Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Wednesday, April 30, 2014

The KLCI’s new high for the year (till April 29 April 2014) indicates that the bulls are still charging. However, the momentum is weak, causing it to pull back. The KLCI remained above the short term 30 day MA. The immediate support level of 1840 points has been renewed to 1845 points. The higher immediate support level is another indication of support for the bullish trend.

The resistance level has shifted from 1880 points to 1870 points after the index failed to break above this level twice in the past one month.

Momentum indicators continue to indicate momentum is bullish but weak. Despite the index climbing to new highs, momentum indicators like the RSI, MACD and Momentum Oscillator were not able to meet new highs, creating a negative or bearish divergence.

Furthermore, the KLCI pulled back from the top Bollinger Band after the decline last Friday. The bearish divergence is an indication that the trend is weak and a reversal can possibly happen.

Technically, the bearish divergence indicates that the chance of the KLCI climbing higher is slimmer. Nevertheless, the trend is still bullish unless the immediate support level of 1845 points is broken. Fundamentally the market may be cautious ahead of companies reporting their earnings for the first quarter 2014 which is expected in the next one month (May 2014).

The traditional sell in May and go away market wisdom may dampen market confidence.

Expect the index to trade between 1850 points to 1870 points. However a breakout below the 1845 points will see the index falling lower level to the next support at 1800 points.

Friday, April 11, 2014

For your weekend reading:

Its earnings results for the fourth quarter ended Dec 31 of financial year 2013 and full FY2013 were in line with market expectations.


Turnover in the last quarter of the year was 11.7% higher year on year on the back of increased volume demand but was relatively flat compared with the immediate preceding quarter.


Net profit doubled in 4QFY2013 to rm5.4 million from rm2.7 million in the previous corresponding quarter. This is attributable to better economies of scale, which led to improved margins.


For the full year turnover was some 4.8% higher at rm1.38 billion. Operating margins in 2013 improved due to lower cost for scrap steel and better plant utilization on higher volume sales.


Consequently net profit rose to rm28.8 million from rm23.9 million in 2012 – up by 20.6%.


The company’s balance sheet remains in good shape and gearing is among the lowest in the stel sector. Gearing stood at 41% as at end 2013.

Domestic steelmakers have been going through a tough patch in recent years amid the global economic slowdown, resulting in excess capacity and weak selling prices. Moreover persistent overproduction in China continues to dampen selling prices.


Indeed, dumping by Chinese manufactures has pressured margins in select segments of the domestic market. There is also anecdotal evidence of cheap imports of steel bars although to a far lesser degree.


Against this backdrop, Masteel has fared comparatively well. The company stayed profitable in the past four years prior to 2014 though earnings were somewhat range bound.


Positively volume demand has been trending higher on the back of increased activities in the domestic construction and property sectors.


Many of the projects are centered within the greater Klang Valley, which benefits Masteel given the proximity to its plants and therefore lower transport costs.


To meet demand increases, the company has been inching production capacity higher through process improvements, helping to boost economies of scale and overall margins.


The company’s sales are mostly domestic centric where selling prices have been comparatively resilient. The cost for scrap steel has trended lower through 2013 helping boost margins slightly.


By comparison, China uses iron ore and coking coal as feedstock for some 90% of its mills.


On the other hand, the weaker ringgit will raise the cost of the raw material, the portion that is imported. Any savings from cheaper scrap steel will also likely be offset by increases in other expenses driven by higher electricity and fuel prices.


Expecting higher turnover for MaSteel in 2014 but flattish margins.


Masteel is pushing ahead with its capacity expansion plans.


Going forward, due to weak prevailing sentiment for steel stocks, upside gains for Masteel will be limited in the near to medium term.


Masteel is a comparatively safer bet for those looking for steel exposure.


Its current PER stood at about 8.2 times and 7.3 times estimated earnings for 2014 and 2015 respectively.


It is also trading at only 0.4 times book value of rm2.51.


In other developments, discussions for an intracity commuter train project in Johor – under a 60:40 JV with KUB Malaysia are still ongoing with the various government departments.

Source : Kenanga remiser 

Wednesday, April 9, 2014

Spritzer/Yee Lee

Wednesday, April 09, 2014 0 Comments

Current (Jan 2014) major shareholders of Sprtizer are Yee Lee Group/Lim A Heng holds 56.5% and Skim Amanah Saham Bumiputera with 5.2%


To recap in Aug 2010 it was reported that Yee Lee Corp Bhd has increased its stake in Spritzer Bhd to 32.35% after buying 5.5 million 50 sen shares, or a 4.2% stake, from Transworld Commodities (M) Sdn Bhd, for RM5.61mil.while Yee Lee Holdings Sdn Bhd has 14.05%, the group will have a total equity interest of 46.39%.


It has raised eyebrows because Yee Lee Corp’s direct interest is closed to 33% threshold level. Does this mean that a corporate exercise between Yee Lee Corp and Spritzer is in the works?



Spritzer recorded revenue of RM55.2 million during 2Q/FY14, an increase of 18.3% y-o Meanwhile, NPAT recorded was RM3.4 million, lower by 34.4% y-o-y. The lower profits were attributed mainly to the higher operating costs. This was especially due to costs on transportation, salary and payroll related expenses, advertising and promotional (A&P) expenses. Furthermore, the weak Malaysian Ringgit had caused an increase in the prices of PET resin consumed.


On the demand side for Spritzer, thedomestic economic environment still appears supportive. This is so due to the fact that most of the group’s sales are derived from the domestic market (whereby the group is the market leader).


In the mean time, the group faces challenges such as domestic inflation, implementation of minimum wages, extension of workers’ retirement age, hike in electricity tariffs and the volatility of raw material prices. Despite of the weak external environment, the group is also working on improving its sales for the export market (for instance Singapore, Hong Kong, Japan, Australia and the Middle East).


With the group’s continuous efforts to promote its various brands and range of bottled water products, enhance its production capacity and to upgrade its warehousing facilities, the sales volume of its bottled water products is poised to continue growing.


The group plans to continue focusing on improving its productivity and operational efficiency in order to remain competitive.


Spritzer has joined the “RM200 million revenue club” at the end of its FY13.


In general, as a consumer product-based business, Spritzer also faces possible routine risks such as a slower rate of economic growth, weak product demand growth, foreign exchange fluctuations, rising production costs (raw materials – e.g. PET resins for plastic bottling) and stiff competition from other major bottled water manufacturers.

Yee Lee has allocated RM36mil for its capital expenditure for 2013 to expand its business while continuously looking to add products to its distributorship portfolio.

It had allocated RM20mil for its packaging business, mainly to expand the efficiency of the aerosol can production machineries, while RM16mil had been set aside for its plantation division.

It is exploring the feasibility of developing a parcel of undeveloped land in Sabah into an oil palm plantation.

The trading division was its biggest revenue contributor, providing 65% of the group's total revenue, followed by 22% from its packaging division, 12% from its palm oil refinery and mill and 1% from its other businesses, including plantation division.

Yee Lee's main products include the Red Eagle cooking oil, Vecorn corn oil and SunLico sunflower seed oil. It also has a 32% stake in bottled mineral water producer Spritzer Bhd.

Its wholly owned subsidiary had lost the distributorship for Johnson & Johnson products from Oct 1 2013.



Tuesday, April 1, 2014


Will MAS go into bankruptcy?

Transmile, Kenmark, Megan Media, Ekran, Linear Corp, Scan Associates, Golden Plus, Dis Technology, Welli Multi and of course Renong Berhad. All are distressed public listed companies which have disappeared.

Will Malaysia Airlines join them ? Good question. Maybe and maybe not.
My sixteen years experience shows that companies rarely go into bankruptcy without some warning. The following are the BEST TOP WARNING SIGNALS which will tell us 99% they are going under. Beware & Stay Away.


Danger Sign No. 1 : Management Scandal. Leaders keep changing.
A serious warning if top guys CEO or CFO take flight suddenly without explanation or give stupid reason such as personal commitement or personal health reason.

Danger Sign No. 2 : A History of Financial Restatements or Late Filings.
Late financial reporting and accounting restatements normally are associated with bad management integity. This was especially characteristic of companies engaging in complex accounting to sweep losses under the rugs and hide liabilities just to drive stock prices higher.

Danger Sign No. 3 : Faster Growth in Accounts Receivable With Flat Growth of Sales.
Faster growth of receivables than growth of sales. The balance sheet is full of rubbish sales with no cash to accrue. Bad companies have serious bad debts, rising receivables and credit downgrade.

Danger Sign No. 4 : Mysterious Growth In Inventories.
Unexpected bumps in inventories relative to sales. Growing inventories could signal a weak customer base, or worse, that the company use suspicious creative accounting to boost value of inventories to offset declining sales.

Danger Sign No. 5 : Mysteriously Bad Cash Flow With Strong Profits And Sales.
Cash flows is the most transparent and is extremely difficult for management to abuse. Bad cash flow normally suggest complex liquidity and smells trouble for the company. If net income is increasing at a faster clip than cash flow, beware. If earnings are rising year to year and cash flow is not, danger! Either way, something’s not right.

Danger Sign No. 6 : Frequent Change Bank Lender And Swim With Loan Sharks.
A company's relationship with its bank and any changes therein is also a useful financial signal. Reduced availability on a company credit line or a frequent change in borrowing patterns may be indicative of financial problems. Increase in loan security and unsecured loan from no-brand-lender are clear evidence of deterioration in the financial health of a business. Finally, the breaching of loan covenants or missed loan payments are clear warning signs that the company requires help.

Danger Sign No. 7 : Three Years Combo Of Sustain Operational Losses And Decline In Sales.
A sustained decline in sales, poor profit margins, losses, increased debt, a highly leveraged balance sheet and negative working capital over twelve straight quarters may be the best cancer signals of a serious financial distress.

Danger Sign No 8 : A Series Of Bad Lucks In A Row
Companies face so many highly improbabale one-time events back-to-back such as a warranty claim, the cancellation of a large order, a huge union strike, an adhoc special operational audit, a sudden uninsured fire or theft, a sudden departure of supplier or a serious change in supplier payments. A failure to explain this event may be some creative accounting management is using to cover operational losses.


Hall Of Fame :

1. Transmile Group Berhad
Recorded a net loss of RM369.56 million and overstated its consolidated revenues by RM 530 million in 2005 after a special audit was conducted.

2. Kenmark Industrial Berhad
Fail to issue the fourth-quarter results 2010 for three months. Operations stopped while two banks demanded RM73 million. Became a PN17 company and shares tumbled 80 per cent.

3. Megan Media Holdings Berhad
Posted a mind-boggling net loss of RM1.14 billion for the fourth quarter ended April 30, 2007. Investigated by the Securities Commission, and found to have defaulted RM893.97mil in maturing banking facilities.

4. Ekran Berhad
Magnificent rise in 1990s corporate Malaysia but only to hit a peak months after it had been awarded the contract for the multi-billion ringgit Bakun hydroelectric dam project. Defaulted loan payments and was categorised as a PN1 and PN17 company for at least four years before delisted from Bursa Malaysia.

5. Linear Corp Berhad
A cooling systems company that has landed itself into a PN17 company after being investigated by Bursa Malaysia and the Securities Commission over its troubled RM1.6bil King Dome project in Manjung, Perak.

6. SCAN Associates Berhad
The board of directors lodged a police report and then dismissed CEO following an alleged misappropriation of near RM2 million funds.

7. Golden Plus Holdings Berhad
Failed to submit its audited accounts and annual report for 2007 and its quarterly report for the period ended March 2008 before being reprimanded by SC.

8. DIS Technology Holdings Berhad
Found to misstate several quarterly reports due to an alleged employee fraud worth RM80 mil reported by a major customer based in Hong Kong.

9. WELLI Multi Corp Berhad
Managing director were convicted for furnishing the Securities Commission with misleading fictitious sales information of RM141 million in its audited 2005 financial statement.

10. Renong Berhad
The deal involving United Engineers (M) Bhd’s (UEM) mysterious put option with a total cost of RM2.34bil from an unknown sellers which later expired with no settlement. The CEO later resigned from the group in October 2001 and later sues government for a sour business deal.
My dedication to all investors of these companies. Hope we learn something...

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