Friday, June 28, 2013

The Magic Number for Dow Jones, Hang Seng and Nikkei

Here's the 3 number that you should not forget:

1. Dow Jones: 15,000 points
2. Hang Seng: 20,000 points
3. Nikkei:        15,000 points

Last week, global equity market sentiment turned negative when Dow Jones got bashed down below 15,000 and Hang Seng got sold down below 20,000. Reason is QE may end soon, hence SELL.

And then US released its 1Q2013 GDP growth of 1.8% (which is below market expectation). GUESS WHAT? Market think that QE will continue because of this and equity market rebound.


Follow the market, now it's time to BUY... 3 stocks to look at are:

1. YEE LEE (Good earnings in 1Q13 growing > 100%, maybe the last consumer stocks with PE at only 7x)
2. IJM PLANTATION (FFB growth > 40% in April and May, meaning results can still grow YoY despite low CPO prices)
3. MAS (only for daredevil, don't expect the stock to come down below 30 sen due to strong GLC support. Trade and sell at 34 sen).


>> When KLCI touch 1785. Now KLCI about 1760, so about 25 more points to play.
>> When Nikkei touch 14,500. Now Nikkei is about 13,600. So about 900 more points to go.

Tuesday, June 25, 2013

CIMB upgrade Jaya Tiasa Target Price to RM2.36

CIMB Research: Jaya Tiasa’s timber earnings to surge

KUALA LUMPUR: CIMB Equities Research expects Jaya Tiasa's timber earnings to surge in the coming quarters, due to the recent sharp rise in log prices.
It said on Tuesday another factor is the stronger housing starts in Japan, which are likely to support plywood prices in 2H13.
“We upgrade our call from underperform to Trading Buy given the likelihood of a near-term re-rating, driven mainly by stronger timber earnings.
“We raise our FY13-15 EPS by 29-60% to account for the more bullish outlook for timber prices. Our SOP-based target price goes up to RM2.36 as we apply a higher valuation to the group's timber business,” it said. 


My take:

>> RSI is only 40 something at current price of RM2.01 so the downside should be limited.
>> Share price should be supported at RM2.00 which is a strong psychological support.
>> Longer term outlook will really depend on timber prices which is volatile and unpredictable.
>> Assume KLCI does not fall some more below 1725, Jaya Tiasa should be able to appreciate to RM2.25 - RM2.30 level.

Friday, June 21, 2013

What to do now when Dow Jones fall 350 points?

What happened?

>> Dow Jones Index crack below 15,000 level convincingly.

>> Foreign investor took the signal of QE coming to an end as an excuse to exit emerging market, including Malaysia.

>> Net foreign selling in local index RM283m yesterday, likely to continue today.

What to do?

>> SELL. You may hate me when I say this, sell everything except dividend yield stocks which has return of > 5%.

>> All the indicators are bearish. USD strengthen against Ringgit, commodity price tumble, Malaysia bond yield got sold significantly and pushing its yield up.

>> Index may fall below 1750 today, support at 1700 next week.
Roughly I expect KLCI to end at 1740-1750 today, meaning down about 10 points to 20 points.

>> Collect Maxis at RM6.50. If the fall is so great that Maxis pushed to RM6.50, can collect a bit. Annual dividend 40 sen, so getting 6.2% dividend yield from KLCI stocks should be OK.

Thursday, June 20, 2013

SBCCORP: Target Price RM2.35 according to Kenanga

Kenanga wrote about SBCCORP today and assign Target Price of RM2.35, implying 38% share price upside.

·          Low land cost. Most of SBC’s landbanks were acquired between the period of 2000-2004, hence relatively low in land cost. Out of its c.134ac landbank, the bulk (59%) are located in Ulu Selangor, 23% are located in KL (mostly in the Mukim Batu area), 10% are in Kota Kinabalu (“KK”) and the remaining in Kuantan. Their Mukim Batu land is near the Taman Wahyu area while they also have niche landbank along Jln Ipoh. Landbanks in KK are in Signal Hill and Tj Lipat, which is a prime area and MAHSING has projects there that have fared well in terms of take-up rates and pricings. Their net gearing is comfortably at 0.2x which provides ample room for landbanking.
·          SBC has been making in-roads into Kota Kinabalu, Sabah (KK), which is another booming market. The big boys are already there; MAHSING has recently acquired land there, while SPSETIA has kicked-off its Aeropod@Tanjong Aru project while IJMLAND has niche landbanks in the area. In May-13, they entered into a JVA with Suria Capital Holdings Bhd to undertake a mixed development project on 16.25ac land along the Jesselton Waterfront, KK. JVA is likely concluded in Dec, so we believe significant earnings contributions will only be felt from FY15 onwards.  The project will have GDV of RM1.8b, in which Suria is entitled to 18% of the GDV as part of land payment; positively, the land obligations are stretched over 8 tranches over a 7 year development period.
·          Risks. We note that revenue has been on a declining trend since 1Q13. However, it 4Q13, revenue did improve by 177% QoQ although it was still 8% YoY lower. We are unclear of their new launches beyond Dex Suites @ Kiara East.
·          Big RNAV upsides and compelling valuations. We project FY14E net profit of RM29.3m (+10% YoY).  The stock is trading at 4.8x FY14E PER and 0.4x FY14E PBV which is far below its peer (developers of RM100-500m market cap) average of 10.8x Fwd PER and 1.0x Fwd PBV. By revaluing their landbanks, particularly the KL and KK landbanks, we derive an RNAV of RM5.86. Even after applying our maximum RNAV discount of 60% on their RNAV (due to small market capitalization of RM145m), we derive a TP of RM2.35, which provides a 38% share price upside to the last price of RM1.70.

Wednesday, June 19, 2013

3 STOCKS to BUY NOW... Foreign investors turned into net buyers

On Tuesday, foreign investors turned into net buyer of RM133m and KLCI stay strong above 1770 points. It is the local institutional (net sell RM62m) and local retail (net sell RM71m).

Usually, foreign investor are regarded as "smart money". Hence, this may be the time to BUY again.

These are 3 stocks I am looking at:

1. HAIO (Target RM2.85-RM2.90)
>>Should announce full year result soon before end-of June. With 9M13 net profit already growing 51% YoY to RM37.3m, the full year FY13 net income should be growing very good.
>> What to do? I think this stock can increase up to RM2.85 - RM2.90 level.
>> For reference purpose, Affin is valuing HAIO at RM2.98 while Kenanga is valuing it at RM2.90.

2. YEELEE (Target RM1.50)
>> I have written about this Company's 1Q13 result previously which grow more than 100% YoY.
>> Despite the good result, the share price has not move much. Meanwhile, Spritzer has increased a lot (>15%) within the same period.
>> Valuation is attractive as this Company is one of the few consumer stocks with PE below 10.
>> What to do? I think this stock can increase closer to RM1.50.

3. MAS (Target RM0.34-RM0.35) WARNING: Only for daredevil
>> Nothing much to talk about on this Company fundamental.
>> But due to its strong backing from government, I think this stock unlikely to fall below RM0.30.
>> Technical RSI is only 33 now (very close to oversold level of 30).
>> Expect small rebound to RM0.34-RM0.35 in the next 1 month. Once hit, take profit fast.

Tuesday, June 18, 2013

Smart money coming back to KLCI?

1. Foreign investor selling cooled off yesterday with only RM30m net selling, this is significantly lower than more than RM200m last Friday.
2. KLCI break above 1770 points yesterday while mid cap stocks are generally flattish.
3. BUY SLOWLY. Time to accumulate slowly on stocks and prepare for the next surge.
4. Concern on Fed Reserve reversing QE have been priced in into the market.
5. My view is that Ben Bernanke will "manage" his words carefully and it won't sound outright QE exit. Which means market should react positively to it after its announcement on Thursday.

Monday, June 17, 2013

KLCI +19points but net foreign selling RM281m?

Yes, that's what happened last Friday....
To balance the number, net local net buy RM229m followed by net local retail RM52m.

What does that mean?
Looking at net foreign selling trend, it should be hard for KLCI to break through 1670 this week.

Expect minimal upside for KLCI.

Thursday, June 13, 2013

Foreign investors selling continues

Foreign investors seems to continue to pull out of South East Asia market.

 Yesterday, net foreign selling is RM263m which is another major selling after RM352.5m registered on 11-Jun-2013.

Recall that on 17-May-2013, I have said that the party is going to end soon between 1 week to 1 month time. On 11-Jun-2013 , 3 weeks after my post... KLCI tumbled 8 points. On 12-Jun-2013, the selling continues with 4 points down.

For today, we should be seeing decline of between 5pts and 10pts. The concern is usually mid and small cap stocks declined more as they are not part of the KLCI index.

Continue to take profit...come back when KLCI closer to 1750

1. TAKE PROFIT on any shares which already gain > 20% profit.

2. HOLD on to stocks with high dividend yield more than 5%.

3. Keep the $ and wait for KLCI to be closer to 1750 before start buying again.

Wednesday, June 12, 2013

Foreign investors start to sell KLCI stocks?

Foreign investors have started to pull out of South East Asia market. 
Yesterday, net foreign selling reached RM352.5m one of the biggest one seen so far this year.

Recall that on 17-May-2013, I have said that the party is going to end soon between 1 week to 1 month time.

And yesterday 11-Jun-2013 , 3 weeks after my post... KLCI tumbled 8 points. As KLCI is usually considered low beta index, 8 points is A LOT.... especially with Indonesia index and Thailand index tumbled significantly.

What to do?
I may be willing to TAKE PROFIT on any shares which already gain > 20% profit.

HOLD on to stocks with high dividend yield more than 5%.

No more BUYing as I may want to wait for KLCI to be closer to 1750 before seeing opportunity again.