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Thursday, September 22, 2016

GENM: A Failed Upside Breakout (AMENDED)


Yesterday, we saw GENM rose 19 sen to close at RM4.70. In the process, GENM broke above the strong resistance from the horizontal line at RM4.60. This resistance has capped its upside for a period of 15 months. This morning, it started off with a mild correction which saw the prices pulling back to RM4.65-4.67. Unfortunately at 11:30am, the share prices dropped sharply to just below the breakout level at RM4.60. The selling intensified in the afternoon. At 2:55pm, it hit the low at RM4.47 before mild recovery set in. At 3:40pm, it was trading at RM4.51-4.52.


Chart 1: GENM's weekly chart as at Sep 22, 2014 (Source: Chartnexus)

Had the upside breakout sustained, GENM could continue to rise within its larger upward channels (see the green lines). This would see GENM slowly rising to the upper channel line at RM5.50-5.80.


Chart 2; GENM's monthly chart as at Sep 22, 2014 (Source: Chartnexus)

These are the potential reasons for the start of the next upleg for GENM:

1) Good financial performance

In last quarter (QE30/6/2016), GENM's net profit rose 195% q-o-q or 106% y-oy- to RM476 million while revenue rose 1% q-o-q or 13% y-o-y to RM2.234 billion. The q-o-q increase in net profit was due to foreign exchange gains of RM46.1 million; higher adjusted EBITDA by RM28.6 million from the leisure and hospitality business in US and Bahamas mainly contributed by lower operating loss from Bimini operations in 2Q 2016 and lower operating cost for RWNYC operations; and, higher adjusted EBITDA by RM20.6 million from leisure and hospitality business in Malaysia mainly contributed by higher revenue.


Table: GENM's last 8 quarterly results


Chart 3: GENM's last 41 quarterly results

2) Opening of a new theme park in Genting Highland

GENM is building a new theme park, the 20th Century Fox World Genting theme park in Genting Highland. The theme park is expected to be opened end of 2016. The theme will feature around 25 thrill rides and attractions based on films and franchises from popular movies and cartoons. 

Conclusion

As it stands, the failure of GENM to stay above the RM4.60 mark negates any call for a trading BUY for the stock following the upside breakout. However, the stock is worth tracking. If the next breakout can sustain, you should consider getting into GENM.

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: Earnings Weakened

Results Update

For QE31/7/2016, Haio's net profit dropped by 13% q-o-q but rose 47% y-o-y to RM9.7 million while revenue dropped by 11% q-o-q but rose 42% y-o-y to RM79 million. Revenue dropped q-o-q for all three divisions: for the MLM division due to the Ramadan season and promotional sales in the previous quarter; for the wholesale division due to lower sales in Chinese medicated tonic and cooking wine which more than offset the additional contribution from one-off re-export sale of RM 2 million; and for the retail division due to year-end grand members’ sales campaign in the previous quarter. As a result of the lower revenue, MLM & retail divisions suffered a drop in PBT which more than offset the increased PBT in the wholesale division, which was due to lower operating expenses incurred in current  quarter and higher contribution from inter-segment sales.  


Table: Haio's last 8 quarterly results


Chart 1: Haio's last 46 quarterly results

Valuation

Haio (closed at RM3.41 yesterday) is now trading at a trailing PE of 17 times (based on last 4 quarters' EPS of 20.39 sen). At this PER, Haio is deemed fully valued.

Techncial Outlook

Haio is in an upward channel, with support at RM2.30 and the resistance at RM3.50. Last week it touched the resistance after a strong rally following the previous strong quarterly result. This latest quarterly result should be a cold shower to the players. A retracement within the channel is likely.


Chart 2: Haio's monthly chart as at Sep 21, 2014 (Source: Shareinvestor.com)

Conclusion

Based on weaker financial performance & full valuation, I believe some profit-taking activities may set in for Haio. You should consider doing the same and aim to buyback at RM3.00 or lower.

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, September 21, 2016

KESM: Earnings Rose Srquentially


Results Update

For QE31/7/2016, KESM's net profit rose by 6% q-o-q but dropped 23% y-o-y to RM8.0 million while revenue rose 5% q-o-q or 8% y-o-y to RM74.5 million. Revenue rose y-o-y due to higher demand for burn-in and test services. Despite the increased revenue, Profit before tax dropped y-o-y due to the drop in Other incomes as a result of the absence of an exchange gain of RM1.1 million and absence of reversal of sundry payables of RM0.7 million; increase in employee benefits expense RM4.2 million as a result of higher wage rates and staff compensation to support increased revenue, which had more than offset the decline in raw  materials and consumables used and changes in work-in-progress of RM2.0 million as a result of lower sales from electronic manufacturing services.


Table 1: KESM's last 8 quarterly results


Chart 1: KESM's last 46 quarterly results 

As mentioned in the previous post, KESM's profit is extremely small compared to its capex. For the past 11 years, it expended RM509 million on capex in order to made net profits totaling RM168 million. Due to high depreciation totaling RM538 million, fixed assets only rose from RM112 million to RM169 million (Note: While I did not attempt to reconcile the numbers, the rough figures seem to tally). The low profits explained why the company's returns on assets & equity are so abysmal, except for periods of peak demand (like 2007/2008 and probably today).


Table 2: KESM's last 11 years' Capex, Depreciation, Net Profit, ROE & ROA


Chart 2: KESM's last 11 years' Capex, Depreciation, Net Profit, ROE & ROA

Industrial Outlook

KESM is dependent on the semiconductor sector, which is expected to be weaker in 2016 due to weak demand for PCs.  However, KESM is now focusing on the chips for the automotive sector. Kenanga had issued a report in early August which highlighted this new area of growth. To wit:

KESM is well positioned to benefit from two salient trends; (1) rising global automotive sales (expected to exceed 100m units in 2017 from 91m in 2015), and (2) increased electronic chips content in cars. The value content of electronics in a car is expected to grow from USD284 to USD330 from 2014 to 2019. The automotive segment represents an area of high growth potential and has enabled the Group to diversify into a segment that offers longer product life cycle and higher margin.
The new demand for automotive chips could be the driving force that propelled the Philadelphia Semiconductor Index (SOX) to break into a new high in late July.


Chart 3: SOX's monthly chart as at Jau 13, 2016 (Source: Yahoo Finance)

Valuation

KESM (closed at RM8.00 yesterday) is now trading at a PE of 11.2 times (based on last 4 quarters' EPS of 71.40 sen). At this PER, we would in the past consider the stock to be fully valued. The big question is whether KESM - like any other stocks in or servicing the semiconductor sector - is now in peak earning. If it is, then there is a good chance that forward earning will drop. However, the automotive sector demand for chip could be something structural, which may extend the earning growth for a while. In the August report, Kenanga valued KESM at RM7.90.

Technical Outlook

KESM is now trading at all-time high. As we have seen in 2000, the steep rise in price is a set-up for a steep correction. Thus we have to be careful trading or investing in KESM.


Chart 4: KESM's monthly chart as at Sep 20, 2016 (Source: ShareInvestor.com)

The weekly chart shows immediate support is at the January 2016 high of RM6.00.


Chart 5: KESM's weekly chart as at Sep 20, 2016 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance & exciting prospect, I consider KESM to be a good stock for long-term investment. However, I believe KESM is good for some profit-taking due to its sharp price run-up.

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, September 19, 2016

MAGNI: Earnings Rebounded

Results Update

For QE31/7/2016, Magni's net profit rose 25% q-o-q or 51% y-o-y to RM23.5 million while revenue rose 40% q-o-q or 40% y-o-y to RM271 million. Revenue increased q-o-q due to 48%-increase in sales for garment segment but a slight 2%-drop in sales for packaging segment. PBT increased by 29% q-o-q due to 33%-increase PBT for Garment which was mainly due to higher revenue and higher currency exchange gain, partially weighed down by higher operating expenses while PBT for Packaging dipped by 14.3% which was mainly due to the cumulative effect of lower revenue and higher operating expenses.


Table: Magni's last 8 quarterly results


Chart 1: Magni's last 30 quarterly results

Valuation

Magni (trading at RM4.15 last Thursday) has a trailing PE of 7.5 times (based on last 4 quarters' EPS of 55.35 sen). Its last 2 years' earning CAGR was at 45%; giving the stock a PEG ratio of 0.2x. At this PEG ratio, Magni's valuation is still very attractive. 

Technical Outlook

Magni is in a long-term uptrend. There are negative technical reading; MACD has just crossed below its MACD signal line and ADX has hooked down. Both are signaling a possible correction in the near term.


Chart 2: Magni's monthly chart as at Sep 15 2016 (Source: ShareInvestor.com)

The weekly chart shows that Magni is moving in a gradual downward channel, with support at RM3.80 & resistance at RM4.40. MACD looks poised to cross above the MACD signal line. 


Chart 3: Magni's daily chart as at Sep 15 2016 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance and attractive valuation, Magni remains 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.

Thursday, September 15, 2016

SKPRES: Potential Bullish Breakout

Recent Financial Results

In QE30/6/2016, SKPRES's net profit dropped 16% q-o-q but rose 2% y-o-y to RM18 million while revenue rose 38% q-o-q or 32% y-o-y to RM321 million. Revenue increased q-o-q as a result of the increase in sales intake by existing key customers. Profit before tax decreased marginally from RM25.13 million in last quarter to RM24.01 million mainly due to higher labor costs incurred as a result of relying on higher cost contract workers to cater for the increase in sales orders.


Table: SKPRES's last 8 quarterly results


Chart 1: SKPRES's last 33 quarterly results

Valuation

SKPRES (closed at RM1.28 yesterday) is now trading at a PER of 17 times (based on last 4 quarters' EPS of 7.45 sen). Its PEG ratio is 0.3x (based on last 2 years' earning CAGR of 65%). As such, SKPRES is deemed fairly attractive for a growth stock.

Technical Outlook

SKPRES has just broken above its intermediate downtrend line at RM1.25-1.26. If this upside breakout can sustain, SKPRES can commence on its next upleg.



Chart 2: SKPRES's weekly chart as at Sep 14, 2016 (Source: ShareInvestor.com)

Conclusion

Based on good financial performance, fairly attractive valuation for a growth stock & potentially bullish technical outlook, SKPRES could be a good stock to consider for 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.

BJAuto: Earnings & Revenue Dropped


Results Update

For QE31/7/2016, BJAuto's net profit dropped 20% q-o-q or 21% y-o-y to RM41 million while revenue decreased by 8% q-o-q or 4% y-o-y to RM494 million. Revenue dropped q-o-q due to lower sales volume of Mazda vehicles in Malaysia and the Philippines. The decrease in sales volume of Mazda vehicles in Malaysia was mainly attributed to supply constraint on certain CKD models as the contract assembler's plant in Kulim was shut down for about five weeks for the upgrading works of its paint shop. In the Philippines, sale of its top selling Mazda3 model was affected by a competitor's newly launched model. In line with lower revenue, higher spending on advertising and promotion expenses, and marginal compression in gross profit margin, Group pre-tax profit for the current quarter decreased by RM14.7 million or 20.1%.


Table: BJAuto's last 8 quarters' financial performance


Chart 1: BJAuto's last 17 quarters' financial performance

Valuation

BJAuto (closed at RM2.25 yesterday) has a fair PER of 14 times (based on last 4 quarters' EPS of 16.36 sen). BJAuto paid good dividend, with an attractive dividend yield of 7.8%.

Technical Outlook

BJAuto has been moving in a gradual uptrend line, S1-S1 with support at RM2.20-2.30.


Chart 2: BJAuto's weekly chart as at Sep 14, 2016 (Source: Share Investors)

Conclusion

Based on good financial performance, good dividend yield and mildly positive technical outlook, BJAuto's rating is kept as 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.

Astro: Earnings Dipped

Results Update

For QE31/7/2016, Astro's net profit dropped by 38% q-o-q or 9% y-o-y to RM125 million even though its revenue increased by 5% q-o-q or 4% y-o-y to RM1.428 billion.

Revenue rose y-o-y mainly due to an increase in subscription, advertising, home-shopping and other revenue of RM1.7 million, RM17.6 million, RM36.7 million and RM3.3 million respectively. The higher revenue performance for home-shopping was due to increase in number of products sold and launch of Chinese Channel in October 2015.

EBITDA margin decreased by 6.0% y-o-y due to higher content costs, particularly EURO 2016 and impact of weakening RM, offset against discounts received from renegotiated content contracts.

Net profit decreased by 9.0% y-o-y due to decrease in EBITDA of RM63.5 million, offset by a decrease in depreciation of property, plant and equipment by RM34.6 million and lower net finance cost by RM18.7 million. 


Table: Astro's last 8 quarterly results


Chart 1: Astro's last 20 quarterly results

Valuation

Astro (closed at RM2.95 yesterday) is now trading at a trailing PE of 24 times (based on last 4 quarters' EPS of 12.25 sen). At this PER, Astro is fully valued. However, Astro paid out dividend quarterly which amounted to 12.5 sen for the last 4 quarters; giving the stock a decent DY of  4.2%.

Technical Outlook

Astro has broken above its long-term downtrend line at RM2.90. The breakout was not accompanied by increased volume nor upward momentum (ADX is flat!). Without public participation, its upside is capped by the horizontal line at RM3.00. For now, Astro is likely to continue to hang around the intermediate uptrend line support at RM2.85-2.90.

 
Chart 2: Astro's weekly chart as at Sep 14, 2016 (Source: ShareInvestor.com)


Chart 3: Astro's monthly chart as at Sep 14, 2016 (Source: ShareInvestor.com)

Conclusion

Based on weak financial performance, demanding valuation & unexciting technical outlook Astro's rating remains 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.

Friday, September 09, 2016

UOADEV: An Attractive Property Developer

Background

UOA Development BHD (‘UOADEV’) is involved in property development of residential, commercial and industrial properties. It has developed a few large projects, the most famous being the Bangsar South development.  


via, Company's website

Historical Financial Performance

The company's top-line and bottom-line show steady growth over the past 5 years.

 
Chart 1: UOADEV's last 10 Half-yearly result

Recent Financial Result

In QE30/6/2016, UOADEV's net profit rose 29% q-o-q but dropped marginally y-o-y to RM124 million while revenue rose 47% q-o-q but dropped 25% y-o-y to RM295 million. Net profit rose q-o-q due to the contribution from Desa Green serviced Apartments which were completed during the quarter.


Table: UOADEV's last 8 quarter's result


Chart 2: UOADEV's last 10 quarter's result

Financial Position

As at 30/6/2016, UOADEV's financial position is deemed satisfactory. Its current ratio stood at 2.4x while gearing ratio stood at 0.38x.

Valuation

UOADEV (closed at RM2.57 yesterday) is now trading at a trailing PER of 8.6 times (based on last 4 quarterly EPS of 30 sen). At that PER, UOADEV is deemed fairly attractive. Its dividend payment rose to 15 sen for FY2015 from 13 sen in FY2014. If dividend payable remains unchanged, the Dividend yield for the stock is at a commendable 5.8%.

Technical Outlook

UOADEV appears to have broken above the line connecting the previous 2 peaks at RM2.50. This upside breakout could lead to an acceleration in its uptrend.


Chart 3: UOADEV's weekly chart as at Sep 8, 2016 (Source: Chartnexus)

Conclusion

Based on good financial performance, satisfactory financial position, attractive valuation & bullish technical outlook, UOADEV could be a good stock for a TRADING 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.

DSONIC: Better Days Ahead?

Results Update

In QE30/6/2016, DSonic's net profit rose 10% q-o-q or 68% y-o-y to RM20.8 million while revenue rose 3% q-o-q or 40% y-o-y to RM76 million.  Revenue rose q-o-q principally due to commencement in supplying components for smart cards. This led to higher profits.


Table: DSonic's last 8 quarter's result


Chart 1: DSonic's last 17 quarter's result

Big Government Contracts In Hand


DSonic has 3 large government contracts in hand worth about RM802.53 million. The contracts are to do the following work:
  • To supply Malaysian Passport booklets for a period of five years or 13.416 million passports commencing December 1, 2016 (Value: RM222.38 million) 
  • To supply12 million MyKad raw cards and MyKad consumables for three years and six months commencing July 1, 2016 (Value: RM260.4 million) 
  • To supply Malaysian passport chips for five years commencing Dec 1, 2016 (Value RM318.75 million)
Valuation

DSonic (closed at RM1.54 yesterday) is now trading at a PE of 29 times (based on last 4 quarterly EPS of 5.3 sen). In June, RHB was reported to have valued DSonic at RM2.00 (based on a 2017F PE of 25x).
 
Technical Outlook

DSonic has just broken above its downtrend line, RR at RM1.50. If the bullish breakout can sustain, the stock may begin its next upleg.


Chart 2: DSonic's daily chart as at Sep 8, 2016 (Source: Shareinvestor.com)

Conclusion

Based on improved financial performance & mildly bullish technical outlook, DSonic could be re-rated as TRADING BUY from a TRADING SELL.

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, September 07, 2016

BAIDU: Another Exciting Chinese e-commerce Giant


Yesterday I read an interesting article entitled “BAT – Baidu, Alibaba and Tencent – lead charge in China mergers and show no sign of slowing down” (here). According to the article, Baidu, Alibaba, and Tencent – referred to in the industry as BAT – have invested a combined US$75 billion in acquiring strategic partners in e-commerce and online-to-offline (O2O) businesses over the past 3 years. If that's not enough, BAT is expected to spend a combined US$88 billion in similar investment; making them the dominant force in mergers and acquisitions on the mainland in 2016.

Recently, I have posted about the upside technical breakout for Alibaba (Code: BABA) (here). That stock has since rallied from US$84 to US$104. There is nothing much to write home about Tencent (Code: TCTZF) since it has been rising since its listing.

Today, I would like to highlight about the promising technical set-up for Baidu (Code: BIDU). From the weekly chart below, you can see the following:
1. BIDU is now poised to test its intermediate downtrend line at US$190.
2. Its RSI has broken above the downtrend line while its +DMI is above the –DMI. (Both are precursors to a potential breakout of the price downtrend line.)
3. ADX has yet to hook up nor climb above the 20 mark (No sign of uptrend momentum!)
4. MACD is still below the zero line (No uptrend yet!)

I think it is possible that the first test of the downtrend line will be unsuccessful. If that happens, the share price may drop back to the 20 & 30-week EMA line at US$172-173. If you must get in cheap & early, this is one level that you can consider. However, you want to conserve your fund and you are okay with buying a bit higher and surer, then you should aim to get in when the price breaks above US$190-195. As always, you have exercised careful discretion in all your trading. Good luck!

 
Chart 1: BIDU's weekly chart as at Sep 6, 2016 (Source: Stockcharts.com)


Chart 2: BIDU's monthly chart as at Sep 6, 2016 (Source: Nasdaq.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.

KSL: Cheaper But Still Good?

Result Update

For QE30/6/2016, KSL's net profit  rose 19% q-o-q but dropped 26% y-o-y to RM52 million. Revenue dropped 9% q-o-q or 21% y-o-y to RM139 million. Despite 9%-drop in revenue q-o-q, gross profit rose by RM1.7 million due to changes in sales mix and percentage of completion of on-going development projects. Higher gross profit; increased other income of RM1.3 million; and drop in selling and marketing expenses of RM1.7 million and administrative expenses of RM6.4 million, helped to boost PBT by 19% q-o-q to RM67 million.


Table: KSL's last 8 quarterly results


Chart 1: KSL's last 47 quarterly results

Valuation

KSL (at RM1.16 as at 4.35pm) is now trading at a trailing PER of 5.5 times (based on last 4 quarters' EPS of 21 sen). At this PER, KSL is deemed fairly valued.

Technical Outlook

KSL has dropped back all the way to its long-term uptrend line support at RM1.10. If this support can hold, KSL should slowly recover along with any recovery in the property sector.
 

Chart 2: KSL's monthly chart as at Sep 6, 2016 (Source: Shareinvestor.com)

Conclusion

Despite weaker financial performance, KSL is maintained as a HOLD based on fair valuation & neutral 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, KSL.

MIKROMB: A small growth stock

Background

Mikro MSC Berhad (MIKROMB) is involved in the research, development and design of analogue, digital and computer-controlled electronic systems or devices for use in electrical, electronic and other industries and provision of technical support and maintenance services.

MIKROMB operates from a relatively small premise measuring15,000 square feet which houses both its R&D lab and manufacturing plant. The plant can produce about 16,000 units of various electrical distribution products monthly, including:
  •   Over-current Relays
  •   Earth Fault Relays
  •   Earth Leakage Relays & System
  •   Metering Solutions
  •   Voltage Relays
  •   Reverse Power Relay
  •   Power Factor Regulator
  •   Annunciator
  •   Motor Protection Relay
  •   Capacitor & Reactor
Its products were used in a few high profile projects (such as airports, hospitals, hotels, ports etc) which is a testament to their high standard. For the whole list of projects that it has participated in, please go here.

Historical Financial Performance

From the chart below, we can see that MIKROMB's top-line and bottom-line have grown steadily over the past ten years. Profit margin was not sacrificed to achieve the top-line growth- a testimonial to the high quality of its products.

 
Chart 1: MIKROMB's last 10 years' P&L

Recent Financial Result

For QE30/6/2016, MIKROMB's net profit rose by 19% q-o-q or 24% y-o-y to RM2.4 million while revenue grew by 11% q-o-q or 8% y-o-y to RM12.5 million. Revenue grew due to increase local demand. This, plus 5%-increase in gross profit margin, pushed up profits for the company.

For FY2016, MIKROMB's net profit rose 25% from RM8.3 million to RM10.3 million while revenue rose 23% from RM39.0 million to RM48.1 million. With the increased profit, the company raised its dividend from 1.2 sen to 2.1 sen per share.


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

 
Chart 2: MIKROMB's last 12 quarters' P&L
 
Financial Position

MIKROMB's financial position is deemed satisfactory as at 30/6/2016 with current ratio at 6.8x and gearing ratio at 0.3x.

Valuation

MIKROMB (closed at 0.46 on 6/9/2016) is now trading at a trailing PER of 13x (based on last 4 quarter's EPS of 3.5 sen). Based on last 2 years' earning CAGR of 37%, its PEG ratio is at 0.4x. Thus, MIKROMB is deemed fairly attractive for a small growth stock. [Note: PEG ratio is computed by dividing PER with earning CAGR.]

Technical Outlook

MIKROMB is in a long-term uptrend line with support at RM0.45. However, its upside is capped by an overhead downtrend line at RM0.50. An upside breakout of the downtrend line will lead to the continuation of its prior uptrend. A drop below RM0.45 could lead to an end to its long-term uptrend.


Chart 3: SEG's weekly chart as at Sep 5, 2016 (Source: Chartnexus)


Chart 4: SEG's monthly chart as at Sep 5, 2016 (Source: Chartnexus)

Conclusion

Based on good financial performance, relatively attractive valuation & positive technical outlook, MIKROMB 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.

Tuesday, September 06, 2016

SEG: Earnings Remained Weak

Result Update

For QE30/6/2016, SEG's net profit dropped 35% q-o-q or 60% y-o-y to RM3.2 million while revenue relatively unchanged at RM65 million. Profits dropped y-o-y partially due to the drop in student enrollment brought forward from the previous year. The new enrollment for 2016 was reported to be "encouraging,  which would result in stronger performance in the second half of 2016". We will have to wait and see.


Table 1: SEG's last 8 quarterly results


Chart 1: SEG's last 33 quarterly results

Valuation

SEG (closed at RM1.14 yesterday) is now trading at a PE of 60 times (based on last 4 quarters' EPS of 1.89 sen). As such, SEG is deemed overvalued. However, it pays a dividend of 12 sen last year, which translates to a DY of 10.5%. While it is unlikely that this level of dividend payment can continue, SEG will probably remain one of the highest dividend yielding stocks on our exchange.

Technical Outlook

SEG was able to hang onto the RM1.15 for the past 4 months after the support from the horizontal line at RM1.20 was violated in May. With the latest disappointing result, the share price has broken below the RM1.15 support. If the share price fails to recover above the RM1.15 mark soon, it could slide to the next support at RM1.00.


Chart 2: SEG's weekly chart as at Sep 5, 2016 (Source: Chartnexus) 


Chart 3: SEG's monthly chart as at Sep 5, 2016 (Source: Sahreinvestor.com)

Conclusion

Based on poor financial performance, unattractive valuation & potentially negative technical outlook, SEG is now rated a SELL or AVOID.

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.