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Thursday, February 10, 2011

Market update & observation

What should we observe???
·         Investors are taking profits after DJIA increase for the 7th consecutive days. Yesterday DJIA closed on green as Bank of America shares helped to squeeze out the gains in the 8th straight days. From 28 Jan to 9 Feb, the Dow increased from 11,823.7 to 12,239.9 within 8 consecutive trading days.
·         Investors are anxious about inflation everywhere. China increased interest rate for the second time 2 days ago and may increase for the 3rd time in four months. Instead of increasing interest rate, Federal Reserve Chairman Ben Bernanke lowered bond yield to curb inflation.  
·         China will announce its inflation data tomorrow.
·         Federal Reserve Chairman Ben Bernanke said the world’s largest economy, US remains weak despite a drop in unemployment rate earlier.  Investors may have doubt on the stability of US economy after the comments.
Let’s work out something on Malaysia market….

 
Are we on the 5th wave? Or we are still in the pullback of the 4th wave? It could be neither of them.
As there are many uncertainties blowing in the market, many confirmations have to be made technically before we conclude it. Anyhow, the first critical point to observe is the 1,500 psychological level. As of 4:47pm FBM KLCI was 1,509.50, which dropped 26.57 points or 1.73%. FBM KLCI February future was bearish as well, dropping 23 points from 1,525 from Wednesday close to 1,502.
If it happens, I'm eyeing on the 1,480 and 1,430 support lines. Otherwise, 5th wave will continue. Resistance is lying in between 1,545 and 1,560.

(Sources: Bloomberg, the Edge)

Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.

 

Tuesday, February 8, 2011

Dialog Group: Attractive Dialogues…..

·         11 analysts are covering the stock and 10 are BUY calls and only 1 is SELL.
·         Average Target Price: RM2.48, representing 13% potential upside compared with the current price of RM2.20
·         Comparison between relative peers
Companies
Dialog
Sapcres
Kencana
Market Capitalization
4.32b
4.69b
4.8b
Price
2.17
3.68
2.62
Revenue y-o-y growth (%)
3.13
-5.64
-4.45
EPS y-o-y growth (%)
28.07
38.25
37.86
ROE (%)
25.24
19.09
24.76
Dividend Yield 12 m gross (%)
1.44
1.89
0.19
P/E
34.72
23.87
25.19





·         The most interesting point is the company currently has about 307m of retained earnings (RE) where its capital share only amounts to about 200m. There is potential that the company will distribute to shareholders. Last year, the company announced bonus issue of 2 bonus shares for existing 5 shares held on 13 January and subsequently its result released on 9 February with RE of about 315m and share capital of 141.
·         EPF acquired about 19.84 million of Dialog’s shares in January, increasing its stake to 13.83%. On the other hand, EPF disposed 5.44 million shares of its peer Kencana in January, decreasing its holdings to 6.24.
·         Dialog’s earning result will be out soon. Last year, its 2Q result released on 9th February on Bursa Malaysia.
(Source: Bursa Malaysia)

Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.

Tuesday, January 25, 2011

ASEAN Indices

Jakarta Composite Index (JCI)
JCI broke below 3,400-level support yesterday and fell lower to 3,346 this morning. When looking for a pattern, it has formed a triple top, followed by a breakdown below support. Despite the breakdown, JCI is reaching the projected decline soon around 3,300-level while its RSI looks set for a soft-landing around 25 level-point.


Stock Exchange of Thai Index (SET)
The outlook for SET is quite worrying as it has dropped by more than 4% today, the worst among the ASEAN countries. Obviously, the index is near to the next support at 950-level, once broken next will be 900. Yet, when I was writing this, SET has returned to green zone at 969.7 compared with open at 968.15.
Philippine Stock Exchange (PSEi)
Apparently, PSEi has rebounded before everyone did.
Overall, the selling pressure by foreign funds may come to an end. Yet, investors should be alert and be aware of the Chinese New Year effect as many people may exit for New Year “Ang Pow”. Technically, FBM KLCI is reaching an upward sloping support around 1,533-level while RSI has flatten at 50-point-level. If index successfully rebounds on 1,533, next resistance is at 1,575.

Thursday, January 6, 2011

Today’s Juices

• MRCB@RM2.18
Catalyst: New contract, Acquisition of land, 10MP, ETP, 4th quarter result is coming up. It should be around February 2011.
Technical: Bounded between RM2.00 and RM2.17 and just broke above the resistance today. Next resistance at RM2.25
Average Consensus Target Price: RM2.25, representing only 2.7% upside.

• Steelmakers in Asia may be forced to pay as much as 33% more for hard coking coal after the worst floods in 50 years in Australia's Queensland state. Prices may increase to $270 a metric ton for 3-m contracts starting April 1. (Source: Bloomberg)
The only listed company on Bursa that has principal activities of production and sale of metallurgical coke is HUAAN. Its business operation is located at Linyi City, Shandong Province, China. It may be benefited from the rising coking coal price.
But Too bad! Average consensus Target price, RM0.36 is below the current share price at RM0.385. Please also note that steel industry is not one of the top gems at this timing.

Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.

IPO – Tambun Indah Land Berhad

IPO

• Public issue of 32 mil new ordinary shares of RM0.50 each comprising of:
1. 11.05 mil for Malaysian Public
2. 11.05 mil for eligible directors, employees and etc
3. 9.9 mil identified investors via private placement

• Issue and offer price of RM0.70per ordinary share

• Offer sale of 22.1 mil shares made available for application by bumiputra investors

• Closing date of the application for IPO shares: 6 January 2011

• Listing date: 18 January 2010

• Utilization of Proceeds: Out of 22.4 mil, 12.7 mil will spend on working capital, 7.1 mil on repayment of bank borrowings and 2.6 mil on listing expenses, which represents approximately 57%, 31.7% and 11.6% respectively. 1.2 mil of working capital will be spent on operating and marketing expenses and the rest will go to construction cost. 3.2 mil will repay the borrowings for Intanasia and 3.9 mil for TID development.

Background

• Involved in property development, investment holding and operation of car park as well as project and construction management in mainland Penang.
• The founder of the company is the managing director Ir. The Kiak Seng.
• Incorporation in 1994 as Tambun Indah S/B
• The company product was the 1st guarded & gated community and the 1st landed strata scheme property
• Structure of the group:
- Cenderaman - 100%
- Langstone – 100%
- Denmas Development - 100%
- Perquest – 100%
- Denmas – 100%
- Tokoh Edaran – 100%
- Epiland – 100%
- Tambun Indah Development – 70%
- Hong hong – 100%
- Tambun Indah S/B – 100%
- Intanasia – 100%
- TID Development – 100%
- Juru Heights – 100%
- TKS Land – 100% - CBD Land – 50%
- Jasnia – 100%
- Zipac – 100%

Highlights
• Purpose of listing: enable the group to gain recognition and further enhance reputation and image in order to expand the business and to move in line with the big players in the local market.
• Catalyst: Building the second Penang bridge, which connect Batu Maung and Batu Kawan, is regarded a catalyst to add value to the company since its products are near to the bridge.
• Dividend policy: The Company has a progressive dividend policy of distributing 40% to 60% of their PAT attributable to shareholders excluding non-recurrent items.
• Net Cash: Cash & cash equivalents – Short & long term debt = 26.947 (pre IPO), 46.747 (post IPO), where most developers in Penang island have higher gearing ratios.
• Instead of marketing the Company’s products, I would prefer to compare it with its peers.


Price
Mkt Cap
P/NTA
BPS
Total debt /C.Equity
Div Yield
P/E
Ivory
1.17
217m
1.26
0.93
95.44%
0%
9.64
Hunzpty
1.71
332m
0.79
2.18
21.14%
3.26%
4.20
E&O
1.31
1.09b
0.95
1.38
90.34%
2.90%
20.03








Tambun Indah
0.70
154m
1.4
0.58
10.32%
6-7%
~5.5-6
• Assuming products’ location, value, quality among these companies remains constant, what would you think about these 4 companies purely based on the figures above.
• First, for safety purposes, I’d look at debt. Somehow, Ivory, Hunzpty and E&O have higher gross gearing compared with Tambun Indah. In such circumstances, the concern of the Company using its IPO proceeds to repay borrowing will no longer an issue. With Net cash on hand, Tambun Indah is considered as healthy and has lower loan default risk.
• Since Tambun Indah has the highest price to NTA among the peers, the important question is whether the premium is worthy or not? Under the circumstance where in that fact that Penang Island is short of affordable properties to new generation, second thing comes to my mind is whether people will compensate them with cheaper property and bigger space if the only condition is that they have to live far away from the heart of the city – You will never know – it depends. However, there is a risk there. Hopefully, someone can answer. I’m not sure whether the second link bridge has been officially approved. If not, the properties may have a hard time to turn hands. If yes, everything will be in place.
Results:

• I wouldn’t spend time on result since the figure below tells it all.



Income Statement Ratios 2007 2008 2009 2010
Gross Profit Margin (%) 27.50% 29.99% 31.99% 35.24%
EBITDA Margin (%) 28.11% 27.53% 30.54% 32.85%
EBIT Margin (%) 27.94% 27.40% 30.36% 32.74%
PBT Margin (%) 27.81% 27.34% 29.76% 32.74%
PAT Margin (%) 20.15% 18.63% 23.56% 24.60%
Net Profit Margin (%) 20.15% 18.63% 23.56% 24.60%
Effective tax rate (%) 27.56% 31.88% 20.83% 24.84%

Comments:
Fundamentally sounds, catalyst remains uncertain. Listing date is on 18 Jan 2011. I believe retailers will think “as long as not China stocks, not making shoes, everything will go during IPO.” No support for this statement, but it’s just purely a sentence that I regularly heard from others. Well, 18 Jan is about 2 weeks before the CNY and subscription for the IPO is closing today. For those who have sent in their subscription form, Good Luck! For those who didn’t send, we can only sit and wait for the performance of the stock.

Source: the Company's Prospectus

Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.

Monday, December 27, 2010

ENG TEKNOLOGI

ENG TEKNOLOGI
Description: manufactures hard disk drive peripherals components, industrial machinery, equipment, precision tools, electronic and computer parts, high precision mould, die, jigs, fixture, and automation system.
Price: MYR 1.88 as at 10am 27 December 2010
52Wk High 3/25/2010: 2.98
52Wk Low 12/28/2009: 1.46
Highest P/E since 1/1/2009: 9.94
Lowest P/E 1/1/2009: 2.54
Average P/E: 5.59
Book Value/share: RM2.00
Holders
• PNB is the majority stakeholder, 14.46%
• Lembaga Tabung Haji 8.34%
• AIG ASIAN Oppurtunity 4.86%
• Prudential Unit Trust 1.09%
• Apex Investment Securities 0.08%
• RHB Unit Trust 0.06%
• Integra Capital 0.05%
• 28.94 out of 63.60%, about half of the substantial shareholders are institutions.
Highlights
• Dividend yield 6.49%, the highest among the peers
• Market Capitalization 228.22 million, the highest among the peers
• Net Cash
• Lowest trailing 12 month P/E among the peers
Risks
• Revenue, net income and EPS q-o-q decreased.
• Strengthening Ringgit Malaysia against USD
• High inventory levels as HDD’s consumer demand has been weak.
Catalyst
• ENG is technically bottomed out with return of buying interest, resistance at RM2.25 and RM2.63. RSI is getting closer to 70 level while daily fast MACD has entered positive territory.
• HDD companies have bottomed out and are recovering, thus I think ENG will follow suit.
• Higher demand for Notebooks & PCs
• Research house comments
HLG Research said “HDD growth is expected to continue, driven by growth in China, cloud computing, DVRs and the PC placement cycle”, “Notebook makers are seeing good demand, translating to increased orders in November”, “A re-stocking of HDDs in 1Q CY2011 could spur a re-rating cycle for Malaysian HDD companies.”

HLG Research has downward revised the target price to RM2.15, but maintained its Buy call. Personally, I think ENG has more upside compared with its peers. Why? 1) ENG has higher dividend yield of 6.49% compared with other local players such as JCY at 5.65%, Notion Vtec at 4.12%. 2) ENG has the lowest trailing 12-month P/E of 3.7x among the local and global players such as JCY at 9.56x, Notion Vtec at 6.72x, Western Digital at 6.03x and Seagate at 4.84x. 3) ENG priced below BPS.
Thus, I believe ENG will grow further. With an average industry P/E of 6.7 after 20% discount and FY2010 consensus EPS of 46 sen, i think ENG should worth about RM2.46, which is 15% more than HLG Research's target. Combined with technical configuration, I believe ENG may increase further to at least RM2.25.

Source: HLG Research
Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.

Wednesday, December 22, 2010

Zelan technically bottoming out?

Facts:
1)Historical fundamental less attractive as FYE2010 revenue dropped by half
2)Loss making company
3)Gearing about 60%
4)Book Value 0.83
Current price 0.58
Yesterday 0.53

Technical-wise
Daily chart shows that the counter is bottoming up with the forming of second consecutive higher low.
Daily fast MACD crosses signal line, moving towards the zero line.
RSI improves and remains at neutral zone.
DMI is in the midst of staging positive crossover.
Support is at 0.50
Resistance lies between 0.65 and 0.75

Technically, i think downside of the company is limited without taking the fundamental into consideration. short-term ? I guess okay. Medium/Long-term? No Idea.

Disclaimer: The company analysis that appear in this blog is merely facts gathered from different sources and the author's personal view. It is not a buy or sell recommendation. The author do not guarantee the accuracy of the facts being presented. Please consult your investment advisors before acting on any information provided by the analysis above.