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Monday, March 02, 2015

QL: Earnings jumped

Results Update

For QE31/12/2014, QL's net profit increased by 15% q-o-q or 25% y-o-y to RM56 million while revenue increased by 12% q-o-q or 10% y-o-y to RM733 million.


Table 1: QL's last 8 quarterly results

PBT increased q-o-q due to higher PBT & revenue from both the Marine Products Manufacturing ('MPM') & Integrated Livestock Farming ('ILM') divisions. The increased PBT from these divisions had more than offset the drop in PBT in the Palm Oil Activities ('POA') division. Compared to the corresponding quarter last year, PBT increased due to higher PBT for all 3 divisions, albeit lower revenue from the POA divisions. The y-o-y changes are as follows:
MPM's revenue increased 16% y-o-y due to overall higher contribution from surimi-based products,  fishmeal operations and new contribution from shrimp farming. MPM's PBT increased 17% y-o-y mainly due to better fishmeal and new shrimp farming contribution.

ILF's revenue increased 10% y-o-y mainly due to higher volume of raw material traded. Current quarter PBT increased 42% y-o-y due to higher contributions from raw material trade and poultry operations.

POA's revenue decreased 2% y-o-y mainly due to lower CPO price (RM2,142 current qaurter vs RM2,424 corresponding quarter). However PBT increased 9% due to higher contribution from Associate (Boilermech) as well as lower losses from Indonesia's oil .palm operations.

Table 2: QL's Segmental Results

Again, it is good to note that the profit margin has inched up in the past 4-5 quarters. This, plus the rising revenue, would lead to higher bottom-line going forward.


Chart 1: QL's last 27 quarterly results

Valuation

QL (closed at RM3.77 last Friday) is now trading at a PE of 26 times (based on last 4 quarters' EPS of 14.77 sen). Based on the PE of 26 times & last year's earning growth of 18%, QL's PEG ratio stood at 1.4 times. This means that QL is overvalued.

Technical Outlook

QL continued its uptrend after it surpassed the recent high at RM3.60.


Chart 2: QL's weekly chart as at Feb 27, 2015(Source: ShareInvestor.com)

Conclusion

Based on satisfactory financial performance & positive technical outlook, QL is still a good stock for long-term investment. However, its upside is limited as it is fairly valued with signs of technical weakness emerging. 

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.

Mediac: Top-line & Bottom-line weakened further

Results Update

For QE31/12/2014, Mediac's net profit rose 13% q-o-q but dropped 24% y-o-y to RM37 million while revenue dropped 8% q-o-q or 10% y-o-y to RM368 million.


Table 1: Mediac's last 8 quarterly results

The drop in profit is attributable to overall drop in revenue. The revenue drop is especially sharp for Malaysia and other S.E.A. countries (from RM76 million to RM67 million) and this had resulted in a PBT drop from RM18 million to RM12 million.


Table 2: Mediac's Quarterly Segmental Results

From the chart below, we can see that revenue has been flattish for the past 4 years while profit margin has been sliding.


Chart 1: Mediac's last 28 quarterly results 

Valuation

Mediac (closed at RM0.715 on Friday) is now trading at a trailing PE of 9.6 times (based on last 4 quarters' EPS of 7.4 sen). It paid out a dividend of 4.6 sen, which gives a respectable DY of 6.5%. Based on these, Mediac is deemed fairly attractive.

Technical Outlook

Mediac broke its uptrend line at RM1.10 in 2013. It is now resting on its horizontal support at RM0.70.


Chart 2: Mediac's monthly chart as at Feb 27, 2015  (Source: Share Investor.com)

Conclusion

Despite poorer financial performance and negative technical outlook, Mediac maybe a good stock for long-term investment based on its decent DY.

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, Mediac.

Success: A Slight Hiccup!

Results Update

For Q31/12/2014, Success's net profit plunged to RM0.2 million from RM7.5 million achieved in the immediate preceding quarter (QE30/9/2014) or RM6.5 million recorded in the same quarter last year (QE31/12/2013). The sharp drop was attributed to Success incurred a net loss after tax due to mainly due to loss incurred in process equipment segment (which is carried on by its subsidiary, Seremban Engineering Bhd which reported a net loss due to cost over-run on a particular project). Adjusted for minority interest, Success's net profit attributable to its shareholders was RM0.2 million.


Table: Success's last 8 quarterly results


Chart 1: Success's last 31 quarterly results

Valuation

Success (closed at RM1.82 last Friday) is now trading at a PE of 8.7 times (based on past 4 quarters' EPS of 20.95 sen). Price to book is about 0.9 time (based on NTA p.s. of RM2.06 as at 31/12/2014). Success is deemed fairly valued.

Technical Outlook

Success is in a long-term uptrend, with support at RM1.25. I believe Mediac could find support at the "middle line" at RM1.60. On recovery, it may re-test the resistance from the channel line is at RM2.10.


Chart 2: Success's weekly chart as at Feb 27, 2015 (Source: ShareInvestor.com)

Conclusion

Despite a poorer set of financial results, Success is rated a good stock for long-term performance. It valuation is fairly reasonable and it has positive technical outlook.

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, Success.

NCB: The Beginning of Recovery?

Recent Results Update

For QE31/12/2014, NCB reported a net profit of RM9.1 million on a revenue of RM229 million. It recovered from its loss-making position, with a profit before tax of RM8.9 million, mainly due to PBT of RM34.8 million (a y-o-y increase of RM11.2 million) in the Port Operations which more than offset the LBT of RM25.8 million (a y-o-y increase of RM3.7 million) in the Logistics Operations.

The Port Operations revenue increased by 6.8% y-o-y to RM169.1 million. Container business being the main contributor of revenue registered a decrease in containers handled to 685,754 teus from 703,54 teus.

The logistics operations registered revenue of RM59.6 million which was a decrease of 11.1% over the same quarter previous year. The main reason for the decline in revenue was due to the lower than targeted scale of business activities in Government and Oil and Gas business, as well as the decision that ceased the businesses that were unprofitable including cross border, trucking and distribution.


Table: NCB's last 8 quarterly results


Chart 1: NCBs last 27 quarterly results

Valuation

NCB (at RM2.50 last Friday) is now trading at a PB of 0.6 time (based on NTA of RM3.98 per share). Assuming a full-year earning of 8 sen, PER is at 31 times.

Technical Outlook

NCB is now resting on its long-term uptrend line support st RM2.50.


Chart 2: NCB's monthly chart as at Feb 27, 2015 (Source: Share Investors)


Conclusion

Based on improving financial performance and possible technical rebound, NCB could be a good stock for long-term investment. In addition, we may have positive surprise in the form of corporate development as business tycoon, Syed Mokhtar was reported to be keen to acquire NCB.
 
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, NCB.

Johotin: Profit increased

Results Update

For QE31/12/2014, Johotin's net profit increased by 76% q-o-q or 33% y-o-y to RM5.2 million while revenue increased by 15% q-o-q or 62% y-o-y to RM105 million. PBT increased sequentially due to increase in PBT from tin manufacturing segment from RM1.33 mil to RM4.1 mil as well as increase PBT from F&B segment from RM2.95 mil to RM3.04 mil.


Table 1: Johotin's last 8 quarterly results


Chart 1: Johotin's last 21 quarterly results 

Valuation
Johotin (closed at RM1.61 on Friday) is now trading at a trailing PE of 11.5 times (based on last 4 quarters' EPS of 13.9 sen). If Johotin can maintain its earnings achieved in QE31/12/2014 of 5.5 sen, its full-year earnings could be 22 sen. Its PER would improve to 8 times. Thus, Johotin's valuation is not demanding. 

Technical Outlook

Johotin is in a long-term uptrend line, with support at RM1.35. Any pullback towards this support would be a buying opportunity. Its intermediate downtrend line resistance is at RM1.65. A breakout above RM1.65 could signal the start of the next upleg for the stock.


Chart 2: Johotin's monthly chart as at Feb 27, 2015  (Source: Share Investor.com)

Conclusion

Based on improved financial performance, fair-to-attractive valuation and positive technical outlook, Johotin is 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, Johotin.

Thursday, February 26, 2015

Vitrox: Earning rose

Recent Financial Results

For QE31/12/2014, Vitrox's net profit increased by 21% q-o-q or 161% y-o-y to RM14 million while revenue increased by 8% q-o-q or 49% y-o-y to RM43 million. The q-o-q increase in both revenue and profit were attributed to increase in sales recorded for  Automated Board Inspection (ABI). Sales from ABI have recoded an increase of 61%, against the immediate preceding quarter, due to increase in customers demand.


Table: Vitrox's last 8 quarterly results


Chart 1: Vitrox's last 29 quarterly results

Expiry of Pioneer Status

Going forward, Vitrox will have to wrestle with the issue of its pioneer status/tax exempt incentive for certain qualifying products granted by the Ministry of International Trade and Industry. For the company, its 5-year pioneer status will expire on 25 January 2015.

Two of its wholly-owned subsidiaries, ViTrox Technologies Sdn.Bhd. (“VTSB”) and ViE Technologies Sdn.Bhd. (“ViE”) also enjoy similar benefit. VTSB’s pioneer status will expire on 31 March 2015 while ViE’s pioneer status will expire on 31 December 2017.

If the pioneer status for Vitrox and VTSB are not extended, the net profit of the group could be affected in FY15. The impact could be softened if the group can maintain its good performance for the near future.

Valuation

Vitrox (closed at RM3.15 yesterday) is now trading at a PE of 14.9 times (based on last 4 quarters' EPS of 21.14 sen). Based on the doubling of earning last year, PEG ratio is at a low of less than 0.2 time. One can argue that Vitrox is fairly attractive. However, Vitrox is operating in a cyclical industry which is prone to erratic earning. Is it approaching its peak earning soon? We will have to wait & see.

Technical Outlook

Vitrox is continuing on its uptrend after surpassing its recent high of RM2.90-2.92. However, we can see a bearish divergence in its Stochastic indicator, which may signal a temporary top ahead.


Chart 2: Vitrox's weekly chart as at Aug 22, 2014 (Source: Tradesignum)

Conclusion

Based on improving financial performance & bullish technical outlook, Vitrox is a good stock for long term investment. However, the nature of its industry and the bearish divergence in its Stochastic indicator could be early warning that we should be on guard for a temporary top ahead.

 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,Vitrox.

Tuneins: Earnings Continue to Grow

Recent Financial Results

For QE31/12/2014, Tuneins's net profit increased by 41% q-o-q or 9% y-o-y to RM23 million while revenue increased by 8% q-o-q or 12% y-o-y to RM119 million. Revenue increased q-o-q due to increase of RM8.2 million in Gross Earned Premium ('GEP') and RM0.8 million in investment income. GEP increase came from RM3.7 million increase in GEP from the general reinsurance business in M'sia & Thailand and RM7.5 million increase in GEP from the general insurance business from M'sia & Thailand (partially offset by drop in investment income of RM0.6 million). PBT increased q-o-q due to increase in PBT of RM5.4 million & RM5.6 million for the general reinsurance & general insurance business, respectively.


Table: Tuneins's last 8 quarterly results


Chart 1: Tuneins's last 8 quarterly results

Valuation

Based on closing price of RM1.97 this morning), Tuneins is now trading at a PE of 20.4 times (based on last 4 quarters' EPS of 9.66 sen). At this PER, Tuneins has priced in earnings growth of more than 20%. To-date, its earnings growth is short of expectation. We can only hope that this will change in the near future.

Technical Outlook

Tuneins has broken above its intermediate downtrend line, R1-R1 at RM1.85 last week. Its next resistance will be at RM2.00 and beyond that, RM2.20.


Chart 2: Tuneins's weekly chart as at Feb 26, 2015_10.00am (Source: ShareInvestor.com) 

Conclusion

Based on the good financial performance, reasonable valuation & bullish t4echnical outlook, Tuneins is a good stock for medium to 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, Tuneins.

MISC: All is Forgiven

Last week, MISC signed a novation agreement to acquire the five new LNG vessels that Petronas had ordered from Hyundai Heavy Industries for USD1.1bn as well as a time charter agreement (15+5 years) to charter out these vessels to Petronas LNG Sdn Bhd (PLSB). MISC is expected to take delivery of these vessels from Sep 2016 to Dec 2017. This marks the return to its previous relationship with Petronas, where MISC acts as the shipping arm for Petronas. See my earlier post on the disowning of MISC by Petronas (here).


With this, the market becomes bullish again on MISC. The stock rallied ahead and broken above the line connecting its recent highs. MISC may test its next horizontal resistant levels at RM9.00 or RM9.50. At these prices, MISC would be trading at PE of 18 or 19 times its rolling EPS of ~50 sen. These would be a good level to take profit on this stock.



Chart: MISC's weekly chart as at Feb 26, 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, MISC.

Wednesday, February 25, 2015

Market Outlook as at February 25, 2014

As at 11.00am, FBMKLCI was down nearly 8 points to 1810. The index tested the intermediate downtrend line, RR at 1820 yesterday and this morning, it failed to go further. The index is now likely to test the intermediate uptrend line, SS at 1800. Until a convincing breakout of these two trend lines happens - either to upside of 1820 or downside of 1800 - the market will be on the holding mode.


  Chart 1: FBMKLCI's daily chart as at Feb 25, 2015_11.00am (Source: ShareInvestor.com)

 
 Chart 2: FBMKLCI's weekly chart as at Feb 25, 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.

Coastal: Revenue down on lesser OSV deliveries

Result Update

For QE31/12/2014, Coastal's net profit dropped 28% q-o-q or 20% y-o-y to RM39 million while revenue dropped 24% q-o-q or 30% y-o-y to RM178 million. PBT dropped due to lower revenue contribution from the Shipbuilding division on the back of lesser OSV deliveries.


Table 1: Coastal's last 8 quarterly results


Chart 1: Coastal's last 42 quarterly results 

Valuation

Coastal (closed at RM3.02 yesterday) is now trading at a PE of 8.2 times (based on last 4 quarters' EPS of 36.75 sen). The slowdown in the O&G sector is beginning to affect the earning of Coastal. If the same earning persists for the next few quarters, Coastal's full-year earning will be 29 sen. Thus, its forward PER would be lowered to 10 times. While this is not excessive, lower earning will be a drag on valuation going forward.

Technical Outlook

Recently, Coastal dropped to its long-term uptrend line support at RM2.25-2.30. From there, it staged a decent rebound to its 30-month EMA line at RM3.40. Further rise in share price will depend on the outlook for crude oil, which is still negative at this moment.


Chart 2: Coastal's weekly chart as at Feb 25, 2014_9.25am (Source: Share Investor.com)

Conclusion

Based on fair valuation & positive technical outlook, Coastal is rated a HOLD. However its earning could remain weaken and that would cap its share prices in the near term.

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.

Gamuda, IJM & WCT: Rail, Road & Malls

 If you look at the top 3 construction stocks on Bursa - Gamuda, IJM & WCT - you will notice the following:
1. Gamuda is in a steady uptrend. It may reach RM6.00 if it can surpass its recent high of RM5.30-5.34.
2. IJM has recently broken above its strong horizontal resistance at RM7.00-7.05. I believe it could reach its next psychological level of RM8.00.
3. WCT, with very little contracts in had & more focused on building shopping malls, has recently dropped to its long-term uptrend line. It could be poised for a decent recovery if it succeeds in securing more contracts.
Based on this quick technical study, I think all three stocks are worth considering for investment. While WCT is a laggard & deprived of a large contract book, it is relatively cheap.


Chart: Gamuda, IJM & WCTh's monthly chart as at Feb 24, 2015 (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,Gamuda, IJM & WCT.

Tuesday, February 24, 2015

Crude Oil: Testing the Low?

Today, WTIC dropped to USD48.80 as at 3.45 (ET). It looks like crude oil prices look set to re-test its low. There are numerous articles about shortage of storage capacity for excess crude oil and this could lead to much lower prices. For more, go here.

Looking at the daily chart, we can see that the technical indicators are weakening. This suggests that crude oil prices could fall back and possibly revisit the recent low.


Chart 1: WTIC's daily chart as at Feb 24, 2015_4.45pm (Source: Investorshub)

If the 2008-2009 low is a guide, we can expect crude oil prices to yo-yo around the USD40-50 mark for a few weeks (possibly months) before recovery set in.


Chart 2: WTIC's monthly chart as at Feb 24, 2015_4.45pm (Source: Investorshub)

Based on the above, I believe that some profit-taking for O&G stocks may not be a bad idea.

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.

Engkah: A good income stock

Background

Eng Kah Corporation Bhd ("Engkah") is involved in the manufacturing and sales of personal care products (such as cosmetics, skin care, perfume and toiletry products) and household products (such as bathroom and floor cleaners)


Past Financial Results

From the 10-year P&L summary below, we can see that the company has been consistently profitable, though the revenue and profit eased off in the past 3 years. Its 6-year Cash Flow is positive and it paid out a steady stream of dividend.


Diagram 1: Engkah's 10-Y P&L and 6-Y CF (Source: ShareInvestor.com)

Financial Highlights

From the Diagram below, we can see:
1. Though PER is relatively high at ~20times, DY is good at 10%!!
2. Though revenue dropped, net profit margin is good at 10-15%.
3. ROA & Assets Turnover dropped sharply over the past 1-2 years.
4. Financial position is string with no/little borrowings and current ratio at 5-6 times.


Diagram 2: Engkah's Financial Highlights (Source: ShareInvestor.com)

Technical Outlook

Engkah is in a downtrend with tentative sign of bottoming. It tested its psychological support at RM2.00 and rebounded. I believe the RM2.00-2.10 would continue to be strong support for this stock.


Chart 2: Engkah's monthly chart as at Feb 23, 2015 (Source: ShareInvestor.com)

Conclusion

Based on strong financial position, Engkah is a stock worth considering for long-term investment. However, its technical outlook is still mildly negative (albeit tentative signs of bottoming) and its financial performance is still showing weaknesses.

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, Engkah.

Elsoft: May have a bullish breakout

Elsoft broke above its intermediate "downtrend line" at RM1.70. It could potentially hit a target of RM2.40-2.50.


Chart 1: Elsoft's weekly chart as at Feb 24, 2015_9.15am (Source: ShareInvestor.com)

A similar breakout was seen in the case of Pestech (at RM3.80 last month). I did not flag the breakout as I was concerned that the stock has gone up much. Well, Pestech is now at ~RM4.50.


Chart 2: Pestech's weekly chart as at Feb 24, 2015_9.15am (Source: ShareInvestor.com)

Based on technical breakout, Elsoft could continue its uptrend.

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, Elsoft & Pestech.

Shell: A lost cause?

Background

Shell Refining Co. (FOM) Bhd is principally engaged in the oil and gas industry namely refining and manufacturing of petroleum products in Malaysia. Its operations also include commercial gas to liquids plant of its kind in Bintulu, Sarawak, and an oil refinery in Port Dickson, Negeri Sembilan.

Its Upstream operations focus on the development and extraction of crude oil and natural gas offshore Sarawak and Sabah. In Downstream, Shell’s main activity is in refining, supply, trading and shipping of crude oil and petroleum products through the sales and marketing of transportation fuels, lubricants, specialty products and technical services. Its Projects and Technology business provides technical services, technology capability and major project delivery in both Upstream and Downstream activities.

Latest Financial Results

For QE31/12/2014, Shell posted 15% lower revenue of RM2.9 billion due to decreasing product prices since early July. The Company posted an after-tax loss of RM917 million this quarter, contributed by stockholding losses of RM445.8 million & impairment loss of RM461 million & operating loss of RM10 million.

The extremely huge loss - especially the recognition of the impairment loss at this juncture - is probably a kitchen-sinking exercise that marked the end of a bad phase. Whether it will herald the start of a more exciting & profitable phase for the company is yet to be seen.


Table 1: Shell's last 8 quarterly results

Past Financial Performance

For the past 17 years, Shell has reported substantially profit as well as huge losses. If we add up the results for the past 17 years, its revenue amount to RM152 billion while its net profit amounted to RM1.11 billion.


Chart 1: Shell's last 17-year results

Over the past 17 years, the average EPS is about 21.76 sen per annum. At the same time, it paid out total dividend of RM5.71 per share or an average DPS of 33 sen per annum. Its NTA rose from a low of RM2.23 as at 31/12/1998 to a high of RM8.11 as at 31/12/2007. From there, it slowly dropped back. After the huge loss in FY2014, its NTA stood at only RM1.08 per share.

 
Diagram: Shell's EPS, DPS & NTA for the past 17 years

Valuation

Shell (closed at RM5.26 yesterday) is now trading at a PB of 4.9 times. No PER is computed as the company is a loss-making concern. Since no dividend has been paid out in the past 3 years, no DY is computed. With the high PB, there is little justification in buying this stock.

Technical Outlook

Looking at the lows recorded in 1998-2003, Shell may have more downside ahead. The strong support is at RM3.50-4.00. Technical indicators (MACD & Stochastics) have yet to flag a bottom. It is interesting to note that the share price was holding quite well despite the huge loss reported last week. This may be interpreted as a positive sign that selling pressure has exhausted. If so, the share price could well hold at the present level at RM5.00.


Chart 2: Shell's monthly chart as at Feb 23, 2015 (Source: ShareInvestor.com)

Conclusion

Based on the above, it is hard to make a case to get into Shell despite its brand name. However, price recovery can only begin with good financial performance. For contrarian investors, Shell could be worth slowly accumulation at RM3.50-4.00.

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, Shell.

Wednesday, February 18, 2015

Happy CNY

I like to wish all my Chinese readers a HAPPY & PROSPEROUS NEW YEAR.


 (Source: xciti.blogspot.com)

KKB: Top-line & Bottom-line Recovered

Results Update

For QE31/12/2014, KKB's net profit soared by 581% q-o-q or 181% y-o-y to RM8.3 million while turnover increased by 47% q-o-q or 39% y-o-y to RM66 million.
The overall improved performance was attributed by the improved performance from both the Steel Pipes and Steel Fabrication divisions, contributing RM61.5 million (93%) of current quarter’s revenue as compared to RM38.3 million (85%) registered in the preceding quarter.


Table 1: KKB's last 8 quarterly results


Chart 1: KKB's 30 quarterly results

Valuation

KKB (at RM1.25 yesterday) is trading at a trailing PE of 15 times (based on last 4 quarters' EPS of 8.1 sen). At this multiple, KKB is reasonably valued. If KKB can maintain its earnings going forward, its yearly EPS could be 13 sen. This could lower the PE to less than 10 times.

Technical Outlook

KKB is consolidating in an expanding triangle. Since it has tested the lower line at RM1.20, there is a good chance that the stock may rebound in line with its recovery in earnings.


Chart 2: KKB's weekly chart as at Feb 17, 2015 (Source: ShareInvestor.com)
 
Conclusion

Based on improved financial performance & mildly positive technical outlook, KKB could be a good stock to consider for 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, KKB

GASMSIA: Short-term Pain, Long-term Gain?

Results Update

For QE31/12/2014, Gasmsia's net profit dropped 49.6% q-o-q or 42.0% y-o-y to RM23.3 million while revenue rose 33.7% q-o-q or 29.2% y-o-y to RM781 million. The drop in profit is due to higher cost of gas sold as higher volume of LNG sold had to be purchased at market price. This resulted in an erosion in the existing spread of RM2.02/mmBTU and a lowering of its profit.

As a hike in the selling prices is unlikely in FY2015, the reduced profit margin will continue unless the volume of gas sold is reduced. Maybank IB expects the FY15/16 earnings to drop further. It revised its earning forecast by 58%/29% to 4.0/7.6 sen. Along with that revision, its TP was reduced to RM3.00. This is based on its report dated 13/2/2015.


Diagram 1: Gasmsia's top-line & bottom-line for the past 11 quarters


Diagram 2: Gasmsia's cashflow for the past 11 quarters

Valuation

As a hike in the selling prices is unlikely in FY2015, the reduced profit margin will continue unless the volume of gas sold is reduced. In a report dated Feb 13, 2015, Maybank IB expects the FY15/16 earnings to drop further. It revised its earning forecast by 58%/29% to 4.0/7.6 sen. Along with that revision, its TP was reduced to RM3.00 (based on DCF valuation with WACC at 7.3% and long-term growth at 2%).



Table: Gasmsia's Financial Highlights & Forecast (Source: Maybank IB)


Technical Outlook

Gasmsia broke its uptrend line, SS support at RM3.50 in November last year. Its immediate support & resistance are at the horizontal lines at RM2.55 & RM2.75.


Chart: Gasmsia's weekly chart as at Feb 17, 2015 (Source: ShareInvestor.com)

Conclusion

Despite the poor financial performance, demanding valuation & mildly negative technical outlook, Gasmsia is rated a HOLD. However, if the stock were to pullback to its horizontal support of RM2.55, it could be a long-term buy.

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, Gasmsia.