Sweet Saucer?

Saucer is a technical charting formation that indicates that a stock’s price has reached its low and that the downward trend has come to a close.

saucer

Saucer formations will exhibit very low volume figures at the point when the stock’s price was the lowest.

http://www.investopedia.com/terms/s/saucer.asp?layout=infini&v=5D&orig=1&adtest=5D

Let’s take a quick look at a Malaysian-based sugar producer company – whether its price trend exhibits a saucer pattern.

Company Background – MSM Malaysia Holdings Berhad (“MSM”)

articlesMSM_raw_sugar_1024x5_177115.transformed_0.jpg

MSM was incorporated on 10 March 2011, is Malaysia’s leading sugar producer. It was listed on the Main Market of Bursa Malaysia Securities Berhad on 28 June 2011. MSM operates the sugar business of Felda Global Ventures Holdings Berhad. It produces, markets and sells refined sugar products. The company conducts its business principally through two operating subsidiaries, Malayan Sugar Manufacturing Company Bhd and Kilang Gula Felda Perlis Sdn Bhd (KGFP) which were established in 1959 and 1971, respectively.

Technically Speaking

MSM_Technical

To some extent, the above chart appears to exhibit a potential saucer chart pattern. MSM’s share price has dropped from a peak RM5.40 (back in June 2015) to a bottom of RM4.55 (Dec 2015), with a declining volume towards the bottom. The 50D MA has recently crossed above the 200D MA, signalling a potential upward movement. A saucer pattern will be confirmed once there is a volume breakout (yet to materialise). Let’s look at the fundamental perspective, as MSM’s profitability will depend significantly on global sugar price.

Fundamentally Speaking

We have performed a simple regression analysis between the share price of MSM and global sugar price (in USD/lb) from year 2012 till date (20 May 2016). From a common sense perspective, we would expect a negative correlation to exist between the share price of MSM and the global sugar price as raw sugar is the main cost component of the sugar producer.

The results are summarised as follows:

MSM_regression.png

Key implications:

  1. The statistical relationship appears weak;
  2. RM4.85 appears to be the “floor value” for MSM;
  3. We did not see the “negative correlation” between share price of MSM and sugar price.

Using the above statistical relationship, MSM appears to be fairly valued at RM5.02 vs forecasted value of RM4.98, with a 95% confidence interval of between RM4.68 and RM5.28:

MSM2_ActualvsForecast_May16.png

Analysts’ Target Price

MSM_PT

Concluding Remarks

bf8573b44e18bfa52a81bedc7e23f266.png

Sugar price has trended up recently and this will impact on the profitability of MSM. Nevertheless, for the past few years, the share price of MSM has not moved significantly despite the movements in global sugar price. Technically, a saucer has not been formed for MSM unless there is a strong volume / price breakout. If MSM ever reaches RM4.65 – RM4.85, this presents a potential trading opportunity with a target exit price of RM5.28-RM5.40.

DISCLAIMER: 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. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

Too Much Divergence?


Too much divergence in YTD movement between Brent Crude and Sapurakencana Petroleum (“SKP”). Potential rebound for SKP  but when?

DISCLAIMER: 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. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

Institutional Strength

Lately, the Malaysian hajj pilgrims fund board (a significant institutional investor), Lembaga Tabung Haji (“LTH”) has been increasing its position in Ranhill Holdings Berhad (“Ranhill”), as shown below:

Ranhill_may 16.pngInsiders’ purchases / transactions by substantial shareholders, e.g LTH’s recent purchases will provide price support to Ranhill from further downward pressure due to prevailing negative market conditions. We believe that LTH is currently attracted to Ranhill’s expected dividend yield of in excess of 6.0%.

Technically Speaking

Ranhill_may2016_graph.png

Given its attractive dividend yield, we think Ranhill is currently in “oversold” position (shown in RSI, William%R and CCI), as shown above, as well as it has touched the lower bound of the Bollinger Band. Potentially, one may consider RM1.15 as the immediate profit target price, should Ranhill bounce upwards.

 

DISCLAIMER: 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. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

May The Parrot Bring You Luck

Company Background / Updates – Berjaya Sports Toto Berhad (“BToto”) (Current price: RM3.03, as of 13 May 2016)

BToto_Parrot.jpg

Berjaya Sports Toto Berhad, through its subsidiaries, primarily operates Toto betting in Malaysia. The company also involves in the lease of online lottery equipment; manufacturing and distribution of computerized lottery and voting systems; and property investment and development activities. In addition, it operates health and fitness centers, as well as offers computer consultancy services. The company was formerly known as Far East Asset Berhad and changed its name to Berjaya Sports Toto Berhad in May 1993. Berjaya Sports Toto Berhad was founded in 1969 and is based in Kuala Lumpur, Malaysia.

Technically Speaking

BToto_Technical.png

Trading range bound with strong support expected at RM2.95 and strong resistance at RM3.40. Some indicators appear to show that BToTo is currently in oversold position. Nevertheless, the crossing of 20D MA below the 50D MA indicates that there could be room for further bearishness.

Fundamentally Speaking

BToto_Fundamental

In terms of fundamental analysis, we impute the required yield by investors based on the 5-year average year end historical dividend yield. The required yield is estimated to be 6.23%.

With BToTo’s stable cashflow profile and dividend policy, we employ the Dividend Discount Model to compute the indicative equity valuation range for BToTo based on assumed annual dividend growth rate which ranges from minus 1.0% to positive 2.0%. The indicative equity valuation range is estimated to be from RM2.67 till RM4.71 per share. At current share price of RM3.03, investors may be expecting BToTo to record future dividend growth rate of between -0.50% and 0.00%.

Analysts’ Forecast Target Price

BToto_Analysts.png

Average target price of analysts is approximately RM3.35, which represents a potential upside of 10.6% to the current share price of RM3.03.

Final Say

Based on this desktop analysis, it is observed that BToTo may present short term trading opportunity based on the range bound of between RM2.95  and RM3.40. Further, it is backed by (i)  its stable cashflow profile and a dividend yield of close to or more than 6.0%; (ii) higher target price by analysts.

 

 

DISCLAIMER: 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. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

No Deal, What Is Next?

Company Updates – Kian Joo Can Factory Berhad (“KJCF”)

The proposed RM1.47bil sale of Kian Joo Can Factory Bhd’s entire business and undertaking to Aspire insight Sdn Bhd, a company partly owned by tne Employees Provident Fund Board (EPF), has been called off.

This also means that the proposed cash distribution of at least RM3.30 per share to Kian Joo shareholders is off, as returning the cash proceeds to them is conditional on the proposed disposal being completed.

There was a much-publicised but unsuccessful court battle to block Aspire Insight’s takeover of tin can and cardboard carton maker Kian Joo. The length of the court battle may have helped to derail the plan, but the final deal-breaker is a disagreement over the sale’s price tag.

In a statement to Bursa Malaysia on Friday, Kian Joo said it and Aspire had mutually agreed to terminate the business sale agreement (BSA) signed in March 2014 and its ancillary agreements.

http://www.thestar.com.my/business/business-news/2016/04/16/kian-joo-and-aspire-call-off-takeover/

Company website sourcelink: http://www.kianjoocan.com.my/

Technically Speaking

The calling off of the takeover exercise has finally removed the overhang over KJCF’s share price. Upon the announcement, its share price has shot up to as high as RM3.38.

KJCB_TA

As of 11 May 2016, KJCF closed at RM3.15 which is considered as “oversold” (from Win%R and RSI indicators) and further, it traded close to the support area of RM3.10. With a “Hammer” candlestick and 50D moving average crossing over the 200D, there is a potential rebound opportunity. Resistance is expected at RM3.44, which may be potentially considered as immediate target price.

Share price has been falling lately partly, attributable to the recent disposals by EPF. However, the existing substantial shareholder, Dato See has been supporting the company as shown below:

KJCF_Insiders.png

Fundamentally Speaking

KJCF_Fundamental.png

Based on a simple desktop analysis, current indicative equity valuation of KJCF is about RM3.50 per share, which represents approximately 10%+ premium to its current price of RM3.15. Based on assumed 12% annual growth rate in share price, KJCF is forecasted to reach RM3.92 by end of 2016.

Analysts’ Price Target

KJCF_Analysts.png

Concluding Remarks

Short term rebound opportunity, with support at RM3.10 and resistance at RM3.44. Supported by good business fundamentals and higher analysts’ target price. There was also a competing offer earlier, at RM3.74 per share for KJCF. (http://www.thestar.com.my/business/business-news/2014/03/12/spotlight-on-epf-toyota-tsusho-offer-will-be-good-opportunity-for-fund-to-cash-out/).There may be potential concerns in view of the on-going tussles between See Family and Management of KJCF. 

DISCLAIMER: 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. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

 

 

I Love Starbucks

Company Background – Berjaya Food Berhad (“BFood”)

BIZD_MM_1609_p5a_32p.JPG

BFood engages in the development and operation of the Starbucks, Kenny Rogers Roasters and Jollibean Foods café and restaurant chains.
Technically Speaking 
Bfood_tech.png
Oversold positions are seen as well as it has reached the lower bound of Bollinger Band. Strong support line at RM1.80, we may potentially see an upward rebound from the support line.

Fundamentally Speaking
BFood_Fundamental.png
Based on the above simple desktop analysis, the current equity value is estimated to be approx. RM1.70 and it is expected to increase to RM1.90 by end Apr 2017 (based on annual expected return of 12.0%).

Analysts‘ Current Target Price

Bfood_target.png

At current trading P/E in excess of 25.0x , it is definitely not cheap. However, given the fact that it is in oversold position as well as the price has been supported by the numerous Buy calls by analysts, this may represent potential trading opportunities.

DISCLAIMER: 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. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.

Temporarily No Power?

Company Background – PWRoot

Power Root Home1-750x750.jpg

Power Root Berhad, through its subsidiaries, engages in the manufacture and distribution of beverage products primarily in Malaysia. It provides ready-to-drink (RTD) coffee, RTD tea, RTD chocolate malt drinks, RTD cereal, and energydrinks. The company markets its products primarily under the Alicafe, Perl Cafe, Oligo, Alitea, and Power Root brand names. It also distributes health and beauty products. Power Root Berhad also exports its products to 18 countries, including Singapore, the United States, the Republic of Taiwan, South Korea, Brunei, the United Arab Emirates, the Republic of China, Bahrain, Qatar, Oman, the Kingdom of Saudi Arabia, Indonesia, Syria, Kuwait, Yemen, Jordan, Egypt, and Lebanon, as well as re-exports its products through overseas distributors/traders to Sudan, Australia, the United Kingdom, and the Philippines. The company was formerly known as Natural Bio Resources Berhad and changed its name to Power Root Berhad in July 2010. Power Root Berhad was incorporated in 2006 and is headquartered in Masai, Malaysia.

Declining Price Trend?

PWROOT_price.png

It appears that PWRoot is “lacking power” as it is currently facing downward price pressure with support lines at RM1.78 and RM1.38. Nevertheless, PWRoot is a fundamentally strong consumer company with financial strength:

 

Trend Trailing 12M
Dec 2015
Full Year
Mar 2015
Full Year
Feb 2014
Full Year
Feb 2013
Per Share Data (Adjusted)
[+] Earnings Per Share (EPS) – Adjusted [RM]
(Earnings/Latest Number Of Shares)
0.18668 0.14172 0.12751 0.11309
[+] Net Asset Value (NAV) Per Share – Adjusted [RM]
((Shareholders’ Equity – Other Share Capital)/Latest Number Of Shares)
0.7824 0.7595 0.7259 0.6709
[+] Net Tangible Asset (NTA) Per Share – Adjusted [RM]
((Shareholders’ Equity – Other Share Capital – Intangible Assets)/Latest Number Of Shares)
0.7663 0.7434 0.7084 0.6534
Valuation Ratios (Adjusted)
[+] Price Earnings Ratio (PER) – Adjusted
(Price/Adjusted EPS)
11.30 14.89 16.55 18.66
[+] Price/NAV – Adjusted
(Price/Adjusted NAV)
2.6969 2.7780 2.9069 3.1449
[+] Price/NTA – Adjusted
(Price/Adjusted NTA)
2.7537 2.8384 2.9788 3.2295
[+] Price/Revenue – Adjusted
(Price x Latest Number Of Shares/Revenue)
1.692 1.674 2.091 2.296
[+] Price/Operating Cash Flow – Adjusted
(Price x Latest Number Of Shares/Operating Cash Flow)
10.027 9.510 16.894 27.916
[+] Price/Free Cash Flow – Adjusted
(Price x Latest Number Of Shares/Free Cash Flow)
10.876 11.335 19.983 52.741
[+] Dividend Yield – Adjusted [%]
(Gross Dividend Per Share/Price)
5.924 4.728 4.223 3.274
[+] Dividend Yield incl Special Dividend – Adjusted [%]
(Total Dividend Per Share/Price)
5.924 4.728 4.223 3.274

Analysts’ Price Target

Date Open Price Target Price Upside / Downside Price Call Source
23/12/2015 2.75 3.10 +0.35 (12.73%) TRADING BUY KENANGA

If PWRoot continues to maintain its strong business and financial fundamentals, it is not unreasonable to assume PWRoot’s share price will rebound in the long run.

DISCLAIMER: THIS SITE IS 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. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED ABOVE.