Monte Carlo Analysis: FBMKLCI

Out-of-money structured FBMKLCI put warrant (code: 06502L) shall be expiring on 31 July 2017. It has a strike price of 1,625.00 which is significantly below the current index price of FBMKLCI of 1,791.31 (16 June 2017).

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What is the likely chance that this put warrant will be in-the-money upon its expiry?

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A Simple 60-Day Forecast

FBMKLCI forecast

Using the Naive function in R programming, the forecast target range for FBMKLCI in the next 60 days is as follows:

  • 1670.108 (80% confidence – low)
  • 1907.892 (80% confidence – high)
  • 1607.170 (95% confidence – low)
  • 1970.830 (95% confidence – high) 

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE STRICTLY 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

Timber anyone?

May 2017 –  Three  Malaysian-listed companies reported a more than 10% deviation in their financial results, with WTK Holdings Bhd and Seacera Group Bhd recording added profits, and HCK Capital Group Bhd lower earnings.

Malaysian timber player, WTK Holdings announced that there was a deviation of more than 10% between its audited and unaudited net profits for Q4’2016 ended Dec 31, 2017, mainly attributable to over recognition of net loss of an associate. The group had earlier reported a share of loss of associates of RM21.21 million, higher than the audited share of loss of RM21.07 million, mainly adjusted for realised gain on foreign exchange on settlement of vessel charter rental denominated in US dollars
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Waiting For Pullback

ORNAPAPER BERHAD is a leader in the corrugated boards and carton manufacturing industry. Incorporated in 24th July 1990, with its humble beginning in rented premises the company commenced its business activity as a manufacturer of corrugated cartons. Riding on the economic boom of the early 90s and with a continuous investment programme, a new high-technology production and development facility was made available in October 1996.

The company expanded its operation to become a corrugated board manufacturer. With the existing facilities, the company is able to produce 84,000 M/T of corrugated boards and cartons per annum. Strategic service points have been set up in many states in Peninsula Malaysia to provide service and products with the highest possible quality aiming at complete customer satisfaction and delight. Armed with the latest technologies and innovations from around the globe, ORNAPAPER is in the forefront of corrugated boards and carton manufacturing, lifting packaging standards in Malaysia to a new level.

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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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