Posts Tagged ‘investlah’
DRBHICOM – FLAG PATTERN
DRBHICOM is showing a bullish flag pattern. Bullish flag pattern is a sign of continuous trend and the target price normally has the same quantum as the pole. Target price for DRBHICOM is RM3.08. At current price of RM2.66, it represents 15.8% upside. What about the downside? Immediate stop loss is at RM2.48.
I rate this a high risk, high return trade. Only RSI is showing a weak sign of bullish reversal while other indicators are neutral.
Technical Analysis on Benalec
Below are my comment after buying into Benalec 5 days ago…
It is a game of patience when you deal with market. If you are read my introduction in “About Me”, you will notice that I am lacking of waiting power. As a result, I miss out a lot of opportunities. I find myself good in identifyng stocks but I reap no fruit because I am so impatient…
But I am very determine to change that with Benalec and Suncity-W. For this post, I would like to bring your attention to Benalec. This stock has been trading sideline for a while now. If you are to notice the highlighted part in the chart, you notice “indecision” indicator, which they call it “DOJI” under candlestick. Now, when you see doji, it basically means two things. First, it is the sign of reversal of the previous trends. Second, it is taking a breather before it continue trending (upward or downward). Simple isn’t it? For Benalec it has shown “DOJI” for three days, where it open and close at the same price as last closing price 4 trading days ago. Now this is my analysis purely on Technical. I will talk about Fundamental later…
1. Is it a sign of bullish reversal? The answer is NO. There is no upward trending in the first place. Look at the chart, the share price has been relatively flat since April. And amazingly, the support price is at RM1.4o which is the same as my entry price. I count myself fortunate. Since, the share price has been relatively flat, I really believe it is just a matter of time, before we see the share price shoot up! Of course there is a chance for it drop too since “DOJI” simply means “indecision”. But I think upside on share price is more likely because 1) I believe it is currently at consolidating phase, where people is accumulating at this price range and 2) since IPO (IPO Price = RM1.00), the share has been at this level on average for the longest time, where it open on the first day at RM1.36. So those IPO investors either waiting for share price to go up further by sitting on the profit or sold it already. So, the support level is around this price. Therefore, upside is more likely…
2. Is it a sign of taking breather before showing trends? YES. Indecision for some time only can mean two things. Trending up or trending down only. Traders will not participate when there is no sign of clear trend. So you see volume getting lesser and lesser. But, assuming what I say on Point 1 is correct, volume will eventually returns because someone will eventually make a “decision” and that will push the share price higher.
3. Trading at lower band of Bollinger Band important? YES. It gives me the comfort level that I am buying the stock within the value band and it is at the lowest value band! For me, it is worth the bet despite being slightly more risky when there is no strong upward trend yet. Knowing the company gives me even more comfort level.
In conclusion, I am pretty positive it will give 15-20% in 8 weeks time. In fact, the stock potentially can trade in and out a few times during that 8 weeks. My target price is RM1.62 – RM1.65. I almost don’t need stop loss as I am confident this is the support level, but lets put it at RM1.25. Chances are, at RM1.25, I will buy further… hehe!
So, huat ar comrade…
Listen To Me… Keep An Eye on Latexx Partner (Part 2)
Five days ago, I was asking for my reader to keep an eye on Latexx Partner. Today, they have announced..
What keeps me interested in Latexx Partners is the fact, the stock was being bashed down all the way to RM2.04 to one point and it was the lowest price since 2009. Then the share price slowly creep up and continue to go up and close at RM2.27 today. Those that believe RM2.04 is the lowest it can go and start accumulating would have pocketed in a handsome 10% return. There is a point where a reasonable stock hit the bottom and the only thing remaining is going up next. For Latexx case, there is really no strong compelling reason for the stock to keep falling from RM2.70 all the way to RM2.04 just because the private equity deal is off and 1Q2011 is not good. If bad quarterly result is the only reason to bash down the stock, other glove companies should experience the same severity which is not the case. For the private equity deal not to go through, could be a reason to bash down the share price, but one have to look at the valuation, where Latexx Partner is only trading at high single digit (P/E of 8-9x) for a growth company at RM2.40. Anymore downside simply means it is oversold and show investors are panicking already.
When YTY came with the proposal to merge the two companies two days after the private equity deal was off, I was very excited. This could be a turnaround story which is not the case. I count myself lucky because I did toy with the idea to have a position in Latexx. Why not? Merger between YTY and Latexx Partner would make the new entity the biggest nitrile glove producer in the world. Just have a look how investors love Hartalega. I am not sure, what is the valuation for Hartalega since this is a quick post after reading the announcement above. Anyway, I have reason to believe Hartalega is trading at P/E of 12-14x. So let’s assume, Hartalega is trading at 12x and Latexx Partner is trading at 8x. If Latexx Partner is given the valuation of 3/4 of Hartalega, Latexx will be trading at 10x already. That is already a whopping 25% upside just from valuation expansion. If Latexx valuation equal to that of Hartalega, then it will represent a 50% upside.
As I said, I was lucky I didn’t put my leg in at RM2.40 level (right after the private equity deal is called off). Why? Because the share price continue to spiral downward for its poor quarterly result and I also believe, investors are worried that Latexx will be too zealous to merge and take YTY proposal of RM1.365bil as it is. Based on latest result of YTY, the RM1.365bil proposed price will represent trailing P/E 11.375x which is not too cheap and not too expensive. Bear in mind, this is trailing P/E which is not reflective of future P/E. With high rubber price, risk oversupply situation and strengthening of Ringgit, future P/E could be much higher than 11.375x which make the deal expensive already.
All the above are history… Let’s talk forward since Latexx comes out with their own proposal. Latexx Partner’s proposal is 8.42% discount compare to YTY’s proposal. What about the valuation? At RM1.250bil and FYE March 2011 of 120mil, Latexx is paying 10x of YTY earnings. Now, this look very promising .. I know higher rubber price, risk of oversupply and strengthening of Ringgit issues still exist, which may mean forward P/E is much higher than 10x, but let’s look at the bright side.. this will create WORLD LARGEST NITRILE GLOVE PRODUCER, so if merge they deserve higher valuation, equal to Hartalega. That is what I like. Secondly, Latexx plant and YTY plant are close to each other so they could be some cost saving there. Thirdly, YTY is a more efficient producer than Latexx with better profit margin which should help enhance the profitability of the enlarge entity. Fourthly, what about other better bargaining power when purchase raw material with the enlarge entity? Size in this business matter… other glove makers are competing to build capacity to become grab market share. And this deal, if go through is like building capacity overnight. Ohh.. did I say, less one competitor in the space, make the producer has better bargaining power rather than price war with each other? Think about it…
Glove maker can pass through cost to their customers easily. All they need is stability in raw material price and currency exchange. Volatility kill them because they are not able to adjust their selling price fast enough. If you have the view there is stability in material price and currency exchange, then this is the time when many people are skeptical on glove companies…
There is new risk… higher energy cost since government has increase the gas price. I would want to believe the effect is minimal, from 3 – 7% dent on its bottom line. This is one off and then everything goes to normal. For other glove stocks, I will have reservation to have a position, because investors will still bash the share price down when gas price dent their profit margin further in the next quarter. But for Latexx, investors already bash them down the share price already (private equity deal off, poor quarterly result and risk of overpaying YTY), so downside is limited.
The risk is pretty obvious, when expectation is being build up on this merger and share price re-rate back to RM2.40-2.50 level and the company announce the deal is off, then it is another killing for this stock. This is the biggest risk! I hope this is not happening again…
I think many people will get very excited over this news, share price will re-rate upward. I am contemplating to jump into the bandwagon too. But I am afraid because it is June and so far, I have make minimal if not ZERO gain from the market but also thankful I make ZERO losses too. I make too many mistake by jumping into wrong trade.. KNM and MBSB took away all my earlier gain. I won’t comment much now, will comment on it next time.
So what do you think? Can HUAT ar with Latexx? Chart looks good too… Damn!
It’s 2.00am, I need to get some sleep. This will not be the last post for Latexx Partner, more to talk about on the structure of the deal.
Listen to Me… Keep an Eye on Latexx Partners
Something is brewing
KEEP AN EYE ON LATEXX PARTNERS
Glomac Is Seriously Looking Very Good
Glomac chart is looking really good. There is plenty upside from here. When Glomac was beaten down by big institutional fund a few days ago, I was a little discourage. It was beaten down from RM1.77 all the way to RM1.70. At one time, it was down at RM1.68. If I am not looking at the chart, I would have trigger a SELL call already. Yeah, the trick about trading is you never know when is the lowest price to enter.
That said, have a look at Glomac’s chart below…
I have been calling a BUY for Glomac since May 16th and the share price has been relatively sidelined for 2 weeks now. I think it will start to move already. Few things why I think it will move very soon. First, Glomac just announced its interim dividend on May 25th and this will support the share price at least at current level. Look below:-
| EX-date |
:
|
09/06/2011 | ||
| Entitlement date |
:
|
13/06/2011 | ||
| Entitlement time |
:
|
05:00:00 PM | ||
| Entitlement subject |
:
|
Interim Dividend | ||
| Entitlement description |
:
|
|
||
| Period of interest payment |
:
|
to | ||
| Financial Year End |
:
|
30/04/2011 | ||
| Share transfer book & register of members will be |
:
|
to closed from (both dates inclusive) for the purpose of determining the entitlements | ||
| Registrar’s name ,address, telephone no |
:
|
|
||
| Payment date |
:
|
22/06/2011 | ||
|
:
|
13/06/2011 | ||
|
:
|
|||
|
||||
|
:
|
|||
| Entitlement indicator |
:
|
Currency | ||
| Currency |
:
|
Malaysian Ringgit (MYR) | ||
| Entitlement in Currency |
:
|
0.045 | ||
….
Secondly, Glomac is expected to announced its 4Q2010 result on end of June. So far, Glomac has been doing pretty well in their quarterly result. All I need this time is another set of good quarterly result and it will definitely give a boast to the share price. Thirdly, I personally think those institutional investors have sold enough (in another word, taken profit) and I think downside is pretty limited now. I think the support level is at RM1.68.
I have a compilation of target price from all the analysts that cover Glomac. Have a look:-
1 Maybank Investment Bank – Buy, RM2.38 (23 May 2011)
2. RHB Research – Market Perform, RM2.03 (19 May 2011)
3. AmResearch – Hold, RM1.84 (16 May 2011)
4. Hong Leong – Buy, RM2.40 (16 May 2011)
5. Kim Eng Securities – Buy, RM2.30 (21 April 2011)
6. SJ Securities – Buy, RM3.00 (4 April 2011)
7. OSK Securities – Buy, RM2.00 (1 April 2011)
8. TA Securities – Buy, RM2.79 (1 April 2011)
9. ECM Libra – Buy, RM2.83 (1 April 2011)
10. Inter-Pacific – Buy, RM2.18 (1 April 2011)
11. KAF – Neutral, RM1.30 (1 July 2010)
In term of technical, MACD is crossing the signal line already as shown in the chart. This could be an indicator that bull is taking over. If it crosses the 0, I think this stock will continue to go up till RM2.00+. I will take profit at RM2.00 and stop loss at RM1.65.
If my prediction is correct, at RM2.00, I would have net a handsome 16.4% return (plus 4.5sen dividend after tax). Anyway, no one will know since stock market is irrational. But I cross my fingers.
Today’s Trade (20/5/2011)
I just bought into OMedia at RM0.09 today.
Simply do not have enough time to look at the fundamental. Just a quick read on Bina Puri + OMedia and I started to key in my order at 1.30am this morning. I also look at the chart and decided to buy. However I am mindful there is no point looking at chart when the stock is thinly traded. So I won’t comment much yet on the technical. I just bought this after seeing the price dropping to 20D MA lower band.
For now I will be using chart to put my cut loss price and potential Target Price. Cut Loss @ RM0.075 and Target Price @ RM0.11. Cut loss is rigid and won’t change but I will let the stock run above my Target Price if there is volume and more clarity in the chart.
I promise I will talk about the fundamental and reason why I bought in this stock soon.
The Problem of Active Monitoring…
While I should be thinking how to introduce myself and the format of my blog, I feel like taking this opportunity to vent my stupidity and highlight the problem of actively monitoring the stock market…
Actively monitoring the stock market always result in narrow-mindedness and short-sightedness. You tend to get very fearful when the stock drop a few cents and get extremely excited when the stock go up by few cents. The problem is in such a short window, the stocks tend fluctuate up and down, as though it has no direction. I allow myself to enter into the irrationality of the market until I deviated from my target exit price and goal of purchasing the stock.
To cut the story short, two weeks ago I bought into Benalec at reasonable price of RM1.445 (I was looking to enter at RM1.42 actually, but when kiasu-ness kicks in, I start to feel a bit kan-cheong and bought in too early) and set a target price of RM1.55 based on the chart. I knew Benalec is a strong fundamental companies which is trading at undervalue valuation. I wish could explain why Benalec is a good fundamental company but I think this is a wrong forum. Anyway… the stock price has been hovering in the value band (the band between upper and lower band) for quite some time, so I thought it is a good opportunity for me to buy now and hold until it hit my target price.
But in that two weeks, Benalec price don’t seem to move. Deep in my heart, I feel like this is a lost of opportunity especially other stocks which I was monitoring were moving up. Just FYI, I put all my money into that single stock. Please do not advice me diversification. I think diversification is for those that do not know what they getting into. Anyway, continuing… because I put all my money into one stock and seeing other stocks within my radar were moving up, I feel a little regret (lost of opportunity)and deep in me, I was contemplating to take small profit and put the money into better yielding stock… I was eyeing MBSB-OR, that time.
So when Benalec starts to move up a little bit, I decided to SELL at RM1.47 and lock in RM200 profit. Then I bought 10,000 units of MBSB-OR. After 1 – 2 trading days Benalec was trading between RM1.44-RM1.48 and I thought I made a good decision. But sadly, today Benalec went up to RM1.55 and close at RM1.53. Instead of making RM200, I could have made close to RM2000 in just two weeks. What a waste….
The lesson here, don’t over-monitoring. Whatever that is excessive is never good, anyway. All I am hoping now is MBSB plus its warrant will give me good profit. I was hoping to make at least RM2000-3000 once the mother share and the warrant are listed in the market. We will see… I could have done it just by holding on to Benalec without taking any risk.
I should stop whining. Lesson learnt..
I still think RM1.55 is a good profit taking point. If it does break RM1.55, the RM1.6o will be the next resistance and take profit. Then go back in again at RM1.44 or better. That’s my gut feeling…This is a good trading stock, while waiting for its fundamental to unveiled.
Investlah - Inspired by the Investlah.com 