uptrend line, you may want to take profit on this stock. Buying can be considered at the uptrend line, SS. In view of the expected recovery in CPO prices in the next 1 or 2 week(s), UMcca may hold onto the current price level for now.
I have appended below the daily chart for CPO, where we can see the Parabolic SAR (short for 'stop-and-reversal' indicator) has moved below the CPO price (denoted as 'A'). This positive sign could signal the start of the rebound in CPO prices. In addition, we can see that the daily MACD has nearly hooked up (denoted as 'B'). The bullish divergence in the Slow Stochastics (denoted as 'C') was already noted in an earlier post.
Chart 3: CPO's daily chart as at Sept 18, 2009 (source: ifs.marketcenter.com)
Chart 1: UMcca's daily chart as at Sept 18, 2009 (Source: Quickcharts)
From the weekly chart, we can see that UMcca came close to its January 2008 high of RM8.65 recently. The on-going correction has seen the share price beginning to go below the 10-week SMA of RM8.00-8.10. Weekly MACD has also just hooked down.
Chart 2: UMcca's weekly chart as at Sept 18, 2009 (Source: Quickcharts)
Based on the above, you may want to avoid buying UMcca at the immediate uptrend line, S1S1. Instead, if UMcca were to violate this uptrend line, you may want to take profit on this stock. Buying can be considered at the uptrend line, SS. In view of the expected recovery in CPO prices in the next 1 or 2 week(s), UMcca may hold onto the current price level for now.
I have appended below the daily chart for CPO, where we can see the Parabolic SAR (short for 'stop-and-reversal' indicator) has moved below the CPO price (denoted as 'A'). This positive sign could signal the start of the rebound in CPO prices. In addition, we can see that the daily MACD has nearly hooked up (denoted as 'B'). The bullish divergence in the Slow Stochastics (denoted as 'C') was already noted in an earlier post.
Chart 3: CPO's daily chart as at Sept 18, 2009 (source: ifs.marketcenter.com)
Thursday, September 17, 2009
GLD-C1- a proxy for gold
Continued weakness in the USD as well as rumored buying by Chinese central bank have propelled gold above the USD1000 level again. This has led to major gold producers such as AngloGold Ashanti & Barrick Gold Corp. to further unwind fixed-price bullion contracts- a practice commonly referred to as de-hedging.
From Chart 1 below, we can see that gold has broken to the upside of the 'ABC' triangle & is now poised to challenge the horizontal line resistance at USD1000-1030. A convincing break above this level will be very bullish for gold. However, a failure to break above this level could set the stage for a bearish triple top reversal. This is a very interesting time for gold bug.
Chart 1: Gold's weekly chart as at Sept 16, 2009 (Source: SuperCharts by Imega Research)
One of the ETFs that invests in gold is SPDR Gold Trust ('GLD'). The chart for GLD is given below.
Chart 2: GLD's weekly chart as at Sept 16, 2009 (Source: Stockcharts.com)
For those who are interested to trade the possible breakout in gold & GLD, you do so by buying GLD-C1, a CW based on GLD. The main terms of GLD-C1 are:
1. Expiry Date: April 7, 2010
2. Exercise Ratio: 400-for-1
3. Exercise Price: USD88.50
GLD-C1 was issued at IPO price of RM0.15 and was quoted on our exchange on July 8 this year. Based on the closing price of GLD of USD99.91 [as at Sept 16] & GLD-C1 of RM0.17 [as at today, Sept 17] & an exchange rate of USD1=RM3.48, GLD-C1 is now trading at a premium of 8%. That's quite reasonable.
Chart 3: GLD-C1's daily chart as at Sept 17, 2009 (Source: Quickcharts)
In conclusion, you can consider a trading BUY on GLD-C1 if gold were to convincingly break above the USD1000-1030 level.
From Chart 1 below, we can see that gold has broken to the upside of the 'ABC' triangle & is now poised to challenge the horizontal line resistance at USD1000-1030. A convincing break above this level will be very bullish for gold. However, a failure to break above this level could set the stage for a bearish triple top reversal. This is a very interesting time for gold bug.
Chart 1: Gold's weekly chart as at Sept 16, 2009 (Source: SuperCharts by Imega Research)
One of the ETFs that invests in gold is SPDR Gold Trust ('GLD'). The chart for GLD is given below.
Chart 2: GLD's weekly chart as at Sept 16, 2009 (Source: Stockcharts.com)
For those who are interested to trade the possible breakout in gold & GLD, you do so by buying GLD-C1, a CW based on GLD. The main terms of GLD-C1 are:
1. Expiry Date: April 7, 2010
2. Exercise Ratio: 400-for-1
3. Exercise Price: USD88.50
GLD-C1 was issued at IPO price of RM0.15 and was quoted on our exchange on July 8 this year. Based on the closing price of GLD of USD99.91 [as at Sept 16] & GLD-C1 of RM0.17 [as at today, Sept 17] & an exchange rate of USD1=RM3.48, GLD-C1 is now trading at a premium of 8%. That's quite reasonable.
Chart 3: GLD-C1's daily chart as at Sept 17, 2009 (Source: Quickcharts)
In conclusion, you can consider a trading BUY on GLD-C1 if gold were to convincingly break above the USD1000-1030 level.
Wednesday, September 16, 2009
Proton to test its resistance of RM4.40-50 tomorrow
There are many rumors or reports surrounding Proton which may account for the current sharp rally in the share price. Among them are:
- Sale of Khazanah's stake in Proton to a Malaysian businessman (Syed Mokhtar?)
- Sale of the same stake to a foreign carmaker (VW?)
- More technical tie-up between Proton & foreign carmakers
The third possibility is an on-going development & is unlikely to have any significant impact on Proton's immediate performance and as such is unlikely to account for its recent sharp share price movement. In my opinion, no carmaker will be interested in acquiring a stake in Proton given the weakness in the global car market presently as well as Khazanah's refusal to relinquish management control over Proton. So, the only likely possibility is the sale of Proton to a Malaysian businessman (whoever he maybe) and I doubt anyone can do a turnaround in Proton, strictly as a commercial enterprise. That person will hope to land the Proton stake for a song; ask for & probably get more protection against foreign competition as well as more subsidies; own & manage for a few years what looks like a profitable automaker; and sell off the stake for a profit in the next up-cycle in the car market. In the end, the Malaysian motorists & taxpayers will continue to be the losers in the whole scheme of things. A sad story, indeed.
From technical perspective, this is what we can expect from Proton the stock. We can expect the recent share price to face resistance soon at the horizontal line of RM4.40-50 & thereafter from the downtrend line & horizontal line at RM5.00. I think the latter will be a major stumbling block & would be a good level for some profit-taking.
Chart: Proton's weekly chart as at Sept 16, 2009 (Source: Quickcharts)
- Sale of Khazanah's stake in Proton to a Malaysian businessman (Syed Mokhtar?)
- Sale of the same stake to a foreign carmaker (VW?)
- More technical tie-up between Proton & foreign carmakers
The third possibility is an on-going development & is unlikely to have any significant impact on Proton's immediate performance and as such is unlikely to account for its recent sharp share price movement. In my opinion, no carmaker will be interested in acquiring a stake in Proton given the weakness in the global car market presently as well as Khazanah's refusal to relinquish management control over Proton. So, the only likely possibility is the sale of Proton to a Malaysian businessman (whoever he maybe) and I doubt anyone can do a turnaround in Proton, strictly as a commercial enterprise. That person will hope to land the Proton stake for a song; ask for & probably get more protection against foreign competition as well as more subsidies; own & manage for a few years what looks like a profitable automaker; and sell off the stake for a profit in the next up-cycle in the car market. In the end, the Malaysian motorists & taxpayers will continue to be the losers in the whole scheme of things. A sad story, indeed.
From technical perspective, this is what we can expect from Proton the stock. We can expect the recent share price to face resistance soon at the horizontal line of RM4.40-50 & thereafter from the downtrend line & horizontal line at RM5.00. I think the latter will be a major stumbling block & would be a good level for some profit-taking.
Chart: Proton's weekly chart as at Sept 16, 2009 (Source: Quickcharts)
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