Supportive International in the red - Net Loss of RM1.02m in 3Q2012

Supportive International Holdings Berhad operates mainly as plastic components manufacturer and property developer. It reported its 9M2012 results yesterday. Here's the summary of the result:
1. 3Q2012 Revenue down 41% YoY to RM8.77m, net loss of RM1.02m (vs. RM0.60m made in 3Q2011).
    This is possibly due to losses in property development segment. In 9M2012 segmental result, property development segment registered net loss of RM1.07m while plastic manufacturing profit is RM0.20m.
2. Trading above Book Value at 1.09x Price To Book. Latest Book Value 26.68sen. With share price     close at 29 sen yesterday.
3. My view: With the losses, the announcement still saying "Barring any unforeseen circumstances, the Board expects the financial performance for the remaining periods to be satisfactory". How can it be "satisfactory"? 

Kenanga Upgrade BJTOTO to OUTPERFORM

1. YTD 1H12 net earnings of RM197.8m accounted for 54% of our FY12 full year estimate and 50% that of the market consensus.
2. Better results got fuelled by the good luck factor. 2Q12 EPPR of 57.9% was nearly 2% below the 60% theoretical level.
3. BToto declared a 8 sen net DPS in 2Q12 same as the preceding quarter, representing 101.0% of its
2Q12 earnings.
4. Upgrading to OUTPERFORM. Post earnings revision, our DCF derived price target has increased slightly to RM4.52 from RM4.49. We continue to like BToto for its sustainable and attractive 7%-8% gross dividend yield.

CPO drop below RM3,000... plantation stocks may retreat tomorrow

1. CPO prices tumbled RM86 or 2.8% to RM2,998 as of 5.45pm. If critical support above RM3,000 is broken today, it will be negative for plantation stocks tomorrow.
2. Historically, KL Plantation Index tracks CPO prices closely with correlation of > 90%.
3. Based on technical RSI value, here's some of the OVERBOUGHT plantation stocks that are most vulnerable to possible selloff tomorrow:
a) Sarawak Oil Plantation - RSI 77.7
b) Tradewinds Plantation - RSI 75.3
c) BLD Plantation - RSI 72.4

George Kent 9M2011 Result Review, PBT down 54% YoY

George Kent (Malaysia) Berhad is an engineering-based company with diversified business interests in many industries such as water industry, construction and project management. It reported its 9M2011 results yesterday. Here's the summary of the result:
1. 3Q2011 Revenue down 31% to RM31.2m, Profit before tax down 54% to RM4.9m.
    This is due to deferment in the commencement of certain projects as well as deferment in the award
    of certain tenders for supply of meters.
2. Trading at 2011 Annualized PE of 13.7x. Annualized 2011 EPS: 7.28 sen.
3. Trading above Book Value at 1.28x Price To Book. Latest Book Value RM0.78. With share price     close at RM1.00 yesterday.

A-Rank 1Q2012 Result Review, PBT down 15% YoY

A-Rank Bhd is principally engaged in investment holding and manufacturing and marketing of aluminium billets respectively. It reported its 1Q2012 results yesterday. Here's the summary of the result:
1. Revenue up 5% to RM100.3m.
    This is due to higher business volume as well as a slight increase in average selling prices due to the
    rise in underlying raw material costs.
2. But profit before tax down 15% to RM1.8m.
    Mainly caused by lower margins as a result of the volatility in aluminium prices as well as the stronger
    Malaysian Ringgit which impacted export margins.
3. Trading below Book Value at 0.54x Price To Book. Latest Book Value RM0.78. With share price
    close at RM0.42 yesterday.

MMHE downgraded to HOLD at Maybank with TP of RM5.70

4 reasons stated for downgrade:
- delay in projects roll-out
- a likely setback at Sime Darby’s yard (it is mentioned that will only contribute from FY14E)
- grey visibility at Turkmenistan
- higher tax rates

Earnings from 2011E to 2013E cut by 9-29%.

Tactical downgrade to Hold. The delay in projects roll-out, a likely
setback at Sime Darby’s yard, grey visibility at Turkmenistan and higher
tax rates are the 4 key reasons that compel us to cut 2011-13 earnings
forecasts by 9-29%. The slower execution will constrain available yard
space and could see MMHE missing out some projects in 2012. Against
this backdrop, we cut our TP to RM5.70 (20x 2013 PER; -29%). We
also downgrade our call on the stock due to fair valuations at this
juncture although we remain positive over its longer term prospects.




Lowering 2011-13 forecasts by 9-29%. We now expect negligible
contribution from the Sime Darby yard in 2012-13 vs. earlier projected
RM30-150m in net profit contribution p.a. In addition, we now project
zero associate profit contribution in 2012-13 at its Turkmenistan venture
(previously RM29m p.a.) on a more challenging orderbook
replenishment outlook. Our new forecasts also assume a higher tax
rate for the group on unabsorbed allowances on lower yard utilisatio

S&P downgraded 14 US banks, upgrade China bank

Bank of America Corp., Goldman Sachs Group Inc. and Citigroup Inc. had long-term credit grades reduced to A- from A by Standard & Poor’s after the ratings firm revised criteria for dozens of the world’s biggest lenders. S&P made the same cut to Morgan Stanley and Bank of America’s Merrill Lynch unit today. JPMorgan Chase & Co. was reduced one level to A from A+. S&P upgraded Bank of China Ltd. and China Construction Bank Corp. to A from A- and maintained the A rating on Industrial and Commercial Bank of China Ltd., giving all three lenders higher grades than most big U.S. banks.(Source: Bloomberg)
Full news click here


How often do you see 14 US banks downgraded by S&P in one go with 2 China banks upgraded?
Here's my thought on the news:
1. This is negative on KLCI as Asian market likely to react negatively to this news. Downgraded banks include those big banks like Bank of America, Citibank and Goldman Sachs will need to put higher collateral in their trading and pay higher yield for their next bond raising. Hence these banks may be more cautious in lending, causing growth outlook dimmer in 2012.
2. Although Malaysia banks are generally not directly exposed to US banks, today's leading decliner for KLCI should be banks. Reason: banks may be more cautious on lending in view of higher global uncertainty, lower loan growth means lower earnings growth, hence lower share price.
3. Welcome to the new world... where the economy power is clearly shifting from West to East. But in the short term, we may have to go through another year of volatility in 2012...

3 reasons to take profit from some of plantation stocks

1. CPO prices should drop below RM3,200 soon (probably today) as soybean oil retreated 2.0% to 51.7 cents per pound overnight at CBOT market. Crude oil price also tumbled 3.7% to US$98.8 overnight. Concern on Europe is getting bigger as Spain bond yield is set to cross 7%.
2. 3Q result should be weaker QoQ as CPO prices has weakened in the quarter July-September. Among the big cap plantation company, IOI will kick start the result season today, which should register decline QoQ. Look for more QoQ decline...
3. Technically, some of plantation stocks has reach overbought level. For example, Genting Plantation 14-day RSI has touched 72 at closing price of RM8.02 yesterday. Rimbunan Sawit 14-day RSI reached 75 at closing price of RM0.94 yesterday.

The next country after Italy is Spain?

The recent market meltdown is caused by Italy bond yield which has increased more than 7%. What is the next country that may have its bond yield increased above 7% soon? Spain maybe the next... Here's why.

1. Currently, Spain 10-year bond yield is 5.82%, it will only need another 118 basis points to breach that 7%. Well, Italy bond yield used to be around 5.8% last month in mid-October. Then the pressure come to force its Prime Minister to resign. Within 1 month, Italy bond yield shoots up more than 7%.
2. Spain unemployment rate of about 22% is significantly higher than Italy's 8%.
3. Political scenario in Spain does not look good as well. The country will be having its election on 20th Nov, about 2 more weeks from now. Opposition party (Popular Party or PP) seems to have good chance to win. This is based on recent local and regional elections held on 22 May 2011, in which PP won 38% popular vote compared to 28% won by the current Socialist government.

Why KLCI should drop 25-35 points today?

1. Everyone knows DJIA down almost 400points yesterday. But the difference is gold also drop 1.2% to about US$1770. In normal drop, investor will flock to gold. But this time with gold also down. What does this mean? The fear is so great that investor choose to hold cash. Be prepared... this may just be the start of another major correction.
2. Futures open at about 1455-1460 points, representing 30-35 points discount to yesterday close.
3. From technical view, KLCI 14-day RSI is at 63, very close to overbought level of 70. It is also has pretty much downside to at least below 50.

DJIA up 101.79p after Berlusconi plans to resign

What's the indication?

1. Market sentiment may have turned positive, eyeing 1,500 this week which is also its 5-year average historical PE of 16.2x. Today should try to test 1,490 points.

2. Although Europe problem has not been fully resolved, market seems to have priced in the risk from Europe. Greece is gone case, but as long as Italy does not go into bailout, things should be OK.

3. Some of the KLCI stocks which RSI still below 50:
a. AMMB (44)
b. Maxis (45)
c. Maybank (46)
d. Hong Leong Bank (48)
e. MMC (48)

3 reasons KLCI may not increase above 1480 today

1. Foreign investor trading was actually at net selling of RM85m last Friday despite the increase of 15 points. Unless foreign investor come in strongly, it may be hard for KLCI to continue its uptrend.
2. Uncertainties in Europe has spread to Italy. As Italy's bond yield has increased above 6%, the market will be watching closely whether it will hit 7%. (This is the level that requires Portugal, Ireland and Greece to start receiving bailout). The market will watch closely the outcome of today's vote on the 2010 budget report.
3. From technical view, KLCI will need to retest 1500 level this week after failing to do so last week. As the RSI is at 59.5 (70 is the overbought level), it appeared that index needed more momentum to surpass 1500.

UMA query on Harvest

Subject	:	HARVEST-Unusual Market Activity ("UMA") query by Bursa Securities
Contents	:	Bursa Malaysia Securities Berhad has on 4 November 2011 issued an UMA query on the trading of the Company’s securities. In this respect, investors are advised to take note of the Company’s reply to the above UMA query which will be posted at Bursa Malaysia’s website under the company announcements, http://announcements.bursamalaysia.com when making their investment decision. The contents of the UMA query is as follows:- We draw your attention to the sharp increase in price and high volume of your Company’s securities recently. In accordance with the Corporate Disclosure Policy on Response To Unusual Market Activity pursuant to paragraph 9.11 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad ("Main LR"), you are requested to furnish Bursa Malaysia Securities Berhad ("Bursa Securities") with an announcement for public release after making due enquiry with your directors and major shareholders seeking the cause of the unusual market activity in the Company’s securities. In this respect, you are also required to publicly confirm, amongst others, the following:- 1. whether there is any corporate development relating to your Group’s business and affairs that has not been previously announced that may account for the unusual market activity including those in the stage of negotiation / discussion. If yes, kindly provide the details including the status of the corporate development to enable investors to make informed investment decision; 2. whether there is any rumour or report concerning the business and affairs of the Group that may account for the unusual market activity and in this respect, you are required to comply with paragraphs 9.09 and 9.10 of the Main LR; 3. whether you are aware of any other possible explanation to account for the unusual market activity; and 4. your compliance with the Main LR, in particular paragraph 9.03 of the Main LR on immediate disclosure obligations. Please note that the contents of the announcement must be endorsed by the Board of Directors of the Company and the announcement must reach Bursa Securities immediately via Bursa LINK.

Top 30 Volume Stocks all under RM1.00, what's the indication?

1. Market may be over optimistic... more than 50% of them are ACE market counters.
2. Probably this is the end of the short lived bull run? But this still need to depend on the outcome of G-20 resolution over the weekend.
3. Ahead of the long weekend, is the market prepared to take some profit?
Maybe yes for selective stocks... especially if the counter has gained > 20% within hours.

KLCI up about 10p as ECB cut interest rate and Greece scrap referendum

1. The new European Central Bank President Mario Draghi has unexpectedly cut interest rate from 1.50% to 1.25%. It is also reported that he prefer to use interest rates than the printing press to promote growth in Europe
2. After being pressured by Germany and France, Greek Prime Minister George Papandreou finally cancelled his earlier plan to call a referendum on the latest bailout package

View: These news should be positive in the short term but may also be interpreted as signal that Europe is almost confirm will go into recession. ECB President said Europe is heading to "mild recession". He is good at managing expectation, but mild recession is still recession. Ahead of the long weekend, magnitude of KLCI increase may not be long lived.

Why KLCI drop when DJIA up 178p yesterday?

1. Europe has withhold aid payments to Greece before a referendum on a bailout agreement.This is an unexpected news to the market. German and French has stopped 8 billion euros aid to Greece. Basically, this is a very strong warning that Greece will surrender all European aid if its Parliament votes against a bailout package in the referendum
2. No QE3 this time from US, although Ben Bernanke did say that additional stimulus "remains on the table". Although this can still be an overall neutral news, market need a QE3 to respond to possible drag from Europe.

Final conclusion:
KLCI may drop below 1460 today, depending on how Hang Seng respond to the news.

KLCI trimmed losses (-4.69p to 1470.95p)

KLCI trimmed losses and declined 4.69p to 1470.95p after touching its lowest point of 1457.50p in the morning. Here's 2 reasons why KLCI recovered:
1. French President Nicolas Sarkozy has told Greek Prime Minister George Papandreou that the “only way to resolve Greek debt problems” is through a deal hammered out last wee. My view: this is a strong pressure from France to pressure Greece to just accept the deal. Although uncertainty is still there, it seems like France together with other G-20 countries will put on more pressure on Greece during G-20 summit on 3-5 Nov.
2. There is hope that US Federal Reserve may announced QE3 or something to continue to support US economy as it is scheduled to release its latest policy statement tonight.

3 reasons why KLCI should decline today.

1. DJIA declined 297.05 points or 2.5% overnight on growing concern that Greece may default if its Prime Minister referendum is rejected. My view: This is a very risky step to take from Greece. Papandreou won his last major vote on austerity measures by slim margin 154 votes to 144 on Oct. 20.
2. Yesterday KLCI drop 16.25 points to 1,475.64. This may well only the beginning as 10 points increase on Monday (31-Oct) happened when most Asian markets are down. Hence, we can say net net KLCI only down 6 points yesterday (less than 1%). My view: My guess KLCI should down between 10-15 points to 1460 to 1465 level. If that is broken, 1450 will be the next support.
3. From technical point of view, KLCI 14-day Relative Strength Index or RSI has declined from 66 to 61. This is still very close to overbought level of 70. My view: With many issues of global market (especially Europe) remain unresolved, KLCI short term bearish trend may have just begun.

Indeed KLCI down 16.25p or 1.1% to 1475.64, but why?

Check my post this morning on 3 Reasons KLCI wont close above 1500 this morning, and now KLCI down 16.25p or 1.1% to 1475.64 at close on the 1st day of trade in November.

Why KLCI down so much?
1. China growth may already be dragged by decline in Europe as its Purchasing Manufacturing Index or PMI drop to 3 year low level of 50.4 in Oct-2011.
2. At 4pm, Europe market tumbled more than 3% after Greek Prime Minister George Papandreou called a referendum and a parliamentary confidence vote, potentially derailing the European bailout effort and pushing Greece into default.
3. Foreign investor may start selling again. MYR has weakened 1.9% against USD today as of 5pm. In a normal day, you seldom see such a huge changes.

Supermax 1-to-1 bonus issue

Share price reaction? Up 8 sen to RM3.78 as of 3pm...
Average analyst target price = RM3.76, seems like upside is limited from now onwards.

3 reasons why KLCI wont surge above 1,500 today.

1. DJIA declined 276.1 points or 2.3% overnight amid concern European leaders may have problems to raise funds to contain its debt crisis. My view: China may not necessary want to help Europe with free money, definitely they will ask for something, e.g. to allow free trade of China products into Europe.
2. Yesterday surge of 10 points happened when most Asian markets are down. E.g. Hang Seng down 154 points or 0.8% and Nikkei down 62 points or 0.7%. My view: Malaysia boleh? Maybe not today...
3. From technical point of view, KLCI Relative Strength Index or RSI has reached 66, very close to overbought level of 70. My view: With many issues of global market remain unresolved, KLCI short term bullish trend may have come to an end.

Why DIGI up 4.4% (RM1.40)?

Here's some of the possible reason:
1. The Company plan to split its stock from 1 to 10 may materialized very soon in November. Check the Company announcement, today already 31-Oct, so it may not be long for the final date to be announced. Usually, after stock split, share price may react due to higher liquidity.
2. Investor start to recognize the high dividend of the Company from about 6% to 7% yield.
3. Window dressing in the last month of the day.

My guess... Reason 1 should be the case. Let's see whether tomorrow any announcement from DIGI.

MSM: How high can it go?

MSM up another 46 sen to RM5.60. From the IPO listing price of RM3.38, it has increased 66% in less than 1 month time.

How high can it go?
1. Let's look at risk free rate, 10-year Malaysia Government Bond is offering 3.93% yield.
2. Based on consensus figure, MSM dividend for FY12 is expected to be 22 sen.
3. Based on the logic that MSM dividend yield cannot go below risk free yield, the maximum value for MSM should be RM5.60.

Time to really look at MSM, whether the optimism surrounding it has gone beyond logic....

What if I miss out MSM? Then look at BERNAS

MSM gained RM1.15 (about 33%) to RM4.65 as of 3pm. Is there any upside? I think not that much. But what if I have miss out on MSM?

Look at BERNAS instead. Kenanga wrote about BERNAS yesterday. Here's the first paragraph:

Padiberas Nasional Berhad (BERNAS) is primarily involved in procurement, importing, buying, processing and selling of rice, rice by-products and paddy.

Recently, BERNAS has received the renewed mandate from Malaysian Government to manage Malaysia’s rice supplies for the next 10 years.

Net profit improved in both FY10 (+5% YoY) and 1Q11 (+36% YoY) as average cost of rice declined.

Net dividend totaled 19.0 sen in FY10 (yield 5.6%).

We view BERNAS as a cheap proxy to consumer staples sector in Malaysia as it trades at 7.8x PER of FY10 (25% below MSM IPO’s PER of 10.2x).

We recommend a fair value of RM3.85 (based on 10.2x historical PER to FY10), implying potential upside of 33%.

Short comment:

Hmm... RM3.85, still plenty of upside. May consider this if you have missed out MSM

MUHIBBAH director sell shares at RM1.82

Director sells shares


MUHIBBAH Engineering (M) Bhd executive director Lee Poh Kwee disposed of some half a million shares in the company for RM1.82 on June 16.


Source:
http://www.btimes.com.my/Current_News/BTIMES/articles/20110621232101/Article/#ixzz1PxOqTaa4

Short Comment:

I guess the indication is quite straight forward, even director is selling...

Kenanga downgrade Muhibah to HOLD

News reported that CIMB Bank is pulling out the financing for APH. This could lead the potential write off for Muhibbah amount due from APH amounted up to RM370m as per audited account 2010. Based on the report, to date APH has drawn down up to RM840m loan from the RM1.4b bridging loan facility by CIMB, which secured in 2006. At present, APH’s main shareholders are KIC Sdn Bhd (40%), PTP Sdn Bhd (35%) and Trek Perintis Sdn Bhd (15%). We view this news as negative to Muhibbah in the short-term. As such, we downgrade our call from BUY to HOLD (due to the uncertainties) but maintain our Target Price of RM2.24, as we keep our forecast unchanged at this juncture, pending for further clarification on the issue.

MSM IPO Priced at RM3.38 or 10.2x PE

So we know it now the IPO price is RM3.38 or 97% of the "Institutional Price".

MSM is the leading sugar producer in Malaysia. Its products range from white refined sugar and soft brown sugar. The Company owns brands such as "Gula Prai" and "Gula Perlis".

My view:
1. Lack of growth story as Malaysia market is generally matured. Sugar intake will be correlated to population growth. I think 5% to 8% revenue growth is the range where the top line will grow.
2. Cost of production will swing according to global sugar price. But current downtrend in sugar price will benefit MSM. Net profit margin = 10.6% in 2008, 14.4% in 2009, 10.7% in 2010. Something like 11% net profit margin should be the case in 2011.
3. Dividend policy of at least 50% of net profit. This will translate to about 17 sen dividend or 5.0% dividend yield.
4. Conclusion: more to dividend play than growth story. Characteristic wise, it will be something like MAXIS (share price stable but give consistent dividend).

KENANGA reiterate BUY on KIAN JOO with TP RM2.54

From Kenanga Research:

Kian Joo 1Q11 net profit was above our and consensus estimates. YoY, 1Q11 revenue grew 17.8% to
RM255.3m while net profit increased 40.3% to RM30.7m, on the back of higher sales, particularly seen
in corrugated carton division. QoQ 1Q11 saw improved margins. We maintain our Target Price of RM2.54
based on unchanged FY11E EPS of 25.4 sen over historical average PE band of 10x. We continue to like
Kian Joo for its decent earnings growth and dividend yields of 6% and hence, we reiterate our BUY rating on Kian Joo.

Kenanga Initiate Coverage on KIANJOO with TP of RM2.54

Kian Joo is the leading can manufacturing company in Malaysia. The company has a history of near to a century in the country; currently manufactures about 60% of local can market and has strong earnings track records. Kian Joo proposed bonus issue and rights of warrant recently. We believe the company’s decent dividend yield and strong fundamentals will attract long term investors given its strong track record. We are initiating coverage on Kian Joo with a BUY recommendation with a target price of RM2.54.

Comment:
1) The business of can manufacturing is a stable one as it banks on beverage sector. As a market leader in can manufacturing, the demand should be resilient.
2) Heard of some negative news on this Company about major shareholder tussle. But putting that aside, the historical dividend payment and business growth has been good thus far.
3) FY11E dividend yield of 6.1% seems attractive
4) The TP of RM2.54 provides about 15% upside (from current share price of RM2.21 as of 932am)

Foreign investors has started to sell Bursa shares

Last Friday, foreign investors are net seller of RM130.6m, buyer = local retail RM46.2m and Local Institution RM84.4m. (Source: The Sun)

However, there's an interesting article with title "Foreign funds buy RM3.8b stocks in two weeks" in Business Times. My first impression is "Why they look at 2 weeks instead of 1 week?"

Anyway... you can see it here http://www.btimes.com.my/Current_News/BTIMES/articles/ffund05/Article/#ixzz1Lo53jw9K

My view:
Start to be bearish, should look at day to day change instead of 2 weeks. At least, have to look at weekly changes. You can check it at The Sun daily business segment.

Foreign investors silently collecting Malaysia shares

Here's some statistics from The Sun on Daily Trading Participation...

Last Friday:
Net Buyer = Foreign (RM122.4m), Net Seller = Local Institutional ( -RM106.1m) and Local Retail (-RM16.3m)

Yesterday (Tuesday):

Net Buyer = Foreign (RM48.1m) and Local Institutional (RM14.7m), Net Seller = Local Retail (-RM62.8m).

My view:

Seems like foreign investors are slowly collecting Malaysia shares. Possibly due to continued low interest in US and money outflow from Japan. No wonder stocks with huge foreign interest e.g. AIRASIA has been moving.

KAWAN Food: Free 1 Warrant For Every 2 Shares

Exercise Price: RM1.40
Period: 5 years from Warrant issue date
Total warrants to be issued: 60m

Short comment:
Should see some short term trading opportunity, but fundamentally nothing much changed except the stock's liquidity may increase.

Kenanga downgraded KAWAN to HOLD with TP of RM1.51

Kawan Food’s 1Q11 revenue YoY grew 11.4% to RM25.9m while net profit dropped 6.7% to RM3m, bringing in slightly below our estimates. 1Q11 revenue surged 18.9% QoQ due mainly to the improved sales
from the rest of Asia, North America and Malaysia. The group’s 1Q11 net profit has decreased by 16.4% QoQ, no thanks to the high effective rate and appreciation of Ringgit Malaysia. We maintain our target price of RM1.51 that derived by using FY11 EPS of 12.6 sen and five-year sector average PE band of 12x. We have downgraded our stock recommendation to HOLD due to the limited upside from current level.

OSK maintain TRADING BUY on Masterskill with TP of RM3.44

Masterskill Education Group's wholly-owned subsidiary, Masterskill (M) SB, has entered into an Undergraduate Articulation Program Agreement with Australia's University of Newcastle (UON). Under the agreement, UON will give one year’s advanced standing in the Bachelor of Business and Bachelor of Commerce program to Masterskill students in a number of study programs, including accounting practice and principles of marketing.

Maintain our TRADING BUY call at an unchanged FV of RM3.44 at 12x FY11 PER. Cheapest within our education sector coverage, the stock is trading at an alluring FY11 PER of 8.1x with a dividend yield of 6.2% p.a. We continue to see this as an opportune time to accumulate as the news flow on its Indonesian venture and collaboration with foreign university partners would likely grow over the next 2-3 months.

My view:
1. The recent sold down by its major shareholder SMALLCAP World Fund, Inc. ceased to be substantial shareholder on 21-Feb-2011. and "FMR LLC & FIL Limited" on 17-Feb-2011.
2. With this news about collabaration with University of Newcastle Australia, the market may have less fear about the Company's over concentration on Nursing courses.
3. Finally, market should have priced in all the fears... worst may be over (unless another major shareholder sells more). Trading opportunity is there for Masterskill..

OSK initiates coverage on TONGHER with TP of RM3.10

Tong Herr Resources (THR) has been a manufacturer of stainless steel nuts, bolts and screws for over 20 years, with its Malaysian base in Prai, Penang. Its recent acquisition of Metech Aluminium Industries will add aluminium extrusion products to its offering and make a full-year contribution in FY11, while the manufacture of steel billets is also on the cards. We value THR at RM3.10 based on a 10x FY11 PER, on the back of its new and future income streams, recovering ASPs and strengthening external demand. Initiate coverage with a Buy recommendation.

My view:

Hardly traded, low volume. Let's see how the market react to this.
As of 1230pm, TONGHER lost 5 sen to RM2.55 with only 13,000 shares traded.

CBIP gets RM38.35m contract from Ministry Of Health

CBIP got contract to supply 100 units ambulance 4x2 (Type “A” and “B”) inclusive medical equipment to Ministry of Health. The contract sum is RM38.35m.

Short comment:
1. It was just last Thursday the Company announced Bonus Issue. With this news flow, we should see another round of movement in CBIP share price.
2. Bear in mind that the ex-date 27-Apr-11 (this Wednesday) for distribution of interim share dividend of 1 treasury share for every 20 existing ordinary shares held.
3. The exact ex-date of the bonus issue has not been announced yet.
In short, plenty of opportunity for trading...

OSK reiterate BUY call on POS with TP of RM4.12

DRB announced that it has succeeded in its bid for Khazanah’s 32.21% stake in Pos Malaysia for RM622.8m, or RM3.60 per share. The acquisition price reflects a RM17.3m that is refundable if POSM cannot secure Government consent for commercial use of land leased to it by 31 Dec 2011. We see DRB, which owns a 70% of Bank Muamalat, as a good fit for POSM as the former could leverage on the latter’s postal network to enhance both their operations and growth as a more complete network that offer financial services. Although we see the offer price as unattractive and not reflective of the value of POSM’s related land, it still adequately reflects POSM’s postal business at 14.5x FY11 PER. Given that we see DRB aiming to redevelop POSM’s land, we maintain our SOP derived FV of RM4.12, which includes the value of the 5 land plots directly owned by POSM. While the share price may suffer some selling pressure in the short term, we maintain our BUY call on potential longer term upside arising from DRB unlocking the land value.

CBIP announced 1 to 1 bonus issue

Historically, stocks which have just announced bonus issue will shoot up in the next trading day. Let's see how high CBIP can go.

As a reference, average analyst Target Price for CBIP = RM4.78 (Lowest = RM4.65, Highest = RM5.00).

BKAWAN: Value Stock That Market May Have Missed

Batu Kawan may be a stock that you never heard of, and yeah that's why the liquidity is low...
BUT there's something worth highlighting about the Company. These are quoted from Kenanga Research:

1. We view BKAWAN as a cheaper proxy to Kuala Lumpur Kepong (“KLK”) since BKAWAN’s 47%
stake in KLK is worth more than its own market capitalization.

2. It also trades at undemanding valuations of 8.5x FY11E PER vs. KLK’s 15.5x. We are expecting FY11E dividend yield of 5.9% and recommend a Sum-of-Parts fair value of RM19.38, implying total upside of 32.4%.

My view: Seriously, at the current market, it is hard to find Company with 5.9% dividend yield and trading at 8.5x PER only... But take note of the share low liquidity. So this stock is good for long term investor interested at dividend, rather than trading play...

TA Initiate Coverage on Crescendo with TP of RM1.87

Crescendo’s FY11 net profit came in above our expectations by 15%. The variance was largely due to the lower-than-expected tax rate. At PBT level, Crescendo’s FY11 earnings were within our forecasts. For this quarter, Crescendo has declared a final gross dividend of 5sen, bringing the total YTD gross dividend to 11sen. This was higher than our projections of 10sen and the previous year dividend payment of 7sen.

YoY, Crescendo’s FY11 net profit grew by >100% driven by: 1) 34% increase in revenue; and 2) improvement in PBT margin 7.5%pts. On the quarter-on-quarter basis, Crescendo’s 4QFY11 earning was boosted by higher top-line growth, coupled with the expansion in margins and lower effective tax rate.
........

We value Crescendo at 9x CY11 EPS, which is at a discount to our sector PE of 12x for the small cap property company. This discount is to factor in the concentrated risks in relation to its sole exposures to property development in Johor.

We arrive at a target price of RM1.87/share. Given the potential upside of 33%, we re-initiate coverage on Crescendo with a Buy recommendation.

For full report, you can get it free from Bursa CBRS website at http://eresearch.bursamalaysia.com/download.aspx?id=12261&type=research

Crescendo FY11 Result Comment

This is the report from Business Times:

Crescendo Corp, a Malaysian property developer, rose the most in three months in Kuala Lumpur trading after saying fourth-quarter earnings more than trebled to RM14.3 million.


The stock climbed 3.6 per cent to RM1.46 at 9:07 a.m. local time, set for its biggest gain since Jan. 3. -- Bloomberg



Additional information:
1) Crescendo earnings for FY11 jumped 286% to RM14.3m or EPS of 8.4 sen per share.
2) Dividend announced = 5 sen for 4Q, making full year dividend at 11 sen (vs 7 sen in FY10). This translates into an attractive 7.4% dividend yield based on price of RM1.48...
3) This stock is a laggard among Iskandar stocks, reasons = low liquidity + lack of promotion from stockbrokers. But fundamentally a strong company with long history.

Quoting from the Company's Bursa announcement:

The Group has performed well for the financial year ended 31 January 2011. The revenue increased by 34% to RM215.2 million and the profit before taxation ("PBT") increased substantially by 95% to RM50.9 million as compared to the last financial year.

The higher revenue is mainly contributed from higher sales in construction services and industrial properties. The increase in PBT is contributed by higher sales as well as improved margin especially from industrial properties and construction operation.

CIMB downgraded TOPGLOV to NEUTRAL with TP RM4.89

Top Glove is likely to report a 15-25% qoq decline in 2QFY8/11 net profit to RM25m-30m on 16 Mar, taking 1H net profit to RM61-66m or only 49-53% of our full-year forecast and 63-68% of consensus. We are likely to slash FY11-13 EPS by 16-36% as we overestimated the company’s ability to pass on costs and did not foresee rubber’s rapid price rise. Preliminarily, we are looking at a cut in target price from RM7.27 to RM5.73, still based on our target market P/E of 14.5x. Ahead of the results, we downgrade our recommendation from Outperform to NEUTRAL. Top Glove is trading at a 1-year forward P/E of 11.3x versus 8.5x for the sector, a premium which we believe is unjustified. But this offset by rubber price’s downtrend, which will enable Top Glove to claw back earnings in future quarters.

Source: CIMB Research Report

Japan Quake: Losers & Gainers at KLCI

Everyone knows it now... Japan earthquake...

The latest new from Bloomberg says:

"The Bank of Japan may today inject more short-term cash into the banking system after the nation’s most powerful earthquake on record, while keeping its asset- purchase plans unchanged as officials gauge the longer-term effect on the world’s third-largest economy. Governor Masaaki Shirakawa told reporters late yesterday he’s ready to unleash “massive” liquidity starting this morning in Tokyo, as the BOJ seeks to assure financial stability..."

Which Company will benefit?

Timber sector ... according to reports from The Edge.


Meanwhile, AmResearch said following the earthquake in Japan, it had have contacted timber players, who are also unsure of the extent of damage stemming from the latest earthquake and the aftershocks.


“Though reconstructions are to be expected, the timber players do not expect a sudden and significant jump in timber exports towards the reconstruction process.
“Of the two timber companies under our coverage, Ta Ann exports 90% of its plywood production to Japan. Its timber products are shipped to trading houses in Osaka, which is located further south of Tokyo, in the central-southern region of Japan. We advise accumulate Ta Ann on weakness (UNDER REVIEW; FV: RM5.61/share) as the recent price pullback has caused an upside of more than 15% over our fair value for the stock,” it said.


Losers

1. The whole market basically due to negative sentiment. Besides, Malaysia export to Japan is RM6.1b or about 11.4% of total export in Jan-2011.
2. I do not recall many Company in Malaysia which has direct business exposure in Japan, except YTL. If you read the news at this link http://www.bernama.com.my/bernama/v5/newsbusiness.php?id=569425 it says "YTL Corp To Turn Niseko Village Into All-Season Resort‎"... they bought it for US$66m, it's a ski resort. With this quake, tourist should avoid Japan for some time, but the impact should be limited...

Malaysia IPI rose less than expected

This is the news from The Edge website:

Start

Malaysia’s industrial production index (IPI) increased 1% in January 2011 from a year ago. It increased 0.4% from December 2010.

The Statistics Department said on Thursday, March 10, the December IPI was revised 4.5% on-year.

“The increase in January 2011 was due to the increases in two indices: manufacturing (4.5%) and electricity (0.3%). However, the index of mining posted a decrease of 6.7%,” it said....

End

Comment:
1. This is lower than the consensus expectation of 1.2% growth. It seems like the strong GDP growth in GDP in 2010 unlikely to repeat in 2011. Our PM has also indicated lower target of between 5% to 6% GDP growth this year.
2. With the lower than expected growth in IPI, Bank Negara likely to maintain interest rate in the evening today. The policy should continue to bias towards maintaining growth, although the intention to control inflation has strengthen. Thailand has just increased its interest rate recently.

SPSETIA vs SPSETIA-WB

There's a warrant for SPSETIA which is convertable to its mother share anytime, that's SPSETIA-WB.
Some background information as of 335pm:

Market Price: RM1.48
Mother Price: RM6.11
Conversion Price: RM4.48

Looking at the market price, there's an arbitrage opportunity by using this strategy:
BUY WB @ RM1.48, pay RM4.48 to convert to mother share... Cash Out = RM5.96
Then SELL it at market @ RM6.11, Cash In = RM6.11
Profit = RM6.11-RM5.96 = RM0.15

BUT more detailed analysis shows some explanations on why the market is not executing this strategy:

1. Time Lag:
There's time to execute this strategy, to complete the forms, submit it, then wait, then queue to sell the mother share at open market. Probably takes 1 week to 1 month to execute this strategy. If the mother share falls, this strategy does not work anymore...

2. Share dilution
SPSETIA has 1020.35m shares outstanding and WB 160.25m shares. Assuming full conversion of the warrant, EPS will be diluted. Again let's assume market is efficient enough to price SPSETIA lower due to the dilution, meaning the new value (if all warrant convert) = RM6.11*1020.35/(1020.35+160.25) = 6234.39/1180.6 = RM5.28. Compared with cash out put of RM5.96, there no more arbitrage opportunity...

Conclusion:
At the 1st hindsight, looks like there is arbitrage opportunity. But with closer look, the market is smart enough...

Comment on TM

As posted in my previous post that predicts TM will distribute the special dividend, TM announced its 29 sen capital distribution and 13.1 sen dividend.

My take on TM:
1. If my investment time horizon is short term, it's time to take profit since the news already out.
2. But if you are long time investor, just keep this share since it kees giving dividend year in year out. Gross dividend yearly about 26 sen, should maintain at least for the next 2 years.
3. Long term growth coming from UniFi, this high speed broadband thing should be successful for TM due to Malaysian hunger for speed. With more and more people addicted to Facebook and Youtube, there seems like the demand is there for TM.

JP Morgan maintain BUY Call on SP SETIA with TP of RM6.80

SP Setia has proposed to purchase a 268-acre piece of freehold land within the Cyberjaya Flagship Zone for M$420MM or M$36psf, which we believe is a fair price for the location. According to the company, the land is estimated to have a GDV of M$3B, with commencement of development expected to start in FY12,
spanning over six years. Management plans to replicate its success with its eco-themed development, Setia Eco Park in this new area in Cyberjaya.

Other developers like Mah Sing and UEM Land already have a presence in Cyberjaya only since the past 1-2 years, and response to their launches here have been encouraging overall.

We maintain an OW on SP Setia, but our preferred property play or top pick in the sector is IJM Land which trades at a steeper 30% discount to our RNAV versus SP Setia's 12% discount to our estimated RNAV of M$6.80/share. IJM Land is also backed by strong fundamentals and earnings growth. Our preferred entry level for SP Setia remains at below M$6.00.

Source: J.P. Morgan Research

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:

***START***

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.

***END***

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...

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.

But:
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.

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."

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.

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.

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...

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).

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...

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.

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...

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.

Happy Chinese New Year 2011

May the readers of this website enjoy a prosperous and great year ahead and blessed with good health.

5 Things To Know Before KLCI Opening Bell

1. DJIA lost 166.13 points last Friday to 11823.70 as fear over Egypt put an end to the market's 8-week win streak (This is NEGATIVE to KLCI)

2.BN won Tenang by-election with an increased majority of 3,707 votes... better than 2,492-vote majority won during the 2008 general election. (This is POSITIVE to KLCI as investors may see this as an increasing support for BN and put higher expectation of General Election to happen this year)


3. Bank Negara Malaysia maintained interest rate at 2.75% last Friday. However, BNM warned that it will have to manage the rising amount of money building up in the domestic financial system. (This is NEUTRAL as investors have generally expected BNM to do so)

4. The latest update on Egypt unrest = i) it is already 6th day of the demonstration, ii) as many as 150 people have been killed in the unrest, iii) despite Mubarak’s appointment of the first vice president since his rise to power in 198, the demonstration goes on, iv) Suleiman has met with the interior and defense ministers to discuss a plan to restore security... for full latest story please read  Egpty Update as of 640am

5. Feb-2011 Futures KLCI is now trading at 1496 points, about 26 points discount to the cash market close of 1521.89 last Friday. (NEGATIVE)

Overall = NEGATIVE but I think 1500 support should be able to hold.

KLCI to breach 1600 by 16-March-2011? Pre-CNY sell down is OVER?

This blog will be short as the pictures will tell the story...

This is 2010 KLCI:

And this is 2011, will history repeat itself?

Similar V-shape pattern in KLCI today vs DJIA 1000 points dip?

This is the graph for today KLCI as of afternoon close...

AND ... this is the graph for DJIA on 6-May-2010 (the day when it drop 1000 points at one time)

Yes, it's the deep V-shape recovery... 

CI Holding 2Q2011 Result

1. Let's compare CI HOLDGINDS result against the average analyst expectation for FY2010:

Net income: Average analyst expectation FY2011 = RM42.83m, 1H2011 net income = RM23.05m
Earnings per share or EPS: Average analyst expectation FY2011 = 30.3 sen, 1H2011 EPS = 16.23sen
Overall, the 1H2011 Result is better than analyst expectation with 1H2011 net income already making 53.8% of consensus estimate

2. 2Q2010 net income of RM11.28m is an increase of 43% y-o-y but a 4% decrease qoq. In the announcement to Bursa, CIHLDG mentioned that "The higher profit after tax was mainly attributed to further economies of scale and prudent cost management"

3. Average analyst target price: RM4.81 as of time of writing, range of targetp price Range RM4.65 to RM4.90

4. Interim dividend of 5 sen less income tax of 25% was announced, ex-date = 16-Feb-2011

5. CI HOLDING BHD is trading at forward PER ending Dec 11of 10.89x, which is lower than F&N 16.63x.


My view: Overall, the 2Q2011 result is better than the market expectation. With RSI at 36.4 (almost Oversold), the time should have come for this share to move upwards.

Feb-2011 futures drop 44.5 points!!! Algo Trading or Key In Error?

Feb-2011 futures drop 44.5 points at one time this morning to 1477.5 points. The huge drop may have caused by:
i) Algorithm trading rules set by futures player in which orders to SHORT are executed when the index broke below certain support level
ii) Key in error in which the futures dealers key in the customer order to short wrongly

Today's V-shape recovery of index may have been caused by this as well.

At 9.16am, Feb-2011 Futures plunged 44.5points to 1477.5, KLCI was around 1515 to 1519.
At 9.19am, Feb-2011 Futures recovered to 1500, KLCI plunged to lowest point of 1505.36 points


Conclusion:
Feb-2011 plunge seems to have lead to huge sell off for index linked stock this morning.

PUBLIC BANK FY2010 RESULT

1. Let's compare PUBLIC BANK result against the average analyst expectation for FY2010:

Net income: Average analyst expectation = RM2962m, Real = RM3048m
Earnings per share or EPS: Average analyst expectation = 89.4 sen, Real = 87.18sen
Overall, the FY2010 Result is within analyst expectation with net income 2.9% better than expected but EPS 2.5% lower than expected.

2. Comparing FY2010 against FY2009 shows that revenue improved 13.6% while net income increased 21.1%. In the Press Release gathered from Bursa, Public Bank's Chairman stated that the improved financial performance was mainly driven by the strong growth in net interest and finance income and higher non-interest income, coupled with lower loan impairment allowances.

3. Average analyst target price: RM13.86 as of time of writing

4. 2nd interim dividend of 33 sen was announced, ex-date = 10-Feb-2011

5. My view: Overall, the result is within market expectation. However, investors may assign some upside to PBBANK due to the 33 sen gross dividend announced. Or at least the 33 sen dividend will serve as a good share price support for the stock.

Public Bank Result Preview

According to a research reprot from Affin Inv Bank, Public Bank or PBBANK will announce its 4th quarter and FY2010 result tomorrow during lunch break. Here's some of the information that you may find useful...


a. Market expectation for FY2010:

Revenue: RM6958m
Net income: RM2962m
Earnings per share or EPS to be 89.4 sen per share

b. Average analyst target price: RM13.86

c. My view:
Check out the Bursa announcement tomorrow during lunch break to see whether there is any major earnings surprise. Normally any earnings surprise of more than 10% will be positive. In this case, if PBBANK EPS turns out to be more than 98.3 sen, then it is positive. Also you may apply the BUY AHEAD OF DIVIDEND strategy, as PBBANK should announce dividend during tomorrow lunch break. AFFIN INV BANK is expecting PBBANK to deliver FY2010 full year gross dividend of 58 sen per share. (which indirectly hinting towards expecting 33 sen gross dividend to be announced tomorrow).

3 Signs That Foreign Fund Are Selling

KLCI has been relatively weak this week and likely to go down also today.
Keep it short and simple... let's look at 3 signs that foreign funds are selling:

1. Exceptionally huge sell volume at the morning market in the big caps
    CIMB - 9:00:09am - SELL 320800 shares at RM8.59 in a deal worth around RM2.756m
    PCHEM - 9:00:02am - SELL 666800 shares at RM6.30 in a deal worth around RM4.2m
    MAYBANK - 9:00:02am - SELL 157500 shares at RM8.88 in a deal worth around RM1.4m
 
The huge volume and value of transaction suggested that these are big players. And the urgency in their trade to sell at market price suggest they are foreign funds.


2. Weaker RM against USD and Euro
On 17-Jan (Monday) the exchange rate was RM3.0585 per USD and RM4.0597 per Euro
As of time of writing, the rate is RM3.0633 per USD and RM4.1250 per Euro

In short, RM has been weaker against USD and Euro since early this week, indicating foreign fund from US and Euro may have sell off their position and exchange RM into their home currency... causing weakness in RM.

3. Regional South East Asia index are facing pressure as well
Indonesia: Last Friday close at 3569.14... as of writing time = 3454.12 (down 3.25% so far)
Philippine: Last Friday close at 4132.04... as of writing time = 4006.24 (down 3.04% so far)

Normally, global fund managers like to invest based on themes, e.g. growth in emerging market such as South East Asia... The similar downtrend across South East Asia suggested that foreign funds are trimming their positions on South East Asia... meaning Malaysia is part of their selling as well...

So what to do?
If you are active investors, short market by selling some shares that you own, hoping to buy back at cheaper position after Chinese New Year.
If you are passive investors, then do nothing, wait for better value to buy after Chinese New Year.

MITRA: Share Split + Bonus Issue + Free Warrant !!!

During the lunch break, MITRA proposed :

i) one-into-two share split
ii) after split, bonus issue of 1 share for every 2 shares held
iii) free 1 warrant for every 8 shares held

The stock is suspended from 230pm until 330pm today.


My view:
At the first glance, it seems like everything is free. Normally, bonus issue is enough to influence share movement upwards. This one is 3 in 1!!! Split + Bonus + Free Warrant! Where to get? I think RM2.00 should serve as the ceiling for the stock for the evening trading based on: i) psycological ceiling, ii) historical PER of 6.21x. If MITRA can break RM2.00, then RM2.20 shall be the next resistance.



A closer look however shows that MITRA has warrant which will mature on 12-Feb-2011 with the last date of exercise is 11-Feb-2011 5pm (Friday). The exercise price for this warrant is RM1.80 and is convertible into mother share.

If you are a warrant player, calculating the fair value of MITRA-WB is quite straight forward, just minus RM1.80 from the mother share assuming 0 time value for the warrant. E.g. if mother share is RM2.00, then MITRA-WB should worth RM0.20.


Last point is it is very rare to see Company which suspend a counter for 1 hour! How can investor use 1 hour to determine the effect of the Company?

DXN 3Q2011 Result

Revenue for 3Q2011 up 3.6% to RM64.6m while 9MYTD revenue grow 7.5% to RM214.8m. The increase in revenue was due to the Multi Level Marketing segment revenue growth albeit property and others segment revenue contribution declined.

However, 9MYTD net income surged 47.8% to RM34.4m. 3Q2011 net income up 32.9% to RM12.0m.

Dividend of 3 sen was announced, with the ex-date to be announced at a later date.


Company background:
DXN Holdings Berhad sells, manufactures, and trades health food supplements and products, traditional medicine, vitamin supplements, confectioneries, and other food products. The company operates as a Multi Level Marketing company with their main product produced using Ling Zhi.

At yesterday close of RM1.50, the stock is currently trading at 9.4x Price to Earnings Ratio, which is lower than HAIO’s 13.5x but higher than ZHULIAN’s  7.9x.

There are no analyst covering the stock actively. However, if the market values DXN at 9.0x PER of annualized FY2011 earnings of 19.06 sen, the stock has potential to go up to RM1.72, representing potential upside of 14.7% from the current price of RM1.50.

From technical view, DXN RSI is neutral at 64.31. (as of yesterday close).

3 Updates on AXIATA

As usual, keep it short and simple, 3 updates about AXIATA:

1. I have mentioned about AXIATA on 25-Nov-2010 when the price was at RM4.72. The stock has appreciated 20 sen to RM4.92 as of yesterday close. To recall, Axiata has announced its dividend policy of minimum 30% of its net income on 25-Aug-2010. Once the Company starts its payment in FY2011, AXIATA is poised to gain more recognition from investors.

2. Out of 28 analysts covering the stocks, 22 are calling BUY call and 4 Hold call and 2 SELL. Average Target Price is RM5.37, Lowest: RM4.03 and Highest: RM6.40.

3. However from technical view, AXIATA RSI is OVERBOUGHT at 71.29.

In short, fundamentally good stock but I will have to wait at slightly cheaper price to get better value.

CRESNDO dividend going ex tomorrow

Just a short message here to inform that CRESNDO's 2nd interim dividend of 2 sen will go ex tomorrow. This means that today will be the last day in which you are still entitled to the dividend.

However, after the ex, the share price will reflect the 2 sen dividend paid out.

MAMEE: Someone key in wrong order to BUY?

MAMEE gained RM1.00 or 28.7% to RM4.48 with 10000 shares traded at this price. This is quite unusual. Based on yesterday close price of RM3.48, I guess that someone have key in BUY order wrongly.

Lesson learnt:

1. Check your order 3 times before keying in (for those that trade directly using Internet).
2. When you see large price increase with huge spread between BUY and SELL, then most probably it is a wrong order.
3. Capitalizing on human mistake, sometimes you can consistently key in SELL order at price way above yesterday close, especially on low liquidity stock. If someone key in wrongly to BUY your offer, you gained the $ from their mistake.

CIMB Initiate Coverage on Petronas Chemical Group

CIMB Research initiated coverage on Petronas Chemical or PCHEM today with OUTPERFROM call with Target Price of RM7.25. At the close, PCHEM lost 10 sen to close at RM5.86.

My view:
PCHEM is a FBM KLCI stocks and for this counter to go down so much when CIMB initiate coverage on this stock is something rarely seen. However, to be fair the South East Asia market performed badly today with Jakarta Composite Index down 152.90 points to 3478.55 and Singapore Straits Times Index lost 32.08 points to 3229.27 points.

All these seems like foreign funds have started to take profit. Be careful and start to unload $ from now onwards...

TM: Limited upside from now onwards

FBM KLCI ended 3.84 points higher today to 1572.21 points, registering 5th day straight gains. On a weekly basis, FBM KLCI surged 53.3 points or 3.51% to 1572.21.

My view:
We have really reached the uncharted territory. Logically, one couldn't stop thinking about what stocks to take profit out of the share market for some shares. Out of the stocks that I am looking at, here's one stock in which I think is ripe for profit taking:

Telekom Malaysia
In my blog with title TM:Special Dividend Coming? dated 3-Dec-2010, I have mentioned of the possibility of TM distributing special dividend. From the share price increase, it seems likely that TM may do so soon. However, I would prefer to take profit first due to: i) Average analyst target price for TM is RM3.53, 20 sen below today close of RM3.73, ii) assume dividend of 20 sen annually, the share price increase have pushed the dividend yield to 5.4% from around 5.8% previously, iii) assume TM pay out all the proceeds from Axiata stake sale and Measat, the special dividend should less than 30 sen which is already reflected in the price increase.

CRESNDO: 5 reasons NOT TO MISS THIS STOCK

Stock Code: 6718
Potential can go up to RM2.12
Upside potential: 47.2%

I have written about Crescendo or CRESNDO on 10-Dec-2010, the full link: CRESNDO Introduction.

To recap, CRESNDO. To recap, CRESNDO is mainly involved in property development and construction related activities in Johor. CRESNDO is a pure proxy to Iskandar investment theme as the Company owns a total of 3,055 acres of land in Johor, out of which 1,735 acres of it is within the boundary of Iskandar Malaysia (as of 31-July-2010).

As usual, let's do some KISS (Keep It Short and Simple) and look at the 5 reasons not to miss this stock.


No 1. Stellar 3Q2011 result with net income up 107% y-o-y
On 29-Dec-2010, CRESNDO announced its 3Q2011 result in which net income surged 107% y-o-y to RM8.45m. However, the net income drop 7.3% q-o-q. Looking from 9-months year to date or 9MYTD perspective, net income surged 56% to RM22.38m


No 2. Consistently paid dividend of 7 sen in the past 5 years, this year dividend likely to be higher
Along with the result announcement, CRESNDO announced dividend of 2 sen per share. This is a surprise as the Company did not do so in last year. Looking at the trend in which 6 sen dividend already announced for this year, final dividend of 3 sen is likely, bringing total dividend to be 9 sen. This translates into 6.25% dividend yield based on yesterday close price of RM1.44... this is easily the highest dividend yield counter among the property stocks.


No 3. From technical point of view, price have returned to NEUTRAL level
After the good 3Q2011 result, the market has noticed CRESNDO and push the stocks to OVERBOUGHT level, causing CRESNDO to move up to as high as RM1.48 on 4-Jan-2011. With the share price retreated slightly to RM1.44 yesterday, the stock RSI has returned to 67.7, indicating it has returned to NEUTRAL level. How to play with this? Use this as a chance to accumulate this stock with deep value.


No 4. Attractive value with Price to NTA ratio of 0.48x
Considering that: i) CRESNDO has the potential of growth due to its exposure to Iskandar investment theme, ii) 3Q2011 net profit jumped 107% y-o-y and iii) consistenly paid dividend in the last 5 years with 7 sen dividend each year... the market may have given too much discount to CRESNDO with only 0.48x Price to NTA or P/NTA. 
 
No 5. Have potential to increase 47.2% to RM2.12
KSL is the nearest comparison for CRESNDO with P/NTA is 0.93x based on yesterday close price of RM1.94 and NTA of RM2.08. However, KSL has land or projects in KL while CRESNDO do not. By taking this into consideration, 25% discount to KSL's P/NTA will give fair P/NTA of 0.7x. If the market agree to 0.7x P/NTA for CRESNDO, then this stock is poised to go all the way to RM2.12, representing possible upside of 47.2%.

FPI: 5 reasons NOT TO MISS THIS STOCK (Stock code 9172)

I have written about Formosa Prosonics Industries or FPI on 18-Nov-2010, the full link: FPI Introduction.

To recap, FPI produces a variety of products which include Home Theatre Audio Systems, Satellite Speaker, High-End Audio Systems, AV Racks, WI-FI Internet Radio, WI-FI Internet Adaptor, Outdoor Speaker, Bluetooth Speaker, Receptor Radio, CD Radio & Car Speaker Series.


The Group’s manufacturing facilities are located in Port Klang (Selangor), Sungai Petani (Kedah) and Dongguan (Guangzhou, China). Overall, the Group owns 2,908,170 square feet in total of land area.

Let's do some KISS (Ooops, I mean Keep It Short and Simple) and look at the 5 reasons not to miss this stock.

No 1. Attractive value with historical PER of only 6.1x
Considering that: i) FPI has 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... the market may have given too much discount to FPI with only 6.1x historical PER. Even at 9x historical PER, FPI should worth at least RM1.33.
No 2. > 10% Dividend Yield (Historical)
In FY2009, FPI distributed total dividend of 10 sen. Based on closing price of 90 sen, this is 11.1% dividend yield. Bear in mind though that this is historical dividend. FPI announced 3 sen dividend in 2Q2009 but did not do so this year during 2Q2010. Nevertheless, FPI distributed 7 sen dividend in 4Q2009 and it is still possible the Company may pay 7 sen or 10 sen. Worst case, 5 sen still not bad as it translates into 5.6% yield.

No 3. Unusual volume increase today
Let's have a look at the previous 5 day volume (rounded to nearest 1000):
28-Dec-2010: 35000
29-Dec-2010: 60000
30-Dec-2010: 55000
3-Jan-2011:    20000
Today 4-Jan-2011, FPI total traded volume is 289000

Which is about 700% increase as compared to its normal average volume of 42.5k. This means that the stock is getting more attention from investors after being neglected for some time. Significant increase in volume in good fundamental stocks may be followed by share price surge.

No 4. Laggards among small cap counters
With market cap of around RM200m, FPI is a small cap counter which has yet to appreciate significantly. When the main market increase cool down, mid cap and small cap counter will normally come into investors attention. From the significant volume increase, FPI seems to be the next stock you should really look at...

No 5. Have potential to increase 47.8% to RM1.33
Wait, don't think I am too bullish here for FPI. Look at my previous post FPI Introduction and FPI 2Q2011 Result, look at the balance sheet, look at the Company's potential in high end speaker manufacturing. Giving a 9x historical PER is certainly not too demanding. If the market agree to 9x historical PER for FPI, then this stock is poised to go all the way to RM1.33.

MBMR: 5 reasons NOT TO MISS THIS STOCK

MBM Resources Berhad or MBMR owns 20% of PERODUA and 71.5% of Daihatsu (M) Sdn Bhd. Besides motor segment, the Company also involves in Manufacturing and Property segments as shown in the Group Structure below:

To make it simple, let's have a glance at top 5 reasons why you SHOULD NOT MISS THIS STOCK:

NO 1: Attractive Valuation
At RM3.34, the stock is trading at forward PER of 5.9x only, as compared to APM 9.3x and PROTON 9.8x


NO 2: Earnings improving, FY2010 earnings poised to be the highest ever in history
For 9 months 2010 or 9MYTD, MBMR accumulated net income is RM112.78m. Considering that Quarter 4 is normally weaker, let say MBMR made only RM25m in the last quarter. If that comes true, MBMR will be achieving its highest ever net income since incorporation. Imagine the share price reaction when the earnings are reported in newspaper and by other research house.


NO 3: Still significantly below book value of RM4.03

At RM3.34, the market is giving discount of 17.1% to the Company's Book Value. Think it again, 20% ownership of Perodua and 71.5% ownership of Daihatsu Malaysia. Does it make sense for the discount? I myself think that the discount should narrow to 5%, which means MBMR has potential to go up to RM3.83.


NO 4: From technical view, still NOT OVERBOUGHT

At RM3.34, the Relative Strength Indicator or RSI reading is 59.1, which means it is still at NEUTRAL state. Still some way to go before MBMR RSI cross 70 level, which then it will be considered Overbought.


NO 5: Average analyst target price is RM4.56
There are 11 analysts covering MBMR, 10 calling BUY, 1 HOLD. The average target price is RM4.56, representing upside of 36.5% from current market price of RM3.34.



Possible bonus issue?
MBMR balance sheet has the strength to do so. The market price has surpassed RM3.00 which may cause less retailers participation. All these indicators suggest that it is possible for MBMR to do bonus issue, 1 to 1 is not a major problem...