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Friday, April 21, 2017

BAT: Earning Recovery Not In Sight Yet

Result Update

For QE31/3/2017, BAT's net profit dropped 62% q-o-q or 34% y-o-y to RM114 million while revenue dropped by 8% q-o-q or 24% y-o-y to RM771 million. Revenue declined 24% y-o-y (or, RM 250 million) in line with volume decline, leading to a Gross Profit deterioration of 27.5% y-o-y (RM97 million).

Operating Expenses dropped 18.1% (or, RM22 million), attributed to timing of spends, lower recharges from related entities as well as overhead savings from cost efficiency initiatives the Group has undertaken.

During the same period, the Group has further recorded a one-off restructuring expenses of RM1.6 million which consists of the on-going cost of the project, outplacement programs and one-off expenses associated with the storage and transfer of unprocessed leaf and raw materials.

As a consequence, the Group registered a decline of 32.8% (or, RM77 million) and 32.3% (or, RM75 million) in Profit from Operations and Profit before Tax respectively.


Table 1: BAT's last 8 quarterly results


Graph: BAT's last 41 quarterly results
  
Valuation

BAT (closed at RM47.06 yesterday) is now trading at an adjusted PER of 20.2 times (based on the last 4 quarters' EPS of 232.7 sen). BAT has paid out quarterly dividend payment totaling of 217 sen; thus giving a Dividend Yield of 4.6%.

Technical Outlook

BAT is trying to find a base at RM40-50 level. With monthly MACD nearly hooking up and downtrend momentum peaking, the bottom is near.


Chart: BAT's monthly chart as at April 20, 2017 (Source: Shareinvestor.com)

Conclusion

Based on weak financial performance and unattractive valuation, BAT is not a good stock for long-term investment. With a tentative bottom in sight, BAT's rating is revised from a SELL to a HOLD.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

PBBank: Steady-as-she-goes

Result Update

For QE31/3/2017, PBBank's net profit dropped 16% q-o-q but rose 1.5% y-o-y to RM1.25 billion while revenue dropped 1% q-o-q but rose 0.4% y-o-y to RM5.03 billion. PBT dropped q-o-q mainly due to the allowance for loan impairment in the current quarter of RM67.1 million as compared to a net writeback of RM37.1 million in the preceding quarter, higher other operating expenses in the current quarter and non-recurring gain on revaluation of investment properties of RM60.7 million in the preceding quarter.


Table: PBBank's last 8 quarterly results

From the chart below, we can see that PBBank's top-line and bottom-line have stagnated for the past 6 quarters.


Graph: PBBank's last 45 quarterly results

Valuation

PBBank (closed at RM19.92 yesterday) is now trading at a PE of 14.7 times (based on last 4 quarters' EPS of 135 sen). At this PE multiple, PBBank is deemed fully valued. It pays a decent dividend yield of 2.9%.

Technical Outlook

PBBank is still in a long-term uptrend, with 30-month EMA acting as a support at RM19.00. 


Chart: PBBank's monthly chart as at Apr 20, 2017 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, fair valuation & positive technical outlook, PBBank is still a good stock for long-term investment. However PBBank is likely to underperform banking stocks that had been sold down in the past 2-3 years, such as CIMB, AMBank & AFG. Hence, CIMB, AMBank & AFG are likely to give you better return than PBBank.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Wednesday, April 19, 2017

IBHD: Earning Maintained Due to Property Development


Result Update

For QE31/3/2017, IBhd's net profit rose 32% q-o-q or 21% y-o-y to RM18.6 million while revenue was unchanged q-o-q but rose 28% y-o-y to RM103 million. The better performance in both the revenue and profit was mainly due to higher revenue recognition of on-going projects for the Property Development segment as well as higher revenue and profit before tax for the Leisure segment. While revenue & PBT were relatively unchanged q-o-q, what was highlighted by management was the strong performance of the Property Development segment. To wit:

"[O]verall comparable result masks the continued growth of the Property Development segment where there was an increase in revenue and profit before tax for the quarter due to higher progress recognition of on-going projects. Lower revenue and profit before tax from the Leisure segment was expected for the current quarter as Leisure segment had attained its peak seasonal revenue in the preceding quarter due to the year-end school and festive holidays."


Table: IBhd's last 8 quarterly P&L


Chart 1: IBhd's last 15 quarterly P&L

Valuation

I-Bhd (closed at RM0.615 yesterday) is now trading at a trailing PER of 9.4x (based on last 4 quarters' EPS of 6.5 sen). At this PER, I-Bhd is deemed fairly valued.

Technical Outlook

IBhd is in a gradual uptrend line. Its immediate resistance will come from the horizontal line at RM0.66.


Chart 2: I-Bhd's weekly chart as at April 18, 2017 (Source: Chartnexus)

Conclusion

Based on good financial performance and fair valuation, I-Bhd could be a good stock to consider for long-term investment.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.
 

MPI: Earnings dropped sequentially


Result Update

For QE31/3/2017, MPI's net profit dropped 21% q-o-q but rose 11% y-o-y to RM43 million while revenue dropped 1% q-o-q but rose 12% y-o-y to RM396 million. PBT dropped q-o-q due to lower revenue & unfavorable forex differences. Revenue dropped as revenue in Asia and European segments were flat while revenue in USA segment dropped by 6%.


Table: MPI's last 8 quarterly results


Graph: MPI's last 41 quarterly results 

Valuation

MPI (closed at RM11.84 yesterday) is now trading at a trailing PER of 12.7 times (based on last 4 quarters' EPS of 93 sen). At this PER, MPI is deemed fairly attractive. Its dividend yield is also decent at 2.3%.

Technical Outlook

MPI has a strong rally to RM12.00 in the past 3 months. The volatile price movement in the past few weeks suggests that the share price could have made a temporary top.


Chart: MPI's weekly chart as at April 18, 2017 (Source: ShareInvestor.com)  

Conclusion

Based on good financial performance & reasonable valuation, MPI is a good stock for long-term investment. However the stock could have made a temporary top after a strong rally over the past 3 months. Thus you may consider taking profit for at least half your position in this stock.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Monday, April 17, 2017

Semiconductor Stocks May Consolidate For A While

In the past 2 weeks, the Philadelphia Semiconductor Index (SOX) had been sliding. Last Wednesday, it broke below its 50-day SMA line at 985, and it closed at 960 - a level well below its intermediate uptrend line at 975 - on last Friday. 

In addition, we can also see that MACD was nearly below the zero line and the RSI has broken its uptrend line support. These plus the breakdown of the uptrend line and the 50-day SMA line could signal a temporary top for SOX. 


Chart 1: Philadelphia Semiconductor Index (SOX)'s daily chart as at April 14, 2017 (Source: Stockcharts.com)

If we look at the weekly chart, we will see MACD has hooked down and -DMI has crossed above +DMI. This negative signal may lead to a prolonged period of consolidation similar to that experienced in August 2015 to February 2016 (denoted as “B” on the SOX weekly chart) or a brief but sharp correction as witnessed by the market in September 2014 (denoted as “A” on the SOX weekly chart).


Chart 2: Philadelphia Semiconductor Index (SOX)'s weekly chart as at April 14, 2017 (Source: Stockcharts.com)

Looking at our the weekly charts of MPI & Unisem, we can see similar consolidation or correction (denoted as “A” and "B" respectively). Undoubtedly the share prices of both MPI & Unisem are off their recent high today. If you expect SOX to correct or consolidate in the next few days or weeks, you should take precaution by avoiding MPI or Unisem. As at 3:55 pm, MPI & Unisem were trading at RM10.96 & RM3.01 respectively.


Chart 3: MPI's weekly chart as at April 14, 2017 (Source: Malaysiastock.biz)


Chart 4: Unisem's weekly chart as at April 14, 2017 (Source: Malaysiastock.biz)

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Tuesday, April 11, 2017

Market Outlook as at April 11, 2017

Three days ago, FBMKLCI broke its intermediate uptrend line, SS at 1740. Since then, it has struggled to stay above the 1740 mark. As at 3.40 pm today, FBMKLCI was trading at 1735. Will the invincible hand push the index above the 1740 mark again?


Chart 1: FBMKLCI's daily chart as at April 11, 2017 (Source: Shareinvestor.com)

The "good" news is that the next strong support for FBMKLCI is not far away. That support will come from the horizontal line at 1730. In fact, it was the breakout above this level that had generated much excitement in the market just a few weeks back. However, if FBMKLCI were to violate the 1730 level, then the market will consolidate for a while.


Chart 2: FBMKLCI's weekly chart as at April 11, 2017 (Source: Shareinvestor.com)

For the past 4-5 months, our market was driven by buying from two sources: foreign funds and local retail players. The tentative breakdown of the intermediate uptrend line for FBMKLCI could signal a pause in the foreign buying of blue chip stocks. What about the buying from retail players?

From the composite chart below, we can see that the indices for the 2nd & 3rd liner stocks (FBM70 & FBMSCAP) as well as penny stocks (FBMACE & FBMFLG) continued to rise even as FBMKLCI had begun to lose some momentum over the past 2 weeks. In fact, FBMACE & FBMFLG picked up pace as reflected by the distance between the indices and the moving average lines.

However, volume has declined noticeably and this sign of divergence could be a warning that retail players are slowing down. If old & tired punters are not quickly replaced by new & energetic ones, a pause in the play is likely. And, a prolonged pause would bring forth a torrent of selling that could lead to a sharp drop for many penny stocks which had risen spectacularly on very little news or no news at all.


Chart 3: FBM70, FBMSCAP, FBMACE & FBMFLG's daily chart as at April 11, 2017 (Source: Shareinvestor.com)

Based on the above, I would advise retail players to exercise caution in the market. Better still, if you can take some chips off the table. Remember this: A bird in hand is better than two in the bush. Good luck!

Tuesday, April 04, 2017

Yinson: A Not-so-Painful Termination? (UPDATED)

This morning we have the news that Yinson Holdings Bhd’s associate firm PTSC Asia Pacific Pte Ltd (PTSC Asia Pacific) has received a notice of termination of a bareboat charter contract for a floating production storage and offloading system (known as FPSO PTSC Lam Son) valued up to US$737mil (RM3.3bil) awarded by Lam Son Joint Operating Company (LSJOC), which is a joint venture between Petroliam Nasional Bhd (Petronas) and PetroVietnam.

LSJOC is the operator of the Lam Son field offshore Vietnam while the PTSC Lam Son has been operating in Lam Son Field since June 2014. PTSC Asia Pacific is a 49:51 joint venture between Yinson and PetroVietnam Technical Services Corp (PTSC).

Yinson advised the following:
  • The contract cancellation is scheduled to occur on June 30, 2017
  • Despite the termination, PetroVietnam - the ultimate holding company of one of the shareholders of LSJOC – intends to continue the petroleum operations at Lam Son Field despite the liquidation of LSJOC and to continue to utilise FPSO PTSC Lam Son for this purpose (How??)
  • PTSC Asia Pacific is entitled to an early termination payment (ETP) from PTSC
Because of the above, Yinson stated that “there is no material adverse financial impact to PTSC Asia Pacific”. For more, go to The Star report & Yinson’s announcement on Bursa Malaysia (here). I share this sentiment based on two grounds: 
  • PetroVietnam owns 51% of PTSC Asia Pacific as well as 50% of LSJOC. This means that PetroVietnam has a pecuniary interest to find a solution for a redundant FPSO
  • The charter contract is a bareboat charter, which means that the cost of reinstating the FPSO in its original condition will be borne by LSJOC
I still believe that we will see a few days of weakness in Yinson. The share price may drop to RM3.00-3.15. That could be a good entry to one of the more focused & well-managed O&G companies in Malaysia.


Chart: Yinson's daily chart as at Apr 3, 2017 (Source: Malaysiastock.biz)

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Friday, March 31, 2017

Ecowld-WA: Fool's Gold?

Next Monday, we will see the listing of Eco World International Bhd on Bursa (here). The fair value given by a number of stock-broking firms is around RM1.30 (here).

I like to highlight the amazing "excitement" about this event by retail players, and this is seen by the huge premium placed on the warrant of its substantial shareholder, Ecowld. Just look at the chart of Ecowld-WA via-a-vis Ecowld!! (Note: Ecowld-WA is currently trading at a premium of 76%. Its exercise price is at RM2.08 & expiry date is at Mar 26, 2022.)


Chart 1: Ecowld-WA's weekly chart as at Mar 31, 2017_4.16 (Source: MalaysiaStock.biz)


Chart 2: Ecowld's weekly chart as at Mar 31, 2017_4.16 (Source: MalaysiaStock.biz)

This is not a totally unusual occurrence in the present market these days. We have seen retail players chasing "cheap" shares & warrants regardless of their fair value or fundamentals or how much the shares or warrants had run up in the preceding few days!! The way they are buying in the market is mind-boggling!! To the syndicates or major shareholders who are looking to sell, this kind of reckless buying is like manna from heaven. It takes the sport out of investing when you are practically stealing candies from the babies!! Thus I call on my fellow remisiers, please advise your customers not to lose their heads and go where angels dare not tread!!

Thursday, March 30, 2017

BAT: Another Day, Another Shoe Drop!!


Yesterday BAT went below its overnight price at around 9.41am. It continued its decline throughout the day and closed at RM45.44. It was the top loser on Bursa- losing RM2.46 or 5%!

A quick check revealed that the likely causes for the selldown are the concern about the likelihood of prices of cigarettes going up from RM17 presently to RM21.50 (here) and the proposal to raise the minimum age for buying cigarettes from 18 to 21 (here). These measures are supposedly intended to reduce the consumption of cigarettes- which is all very good. But, the government must do more to curb the trade in illicit cigarettes. Higher cigarette price has been a boon to that trade which saw the percentage of illicit cigarettes capturing more than 50% of total cigarettes consumed in Malaysia. If we don't tackle this trade, we will collect less revenue from both corporate tax & duties while the incurring higher medical cost to treat various ailments that resulted from long-term smoking but I digress.


Source: CIMB

Now, back to BAT. The chart looks like this:


Chart: BAT's weekly chart as at Mar 29, 2017 (Source: Kenanga)

BAT is in a downtrend (RR) which is accelerating (R1-R1). The area between RM41-43 is the support for the stock. If you are an investor looking for a decent income stock, you may be tempted to buy at that level. If you are a medium-term speculator who viewed the price movement as a downward channel, you may be tempted to buy at the lower line, R2-R2 (around RM38) and hoping for a rebound to sell at the upper line, R1-R1 (at RM49).
 
For now, I maintain my existing rating for BAT, i.e. a SELL. However it can be considered as a Trading BUY for a rebound play if it drops to RM39.00-40.00 (the support of a long-term uptrend line). 

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

Haio: Earning Playing Catch-up!

Result Update

For QE31/1/2017, Haio's PBT rose 7% q-o-q or 65% y-o-y to RM21.7 million while revenue rose 7% q-o-q or 33% y-o-y to RM107 million. Overall revenue increased q-o-q due to higher revenue for the MLM, Wholesale & Retail divisions. Revenue for the MLM division rose 2.5% due to increased demand for personal care and household consumer products. Revenue for the Wholesale & Retail divisions rose 22% & 34% respectively, due to higher sales generated from the CNY sales promotion campaign.

PBT for the MLM & Retail divisions rose 6% & >100% respectively. The sharper increase in Retail division PBT was attributed to higher sales of house brand products with higher margin. PBT for Wholesale division dropped by 8% due to higher operating costs and A&P expenses incurred.

Despite higher PBT, NP dropped 3.4% q-o-q due to higher tax charge as deferred tax was recognized in profit or loss in the current quarter while capital and reinvestment allowance were utilized to reduce tax charge in previous quarter.


Table: Haio's last 8 quarterly results (Note: EPS, DPS & NTA ps have been adjusted for the latest 1-for-2 bonus issue.)


Graph: Haio's last 48 quarterly results

Valuation

Haio (closed at RM3.30 yesterday) is trading at a trailing PE of 18.4 times (based on last 4 quarters' EPS of 17.97 sen). Based on earning CAGR of 30% over the past 2 years, Haio's PEG ratio is about 0.6x. Thus, Haio is considered attractive as a growth stock.

Technical Outlook

Haio is a long-term uptrend. The share price has rallied substantially over the past 15 months. The last time this stock had such a strong rally was in 2010. That rally didn't end too well. Be careful!


Chart 1: Haio's monthly chart as at Mar 29, 2017 (Source: MalaysiaStock.biz)

If you compare the share price movement to the earnings from 2005 until the latest quarter, you will agree that share price may be running well ahead of fundamentals.

 
Chart 2: Haio's mthly chart as at Mar 29, 2017 with quarterly earning (Source: MalaysiaStock.biz)

Conclusion

Based on good financial performance & positive technical outlook, Haio is a good stock for long-term investment. However I would rate Haio as a SELL INTO STRENGTH as the share price is running ahead of the fundamentals as noted above.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.