Sunday, February 27, 2011

WOW... Average staff earning RM1.125 million in this Company

I read an article in StarBiz yesterday with the title "Too Big To Fail?" which highlights five intriguing things about an audited account of an unnamed Company. Out of the 5 points highlighted, I am particularly interested in this point:


5. Remuneration Per Staff:

In its annual report, the company stated that it had a total of 200 investment management staff and 120 administrative staff. This adds up to a total workforce of 320, resulting in a total staff cost of RM360mil. This works out to a significant average annual cost per employee. Evidently, the staff force is all well paid and one would assume that they should be delivering results for the subsidiary.


My view:
Let's do the simple math: RM360m for 320 staffs means on average an employee earns RM1,125,000 yearly in this Company. This thing really worth another highlight: It's RM1.125m average annual earnings per staff.

Finding it hard to make ends meet every month? Maybe you should join this Company. But the sad thing is we don't know exactly which Company is this...

Tuesday, February 22, 2011

AXIATA FY2010 Result Preview

Axiata will release its FY2010 result tomorrow with the consensus are estimating revenue of RM15526.44m (22.27% growth y-o-y) and net income of RM2626.07m (90.85% growth y-o-y).

My view:
i) Growth in the broadband segment should continue to be strong. In 3Q2010, broadband net adds improved to 96,000 (2Q10 : 72,000) bringing total to 803,000.
ii) Indonesia contribution at EBITDA level should continue to surpass Celcom. In 9MYTD2010, XL Indonesia already consists 46% of Axiata's EBITDA (vs. 43% from Celcom)
iii) FY2010 KPI should be easily beaten as 9MYTD revenue growth already at 21.4%, vs target of 12.1%. Meanwhile, 9MYTD EBITDA growth already at 40.7%, vs. 14.1% target.

Market seems to have anticipated the good set of result with Axiata share price has increased after the release of XL Axiata result which is better than expected.
Average analyst target price = RM5.43, range from RM4.18 to RM6.40
KLCI sentiment seems to be negative as well, so the result really need to surpass expectation by more than 5% to see meaningful impact on share price.

CENSOFT: Kenanga keep Trading Buy with TP RM1.60

Century Software Holdings Bhd (“CSHB”) has reported a good set of results, which is 20% above our estimate. We understand that the Group is soon officially launching the e-Bayaran portal. We are excited over the potential from e-Bayaran. We have revised up FY11 and FY12 earnings estimates to RM21.3m and RM28.3m from RM19.1m and RM25.3m, previously. Despite the recent run-up in share price, we continue to see values in CSHB. We value CSHB at 12.9x PER to its revised FY11 EPS of 12.4 sen, hence we upgraded 12-month target price to RM1.60 (from RM1.43 previously. Maintaining TRADING BUY.

Friday, February 18, 2011

MBMR: OSK target price RM5.00

This is quoted from OSK Research released today:

"MBM Resources’ FY10 core net profit of RM141.6m was in line with our estimates. Core earnings growth surged 133.5% y-o-y driven by a topline growth of 40.4% y-o-y. With its associates’ profits doubling, the significant improvement in earnings was also boosted by healthy margins on the back of higher volume and efficiency achieved amid the strengthening Ringgit. A special dividend of 3 sen was announced, with full year dividend amounting to 13 sen a share, for a net yield of 4%. Maintain BUY at TP of RM5.00."

Wednesday, February 16, 2011

5 Things To Know Today: 16-Feb-2011

1. FBM KLCI gained 10.81p to 1505.33 on Monday. Yesterday, Thai Index was flat (+1.42p), Philippine Index also flat (-5.95p). These are signs that foreign selling almost done.
2. China inflation for was 4.9% in Jan-2011 which is lower than the expectation of 5.4%. This is good news as it shows inflation worry may be overdone.
3. Major news = Petronas made major "discoveries" of oil at Sarawak. This is positive for O&G sector. Stock to watch = SAPCRES, KENCANA and DAYANG.
4. Stocks mentioned in The Edge = AMMB (EPF accumulating) and AXIS REIT (reinvestment plan lauded).
5. My view = positive with 1510 as immediate target. PCHEM should lead the index today.

Monday, February 14, 2011

SUPERMAX FY2010 Result

This is the news on Supermax FY2010 Result from The Edge Malaysia website:e

TITLE: Supermax 4Q earnings fall 24.8pct on high latex prices, unfavourable forex

Supermax Corp Bhd saw its earnings decline by 24.8% from RM43.54 million to RM32.72 million in the fourth quarter ended Dec 31, 2010 due to the continuous high latex prices and unfavourable exchange rates.

The rubber glove maker said on Monday, Feb 14 its revenue rose 18.4% from RM196.42 million to RM232.67 million. Its earnings per share were 9.62 sen versus 16.22 sen. It proposed a dividend of five sen per share.... "

Analysis and extra information:
1. The full year FY2010 result was 5.2% below market expectation with EPS of 49.45 sen, vs concensus estimate of 52.2 sen.
2. This quarter of 4Q2010 is the consecutive 3rd q-o-q drop in net income from the highest in 1Q2010 of RM51.47m to 4Q2010 of RM32.72m.
3. Consensus average target price as of today (before incorporating this worse than expected result) from analyst is RM6.23.

My view:
The result is worse than expected but share price drop before the result release may indicate that almost all negative news has been priced in. With RSI of 42.0 as of time of writing, downside seems limited in the short term. However, longer term outlook depends on USD outlook and raw material cost (latex price).

5 Things To Know for today's trading

1. KLCI dropped another 9.47 points last Friday to 1494.52 points.
2. Asia market was positive this morning with Nikkei up 76.3p while Australia up 43.1p. (as of 845am).
3. Major news globally = Egypt's Mubarak has finally agreed to step down, the country is now planning its stimulus plan to jump start its economy.
4. 3 companies mentioned in The Edge Weekly:
i) Metro Kajang - talks about the Company continuous effort to build in Kajang
ii) POS Malaysia - bidding for Khazanah stake coming to end-stage
iii) PFC Engineering (which is making MGO for APP Industries) is likely to get RM500m job, The Edge reported quoting unnamed sources.
5. From the economy data, watch out for Malaysia 2010 GDP which will be released on Friday 18-Feb-2011.

Overall, I am positive on today's outlook with KLCI should regain its 1500 points level.

Friday, February 11, 2011

Answer on KPS

Someone ask me on KPS outlook... here's my short feedback.

Company background:
1. KPS = Kumpulan Perangsang Selangor
2. Basically, KPS is a water treatment operator and service provider. The Company holds strategic stakes in major water supply companies namely Konsortium ABASS Sdn Bhd (100%) via Titisan Modal (M) Sdn Bhd a 55% owned subsidiary of KPS, Syarikat Pengeluar Air Selangor Holdings Berhad (30%) via Viable Chip (M) Sdn Bhd, a 100% owned subsidiary of KPS and Taliworks Corporation Berhad (20%).
3. The Company's Chairman is Dato' Hj Abd Karim Munisar

Fundamental Data:
With share price of RM1.32, here's some fundamental data:
1. Trading below book value of RM2.04
2. Last FY dividend yield (gross) is 4.0%
3. Trading at historical PER of 8.37x.
4. Heard rumours something is on with this Company, but unsure about how true it is...

I have no view on this stock, thus I can only provide some factual information here...

Thursday, February 10, 2011

Some latest news analysis

1. December industrial output up 4.2pct on-yr, up 2.1pct on-month - The Edge

My view: This is actually below expectation, because economists expected IPI to grow 5.0%.

2. Malaysian palm oil output falls 14.18pct in January - The Edge

My view: Good for CPO price, but slightly negative for Plantation counters as their FFB output likely to be affected as well.
These 2 reasons may explain why KLCI drop further from 15 points drop to 21 points drop... hopefully index manage to recover to 1520 ...

3 Reasons To Be Bullish Despite KLCI down 15 points

1. I think that the worry on China interest rate is overdone.

According to The Edge, the decline in KLCI is caused by interest rate increase in China. Is the worry valid? NO from my point of view, due to: i) inflation is still manageable in Malaysia with the latest reading at 2.2% as of Dec-2011 (vs. China's 4.6%), ii) Malaysia economy seems to be on soft landing form with GDP expected to be 7% in 2010 and 5.5% in 2011 (meaning the growth is still there) and iii) increase in world oil price and CPO actually should be beneficial to Malaysia as a net exporter of these commodity

2. Sarawak election is coming soon

There are many versions of speculation when Sarawak election will be held... some say March, some May... My thought? Wait for the Merlimau by election on 6-March-2011, if BN win with bigger majority then March version should be a reality. Sarawak counters should continue to be in the limelight. (Note that NAIM has surged slightly yesterday).

3. Generally, Malaysia is still underowned by global fund manager

Sources indicated that average allocations of EM portfolio managers for Malaysia hovers around 1.8% (vs. MSCI neutral weight of 2.8%). This suggests that the chances of Foreign Fund Managers buying is more (vs. selling).

Tuesday, February 8, 2011

FPI: 5 Updates That You Should Not Miss

Update 1: As of 2:50am, FPI gained 2.73% or 2.5 sen to 94 sen. 85% of the volume is BUY, signalling increasing interest in this stock.

Update 2: Despite gaining about 4 sen from 90 sen since my last writing on FPI on 4-Jan-2011, FPI's RSI is now only at 60. This means that there is still room for share price increase with 70 acting as Overbought level.

Update 3: According to sources, FPI may release its 3Q2011 result on 11-Feb-2011. This may explain the share price gain recently.

Update 4: I still think FPI is worth RM1.33, representing 41.5% upside. This is based on 9x historical PER.

Update 5: FPI fundamental remained solid with: i) more than 20 years experience in manufacturing high end speaker, ii) net profit jumped 175% in FY2010 and iii) strong balance sheet with net cash of RM81.4m...
Watch out this stock, I think the price increase is still in the early stage...

Monday, February 7, 2011

5 Things To Know for Today's Trading

1. FBM KLCI was up by 11.88 points or 0.78% to 1,531.82 last Wednesday.

2. Asia market open on firm footing this morning... As of 8:17 am, Nikkei was up by 93.22 points to 10,636.74 while ASX200 was also up by 2.3 points to 4,865 since market open.

3. The Edge Financial Daily first page talk about Sarawak Election play stocks which include HSL, NAIM, DAYANG, PETRA and CMSB. Expect this stock to rally in the first 15 minute. If you are interested to buy these stocks, dont chase in the 1st 15 minutes, but wait for weaker price from 915am to 11am.

4. Update on Egypt issue: Mubarak still hold on to his position. Indian Deputy Governor Subir Gokarn said Egypt political crisis poses a risk to oil prices and will impact?Indian central bank actions, according to report from Bloomberg.

5. Today's economy data to watch for will be US Consumer Credit for Dec-2010 and Germany Factory Order in Dec-2010.

OVERALL: KLCI should gain today on the back of strong CPO price, increasing interest in Oil and Gas stock and Sarawak election theme play.

Thursday, February 3, 2011

3 Signs Of Bullish Sentiment After Chinese New Year

Sign 1: The poll at The Edge Malaysia website shows positive result among readers... See the pics below, I have voted at around 1215pm 3-Feb-2011...

Sign 2: Many of my Chinese friends and relatives received Chinese New Year SMS greetings from Prime Minister...Well this is quite straightforward as another strong sign of possible general elections this year, which will then benefit stock market...

Sign 3: Strong market performance despite only half day trading on Chinese New Year Eve. FBM KLCI surged 11.88 points (Well, 1188 is a good number, isn't it?) with 674 gainers and 137 losers. Volume was strong too with 1.53 billion shares valued at RM1.70 billion changed hand.

What's the stock I am looking at? CBIP, FPI and SPSETIA. Will try to write on these companies soon...

Tuesday, February 1, 2011

Major Share Buy Back on 31-Jan-2011

1. CBIP - 275,300 shares bought back at average price of RM4.08 in a deal worth about RM1.12m

2. REDTONE - 150,000 shares bought back at average price of 19.2 sen in a deal worth about RM28.8k

Interestingly, CBIP announced that it gets RM40.3m contract to build a mill in Ivory Coast at the same day.