Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Tuesday, January 26, 2010

By Steve Hargreaves, staff writer


NEW YORK ( -- Two very different views on where oil prices are going by the year's end are emerging - one says $60 or lower, the other $100 or higher, and there's little consensus as to which is right.

The bulls say stronger global economic growth and low interest rates will lead to higher demand, pushing prices up from their current level of around $75 a barrel.

The bears say a rising dollar, weaker economic growth and greater efficiency will cause oil prices to fall as the year progresses.

"It underscores the volatility of the market and the various assumptions about the economy," said Antoine Halff, Deputy Head of Research, Americas, Newedge USA, a joint venture brokerage subsidiary of Calyon and Societe Generale.

The case for higher prices

It's easy to imagine higher prices, especially as we've seen oil spike to over $140 a barrel just 18 months ago.

Most arguments for rising prices center around predictions for strong economic growth.

Merrill Lynch assumes a fairly robust global economic growth rate of 4.4% in 2010 and 4.5% in 2011. Merrill's views on the economy, and oil prices, are similar to those at Goldman Sachs and Barclays.

The bank also feels interest rates will remain low. That means more liquidity and faster growth in the developing world, said Francisco Blanch, head of global commodities research at Merrill. To a lesser extent, it could also lead to more investment interest in commodities.

"As the private sector resumes its role as an engine of global growth in the second half of 2010, we see oil prices averaging $92 a barrel and potentially breaking through $100 a barrel as we enter 2011," Blanch wrote in a recent research note.

Not so fast

Yet other big banks have a very different view.

Analysts at Deutsche Bank's commodities unit average various economic growth forecasts to arrive at a rate of 3.2% - lower than Merrill's 4.4%.

Deutsche feels the threat of rising interest rates will lift the dollar, causing oil prices to fall. The bank has also argued in previous reports that efficiency gains made over the last few years will dampen oil demand, even when the economy expands.

The bank is predicting prices in the last quarter of the year will average $60 a barrel. While prices will steadily rise after that, the bank doesn't expect prices to average over $100 a barrel until 2015.

"We remain cautious about the oil price outlook for 2010," Adam Sieminski, chief energy economist at Deutsche, wrote in a recent research note. "The markets remain delicately balanced, we expect some weakness"

The bank throws in another wild card: OPEC. Not wanting to kill budding economic growth, Deutsche feels OPEC - particularly Saudi Arabia - will use its vast supply of oil-in-reserve to thwart sustained prices above $75 a barrel.

That's not a view shared by the oil bulls.

"We've seen oil at $84 a barrel and OPEC hasn't blinked," said Merrill's Blanch.

A muddied outlook

Asking other analysts who's right is of little value - there seems to be no collective reasoning.

Newedge's Halff thinks prices will end the year closer to $100, but not for the same reasons Merrill does.

He believes Deutsche Bank's theories on the economy and efficiency, but thinks the Iran factor hasn't been priced in.

Halff thinks no deal will be reached over its nuclear program, which will cause oil prices to rise over fear of a military strike.

The U.S. Energy Information Administration is taking a more middle-of-the-road approach, calling for oil in the low $80s by year's end.

EIA also assumes a lower level of economic growth, and thinks OPEC will act to keep prices down.

EIA senior economist Tancred Lidderedale said it's not all that uncommon for two different oil analysts to have oil prices going in completely opposite directions.

To underscore the uncertainty in the market, he said analysts can only say with 95% confidence that oil will be somewhere between $46 a barrel and $162 a barrel by the year's end.

Gold, anyone?

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Monday, January 18, 2010

*This Article is written by one of our regular chatter in Bursa Chat. He or She doesnt want to reveal him/herself. BUT IF YOU CAN GUEST WHO THAT PERSON IS, you may want to take advantage of his/her kindness in helping other to understand stock picking and warrant selections to yourself. The person also very helpful in explaining TA. Read the article and be inspired..... tq.

A Personal Million Dollar Story I Don't Mind Sharing

I aspire to be a millionaire!. Yes.. a millionaire. But then who doesnt?

Way back in June 2006, I started planning my route to a millionaire's club. Way back then, I did not know whether I was an investor or a trader. This seems to be the first question a newbie has to response when chatting for the first time in the Now I know I am a trader because I despise tying up my money in the stock market if it is not growing daily.

I began trading/investing going against two in stock market. Firstly, I used an overdraft facility of RM200,000. But at any one time I did not exceed RM180,000 so that when the monthly interest was added to the account, it did not exceed the limit. Secondly, I traded/invested in warrants only, and only one warrant at a time.

In late November 2006, with the Bursa CI trending upwards plus a little knowledge in Fundamental Analysis and almost zero in Technical Analysis, I bought 1,050,000 units of TA-WB @ 14 sen/unit and started planning on my PDA what to do when I gained RM1,000,000. Hmm.. I am a normal human being. Before I slept each night, I would check and revise the plan. Many a times, I raised the target price because I needed more than a million to fulfill my immediate needs as a new millionaire.

Every trading day I started work at my workstation at 8.30 am, took a break from 12.30 pm to 2.30 pm, and stayed back until market closed at 5.00 pm monitoring my million-dollar-to-be TA-WB. I chose TA-WB because of TA Enterprise's solid fundamental. Furthermore, there were share buybacks at that time by none other than the spouse of the Executive Chairman of the Company. "When Datin bought back mother shares, the company must be going for the better", I reasoned. When the price reached 19 sen I told my wife I made a paper profit of RM50,000. She begged me to take profit. RM50,000 is a lot of money�, she said. I told her my target was RM1,000,000.

The price kept creeping up. It reached 21 sen. I was happy and excited. Then the price started falling. Its ok for the price to oscillate as long as its overall trend is up�, I told myself. Gone were my happiness and excitement. When the price came down to 15 sen, I panicked. Sell or hold, sell or hold I asked myself. Finally I sold @ 13.5 sen. I lost RM6,800. Not only that, the interest on the overdraft kept adding up, RM1,200 a month. Later I found out that the price I sold was the lowest that day. It closed @ 15 sen.

I was not to be beaten. I believe that during a bull market it is not that difficult to gain from stock market. I believe that it is a matter of choice and timing. I scrutinized all the warrants available, checked their exercise price and expiry date, and the health of their mother shares. During the second week of January 2007, I entered the market again. This time I purchased 1,020,000 units of Asiaep-WA @ 13 sen/unit. With the TA-WB experience still fresh in my mind, I disposed all of them @ 22.5 sen the following week with a gain of RM94,900. Not bad, I told myself. If I could repeat it ten times I would achieve my target.

Late January 2007, I bought TA-WB again. This time 700,000 units @ 24 sen/unit. The next day the price of TA-WB refused to rise, so I sold @ 23.5 sen. Again I lost, this time RM5,370. I had no luck with TA-WB although I believed that TA Enterprise Berhad was a strong and profitable company with diversified business. I immediately bought Ancom-WA the same day, 350,000 units @ 22.5 sen/unit. This time I was lucky again. The warrant price gained the next day with high volume, and I sold all @ 31.5 with a profit of RM30,683.

By then the Chinese New Year was fast approaching with a two-day break, 19-20 February 2007. I was contemplating whether to buy and hold over the two-day break or to buy after the new year when daily volume on Bursa started to increase. Not to miss the bull market, I finally decided to buy and hold. So on 14 February 2007, I purchased 1,200,000 units of Insas-WA @ 17 sen/unit. It closed @ 20 sen. The next day it opened @ 21 sen, went up to 24 sen but closed @ 21 sen. On the last day before the break, it opened @21.5 sen and went up to close @ 28 sen. I smiled to myself, happy that I had made a good decision.

Come 21 February 2007 after the Chinese New Year break, Insas-WA opened gap-up @ 30.5 sen and went up all the way to close @ 53 sen. I was ecstatic at the paper gain of RM427,500. The following morning it went up to 58 sen before it succumbed to selling pressure and closed the day at 47.5 sen. I did not sell, hoping for it to go up further. The next day it opened at 47.5 sen and went down to 40 sen before closing at 43 sen. I sold the following day @ 43 sen with a gain of RM308,000.

On 27 February 2007, Bursa CI experienced a sharp drop. I then decided to take a break and went to Singapore for a holiday.

Looking back, TA-WB reached a high of RM1.21 before the sharp drop. Had I held to 1,050,000 units of TA-WB I bought in November 2006 and sold @ above RM1.15, I would have achieved my target of gaining RM1,000,000. Sigh.

This article was first posted in Talk and Share 2 year ago.

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Friday, January 8, 2010

KNM Group (KNMG) yesterday announced that its wholly-owned subsidiary, KNM Process Systems Sdn Bhd and its affiliated company, KNM Projects (Thailand) Co. Ltd, had on 7 January 2010, collectively secured a substantial new order amounting to THB1.3bn (RM143m) from Impress Ethanol Co. Ltd for its bio ethanol project in Thailand. The project involves the engineering, procurement, construction and commissioning (EPCC) of a 200,000 litres per day cassava based bio ethanol plant in Chachaengsao, Thailand and is expected to be completed within 18 months. Besides this, KNM also proposed an internal restructuring exercise yesterday to streamline their businesses in the Caspian region. It generally involves the forming of KNM Europa BV that will house subsidiaries in Kazakhstan, Turkmenistan and Uzbekistan. No gain or loss will be incurred from the internal restructuring. (Bursa Malaysia)

· Comments
The contract follows swiftly after the group’s announcement late November 2009 that they were investing (maiden venture into Thailand) in 2 dormant companies in Thailand. We most certainly view the job award positively given the group’s contract drought over 2009. To note, the group does have some exposure to the biofuel industry prior to this.

Recall back in mid-2007, they were building a biodiesel plant for Mission Biofuels in Pahang for RM122m. We see no earnings adjustments necessary for the contract as it forms part of our replenishment expectations for FY10 and FY11. In terms of margins, we believe that at least 15% at EBIT level should be achievable. To note, total group orderbook currently stands at an estimated RM1.5bn inclusive of this job and this should be just sufficient to take them through
2010. Naturally, we expect more contract flow to be seen from KNM over 2010.

We (ECM Libra) maintain our TP of RM0.74 and HOLD call on KNM for now. This is based on a 12x historical average PE pegging FY10 prospective EPS. Our hesitance at this point of pushing the stock to a BUY is due to the margin erosion seen in 3QFY09. We are concern that this will continue into 2010 as the group grapples to be more competitive than other process equipment players and may compete for lower end jobs that generally yield lower margins in order to beef up plant utilisation. Group utilisation is still low for now at <70%>

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Tuesday, January 5, 2010

KUALA LUMPUR: SCOMI ENGINEERING BHD [] has finalised the CONSTRUCTION [] of the first of the 60 monorail cars needed for the Mumbai monorail project in India.

The vehicle left the company's Kuala Lumpur manufacturing facility for Mumbai last Saturday, the public transportation solutions provider said in a statement today. Suhaimi Yaacob, who is country president of Scomi's operating unit in India, said the first monorail car would play a pivotal role in the project's preliminary systems interface testing which was crucial in ensuring that the monorail system ran smoothly.

"Our new state-of-the-art facility in north Kuala Lumpur has the capacity to handle two more projects concurrently and we have plans to expand our manufacturing expertise into other emerging markets where the demand for our transportation solution arises.

"We believe the Mumbai monorail system will provide sustainable mobility, reduce urban congestion, improve reliability and journey comfort for commuters," Suhaimi said.

The monorail car before leaving its manufacturing facility in Malaysia for Mumbai.

The monorail car before leaving its manufacturing facility in Malaysia for Mumbai.

Scomi Engineering and its India-based partner Larsen & Toubro Ltd secured the US$545.02 million (RM1.85 billion) Mumbai monorail project in November 2008. They have 30 months to complete the first monorail project in India.

Under the deal, Scomi will need to deliver a total of 60 cars to make up 15 sets of four-car trains.

The Malaysian firm also hopes to venture into other areas such as low-floor city buses as a part of its complementary business model to contribute to the urban transportation growth in India.

Suhaimi said Scomi had started its second stage of expansion in line with the company's recent recruitment drive in the south Asian country.

"We are also conducting special skills training in the area of operations and maintenance, ensuring quality workforce with well-equipped technical capabilities before the inaugural monorail service in India by the end of this year," he said

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NEW YORK ( -- Oil continued to rally for an eighth straight session and closed at the highest level in more than fourteen months as a pricing dispute and disruption in crude exports between Russia and Belarus worried investors.

Oil for February delivery rose $2.15, or 3%, to close at $81.51 a barrel, the highest settlement since Oct. 9, 2008.

"Russia is playing oil politics again and is making the market nervous," said energy economist James Williams, president of WTRG Economics.

After earlier reports on Monday that Russia briefly cut off supplies to refineries in Belarus, Russia said later in the day that it had resumed exports.

"The story isn't necessarily over yet," said Phil Flynn, senior market analyst at PFG Best. "This is an ongoing concern and it raises a larger issue of energy security in Europe overall."

Prices were also boosted by a softer dollar, which was down against the euro, pound and the yen. Crude oil, like other commodities, is priced in dollars, and a weaker greenback tends to support prices.

Prices have spiked 10% in the last seven sessions. They climbed 78% in 2009 and posted the largest annual percentage gain since 1999, when prices jumped 112% during the year. Prices surged 134% since hitting an annual low in February.

But Williams doesn't expect the current rally to be a harbinger for the future of oil. While prices may continue to hike the first couple of weeks on colder temperatures across the nation, Williams said oil will not hold above $80 a barrel for long, and likely drop to between the $70 and $80 range as the economy undergoes a slow recovery.

He added that stability in Iraq could pressure oil prices even further.

"Iraq has opened up to foreign oil companies refurbishing its field and getting oil production back up," Williams said. "If the the internal squabbles get under control, Iraq could increase oil production tremendously in a short period of time."

He said peace in Iraq could add up to 1 million extra barrels of crude oil to the market by the end of the year, and the country could rival Saudi Arabia in production levels within five years.

Gasoline prices. The national average price for a gallon of regular unleaded gas increased to $2.663, up 0.3 cent from the previous day's $2.660, according AAA. It was the 11th consecutive increase.

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Monday, January 4, 2010

Pelikan International

Monday, January 04, 2010 0 Comments
Target Price: RM3.13

A luxurious tie-up

• News
Pelikan announced on Dec 31, 2009 that the company had entered into a Manufacturing and Distribution License Agreement with Porsche for the use of “Porsche Design” trademark for writing instruments. The agreement gives Pelikan a 5-year right to manufacture and distribute
writing instruments under the “Porsche Design” brand globally commencing Jan 1, 2011. “Porsche Design” products are sold worldwide exclusively in Porsche Design stores, shop-in-shops, top-quality department stores, luxury retail outlets and by selected retailers.

While we are somewhat positive on the news, our cum-rights target price of RM3.13 and BUY call remain unchanged respectively, based on a PE multiple of 10x to FY10 EPS of 31.3 sen. There is a lack of detail in the announcement made other than the company stating that the addition of “Porsche Design” brand expands Pelikan’s fine writing instruments’ product range and provides an ideal fit to capture different market needs.

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