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Sunday, June 25, 2017

BursaStation Quarterly Market Outlook

I will be speaking at the BursaStation Quarterly Market Outlook event next month. It will be an 1-hour presentation entitled Market Observation In Brief where I will be sharing about how we can use both simple techniques or ideas from Fundamental Analysis and Technical Analysis to select stocks for investment. I am looking forward to meeting up with you.

Date:     8 July 2017 (Saturday)
Time:    10:00am-1:00pm
Venue:  Theatrette Room (LG Floor)
             Bursa Malaysia Exchange Square
             Bukit Kewangan
             50200 Kuala Lumpur

If you like to attend the event, please sign up here

Friday, June 23, 2017

Selamat Hari Raya AidilFitri

I like to wish all Muslim readers a joyous and blessed Hari Raya Aidilfitri.


From 123Greetings.com



Thursday, June 22, 2017

WTIC: At The Crossroad

Crude oil prices have been sliding! How low can it go?

On June 14, I did a study for my record and came up with the target for the current decline of USD42. Firstly, I drew a best fit channel (AB-A1B1) which captured the price movement since August 2016. Within this "rounding channel", I managed to draw 3 lines; the first line for the top (X1Y1), next line for the preceding lows (X2Y2) and current line for the low to come (XY). The line, XY intersect with the lower line for the "rounding channel) at USD42.


Chart 1: WTIC's daily chart as at Jun 14, 2017 (Source: Stockcharts.com)

Today I did one more study where I drew 2 ovals onto the chart for WTIC. We can see prices are within the upper reaches of the red oval while staying away from the blue oval. The intersection of the 2 ovals is again at USD42. This should provide the support for a rebound.


Chart 2: WTIC's daily chart as at Jun 22, 2017 (Source: Stockcharts.com)

Based on my "unconventional" studies, I think WTIC is poised for a rebound. In line with that, I would recommend that you do not join the selling of O&G stocks in the current market. In fact, I believe that O&G stocks are now at a relatively good level for slow accumulation. Please exercise careful discretion if you choose to follow this suggestion.

SCGM: Earnings Stagnated

Results Update

In QE30/4/2017, SCGM's net profit was mixed- dropped 27% q-o-q but rose 47% y-o-y to RM5.1 million while revenue rose 15% q-o-q or 63% y-o-y to RM53 million. Revenue increased q-o-q due to higher demand from both local and export markets. PBT dropped q-o-q mainly due to increase in operating expenses which was attributed to higher cost of raw materials.

 
Table: SCGM's last 8 quarterly results

 
Graph: SCGM's last 33 quarterly results

Valuation

SCGM (closed at RM4.09 yesterday) is now trading at a PE of 24X (based on last 4 quarters' EPS of 17.17  sen). With earning stagnating, the high PER is not justifiable.

Technical Outlook

SCGM is in a long-term uptrend line, SS with support at RM3.60-3.70. MACD has hooked down- indicating the possibility of a near term pullback. This is also borne out by directional movement index, with +DMI is dipping while -DMI is rising.


Chart 1: SCGM's monthly chart as at Jun 21, 2017 (Source: Malaysiastock.biz)


Chart 2: SCGM's daily chart as at Jun 21, 2017 (Source: ShareInvestor.com)

Conclusion

Despite satisfactory financial performance & still positive technical outlook, I am revising my previous rating from a Trading BUY to a SELL INTO STRENGTH due to demanding valuation.

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, June 21, 2017

Refinery Stocks Coming Under Selling Pressure

In May, PetronM and Hengyuan rallied strongly to their high. Since then, they have been sliding. Most investors would think that the reason for this is the drop in crude oil price. That's not quite right. 

 
Chart 1: PetronM's monthly chart as at Jun 21, 2017_10.00am (Source: ShareInvestor,com)

 
Chart 2: Hengyuan's monthly chart as at Jun 21, 2017_10.00am (Source: ShareInvestor,com)

I had posted before that the earnings of refinery companies depend on crack spread, which is the differential between the price of crude oil and petroleum products extracted from it. To give you an idea how that impact the earnings of these companies, I have created a graph comparing their earnings for the period Mar 2014 to Mar 2017 with the crack spread for that period. As you can see the earnings dropped whenever crack spread dropped. 


Chart 3: Crack Spread (Front Month) and PetronM & Hengyuan's profits for Mar 2014-Mar2017 (Source of Chart: Quandl)

Now, crack spread is again dropping. The smart money is again selling these stocks since they have rallied so sharply in May. If you have good paper profit sitting in these stocks, you should consider SELLING INTO STRENGTH.

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

Superln: Earnings Remained Healthy

Result Update

In QE30/4/2017, Superln's net profit rose by 2% q-o-q or 72% y-o-y to RM6.4 million while its revenue rose by 26% q-o-q or 37% y-o-y to RM32.5 million. Revenue rose y-o-y due to increased revenue for both the manufacturing & trading divisions.

The manufacturing division recorded higher revenue of RM28.4 million (FY 2016 : RM22.2 million) due to higher sales volume while PBT rose to RM7.9 million (FY 2016 : RM4.9 million) mainly due to the increase in total gross profit generated from higher volume of sales and favourable exchange rate.

Revenue for the trading division of RM4.1 million (FY 2016 : RM1.4 million) was mainly due to the increased sales of copper pipes to local customers. As a result, that division PBT increased to RM0.2 million compared to RM0.01 million previously.


Table: Superln's last 8 quarters' results


Graph: Superln's last 17 quarters' results

Valuation

Superln (closed at RM1.92 yesterday) is now trading at a trailing PER of 13x (based on last 4 quarters' EPS of 14.94 sen). Based on an earning CAGR of 60% over the past 3 years, Superln's PEG ratio is only 0.2x. As per the notes to its accounts, the company plans to invest approximately USD 4 million for the expansion plans and is targeting for Factory 4 to commence production in the FY2019. The new factory would enable Superln to strengthen its presence and support its customers in Vietnam and neighboring countries. Hence, Superln will continue to be a growth stock trading at attractive earnings multiple.

Note: Superln has completed its 1-for-2 share split in early June. This exercise may explain the strong rally in the share price for the past 3 months. It is not unusual that the stock may consolidate its recent gain before it continues with its upward trajectory.

Technical Outlook

Superln is in an uptrend line, which accelerated after it broke above the line, AB at RM1.30-1.33.


Chart 1: Superln's weekly chart as at Jun 20, 2017 (Source: Shareinvestor.com)


Chart 2: Superln's monthly chart as at Jun 20, 2017 (Source: Shareinvestor.com)

Conclusion

Based on good financial performance, attractive valuation & positive technical outlook, Superln could be a good stock for trading BUY.long-term investment. If you want to get into this stock, I think any price below RM2.00 will be a good entry.

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, June 20, 2017

MBSB: Uptrend May Continue

In January, I posted on the start of MBSB's next upleg (here). From RM0.96, MBSB rose to a high of RM1.36 in May. The stock consolidated for the past 6 weeks. Today it looks like MBSB is trying to break above the horizontal resistance at RM1.36. This could be due to market reaction to the news that it has applied for BNM's approval to begin merger talk with Asian Finance Bank.

If it can break above and stay above the horizontal line at RM1.36, MBSB could be a good trading BUY. If you choose to buy into MBSB, please exercise careful discretion given the current weak market sentiment. Do not over-trade! 


Chart: MBSB's daily chart as at Jun 20, 2017_11.40am (Source: Shareinvestor.com)

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, June 19, 2017

Topglov: Earnings Dropped Sequentially

Results Update

For QE31/5/2017, Topglov's net profit dropped 6% q-o-q but rose 24% y-o-y to RM78 million while revenue rose 2% q-o-q or 29% y-o-y to RM870 million. PBT dropped q-o-q resulting from the time lag in passing on cost to the customers, as average prices for natural rubber latex and nitrile latex rose 18.7% and 24.1% respectively.

 
Table: Topglov's last 8 quarterly results


Graph: Topglov's last 44 quarterly results

Valuation

Topglov (closed at RM5.61 last Friday) is now trading at a trailing PE of 23.5X (based on last 4 quarters' EPS of 23.92 sen). At this PER, Topglov is deemed fully valued.

Technical Outlook

Since it made a high of RM7.00 in December 2015 & January 2016 - coincided with its blown-out net profit of RM128 million in November 2015 - Topglov is moving within a rising trading range (AB A'B'), currently at RM4.50 & RM5.60. Last week, it broke to the upside of the trading range and made a high of RM5.95 on June 9. It is now resting just above its trading range or will it breakdown into the trading range again?

 
Chart 1: Topglov's weekly chart as at as at Jun 16, 2017 (Source: ShareInvestor.com)
 

Chart 2: Topglov's monthly chart as at as at Jun 16, 2017 (Source: ShareInvestor.com)

Conclusion

Based on weaker financial performance, full valuation & unexciting technical outlook, I think it may be a good idea to take some profit on Topglov. Thus I revise my rating for Topglov from a HOLD to a REDUCE.

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, June 18, 2017

Alumimium Stocks Looking Toppish (updated)

Aluminium stocks, such as PMetal, LBAlum, Tongher & Arank, have rallied strongly over the past 1 & 1/2 years.


Chart 1: PMetal & LBAlum's monthly chart as at as at Jun 16, 2017 (Source: ShareInvestor.com)


Chart 2: Tongher & Arank's monthly chart as at as at Jun 16, 2017 (Source: ShareInvestor.com)
 
When you pair aluminium price chart with individual stock price chart, you can see that the stock prices have rallied upward on the back of improvement in the metal price, and vice versa.


Chart 3: Aluminium & PMetal's chart as at Jun 16, 2017 (Source: Investing. com & ShareInvestor.com)


Chart 4: Aluminium & LBAlum's chart as at Jun 16, 2017 (Source: Investing. com & ShareInvestor.com)
 

Chart 5: Aluminium & Tongher's chart as at Jun 16, 2017 (Source: Investing. com & ShareInvestor.com)


Chart 6: Aluminium & Arank's chart as at Jun 16, 2017 (Source: Investing. com & ShareInvestor.com)

The reason why share prices of these aluminium companies have been rising is because their profits have risen in line with the price of aluminium. What may happen when aluminium price starts to come off?


 
Chart 7: Aluminium price & Aluminium Companies' Profits from 2010-2017 (Source: Investing. com)

If you study the aluminium price chart, you can see that aluminium prices could have make a top- especially after it touched the line, AB which has capped the price rallies in the past 5 & 1/2 years. The indicators are leaning towards a bearish outlook for aluminium:
  • MACD has hooked down
  • +DMI is dropping; -DMI is rising; and, the ADX is declining
  • Stochastic RSI is now in oversold territory, and may remain here for a while if prices should trend lower in a downtrend.

Chart 8: Aluminium's weekly chart as at Jun 16, 2017 (Source: Investing. com)

Based on the above negative technical outlook for aluminium, I believe you should avoid aluminium stocks or take profit if you have position in aluminium stocks.

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.