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Friday, 25 March 2016

Value Pick No. 9 Update : Analabs Resources Bhd (Intial TP RM2.64)

Image result for analabs resources berhad

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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Value Pick No. 9: Analabs Resources Bhd (Intial TP RM2.64)

Following my earlier recommendation, the latest quarter results released yesterday by Analabs surpassed my expectation. I consider Analabs on track to surpass last year's full years results with its latest record profit and strong performance for the past 3 quarters It will definitely show a full year of consecutive profit growth.

My earlier post on Analabs
http://klse.i3investor.com/blogs/tradeview/88898.jsp

The latest quarter results, the revenue dipped slightly to RM35 million but the EPS tood at 6.96 sens which was a whopping increase of almost 300% YoY. QoQ, the Analabs exceed the previous quarter strong perform with record profits. Taking the first 3 quarters results combined, the EPS for half of the 2016 financial year is 18.91 sens. By annualising the quarters to take a future view, the full year EPS is estimated to be around 24-25 sens. At current price of RM2.13, 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 3 quarters, the profit margin now stands at 9.3% which double of that of last financial year. It is still away from the record high 12% (where a dividend of 5.5 sens was offered as well), with 1 more quarter 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. However, the company is also doing well due to the cost rationalisation plan of the Singapore subsidiary. It is not fully all fue to FOREX gains as the past months, MYR has weaken considerably against USD yet Analabs manage to achieve record profits.

Most importanly, my favourite part about Analabs is the solid balance sheet. The NTA stands at RM3.95 per share but current price is only RM2.14. That means the company is holding net assets worth 2x its current share price. In addition, the net cash position has increased to RM33.95 million.


If Analabs is able to maintain their performance for the final quarter as they had delivered in the previous 3 quarters, at EPS of 24 sens with a historical PE of 10x, Analabs FV should be at least RM2.40. I am 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. I am taking a long term view on Analabs as one of my safe counters. 

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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.

Wednesday, 16 March 2016

3 Years View : To Concerned Rotational / Theme Investors

3 Years View : To Concerned Rotational / Theme Investors

Dear fellow traders, 

Once again, these writings are just my humble jottings, 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 talks recent in the market that "export is dead". Some say now is the time of Oil and Gas. Now is time of Construction. Now is time to move on and forget about export altogether. It is toxic. Honestly, I do not know if export is dead. I also do not know if Oil and Gas is back. I do not even know if there is a theme to be played at all as I would readily admit the volatility in the market locally and abroad has shown a completely vague road map ahead. However, what I do know is that there is indeed a selldown of export stocks in the past few weeks as MYR was strengthening and oil price broke $40. 



As long as the counter was export related, regardless of the earnings or fundamentals, there was a complete selldown across the board. Many famous investors' portfolio went into the red. Then, there were many that jump on the  "I told you export counters wont last" and "move to O&G" bandwagon.

 

Actually, the selldown by retailers / market makers / operators / funds are logical and rational. There is nothing wrong there. However, does it mean to say that export is truly dead? Or that O&G is back? If so, then these people would have missed the boat in this week's rebound in export plays albeit a minor rebound. I think export is not dead. I just think the star is shinning less bright compared to last year. Thats all. The fact of the matter is, the market is a dangerous play. Purely relying on themes and rotational play is dangerous. Unless one possess great mastery of TA or have sufficient insights of the movement in funds / institutions / operators, there is no way one can catch the cycle right every single time. 



I am of the view that the move to O&G is cherry picking / bottom fishing. Similarly, I think the selldown on exports counter is a simple case of profit taking. Especially so with the local funds that have supported the selldown as the foregin fund returns to Msia. This is a simple case of upside vs downside. You can refer to my earlier article on this sometime in January.

http://klse.i3investor.com/blogs/tradeview/90147.jsp

Please note that I respect all investment styles and in no way saying one method of investing is better than another. I know that everyone has their own preferred method and that is what makes the market interesting. Diversity. Below is a simple post that I posted for private subscribers and followers. This is for sharing and discussion purposes.
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This is because the volatility now is way too great. Can you imagine, the market is now moving so much hand in hand with the FOREX market. So that shows in actual fact there are many more speculators than investors in the market. Which means majority of people have lost money for the past 3 months. I just spoke to some local fund managers yesterday, for your knowledge, currently, the best performing fund in the market is only making 1%. Most funds are underperforming year to date be it unit trust / PRS etc.



My view is this:
1. If you are looking to contra, my advise please stay sidelines.
2. If you can hold 3-6 months, for now it is still export stocks.
3. If you can hold more than 1 year, you can consider O+G, logistics 
4. If you can hold more than 2 years, you can consider textile and apparels,  manufacturing.
5. If you can hold more than 3 years, you should buy property stocks, commodities  

My advise to all is this, don't keep looking at rotational play or theme plays because it is all short term. Additionally, you will lose money more than you win unless you are a Master of TA or Master of Info.

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Food for thought: