Overdone?

KUALA LUMPUR (May 31): Karex Bhd’s share price hit a low of RM1.83 this morning at 10.08am — also the lowest since its closing of RM2.25 on May 24 this year — after a research house highlighted an opaque outlook for the condom manufacturer as well as contraction in third quarter earnings.

Prior to this, the stock had been at its lowest two years ago, when it closed at RM1.83 on March 19, 2015. Karex’s net profit in the third quarter ended March 31, 2017 (3QFY17) contracted 28.3% to RM6.9 million from RM9.63 million a year earlier, on higher distribution expenses. Source

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Volatility & Companies Trading Below Book

Question of the day – what happens when there is a significant drop in share price volatility (over a period of time) of companies that are trading below book (or net asset value, NAV) ?  Let take a brief look at 3 Malaysian-listed companies:

Company 1 – TA Enterprise

This property company has been trading below its book value or NTA. Since mid 2014, there has been a steady decline in its share price with a corresponding drop in Price / NAV and Average True Range (“ATR”) (a measure of volatility). There was a reversal of trend since early 2017 and has since continued with its upward trajectory. What was evident was that both Price / NAV and ATR had dropped to record low before a counter-trend emerges.

TA_may 17.png

Company 2 – MNRB

This reinsurance company’s share price has been on a declining trend since mid 2014, with a corresponding drop in Price / NAV and ATR. Similar to TA Enterprise, what was evident was that both Price / NAV and ATR had dropped to record low before a reversal in the trend emerges in August 2016.

MNRB_may17.png

Company 3 – Pasdec

Similar to both TA Enterprise and MNRB, what was evident was that both Price / NAV and ATR had dropped to record low before a reversal in the trend emerges in April 2016.

Pasdec_may 17.png

What about this company? 

Daiman has recently reached record low Price / NAV and ATR. One should ask when will a ‘new trend’ emerge? Could this company be in the value trap category? Only time will tell.

Daiman_may17

The above analysis is observation of certain selected companies. As the sample size is small, further research is definitely required on whether the combination of low Price / NAV and ATR will have predictive value of companies’ future share price.

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 MENTIONED IN THE ARTICLES.

Predicting Price Earnings Ratio

By using regional equity indices’ trailing price earnings ratio (PER), can we form a predictive P/E range for a particular equity index? Let’s explore this question by using Malaysia’s FBMKLCI as the base index and comparing the index to its regional equity indices in the ASEAN region, e.g JCI, SET, STI and PCOMP.

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Trading Protection

TunePro Group is an underwriter, directly and via reinsurance, of general and life insurance products across the Asia-Pacific region. TunePro operates two core businesses, an online insurance business through which insurance products are sold to customers as part of their online booking process with our online partners, and other general insurance business, currently only in Malaysia. It is a related company of AirAsia Group. Would it fly like AirAsia & AirAsia X shares?

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Due For Correction?

Malaysia’s FBMKLCI index has recently fallen in line with the overall global equity weakness (due to political uncertainties in the US). Is it due for correction?

On a daily chart, FBMKLCI appears to be on an overall uptrend, with multiple minor pullbacks. The likelihood for further correction or downtrend will be higher if the trend breaks below the support zone around 1,728 points.

day.jpeg

On a higher time frame (weekly), it appears that the downside risk may not be significant. Nevertheless, consistent with the lower time frame (daily), the support zone around 1,728 will be a test for FBMKLCI whether it can stay above that level.

weekly.jpeg

Fundamentally, FBMKLCI’s trailing P/E is more than 18 time mark, which represents the highest trading P/E  since Jan 11. Potential signal for overvaluation?

FBMKLCI PER.png

To sum up the observations, technically, the momentum uptrend for FBMKLCI may be intact but fundamentally, there may be risk of overvaluation. One should be aware for any potential “flash crash” resulting from global political uncertainties.

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 MENTIONED IN THE ARTICLES.

Proxy To Palm Oil?

Since 1979, CB Industrial Product Holdings Bhd has been equipping palm oil mills in Malaysia and around the world with high quality processing equipment and replacement parts. Over the years, the products have gained a reputation in the industry for excellent workmanship, consistent high quality and unsurpassed reliability.
As a result, the products enjoy a healthy market share in Malaysia as well as foreign markets including Indonesia, Papua New Guinea, West Africa, and Central and South America. Today, CBIP much more than just an equipment and parts manufacturer. Expanding on in-depth industry knowledge, experience and expertise in this area, CBIP successfully established as a full-fledged turnkey contractor for palm oil mills.

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