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Monday, 29 February 2016

Value Pick No. 8: Analabs Resources Bhd (Intial TP RM2.64)

Image result for analabs bhd
Dear fellow traders, 

Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. To join my telegram channel : https://telegram.me/tradeview101
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Value Pick No. 8: Analabs Resources Bhd (Intial TP RM2.64)

Following the January 2016 rout, many counters have gotten whack down regardless of their valuation. I understand if those expensive counters or overly optimistic forward looking target faced sell down. How about those companies which has shown progress or turnaround and is on track to achieving good results? Should these companies be punished as well? Sadly, market is driven by sentiment and sentiment do not discriminate.

I consider Analabs as it is in  turnaround mode and have shown improved performence for the 3 quarters. With 1 more quarter in sight, if Analabs deliver, it will show a full year of consecutive profit growth. The latest quarter results in December, the revenue was record high at RM44 million arriving at EPS of 6.39 sens which was an increase of over 118% YoY. Taking the first two quarters results combined, the EPS for half of the 2016 financial year is 12 sens. By annualising the first two quarters, the full year EPS would be estimated to be around 24 sens. At current price of RM2, it is only trading at a PE of 8x only. There is also dividend although the yield is only 1.5%.




Additionally, a plus point is the improved profit margin for their products. Based on the first two quarters, the profit margin currentl stands at 8.4%. Although it is still away from the record high 12% (where a dividend of 5.5 sens was offered as well), with two more quarters for the full year ahead, there is a good chance Analabs is able to exceed both revenue and EPS with increased profit margin. 


Indeed, it is true that Analabs is beneficiary of FOREX gains due to weakening MYR. The margins did improve substantianlly from the gains in translation. Hence, for those who believe that MYR will stay above RM4/1USD, this counters fit the view. However, for believers that MYR will strengthen to below RM4, than maybe the counter is not as interesting. 




What interest me is the business has been around for a long time with links to the Singapore HQ. It is also one of the few companies in Malaysia that has the ability to execute water treatment, recyling and waste management service at a high level protecting. The core business is manufacturing and formulation of reisin, chemicals and building materials. The increase in exports was also one the reason it was able to benefit from the FOREX gains. That aside, there is increases in the sales volume as well. So it was not purely a case of forex gain alone. Additionally, the business is not cyclical in nature as it is involved in the following activies:





I am also keen due to the solid balance sheet. The NTA stands at RM3.91 per share but current price is only RM2. That means the company is holding net assets worth 2x its current share price. In additiona, the net cash position has increased from RM25.5 million to RM32.2 million. 

There is some minor buy backs by the company of their shares from open market at average of RM1.70 per share to be placed into the company treasury in 2015. This would show some level of guidance to potential investors on the bottom for Analabs as well as signify confidence the management has towards the company. 

Should Analabs is able to maintain their performance for the next two quarters as they had delivered in the previous two quarters, at EPS of 24 sens with a historical PE of 10x, Analabs FV should be at least RM2.40. I of the view PE of 10x is too conservative and would likely place 11x as reasonable bringing it to RM2.64. (32% upside). This figure excludes the historical dividend payout.

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Food for thought: 


May good fortune come your way!

Disclaimer: This is not a recommendation to trade. It is merely the expression of the author's personal opinion and shall not be held responsbile for potential gains or losses executed by readers.

Friday, 26 February 2016

Value Pick No. 2: UPA Corporation Berhad (TP RM2.77)

Dear fellow traders, 

These are just a few of my humble highlights (not recommendation), feel free to have some intellectual discourse on this. To join my telegram channel : https://telegram.me/tradeview101
________________________________________________________________________

 Value Pick No. 2: UPA Corporation Berhad (TP RM2.77)

UPA results has just been released. The 4Q EPS stands at 8.04 sens bringing the total full year EPS to 24 sens. At PE of 10x, the FV should be RM2.40. Previously, in my earlier highlight, I expected UPA to post 7 sens EPS. It exceeded my expectation. In addition, UPA declared a 9 sens dividend compared to 8 sens previously bringing its dividend yield for the year to 4% at current price of RM2.22. NTA has increased as well to RM2.60. Based on the performance, attaching PE 12x would bring the FV to RM2.88. However, due to the cautious market sentiment, PE 11x would bring about a FV of RM2.64. This is a good year for UPA and I expect it to maintain its performance provided there are able to grow their revenue YoY.


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Food for thought: 

May good fortune come your way!
Disclaimer: This is not a recommendation to trade. It is merely the expression of the author's personal opinion and shall not be held responsbile for potential gains or losses executed by readers.

Thursday, 4 February 2016

Tradeview - 2016 February (8 Value Picks to Accumulate on Weakness)


Dear fellow traders, 

Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. To join my telegram channel : https://telegram.me/tradeview101
_________________________________________________________________________________


Over the weekend, I wrote this article on 2016 outlook. Simple, easy to understand but more importantly, my followers have been writing to me to ask me how do I derive such outlook.
http://klse.i3investor.com/blogs/tradeview/

I believe nobody can predict the market. Forecasters or Analyst no matter how experience, cannot tell you what will happen tomorrow. It is up to you to decide whether to trust their opinions or formulate your own. Similarly, when I post articles, It is never to brag or put down or praise or glorify anything or anyone. I only want to share what I know with my humble learnings so maybe one or two readers can benefit from it. Maybe because when I started trading, I too wanted guidance but could not. Below was the 2nd reminder I sent out to my readers following the bull run on Friday 29 January 2016. I am sharing with you all as below :

My fellow investors, following the long weekend, China data today shown further weakness in their economy. PMI number is below forecast hence resulted in some profit taking. Some people ask me whether I see CNY rally soon. Honestly, I dont think there will be any CNY rally this year. As my earlier article to you all, CNY rally means a rally in blue chips, second liners and third liners. This week is another shorten trading week with only 4 days. Most retailers would have cash out by now following the disappointing January month. Friday run up was at most a month end book dressing coupled with the sudden unexpected BOJ negative interests rate.

However, I honestly would appeal to all my followers to please be rational when buying shares. If your view of the fundamentals of Msia economy or the world is doubtful, whatever rally or run up is only temporary. Equities market is getting harder to earn the so called "quick bucks". Unless you have the funds to buy and hold, i advise to stay out.

Seeing that CNY is soon, I will reiterate the counters to monitor and look to accumulate on weakness. These are solid counters backed by good fundamentals, hence there is no need to worry about volatility. 
 
1. CCB - Results out mid Feb

2. Magni - Olympic 2016
 
3. Tguan - double positive (low oil price and weak MYR) 
 
4. Perstim - Superb dividend yield / monopolistic position / weak MYR /recent results good / steady
 
5. Apollo - Dividend Play / Consumer stock laggard
 
6. UPA - Dividend play and export play (laggard compared to Chee Wah)
 
7. FFHB - Starbucks play / turnaround company / mulling dividend policy
 
8. TeoSeng - whacked down to attractive valuation / consumer staple / laggard compared to peers despite being one of the biggest player in the market

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Food for thought: 

Monday, 1 February 2016

Tradeview - 2016 Outlook

Dear fellow traders, 

Once again, these writings are just my humble highlights (not recommendation), feel free to have some intellectual discourse on this. To join my telegram channel : https://telegram.me/tradeview101 or Email me to sign up as private exclusive subscriber : [email protected]
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There have been many articles on market outlook for the year ahead at the end of 2015 and start of 2016. However, while many are enjoying the fireworks during the 2015 countdown, I am certain there are only a handful that predicted such a terrible start to the year.
Global equities market in itself is in bad shape. Not the worst. But real bad. Several key equities markets entered bear market territory. Just when people had that hope of a market rebound, the so called technical rebound could not sustain and once again bearish sentiment took over. I will highlight below some of the notable market prediction and provid a simple commentary for your reading pleasure. 

1. "January effect" for KLCI did happen in the first 10 days of the month for second and third liners. The euphoria was short lived before KLCI follow suit global market rout and have been on the downwards trends

Verdict : True for KLCI as it did happened albeit for only 10 days. False for the rest of the world.


2. "CNY Rally" as far as I see it appears to be not happening. A rally includes a rally in major blue chips, second and third liners along with the movement of KLCI index upwards. As of Thursday 28th February, it did not materialise. However, there was a major push on Friday a day after due to the unexpected BOJ cut. Although there is another week before CNY, the chances of a CNY rally is looking dimmer by the day. This is because it is only 4 trading days left and retailers likely will cash out for CNY. Unless "Foreigners" intend on pushing based on the perception that 1MDB issue is resolved and oil price has hit the reversal point.

Verdict : TBC with 1 week left.


3. Oil price will hit $15-$20 with Iran sanction lifted and will flood the market. So far it would seem the weakness in oil price remains. Apart from the cold winter blizzard that temporarily lifted oil price back up above $30 and Kuwait Minister talking about deal within OPEC and Non-OPEC producer to control the supply, oil price would look to be low for an extended period of time. Personally, I dont think it will hit $20 per barrel. However, if not for Msia being so oil reliant, low oil price is actually a good thing. 

Verdict :  TBC.


4. China hard landing is unavoidable, in fact he is observing it. Soros believes that china will contribute to global deflation due to their slowing growth and expect growth less than 7% for the years to come. Arguments on the other side by people like Dalian Wanda Wang Jian Lin is that China is merely transitioning from manufacturing to service sector. Hence, once the transition is successful, their growth rate will return. I do agree with this statement however, some level of slow down in growth for China is not entirely a bad thing considering their exponential growth for the past decades. The question in hand is whether hard landing or soft landing. Also whether the markets have priced it in or not. Additionally, there is the issue of Yuan devaluation, attacking the HK-USD peg which I have written in an earlier article here:

http://klse.i3investor.com/blogs/tradeview/90224.jsp

Verdict :  TBC.
 
5. Last year, Goldman Sachs predicted the US Fed will have 4 rate hikes through out 2016 after hiking 25 basis point in Dec 2015. Considering the terrible start to global markets, this target would seem too hawkish. In fact, the sentiment has showed 4 rate hikes will no longer be possible in 2016. Although it is still early in the game, I am of the view that it is unlikely Fed will hike rate at such a pace while disregarding the rest of the world. In fact, the low oil price make inflation targets a mere wishful thinking. Unless oil price miraculously rebounds, chances are, the Fed will not be able to ignore situation around the world to push ahead.

http://klse.i3investor.com/blogs/tradeview/90224.jsp

Verdict : TBA

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Food for thought: