Not all are down

Asian currencies have all been bruised in the wake of the surprise Trump victory in the United States presidential election last week, but none has been battered as badly as the Malaysian ringgit – See more at: Read More

The export stocks (such as Focus Lumber) are expected to do well in a declining Ringgit environment. Focus Lumber was first covered in an earlier post : Read More

As shown below, the market cap of Focus Lumber generally moves in tandem with the movements in the Ringgit. Lately, there was some degree of divergence since Q2 2016.

flb-vs-usdmyr

Statistical View

As shown below, there is a statistical significance between market cap of Focus Lumber and USDMYR exchange rate:

testresults

With the above statistical relationship, a forecast of Focus Lumber’s market cap may be established:

FLB vs Forecast.png

The current market of Focus Lumber appears to be hovering around the lower band of the confidence interval.

Confidence.png

At USDMYR of 4.41, we may potentially see a forecast market cap of Focus Lumber to be approximately RM241 million (or RM2.33 per share) with a confidence interval of between RM186 mil (or RM1.80 per share) and RM296 million (or RM2.86 per share). There may be potential trading opportunity as Focus Lumber was last traded at RM1.71 per share (as of 18 November 2016). 

The above analysis is a simple high-level desktop analysis. The key risk for exports-based stocks is none other than a slowing global trade which may lead to decline in sales and earnings of these export stocks (in spite of a declining Ringgit).

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES OR RELATED INSTRUMENTS MENTIONED ABOVE.

Author: Ken Utau

Markets Observer + Food Lover

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