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Friday, April 17, 2015

WTIC: Tentative Bottom Formed

Looking at the chart of WTIC, I believe that crude oil prices had bottomed and we are in early stage of recovery.


Chart: WTIC's weekly chart as at Apr 16, 2015 (Powered by Stockcharts.com)

If you like to have a road map of where WTIC is going, you can try out Wyckoff Schematic. The current move may go as high as USD65-70 and then we may see a throwback towards USD55. If WTIC can hit a high of USD70, I don't think it would go down to USD55. If the high is USD65, a throwback to USD55 is doable.


Diagram: Wyckoff Schematic (Source: Stockcharts.com)

If you accept that crude oil prices have bottomed, then this is a good time to buy some good O&G stocks. And, it would also mean that our Ringgit should be recovering together with the stock market.

Pesona & Pesona-WA: What's up? (UPDATED)

One of the basic tenets of Dow Theory states that the market averages or indices must confirm each other. That tenet or principle came about when Charles H. Dow wrote about the divergence between the Industrial Average & the Transport Average. In America, where its industrial output must be shipped from the production centers to the population centers for consumption (or to the ports for export), improved business outlook for industrial sector will lead to similar improvement in the transport sector. Thus, the economy is doing well if both the Industrial Average & the Transport Average are moving higher. Obviously, if both averages are moving lower, the economy would be slowing down.

What if the Industrial Average is moving higher while the Transport Average is moving lower? This simply means that there is divergence and that the rise in the Industrial Average does not presage improvement in the economy. In fact, when we see divergence in indices or securities that should move in congruent, we should be very concerned.

This morning, we saw Pesona gaining 7 sen to RM0.88 on a volume of 41.6 million. Strangely, Pesona-WC - a fairly new warrant with an exercise price of RM0.25 -  only rose by 0.5 sen to RM0.505 on a volume of 29.3 million. Thus, Pesona-WC - with 1746 days to expiry - is now trading at a discount of 14%.  Why?

If we apply the aforementioned tenet -and I don't see why we can't - we should be concerned. 

UPDATE: This is not a call to try your luck with the warrant, though I think the warrant may make a quick run for it. Whenever you see something like this, the best thing to do is to AVOID getting into the stock and/or warrant. If you have the stock, you should try to SELL INTO STRENGTH.

 
  Chart 1: Pesona daily chart as at Apr 17, 2015_12.30pm (Source: ShareInvestor.com)

 
 Chart 2: Pesona-WC daily chart as at Apr 17, 2015_12.30pm (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, Pesona & Pesona-WC.

Wednesday, April 15, 2015

Cenbond: Continuing with its Uptrend!

Cenbond broke above its intermediate downtrend line, RR at RM1.35 last Friday. See Chat 1.

 
 Chart 1: Cenbond's weekly chart as at Apr 15, 2015_9.30am (Source: ShareInvestor.com)

It is good to note that Cenbond is in a long-term uptrend line, SS, with support at RM1.20. See Chart 2.

 
 Chart 2: Cenbond's monthly chart as at Apr 15, 2015_9.30am (Source: ShareInvestor.com)

Based on technical consideration, Cenbond could be a good trading 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, Cenbond.

SKPetro: Bullish breakout noted

SKPetro broke to the upside of its trading range (RM2.25-2.45) today. At the time of writing, it is at RM2.52.


Chart 1: SKPetro's daily chart as at Apr 15, 2015_9.30am (Source: ShareInvestor.com)

With this breakout, the stock may revisit the recent high of RM3.00.


Chart 2: SKPetro's weekly chart as at Apr 15, 2015_9.30am (Source: ShareInvestor.com)

Just a quick look at WTIC will reveal that crude oil will soon test the resistance of USD55. An upside breakout of this level could signal the end of the downtrend for crude oil.


Chart 3: WTIC's daily chart as at Apr 14, 2015 (Source: Stockcharts.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, SKPetro.

Friday, April 10, 2015

MYEG: Time to step aside

Sometimes we can bite off more than we can chew. That's the story of MYEG, a company that obtained a license to handle the renewal of working permits for foreign workers. The government has now agreed to the award of more license instead of giving MYEG the monopoly in this business. For more, go here.

Given the sharp rise in MYEG share price - from RM0.50 in May 2013 to about RM3.00 recently - this negative news can end its uptrend. I see the immediate support levels at RM2.40 or RM2.20. If these two support levels fail, then it could go down to RM1.55.

Despite the much lower price as compared to last week, I think it is advisable to reduce position in this stock. Something are not meant to be....


Chart 1: MYEG's weekly chart as at April 10, 2015 (Source: ShareInvestor)


Chart 2: MYEG's monthly chart as at April 10, 2015 (Source: ShareInvestor)

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, MYEG.

Century: A bullish breakout

Technical Breakout

Century broke above its intermediate downtrend line, RR at RM0.77 yesterday. It may revisit its March 2014 high of RM0.87. If it can surpass that high, it could potentially test the psychological RM1.00 mark.


Chart 1: Century's weekly chart as at April 10, 2015_3.00pm (Source: ShareInvestor)


Chart 2: Century's monthly chart as at April 10, 2015_3.00pm (Source: ShareInvestor)

Recent Results

The latest quarterly results (QE31/12/2014) shows a jump in Century's net profit, albeit a lower revenue. Its NP rose by 232% q-o-q or 70% y-o-y to RM17 million while revenue was down 5% q-o-q or 11% y-o-y to RM66 million. The improvement in its bottom-line was attributed to gain on disposal of property, plant and equipment of RM48.2 million and gain on revaluation of investment property of RM2.5 million. If the gain on the disposal of PPE is excluded, the company would report a net loss of about RM31 million. That's something to think about!!


Table: Century's last 8 quarters' results


Chart 3: Century's last 35 quarters' results

Valuation

Century (closed at RM0.81 at the end of the morning session) is now trading at a PB of 1.1x. If we exclude the one-off gain from disposal of PPE, Century would be a loss-making company. Thus, there is no PER to look at.

Conclusion

Based on the above, Century is not a fundamentally exciting stock to look at. The only reason for this post is the technical breakout. That breakout would make Century a Trading 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, Century.

Technology stocks: We're Back!

 For more than 10 years, no one thought it was possible for Nasdaq to revisit its high recorded in the heady days of the dotcom bubble in 2000. Don't look now but we are BACK!!!!!

 
Chart 1: Nasdaq's monthly chart as at Mar 9, 2015 (Sourced: Yahoo Finance)

Nasdaq has benefited more from the rally in Wall Street than S&P or DJIA. If we plot the ratio of Nasdaq to SPX or Nasdaq to DJIA, we can see that these 2 ratios have been  rising. This indicates that Nasdaq is rising at a faster pace than either SPX or DJIA. The other thing that you may notice is  that the ratios are now pressing against the upper line of the upward channel of the 2 ratios. A breakout of that channel would lead to an outperformance of Nasdaq vis-a-vis SPX or DJIA. This could happen with Nasdaq either rising faster or dropping slower than SPX & DJIA. However, with Nasdaq approaching the all-time high, I believe that it is more likely that we will see a correction in Nasdaq which would lead to a pullback of the ratios within the channel.


Chart 2: Nasdaq, Nasdaq/SPX & Nasdaq/DJIA's weekly chart as at Mar 9, 2015 (Source: Stockcharts.com)

During the dotcom bubble v.1 in 2000, Nasdaq was trading at PER of 25X. In the current rally - which some referred to as the dotcom bubble v.2 - Nasdaq 100 has a PER of 23X. This is higher than either SPX's PER of 20X or DJIA's PER of 16X. See the table below.


Table: PERs & DYs of major US Indices as at Apr 2, 2015 (Source: WSJBlog )

The outperformance in Nasdaq inspiered a rally in our technology sector since 2013. The rally could be justified by higher earnings from semiconductor producers as well as selected elctronics parts & components manufacturers. Lurch behind them are countless small ICT players whose earnings had either rebounded or grew in line with the economics growth of the past few years. Lately, they have all benefited from the weaker Ringgit via-a-via the US Dollar.

The big question facing investors is not whether to buy or not to buy, but what to buy?


Chart 3: FBMACE's monthly chart as at Mar 9, 2015 (Sourced: ShareInvestor.com)


Chart 4: Technology's monthly chart as at Mar 9, 2015 (Sourced: ShareInvestor.com)

Market Outlook as at April 10, 2015

FBMKLCI broke above its downtrend line in the middle of March (see Chart 1). FBM70 lagged behind and only managed to break above its downtrend line in end March (see Chart 2).

 
Chart 1: FBMKLCI's daily chart as at Apr 9, 2015 (Powered by ShareInvestor.com)

 
Chart 2: FBM70's daily chart as at Apr 9, 2015 (Powered by ShareInvestor.com)

The better performance of FBMKLCI due to strong performance by the banking stocks. The Finance index recovered well after breaking above its downtrend line in January.


Chart 3: Finance's daily chart as at Apr 9, 2015 (Powered by ShareInvestor.com)

Another sector that has done very well is the technology sector. This can be seen in the sharp rally for Technology index (consisting of technology companies listed in the Main Market) and FBMACE (consisting of all the companies in the ACE market). The rally in the technology stocks is consistent with a similar rally in Nasdaq which is approaching the high recorded in February 2000. I may look into that story later.


Chart 4: Technology's daily chart as at Apr 9, 2015 (Powered by ShareInvestor.com)


Chart 5: FBMACE's daily chart as at Apr 9, 2015 (Powered by ShareInvestor.com)

In conclusion, our market is looking positive in the near term. It has shaken off concern about the impact of lowered crude oil prices and the on-again, off-again interest rate hike in the US and is now climbing up a wall of worries. I believe that there is still opportunity for market to go higher while at the same time, we have to be cautious and keep some cash on the sideline.

TROP: Poised to a decent rally?

Trop may have broken above its intermediate downtrend (using the 100-day SMA as proxy). The last time it had a similar breakout in Mar 2014, the stock had a decent rally from RM1.35 to RM1.65.


Chart 1: TROP's daily chart as at Apr 10, 2015_9.15am (Source: ShareInvestor.com)

Trop's monthly chart shows that the stock is now testing a strong downtrend line, R2-R2 at RM1.10. It has a strong support from its gradual long-term uptrend line, SS at RM1.00.


Chart 2: TROP's monthly chart as at Apr 10, 2015_9.15am (Source: ShareInvestor.com)

Based only on technical consideration, Trop could be a potential trading BUY. For long-term investment, we need to look into its fundamental. Nonetheless, I believe the RM1.00 should be a strong support and possibly a good entry level to 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, TROP.

Thursday, April 09, 2015

Hang Seng heading towards 30000

Hong Kong Hang Seng Index (HSI) rose 708 points today! Why not?! HSI broke above its psychological resistance at 25000. It could test the 30000 mark very soon. The potential target for this rally could be 32000-35000.



Chart: HSI's monthly chart as at April 9, 2015 (Source: Yahoo Finance)

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, Hang Seng Index.

Wednesday, April 08, 2015

GDEX: Continuation of prior uptrend

GDEX has broken above the line connecting the peaks for the past 10-11 months (A-B). This breakout at RM1.70 could send the stock to RM2.00-2.10.

Based on technical consideration, GDEX could be a trading BUY.


Chart: GDEX's daily chart as at Apr 8, 2015_3.00pm (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, GDEX.

BJToto & MediaC: Good income stocks

Background

Recently I read a book on stock screening entitled The Standard & Poor's Guide on Selecting Stock (here). Later I used the Screener function of ShareInvestor.com to select some income stocks for my customers. The main criteria is high DY for the past 3 years and the secondary criteria is PER of 15 times (slightly lower than market PER now) and Net Debt to Equity of 0.5 times (to avoid stocks with high borrowings). The list I have gotten is appended below:


Diagram 1: Screener Results for Stocks with High Dividend Yield (Source: ShareInvestor.com)

The list includes 4 REITs and 2 companies. As I am not interested in REITs, that leaves me with BJToto and MediaC.

Fianncial Performance & Dividend Record: BJToto & MediaC

I have appended below the quarterly P&L, profit margin and Dividend for BJToto and MediaC below:


Diagram 2: BJToto's last 42 quarterly P&L & Dividend Record


Diagram 3: MediaC's last 28 quarterly P&L & Dividend Record

Research Reports: BJToto & MediaC

Then I referred to Kenanga's research reports on these 2 companies. I appended below the Summary of Earnings tables for both companies.


Table 1: BJToto's Summary Earnings (Source: Kenanga Research)


Table 2: MediaC's Summary Earnings (Source: Kenanga Research)

A quick look at the Summary of Earnings tables will reveal that EPS for MediaC is projected to decline from 9.3 sen for FY2014A to 8.8 sen for FY2016E. With that, its DY will drop from 6.7% to 6.1%. On the other hand, BJToto's EPS is expected to rise 28 sen for FY2015E to 30 sen for FY2017E. DY would rise from 7.5% to 8.1%. However, it will be noted that MediaC has lower PER & P/BV than BJToto. Kenanga placed a Fair Value of RM0.71 for MediaC (currently at RM0.68) and a Fair Value of RM4.25 for BJToto (currently at RM3.30). Based on the foregoing, I would prefer BJToto to MediaC.

Technical Outlook: BJToto & MediaC

We will now look at the chart of BJToto. I always have problem looking at BJToto's chart because I feel that the price data has not been adjusted accordingly.

This stock did a Rights Issue of ICULs in 2002 on the basis of RM27 of nominal value of ICULs for every 20 BJToto shares held. At the same time, it proposed a Special Dividend of 170% (comprising of 45% tax exempt & 125% less tax of 28). The amount of this Special Dividend receivable was RM1.35 for every BJToto share owned (or RM1350 per 1000 shares owned). That's exactly the same as the subscription amount of RM1350 nominal value of ICULs for every 1000 shares owned.

The conversion price of the ICULs is RM1.20 and shall be by way of surrendering 1 ICUL plus cash payment of RM0.20. So effectively, it is a Bonus Issue of 1-for-1 (except for the negligible 20 sen cash payment for conversion of ICULs to share). Chart 1 is the unadjusted chart from ShareInvestor.com while chart 2 is the adjusted chart, with adjustment made by myself.


Chart 1: BJToto's unadjusted monthly chart as at April 7, 2015 (Source: ShareInvestor.com)

From Chart 2, we can see that BJToto broke its uptrend line, SS in late 2008. Since then, it had seesawed within a triangle, ABC. It broke to the downside of that triangle in 2013 and is now resting at the immediate support of RM3.30. If this support fails, it should find support at the horizontal line of RM3.00.


Chart 2: BJToto's adjusted monthly chart as at April 7, 2015 (Source: ShareInvestor.com)

MediaC has also broken its long-term uptrend line, SS at RM1.10 in 2013. It has recently tested its horizontal support at RM0.65.


Chart 3: MediaC's monthly chart as at April 7, 2015 (Source: ShareInvestor.com)

Based on technical consideration, I believe both BJToto & MediaC's downside to be fairly limited.

Conclusion

Based on the above, I believe both BJToto & MediaC would give steady income while we wait for a recovery in their share prices. As an income stock, BJToto holds a slight edge over MediaC as its dividend payment is quarterly as compared to half-yearly for MediaC. In addition, BJtoto's DY is higher & is expected to inch up while MediaC's dividend may dip due to lower bottom-line.

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, BJToto & MediaC.

Wednesday, April 01, 2015

Parkson: Early Termination Can Be Painful!

Parkson's plan for turnaround involved its Chinese operation streamlining its large branch network. That plan maybe more problematic than first anticipated. It has just been reported that one of the branches that was closed, would have to pay compensation to the landlord for early termination. That was decided by China International Economic & Trade Arbitration Commission with the amount of damages awarded of RMB140 million (or, RM83.82 million) against Parkson's Chinese unit, PRDC (a subsidiary of Parkson Retail Group Ltd which is in turn a subsidiary of Parkson).

The Edge Daily reported:


According to an attached statement by PRGL, the approximate 140 million yuan payable to the landlord represents about 57% of the audited net profit of the group for the financial year ended December 2014 (FY14). PRGL also said based on a preliminary review of its unaudited consolidated management accounts for the two months ended Feb 28, 2015, it does not expect its operating results for the first quarter of 2015 to be able to cover the impact from the arbitral award.

Hence, PRGL expects the profit of the group for the three months ended March 2015 will decline “significantly” compared with the corresponding period in 2014.

(The asme news is also carried in The Sun Daily.)

If the main operating unit of Parkson (PRGL) were to report a loss, the psychological impact on Parkson stock price would be fairly significant. I would not be surprised if Parkson were to break the RM2.00 again. Its next support could be at RM1.70 but its really strong support is at RM1.25.

For now, it would be best to adopt a wait-&-see approach on Parkson. Even if it can stabilized or rebounded from its support level, we cannot be sure how the management would carry out its turnaround plan given the additional cost to be factored into the calculation.


Chart 1: Parkson's weekly chart as at Mar 31, 2015 (Source: Share Investor)


Chart 2: Parkson's monthly chart as at Mar 31, 2015 (Source: Share Investor)

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, Parkson.

Friday, March 27, 2015

VS: Bottom-line dropped q-o-q

Result Update

For QE31/1/2015, VS's net profit dropped by 48% q-o-q but rose 387% y-o-y while revenue dropped 15% q-o-q or rose 27% y-o-y to RM465 million. PBT dropped q-o-q to RM26 million as compared RM42.7  million recorded in the immediate preceding quarter (QE31/1/0/2014) due to lower sales generated by the Malaysia operations. 


Table 2: VS's last 8 quarterly results


Chart 1: VS's last 40 quarterly results

Valuation

VS (closed at RM4.41 last Friday) is trading at a trailing PE of 9 times (based on last 4 quarters' EPS of 49 sen). If we exclude the exceptional large tax credit for QE31/7/2014, the 4 quarters' EPS  would be reduced to 39 sen and the trailing PE would rise to 11 times. Based on the revised PE, VS is deemed fairly valued.

Technical Outlook

Since my last post (here), VS had gained about RM2.00 to the present price of RM4.41. Such as steep rise may not be sustainable.


Chart 3: VS's monthly chart as at Mar 26, 2015 (Source: ShareInvestor.com)

Conclusion

Based a decline in financial performance and recent sharp rise in share price, it may be advisable to take some profit 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, VS.