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Tuesday, December 06, 2016

N2N: Riding The Fintech Train

Background

N2N is in the provision of trading and analytics solutions mainly to local stock broking firms and banks. It is the provider of the TCPro brand of trading terminals used by 70% of the investment banks and stockbroking firms in Malaysia. It's currently operating in 3 other ASEAN countries, such as Singapore, Indonesia and the Philippines. It plans to expand into Hong Kong, Australia and Japan in the next 3 years.  

Last month, it announced plan to acquire AFE Solutions Ltd from its 2 shareholders, Reuters International Holdings S.A.R.L. and Systex Capital Group Inc for USD20.6 million. The acquisition of AFE would enable N2N to have a strong presence in the provision of financial data & trading solution in Hong Kong, Macau & Vietnam. For more, go here.



Historical Financial Performance

N2N's financial performance has been on a steady rise after the Global Financial Crisis.


Graph 1: N2N's last 10 years' P&L

Recent Financial Result

For QE30/9/2016, N2N's net profit rose 18% q-o-q or 71% y-o-y to RM3.4 million while its revenue was mixed - down 1.5% q-o-q but up 5.7% y-o-y - to RM10.5 million. The improved bottom-line was mainly due to the fair value changes on the financial assets at fair value through profit or loss.


Table: N2N's last 8 quarters' P&L


Graph 2: N2N's last 12 quarters' P&L

Latest Financial Position

N2N's financial position is very strong. As at 30/9/2016, it has net cash, FDs & financial assets totaling RM101 million (or, 21 sen per share). This gave the group a current ratio of 18x and a gearing ratio of less than 0.1x.

Valuation

N2N (closed at RM0.78 yesterday) is now trading at a PER of 33x (based on last 4 quarters' EPS of 2.4 sen). If the net cash is deducted from the share price, its PER would be reduced to 24x. Based on earning CAGR of 28% over the past 3 years, its PEG ratio is 0.86x. This means its valuation is acceptable.

Technical Outlook

N2N is resting on its "arching" uptrend line support of RM0.75.


Chart: N2N's monthly chart as at Dec 5, 2016 (Source: ShareInvestor)

Conclusion

Based on good financial performance, strong financial position, fairly attractive valuation & still positive technical outlook, N2N could be a good stock 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.

USD-MYR Outlook as at December 6, 2016

Last Friday, the ringgit closed at RM4.45 against the dollar in the domestic market while it closed at RM4.44 in the offshore market. The reason is the traders were closing the positions in the offshore market and taking positions in the onshore market, where Bank Negara is the main supplier of US dollars and effectively the market maker for the US dollar-ringgit trades.

As the main supplier of US dollars, Bank Negara may run short of US dollars. To increase the supply, Bank Negara has issued a new ruling requiring exporters to convert 75% of their new export proceeds to the ringgit. Previously, exporters can keep their proceed in US dollar if they take the view that the ringgit will depreciate against the dollar.

To incentivize the exporters, Bank Negara has announced a fairly attractive deposit rate as well as allowing these exporters to go into active and free hedging for their foreign currency requirements of up to six months. Are these moves enough to reduce the volatility of the ringgit – thus leading to its eventual recovery. In my opinion, these moves have a high chance of success. Here's why!

The price of any security, commodity or currency is a function of supply and demand. If the demand of USD (to repatriate investment fund or to pay for import) increases vis-a-via MYR, the equilibrium will only to reach if the price of USD increases in term of MYR. This is aggravated by a contraction in the supply of USD as investment fund stops coming to Malaysia as well as our exporters stop converting their USD to MYR. By forcing the exporters to convert their USD proceed to MYR, we have an increased supply of USD.

The other reason is technical consideration. Firstly, USD-MYR is now facing strong resistance from the horizontal line at 4.45-4.50. This is the September 2015 high which capped the rise of USD-MYR in January 2016 and may do the same again today.  


Chart 1: USD-MYR's weekly chart as at Dec 6, 2016_11.45am (Source: Investing.com

In fact, if you look at the daily chart, MACD has just crossed below the MACD signal line. This is a bearish signal that alerts us of a possible trend reversal.


Chart 2: USD-MYR's daily chart as at Dec 6, 2016_11.45am (Source: Investing.com

Secondly, USD index which appeared to be breaking to the upside of its trading range of 92.5-100.25, seems to be faltering. Yesterday, USD index dropped back into the range. This would lead to weakness in USD index for the weeks ahead unless it can quickly recover back above the 100.25 level.


Chart 3: USD index's weekly chart as at Dec 5, 2016 (Source: Stockchart.com)

Based on tentative weakness in USD index, USD-MYR and measures taken by Bank Negara, I believe that the ringgit could recover in the next few weeks and the eventual recovery of the ringgit would lead to the recovery of our stock market.

Friday, December 02, 2016

Supermx: Earnings Recovered Somewhat

Result Update

For QE30/9/2016, Supermx's net profit rose 188% q-o-q to RM19.5 million on the back of a 1%-crease in revenue RM269 million. Compared to the corresponding quarter last year, net profit dropped 49% while revenue declined 13%.

Profit before tax dropped y-o-y due to increased minimum wages and further rationalization of natural gas subsidy. The Group has also incurred additional costs for its contact lens division particularly in terms of advertising and promotion expenses. On the other hand, raw material cost was mixed with nitrile cost down 13.3% y-o-y while natural rubber latex cost went up 5.1%.

While profit before tax dropped q-o-q, net profit rose q-o-q due to higher tax charges in the immediate preceding quarter due to additional tax paid amounting to RM7.7 million in respect of previous years’ assessments (YA2007, 2009-2011); and provision for deferred tax.


Table: Supermx's last 8 quarters' P&L

I have tabulated the pre-tax profit and net profit for first 9-month period for the past 10 years. Over the past 4 years, we can see that pre-tax profit and net profit began to diverge because effective tax rate has gone up. In fact in 2016, the effective tax rate soared to 40%. This was due to the reason given above. With the absence of prior year tax charge, net profit should recover for Supermx.



Chart 1: Supermx's las10 years' first 9 months P&L


Chart 2: Supermx's last 27 quarters' P&L

Valuation

Supermx (closed at RM2.18 yesterday) is now trading at a PER of 17.5x (based on last 4 quarters' adjusted EPS of 12.49 sen). At this PER, Supermx is deemed fairly valued.

Technical Outlook

Supermx is moving within a large band between RM1.90 & RM3.30. A breakout above RM3.30 or a breakdown below RM1.90 would point the way forward for the stock.

Chart 3: Supermx's monthly chart as at Dec 1, 2016 (Source: ShareInvestor)
 
Conclusion

Based on poor financial performance and neutral technical outlook, I revised my rating for Supermx from a BUY 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.

RGB: Earnings Continued To Rise

Result Update

For QE30/9/2016, RGB's net profit rose 34% q-o-q or 63% y-o-y to RM9.3 million while revenue rose 63% q-o-q or 19% y-o-y to RM95 million. Revenue increased q-o-q due to higher revenue from Sales & Marketing (SSM) division while revenue from Technical Support & Management (TSM) division was unchanged. PBT rose q-o-q due to higher profit from SSM division (an increase of RM3 million) which more than offset the drop in PBT for TSM division (of RM0.4 million) as well as forex losses of RM0.9 million.


Table: RGB's last 8 quarters' P&L


Chart 1: RGB's last 13 quarters' P&L

Valuation

RGB (closed at RM0.235 yesterday) is now trading at a PER of 12x (based on last 4 quarters' adjusted EPS of 2 sen). Based on CAGR of 25% over the past 2 years, PEG ratio is still comfortably below 1x. At this PER & PEG ratio, RGB is deemed attractively valued.
  
Technical Outlook

RGB broke above its saucer bottom at RM0.20. After a strong rally to RM0.27, RGB may be due for a bit of correction. As long as it stays above RM0.20, the stock has a chance to go higher.


Chart 2: RGB's monthly chart as at Nov 30, 2016 (Source: ShareInvestor)
 

Chart 2: RGB's daily chart as at Dec 1, 2016 (Source: ShareInvestor)
 
Conclusion

Based on good financial performance, attractive valuation and positive technical outlook, RGB is rated a BUY.

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.

Thursday, December 01, 2016

SAM: Earnings Plummeted

Result Update

For QE30/9/2016, SAM's net profit dropped 43% q-o-q or 68% y-o-y to RM5.6 million while revenue dropped 4% q-o-q or 28% y-o-y to RM122 million. Revenue dropped q-o-q as its three business segments reported lower revenue. Revenue from the Equipment Manufacturing segment was lower by RM32.8million as a result of weaker demand from customers. Revenue from the Aerospace segment decreased by RM14 million due to the weakening demand for air cargo and the reduction in the production rate for A380 aircraft. Revenue for the Precision Engineering segment also decreased by RM0.2 million during the quarter. Coupled with new projects start-up cost and unfavorable foreign exchange movement, its profit before tax dropped from RM10.8 million to RM7.9 million .


Table: SAM's last 8 quarters' P&L


Chart 1: SAM's last 24 quarters' P&L

Valuation

SAM (closed at RM5.55 at the end of the morning session) is now trading at a PER of 14.6x (based on last 4 quarters' adjusted EPS of 38 sen). Based on CAGR of 45% over the past 2 years, PEG ratio is still comfortably below 1x. Provided this is not the end of its growth cycle (with the peak in late 2015), SAM valuation is deemed 'reasonable' for a growth stock.If you read the current year prospect (see below), you may come to the conclusion that the next few quarters will be challenging due to weakness in equipment manufacturing and precision engineering divisions.


From Notes to the Account (page 11)
 
Technical Outlook

SAM is in a tentative uptrend line, SS which accelerated in 2015. It made a double-top reversal at RM8.00 and is now hanging onto the support from the horizontal line at RM5.60. If this support fails, SAM will drop to the next support at the horizontal line of RM4.20 (which may happen though not in the next few months). Below that, SAM may find support at the tentative uptrend line RM3.50. I believe the stock is unlikely to test the uptrend line anytime soon unless SAM's financial performance completely collapses.


Chart 2: SAM's monthly chart as at Dec 1, 2016 (Source: ShareInvestor)
 

Chart 2: SAM's weekly chart as at Dec 1, 2016 (Source: ShareInvestor)
 
Conclusion

Based on poor financial performance and negative technical outlook, I revised my rating for SAM as a HOLD. If it breaks the support at RM5.60, you may consider reducing your position in the stock as it may slide down further.

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.

CMSB: Earnings Rolled Back In

Results Update

Yesterday, CMSB announced a very good set of result. Its net profit roared back- up more than 6-fold q-o-q but still down 10% y-o-y to RM59 millionon the back of lower revenue, which dropped 11% q-o-q or 14% y-o-y to RM356 million.


Table 1: CMSB's last 8 quarters' P&L


Graph: CMSB's last 13 quarters' P&L

The main reason for the turnaround in the performance of its 25%-owned associate, OM Materials (Sarawak) Sdn Bhd. This company, which operates a ferro silicon alloys smelter in Samalaju Industrial Park, contributed a PBT of RM8.42 million to CMSB for QE30/9/2016 as compared to a LBT of RM48.90 million for 1H2016. This profit plus increased profit from JVs, Cement & Other Divisions had more than offset decreased profit from Contruction and Construction Material Divisions.
 

Table 2: CMSB's segmental analysis for QE30/9/2016 & QE30/6/2016
 
Valuation

CMSB (closed at RM3.57 yesterday) has a PER multiple of 26.3 times (based the last 4 quarters' EPS of 13.57 sen). However, the earnings of CMSB could be significantly higher once the Pan Borneo Highway construction work goes into full swing as CMSB is the main supplier of cement in Sarawak as well as being one of the bargest suppliers of building materials in that state. This plus the turnaround in OM Materials could easily help CMSB to sustain its earnings at the same level as QE30/9/2016, if not higher than that. Assuming CMSB's FY2017 is 20% higher than the earning of QE30/9/2016, then CMSB's FY2017 EPS would be about 26 sen. Thus, CMSB would now be trading at an attractive forward PER of 14 times. (Note: CMSB was trading at RM3.69 as at 10:30am.)
 
Technical Outlook

CMSB had a scorching rally from a low of RM0.30 in 2008 to a high of RM6.00 in July 2015. Since then, the share price had dropped back to form a Head and Shoulders formation with a neckline at RM3.30. As you may know, a Head and Shoulders formation is a well-known pattern in technical analysis that tends to culminate in a reversal. The reversal is confirmed if the share price were to drop below the neckline. However, a failure to break below the neckline would convert a reversal pattern into a continuation pattern where the stock would then continue on its prior uptrend.


Chart 1: CMSB's monthly chart as at Nov 30, 2016 (Source: ShareInvestor.com)

It is debatable whether CMSB has actually completed the right "shoulder" of a Head and Shoulders formation. However, if CMSB can break above the intermediate downtrend line, RR at RM4.00, we can accept that the Head and Shoulders formation was completed and that it had changed from a possible reversal pattern to a continuation pattern. And the ensuing move would then be on the upside as the dominant trend would once again be an uptrend. Let's wait and see whether the bullish trend will emerge.
 

Chart 2: CMSB's weekly chart as at Nov 30, 2016 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance and exciting prospect, CMSB could be a good stock to ride on the construction boom as well as economic boom in Sarawak.

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, November 29, 2016

Market Outlook as at November 29, 2016

Our market is now taking direction from the way MYR is trading. At lunch time, USD was trading at MYR 4.46 - not far from the high of 4.48 recorded in September 2015. A convincing break above the 4.50 mark may send MYR to 4.90-5.00. And, that's why foreign funds are selling in our market. They are anticipating MYR to breakdown and the stock market to go into a selldown. If this scenario pans out - MYR weakens (say by 10%) and stocks tumble (say by 10%) - today sellers would "make or save" a lot of money (about 20% in this example). Before you join in the fun, you should bear in mind that technical resistance levels (such as the 4.50 mark for USD-MYR) should be respected. They are there for a reason! Failure to break that resistance could set off a decent rebound!


Chart 1: USD-MYR's wekly chart as at Nov 29, 2016_12.30pm (Source: Investing.com)

There is two sides to a coin. MYR is very much a victim of a strengthening USD. You may note that USD Index (below) has broken above its resistance. Thus USD may strengthen further.


Chart 2: USD's wekly chart as at Nov 28, 2016 (Source: Stockchart.com) 

The strengthening of USD only tells one side of the story; our MYR is weakening against many other currencies! Look at the SGD-MYR chart below. SGD is now trading at the September 2015 high of MYR3.13. Thus it is critical that MYR must stage a strong rebound now or else we may fall into the abyss! 


Chart 2: SGD-MYR's wekly chart as at Nov 29, 2016_12.30pm (Source: Investing.com) 

A quick look at our indices shows that most of them are drifting to their strong horizontal support. For FBMKLCI, FBM70 and FBMSCAP, the support that we hope will not be violated are 1600, 12500 and 14000 respectively.

 
Chart 4: FBMKLCI's monthly chart as at Nov 29, 2016_12.30 (Source: Shareinvestor.com)  

 
Chart 5: FBM70's monthly chart as at Nov 29, 2016_12.30 (Source: Shareinvestor.com)   

 
Chart 6: FBMSCAPs monthly chart as at Nov 29, 2016_12.30 (Source: Shareinvestor.com)    
 
Meanwhile, FBMACE is already at its strong horizontal support of  4800. 


Chart 7: FBMACE's monthly chart as at Nov 29, 2016_12.30 (Source: Shareinvestor.com)    

Of course, there is always a black sheep in every family! FBMFLG - the index for the weakest stocks - is showing us how to live life to the fullest.


Chart 8: FBMFKG's monthly chart as at Nov 29, 2016_12.30 (Source: Shareinvestor.com)

Our market is now a buyers' market. If you are looking for bargains, you will love this market. If you exercise careful discretion, carry out due diligence and observe strict discipline, you will get many bargains that will reward you handsomely in the months and years ahead. Good luck!


Monday, November 28, 2016

MFCB: Earning Increased

Result Update

For QE30/9/2016. MFCB's net profit rose 35% q-o-q or 35% y-o-y to RM36 million while revenue rose 9% q-o-q or 48% y-o-y to RM215 million. Net profit rose more than the increase in PBT due to lower effective tax rate - mainly due to the lower effective tax rate for construction profit from the Don Sahong Hydropower project, foreign exchange translation gains which are non-taxable and over-provision of income tax in the previous financial year- and foreign currency translation difference for foreign operations of RM8.0 million and fair value changes of available-for-sale financial assets of RM3.3 million.

 
Table: MFCB's last 10 quarterly results


Graph: MFCB's last 13 quarters' P&L 

Valuation

MFCB (closed at R2.34 last Friday) is now trading at a trailing PER of 6.7x (based on last 4 quarters' EPS of 34.99 sen).MFCB enjoys steady growt, with earnings CAGR of 20% in the past 2 years. This gives the stock a PEG ratio of less than 1 time.

Technical Outlook

In October, MFCB has broken above the resistance from the horizontal line at RM2.12. This breakout could send the stock to RM2.50.


 Chart: MFCB'sweekly chart as at Nov 25, 2016 (Source: Chartnexus)

Conclusion

Based on good financial performance, attractive valuation and bullish technical outlook, MFCB is a good stock 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.

Sunday, November 27, 2016

MKH: Earnings Soared (Updated)

Result Update

For QE30/9/2016, MKH's net profit rose 34% q-o-q or 107% y-o-y to RM50 million while revenue rose 43% q-o-q or 16% y-o-y to RM404 million. Profit before taxation rose y-o-y mainly contributed by the property and construction division from its on-going and new development projects and the turnaround in the plantation division from a loss before tax of RM31.1 million (included unrealized foreign exchange losses of RM17.7 million) in QE30/9/2015 to a profit before tax of RM12.7 million (included unrealized foreign exchange gains of RM7.4 million). PBT improved q-o-q mainly due to
mainly due higher profit contribution from property and construction division.


Table: MKH's last 10 quarterly results


Graph: MKH's last 15 quarterly results

Valuation

MKH (closed at RM2.82 last Friday) is now trading at a trailing PER of 5.8x (based on last 4 quarters' EPS of 48.9 sen). In addition to being very attractively priced at a low PER, MKH has a high growth - with earnings CAGR of 36% in the past 2 years. This gives the stock a PEG ratio of less than 1 time. This makes MKH an exceptional growth stock, trading like a cheap value stock.

(Updated: MKH has announced a dividend of 7 sen which will go ex on December 16. For more, go here)

Technical Outlook 

MKH is in an intermediate uptrend line with support at RM2.70. Immediate resistance will come from the overhead horizontal line at RM2.98-3.00.


Chart: MKH's weekly chart as at Nov 25, 2016 (Source: Chartnexus)

Conclusion

Based on satisfactory financial performance, attractive valuation and positive technical outlook, MKH is rate a STRONG BUY as a growth/value 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.

Ulicorp: Earnings Recovered

Result Update

For QE30/9/2016, Ulicorp's net profit rose 27% q-o-q or 38% y-o-y to RM11 million while revenue was mixed - down 6% q-o-q but up 14% y-o-y to RM52 million. Profit before taxation rose q-o-q mainly due to better profit margin achieved on goods sold during the quarter under review.


Table: Ulicorp's last 10 quarterly results


Graph: Ulicorp's last 13 quarterly results

Valuation

Ulicorp (closed at RM3.50 last Friday) is now trading at a trailing PER of 14.6x (based on last 4 quarters' EPS of 23.91 sen). As the company has once again returned to high growth - with earnings CAGR of 39% in the past 2 years - the PEG ratio is down to less than 1 time. Thus its valuation is deemed acceptable.

Technical Outlook 

Ulicorp hase found support at the horizontal line at RM3.50.


Chart: Ulicorp's weekly chart as at Nov 25, 2016 (Source: Chartnexus)

Conclusion

Based on improved financial performance and attractive valuation as a growth stock, I revised my rating for Ulicorp 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.

Thursday, November 24, 2016

Huatlai: Earnings Soared

Background

According to a recent Affin report, Huat Lai is a major integrated poultry player in Malaysia. It is Malaysia’s largest layer and the second largest broiler player in the country, behind unlisted Leong Hup. Based in Marlimau, Malacca, its operations span from the production of poultry feed, the breeding of day old chics, broilers, layering and also downstream processing of chicken. Huat Lai has intentions to further beef up its boiler and layering capacity with planned capex of RM80-100m over the next 2 years.

From Company's website

It announced a sterling set of results 2 days ago. Prior to that, its major shareholders, the Lim Brothers had offered to buy up the remaining shares not owned by them (about 25%) at RM5.00 apiece. For more, go here.

Industry Outlook

In QE30/9/2016, the  prices of chicken egg were quite volatile while prices of meat were relatively stable. In the current quarter, prices of egg has been sliding while prices of meat has recovered some of the lost ground. See Graph 1 below.

Graph 1: Price charts of chicken egg and meat from June to November 2016 (Source:
Jabatan Perkhidmatan Veterinar)



Graph 2: Price charts of chicken egg and meat for the past 4 years  (Source:
Jabatan Perkhidmatan Veterinar ) 

Financial Performance

For QE30/9/2016, Huatlai's net profit rose 221% -o-q or 245% y-o-y to RM45 million while revenue rose 12% q-o-q or 6% y-o-y to RM441 million. The improved profits for the current quarter was mainly attributed by improved selling prices of eggs and higher average selling prices of broilers as compared to the preceding quarter due to the shortage in the supply of poultry products in the market.


Table: Huatlai's last 8 quarters' result

Over the past 14 quarters, we can see that revenue has been on steady rise while profits have also been rising but on a zigzag pattern.


Graph 3: Huatlai's last 14 quarters' results

Latest Financial Position

Huatlai's financial position is stretched as at 30/9/2016, with current ratio at 0.8 times and gearing ratio at 1.4 times. The reason for this is due to its aggressive expansion plan and a small paid-up capital of RM86.6 million (comprising of 86.6 million shares). 

Valuation

Huatlai(closed at RM4.97 today) is trading at a PER of 7.6 times (based on last 4 quarters' EPS of 65 sen). This compares favorably to Teoseng and LTKM which are trading at PER of 14 and 13 times respectively. If Huatlai trades up to a PER of 13 times, its fair value could be RM8.45.

Technical Outlook

Huatlai is in a long-term uptrend. Its immediate resistance will be at the psychological RM5.00 (which is also the offer price for the buy-out by the Lim Brothers). Beyond that, it may test the November 2015 high of RM5.28. 


Chart 1: FGV's weekly chart as at Nov 23, 2016_4.00 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance, attractive valuation and positive technical outlook, Huatlai is a good stock for long-term investment. I think we should not be deterred by the presence of the buy-out offer at RM5.00, which under-valued the stock. If the offerors are keen to privatize Huatlai, they may have to raise the offer price to get more acceptance. The risk is that the offer lapsed and the share price drops back. If that were to happen, then the share price will have to find its fair value, which I hope will eventually be closer to my estimate of RM8.45.

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.

Harbour: Earnings Took A Heavy Knock

Result Update

For QE30/9/2016, Harbour's net profit dropped 53% q-o-q or 15% y-o-y to RM8.8 million while its revenue dropped 30% q-o-q or 3% y-o-y to RM112 million.


Table 1: Harbour's last 8 quarterly results

All 4 segments suffered q-o-q decline in revenue & profits.


Table 2: Harbour's segmental results for QE30/9/2016 & QE30/6/20165


Graph 1: Harbour's last 37 quarterly results

Valuation

Harbour (closed at RM0.80 in the morning session) is now trading at a PE of 5.5 times (based on last 4 quarters' EPS of 14.36 sen). At this PER, Harbour is deemed attractively valued. 

Technical Outlook

Harbour is in a long-term "uptrend line" with support at RM0.55.


Chart 2: Harbour's monthly chart as at Nov 24, 2016_3.30pm (Source: ShareInvestor)

Conclusion

Despite the weak financial performance, I am keeping my rating for Harbour as a BUY based on attractive valuation and mildly positive technical outlook.

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.