Wantan Mee Case Study: How Investment Bank Protocols Affects Traders

Once a company not able to submit its Quarterly Report, the counter will be suspended after 5 trading days in Bursa. Take Wantan as a case study, assuming 30 Nov last day to submit and Wantan failed to do so. Add another 5 working days is 8 Dec to be suspended from trading. 7 Dec is the last day to trade. What does it mean?

If you see the price this morning, it was dived to lowest 0.045. Why? Once the counter confirmed to be suspended on 8 Dec, today all the Credit Controllers natiowide irregardless of broking houses will impose a condition which is BUY ON CASH in the Trust Account only. Cheques are not acceptable. In another word which we are familiar with is 'designated counter' (bursa term).   

First issue, today cash upfront buy is T+0. next Tuesday 8 Dec is T3 so the buyer confirm must have cash in the Trust Account to pick up the shares once the counter is suspended. You will be a shareholder of a suspended listed company. The panic occurs and people dumping the shares from 0.065 to 0.045.  NO CASH NO TALK WILL LIMIT THE GORENG KAKIS/TRADERS TO ENTER THE TRADE. It works the same for the PDTs.

2nd issue, this one you MUST TAKE NOTE. Once it reaches 4.pm to 4.45pm, 2nd wave comes. Those who trade/operate with Margin Accounts / Limits from Remisiers or Limits from Paid Shares in CDS will not be able to continue to roll. Once force sold you can't buy back as you do not have CASH IN THE TRUST to continue to buy. All lines will be jammed.

There are key board warriors out there saying the bosses wanted to press down the price and submit the Quarterly Report by Monday so that they collect cheap ask  you continue to hold and buy more to average down. I do not have the crystal ball with me to answer this question. I suggest not to speculate base on own opinion and defamation to the bosses that pressing their own share prices. The decision to trade should be solely yours. 

Conclusion:

The article is to share the protocols of stock broking houses on controlling the credit limit at the same time for education purpose. It is not a suggestion for members to trade or not to trade certain counters.

Basic Sharing on Warrants

Call/Put warrants are being traded due to their leveraging concept in nature. Leveraging means they share exactly the same risk with derivatives. FYI, call/put warrants are created by Structured and Derivatives Department. Leveraging means you trade using a fraction of the mother price to control exactly the same market value.

A lot of investor mistakenly thought that low upfront capital means suitable for new investors with limited capital to start with. It is a very wrong concept. Leveraging concept in a nutshell means it MAGNIFIES YOUR WINNINGS AND LOSSES AT THE SAME TIME! It is for professional traders and not newbies.

I would like to touch few financial jargons which you may seldom/may not be using when you are trading warrants. Not to scare you guys but to point out the complexity and technical skill required to trade warrants.

Delta Value:
Delta = Change in warrant price / Change in underlying share price.
Meaning how many % the warrant price change vs the changes of the mother price. You need a higher delta so that when the mother price moves, the warrants will moves in a higher %

Effective Gearing (Very important)
= Gearing X Delta Value
% change of price of warrant vs the change of 1% in the mother price. You need a higher EG to have a meaningful fluctuations of warrant price.

Implied Volatility
It is a probability/estimation of future prices, rather. The higher IV, the probability of warrants futures price moves in tandem with mother price will be correlated. Higher IV, the better.

How to combine and use this few parameters?

1st Choose the warrant which has a longer expiry dates (theta value)
2nd Choose higher Delta, EG and IV compare to peers
3rd Do not choose illiquid shares as the Issuer will do arbitrage trading
4th Do not trade if you are no good. Do paper trade and buy mother share instead.

Case Study: MRCB vs MRCB WA

Step 1 Calculate the Basic Intrinsic Value:
Mother / Underlying Price = 1.41
Warrant Price = 0.22
Exercise Ratio = 1 to 1
Exercise Price = 2.30
Breakeven price = 2.52
Moneyness = OTM 38.7%
Option Style = American
Expiry Date = 18 Sept 2018

Exercise Ratio is 1 to 1.
Buy 1 warrant at RM 0.22 (you have the right to convert become mother share from the date issued until expiry date – that is American Style. For European style can only be exercised after expired in 2018)

Case study:
Buy 1 Warrant at 0.22 and Add Exercise Price 2.30 = 2.52 (total cost of owning the mother price that worth 1.41 now (it is called dumb)

Moneyness is Out of The Money 38.7%
Exercise Price 2.30- 38.7% = 1.4099 / 1.41
Means you are buying at the price of 38.7% higher than the market price (it is also dumb)

Step 2: Input the IV, EG, Delta, Theta

It is for forecasting purpose
1. Check and test the similar wa for bench mark to find the most value for money
eg. CA CB CC CD

2. Do back test to check their IV, EG, Delta Theta for all the warrants for one mother share

3. Do a back test to check the Mother Price for the past 3 to 5 years on their price movement and correlation between Mother Price and Warrants

4. Set your entry price, if the Warrant touches your entry price, execute, if not ignore and find other warrant.

Kungfu Penta

1.       Company’s Management Ex CEO Tan Boon Teik resigned and disposed his 3.997m shares on 23 June 2015. Another announcement filed with Bursa stated the total 3.997m shares were acquired by Mr. Chuah Chong Ewe. One thing I like about the management is they file the relationship of the shareholders. I perceived that there is a Management change in Penta although the shareholders are related. The price did went up for awhile from 0.75 to 0.90 then soften back. Perhaps it might due to the feel good factor of new CEO.  2.       Business Analysis Semicon and exports related has been doing good this year. I expect the Penta's price should be OK for the rest of this year. Revenue / Profit expected to be stable for 2015 due to the other income gains reported in the Latest Quarterly Report.  For normal fundamental analysis, as long as Current Quarter is better than Previous Quarter means good? Theoretically yes. But under Good Accounting Analysis, we prefer to look at Current Quarterly Report VS Last Year Quarterly Report. For Penta, it is 5.4m for Q3 2015 vs 2.0m for Q3 2014. We minus out the 2.6m from other income means it is left with 2m plus profit. Slightly better compare to Q3 2014. Neutral. 3.       Financial Statement Analysis Income Statement Profit Margin   : 14% pass (<5% fail) Interest Cover  : 17x pass  (<3x fail) Profit for the past 3 years  (pass) Balance Sheet Current Ratio   : 1.91 pass (<1x fail) Debts to Equity Ratio : 0.44x pass (>3x fail) Cash Flow Positive at least 1 year: Pass 4.       Pricing Analysis Price to Earnings – Q3 2015 is a inflated by the one off gain. To reflect a better valuation, ill use Q1 and Q2 and annualized it.  (1.31 + 2.44)2 = 7.5 P/E = 0.795/7.5 = 10.6x (acceptable) Price to Book Value – 1.49x (not cheap) Penta's Management's Comment on her Latest Quarterly Report: Pentamaster is expected to benefit from Origo's platform to showcase the new venture given the huge potentials from growing IoT concepts. Subject to the external market conditions and macroeconomic factors, the overall business performance in 2015 remains promising with better cost structure and wider sales base. Conclusion: Penta pass all the Financial Health Analysis Ratios and the Price appear to be acceptable but not cheap. Things we need to put in consideration:  1. New CEO appointment. We are not aware of his Management style and track record. 2. Venture into new field of development. 3. Placement of 10% to new investor whom we are not sure of his background and profile. As I am expecting a weaker RM vs USD, it should benefiting her for the next 1 or 2 quarters. I am willing to nibble a little bit for Penta but putting a cautious view and constant monitoring.  Please like us at our facebook page - Bursa Blue Ocean and complete the survey form and join out telegram group chatroom! Sincerely, Humble Pie Disclaimer and Declaration The information is meant for the members of Bursa Blue Ocean (BBO). Disclosure and distribution of the message without the permission of BBO is prohibited. The full content of the article and write ups are for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss.

9 Nov - 13 Nov Market Outlook “Weakening Ringgit & Lower Crude Oil Continue to Pressure The Market

Weekly Trend: Sideway with downward bias

 

The FBMKLCI closed at 1685.7 after a light rebound from its recent low 1659 level. The USD/MYR exchange rate quoted at 4.36 after a spike seen during Friday night which it's now approaching to previous high 4.48 level. In addition, the Crude Oil price extended its three straight day losses which could further pressure our local market sentiment. This week we re-select export related counters as our sector in focus, meanwhile we are also looking into some oversold counters.

Support: 1659

Resistance: 1727

 

Sector in focus: Export related Counters

 

Stocks to watch:

 

Last week (2/11-6/11)

PESTECH TP:7 SL:5.90 (Reached TP, remain) 

SUNCON TP:1.45 SL:1.25 (Remove)

HOHUP TP:1.10 SL: 0.95 (Remain)

OLDTOWN TP:1.43,1.50 SL:1.25 (Reached 1st TP, remove)

FGV TP:2.30 SL:170 (Remove)

MITRA TP:1.42 SL:1.18 (Remove)

MYEG TP:3.30 SL:2.71 (Reached TP, remove)

SUPERMX TP:2.50 SL:2.17 (Remain)

TUNEPRO TP:1.58 SL:1.38 (Remove)

SUNWAY TP:3.20 SL:3.05 (Triggered SL, remove)

JAKS TP:1.34,1.43 SL:1.11 (Remain)

 

**This week (9/11-13/11)**

PESTECH TP:7 SL:5.9 

HOHUP TP:1.1 SL: 0.95

SUPERMX TP:2.5 SL:2.22

JAKS TP:1.34,1.43 SL:1.11

AEMULUS TP:0.67 SL:0.53

DSONIC TP:1.80 SL:1.45

PENTA TP:0.84,0.9 SL:0.76

SCICOM TP:2.1,2.2 SL:1.98

HOMERIZ TP:1.23 SL:1.06

 

 

 

Price as at Monday closing 9 th November:

 

 

 

Please like us at our facebook page - Bursa Blue Ocean and complete the survey form and join out telegram group chatroom!

 

Sincerely,

Bursa Blue Ocean (by MIVCO)

 

Disclaimer and Declaration

 

The information is meant for the members of Bursa Blue Ocean (BBO). Disclosure and distribution of the message without the permission of BBO is prohibited. The full content of the article and write ups are for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss.

2 Nov - 6 Nov 2015: Market Outlook “Weakening Malaysia Ringgit Continue to Pressure the Stock Market

Weekly Trend: Downtrend

The FBMKLCI closed lower at 1665.71 last Friday after the violation of 1700 psychology level on 27th October. This week, Bursa Malaysia is likely to consolidate with downside bias.
Support: 1660, 1630
Resistance: 1700-1720

Sector in focus: Export related Counters

Stocks to watch:

Last week (26/10-30/10)

❌ENGTEX TP: 1.22, 1.30 SL:1.10 (Remove)
✅PESTECH TP:6.40, 6.50 SL:5.90 (Remain)
✅SUNCON TP:1.45 SL:1.25 (Remain)
✅HOHUP TP:1.10 SL: 0.95 (Remain)
✅OLDTOWN TP:1.43,1.50 SL:1.25 (Remain)
✅FGV TP:2.30 SL:170 (Remain)
❌PMETAL TP:2.69 SL:2.07 (Remove)
✅MITRA TP:1.42 SL:1.18 (Remain)
✅MYEG TP:3.30 SL:2.71 (remain)

**This week (2/11-6/11)**

👉🏻SUPERMX TP:2.50 SL:2.17
👉🏻TUNEPRO TP:1.58 SL:1.38
👉🏻SUNWAY TP:3.20 SL:3.05
👉🏻JAKS TP:1.34,1.43 SL:1.11

Please like 👍🏻 us at our facebook page - Bursa Blue Ocean and complete the survey form and join out telegram group chatroom!

Sincerely,

Bursa Blue Ocean (by MIVCO)

Disclaimer and Declaration

The information is meant for the members of Bursa Blue Ocean (BBO). Disclosure and distribution of the message without the permission of BBO is prohibited. The full content of the article and write ups are for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss.

Top Glove on Top of The World

1. Management Team / Major Shareholders:

Tan Sri Lim humble beggining since 1991 has made Topglove the largest rubber glove manufacturer in the world commanding 25% market share. Company is paying consistent dividends. Renewal of mandate buying back her own shares is a good news. Proposal of Bonus Issue and Share Grant Plan is indeed a good move to maintain the performers.

2. Financial Health Analysis 

Income Statement

i.Profit Margin = 11.2% / PASS (if < 5% fail)

ii.Profit for the past 5 years = PASS 

iii.Interest Cover = -29 / FAIL (if <3x fail)

Balance Sheet

iv.Current Ratio = 1.73x/ PASS  (if < 1x fail)                    

v.Debts to Equity Ratio = 0.38x / PASS (if > 3x fail)

Cash Flow

vi.Positive at least 1 year                     = YES / PASS

3. Pricing Analysis

i.  P/E Ratio: 

Nov 14 + Feb 15 + May 15 + Aug 15

7.85 + 9.09 + 11.7 + 16.68 = EPS 44.8

Price 8.81 / 44.80 = PE 19.5x Higher than PE for FD (Not Cheap)

ii.  P/BV 3.35 (Not Cheap)

iii. Dividend Yield 2.3% - Negligible

4. Economic / Industry - Theme play for now?

Yes. The volatility of RM/USD definately gives a good impact on TopGlove forex gain. The suprise EPS for Q4 2015 gives us the confident that the next quarter will be better due to the impact from forex gain for the period of June to Sept. We believe it has not been factored in. The challenging environment in Malaysia will be a minor issue to Topglove as most of their businesses are in oversea. The PE is 19x is indeed not cheap but it climb up from RM7.99 till 8.81 is well supported by their spetacular Quarterly Result.

Conclusion

Northcape Capital was a net sell while KWAP is accumulating from the market. From FA (di li)perspective, it is pricey and difficult to gauge. When we quoted on 'Stocks to Watch' on 11 October 2015, it was base on Theme Play (tian shi) and Price Volume Action (ren her). We were expecting a good Quarterly Report but it came out as an excellant Quarterly Report. For those investors who bought earlier last week, congratulations and do prepare to take profit. Happy Trading.

Disclaimer and Declaration

The full content of the article is for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. Examples of specific shares is citied for illustration purposes.

Regards,

Humblepie188

Bursa Blue Ocean (by MIVCO)

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Fundamentals Is Not By Financial Analysis Alone

Dear Members, to do thoroughly analysis on the targeted company, looking at the Financial Report card are insufficient. There are more to look at besides the company’s numbers. Most of them did not share the whole picture on how a stock being selected by using a complete checklist. We are sharing some of the commonly used parameters by Fund Managers to screen the stocks.

 

1. Management Team 

Good companies are being run by great management. Those involved before in scandals and hanky panky practices will be avoided. Their reliability and trustworthiness are low. For the announcement/speeches made by the MD/CEO, it must be in line with the company’s direction. If they say one thing and do another thing, it is a no go. Be careful on those syndicated counters. Companies go for listing to raise funds and not making money from the market. Remember that.

 

2. Financial Health Ratios

Companies must be in good health. Generally this is the main factor being used by FA clan practitioners to do their analysis. Tell me one thing; if the company is in bad shape, do you still want to put your hard earn money into it? Putting your money in the company means you are a shareholder. You share the upside and also the downside if the business.

 

3. Pricing Analysis 

You found a healthy company with good management, so what is next? Buy? Not really. Look at the price. Cheap or expensive. FD’s PE in Malaysia is around 18x, only blue chips with high dividends yield can command that valuation. Generally main board PE should be around PE10x to 14x while ace is around PE 7 to 10x. Anything more or less than the amount, you need to have a good reason / story to back your purchase.

 

4. Theme Play / Industry in Action

This is a subjective manner, people buy a stock because of the upside value. Generally funds will rotate base on what is hot now and not few years down the road. Why? If we buy base on FA, we can keep it for months and years but how about Fund Managers? For you to know they have 12 months only to invest. By the time November comes, they have to finalize their trades and cut some losing stocks to show better year end results with not much losses carry forward and some spare cash to start the next year. Basically 10 months. For your understanding, theme play is for midterm. Pure FA play is definitely more than 10 months.

 

Conclusion:

Some FA clan will argue this PE is cheaper than that PE and the forward EPS is better than that EPS. So buy A stock and not B stock. Remember, listed company is there for business purposes. It’s the Management Team who runs the day to day business. Do not rely only to Financial Health to make the investment decision. It is just a part of the Fundamental Analysis.

 

Disclaimer and Declaration

 

The full content of the article is for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. Examples of specific shares is citied for illustration purposes.

 

Regards,

 

Humblepie188

Bursa Blue Ocean (by MIVCO)

Please like us at our facebook page - Bursa Blue Ocean

Pestech: My Darling Stock

1. Management Team / Major Shareholders:

After Humblepie188 sharing on 17 July @ Price 5.15, we did notice the CEO/ED Mr. Lim Pay Chuan made another purchase on 2nd Sept at the price of 5.31. This further enhances our believe that Mr. Lim has confident with his listed vehicle to continouously generating good profits. 

2. Financial Health Analysis 

Income Statement

i.Profit Margin = 14% / PASS (if < 5% fail)

ii.Profit for the past 5 years = Profit since listing in 2012 and growing / PASS 

iii.Interest Cover = 6.27x / PASS (if <3x fail)

Balance Sheet

iv.Current Ratio = 1.7x/ PASS  (if < 1x fail)                    

v.Debts to Equity Ratio = 1.3x / PASS (if > 3x fail)

Cash Flow

vi.Positive at least 1 year                     = YES / PASS

3. Pricing Analysis

i.  P/E Ratio: 

Sept 14 + Dec 14 + Mac 15 + June 15

5.06 + 5.18 + 5.37 + 16.78 = EPS 32.1

Price 5.95 / 32.10 = PE 18.5x Comparable to PE for FD (Not Cheap)

ii.  P/BV 3.65 (Not Cheap)

iii. Dividend Yield 1% - Negligible - Comstruction companies rarely pay dividends  

4. Economic / Industry - Theme play for now?

The past few months we had seen the volatility of RM/USD. From 3.50 to 4.20 It definately gives a good impact on Pestech's forex gain. The suprise EPS for Q4 2015 gives us the confident that the next quarter will be better due to the impact from forex gain for the period of June to Sept. We believe it has not been factored in. Pestech main revenues mainly comes from Cambodia and it is quoted in USD. The challenging environment is Malaysia will be a minor issue to Pestech's outlook. For construction companies like Pestech, she is defensive for current market scenario.

Conclusion

As long as Paul Lim still accumulating from the market, I'm confident with him. PE 18.5x is not cheap. For those investors who are willing to look at this counter, do prepare to hold mid to long term with less dividends. Congratulations again to Pestech who has joined the billionaire club.

Disclaimer and Declaration

The full content of the article is for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. Examples of specific shares is citied for illustration purposes.

Regards,

Humblepie188

Bursa Blue Ocean (by MIVCO)

Please like us at our facebook page - Bursa Blue Ocean

12 Oct - 16 Oct 2015 Malaysia's market outlook - How long the rally can last?

Weekly Trend: Uptrend 

The weekly trend was bullish as the FBMKLCI up more than 200 points in less than 3 months time due to previous oversold sentiment, the recent strong Ringgit versus the US dollar and the possible delay of US rate hike. However, there is a “Shooting Star” candlestick pattern spotted in the index after 5 straight day’s gain which suggests possible short-term trend weakness or price consolidation.

Support: In between 1647-1652

Resistance: 1740

Support level pledged at 1647-1652 (rising window gap) while resistance level at 1740.

Sector in focus: Undervalued GLC linked counters, and water and piping related counters.

👉ENGTEX TP: 1.22, 1.30 SL:1.10

👉TOPGLOVE TP:8.60, 8.90 SL:7.70

👉OLDTOWN TP:1.42, 1.58 SL:1.24

👉FGV TP:1.80 SL:1.4

👉BONIA TP:0.81 SL:0.675

👉UEMS TP:1.45 SL:1.13

👉SUNCON TP:1.31 SL:1.16

👉PMETAL TP:2.40 SL:2.03

👉HOHUP TP:1.10 SL: 0.95

👍 Please like us at our facebook page - Bursa Blue Ocean

Sincerely,

Bursa Blue Ocean (by MIVCO)

Disclaimer and Declaration

The information is meant for the members of Bursa Blue Ocean (BBO). Disclosure and distribution of the message without the permission of BBO is prohibited. The full content of the article and write ups are for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss

5 Oct-9 Oct 2015 Malaysia's Market Outlook

"Will it be a Bull Trap?"

Weekly Trend: Trending up with downside bias

FBMKLCI formed higher low and lower highs in the past 6 weeks. This suggests a bullish signal from technical point of view.

Support: 1620
Resistance: 1655

Support level pledged at 1620 while resistance level at 1655. we shall see further correction if 1620 level being violeted.

Sector in focus: Consumer. Drought causing the hike of raw food prices amid haze issues.

Stocks picked for next trading week:
1. Oldtown: TP 1.42, 1.58 SL 1.24
2. Bonia: TP 0.81 SL 1.24
3. Supermx: TP 2.20, 2.30 SL 1.92
4. Penta: TP 0.84, 0.90 SL 0.75
5. Unisem: TP 2.23, 2.30 SL 2.01
6. Comform: TP 0.865 SL 0.790
7. SunCon: TP 1.31 SL 1.16
8. Armada: TP 1.15 SL 0.885
9. Malakof: TP 1.86 SL 1.59

Please like us at our facebook page - Bursa Blue Ocean

Sincerely,
Bursa Blue Ocean (by MIVCO)

Disclaimer and Declaration

The information is meant for the members of Bursa Blue Ocean (BBO). Disclosure and distribution of the message without the permission of BBO is prohibited. The full content of the article and write ups are for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss.

Pestech - Joining the Bursa Billionaire Club

Congratulations Pestech! She is no longer a Small and Mid cap player. When I first posted about Pestech it was 5.15 @ 17 July , the market cap of RM 956m, fast forward 4 working days it has break the billion dollar company mark. Today closing @ 5.56 with a market capitalization of  RM1.033b. About 8% increased for a quick 4 trading days.

It has touched 1 billion mark. What's next? If the price is sustainable in another few trading days without huge force selling/profit taking, I am in the opinion that some bigger boys shall come in. Generally for larger Institutional Funds, they can only come in for company bigger than 1b.  

Looking at their company's strategy of accumulating shares and cross it to the Institutional Funds, it would not suprise me if currently they are talking to the larger Institutional Fund House to join their journey. 

Personally for myself, I will keep the share and continue my exciting journey with Pestech.

Posted on 17/7:

http://klse.i3investor.com/blogs/humblepie188/80032.jsp

Conclusion:

PE 17x is not cheap. For those investors looking for a very safe and high dividend yield stock, this is not for you. For investors who are willing to look at this counter, do prepare to hold mid to long term with less dividends given (it is normal for construction company to give less dividends). Personally I am monitoring this counter, if the bosses keep accumulating from the open market eventhough it touches RM5, I do not mind to follow his foot steps. 

I believe Pestech is joining the billionaire club soon. 

http://humblepie188.blogspot.com/

https://www.facebook.com/myinvestcoach

Disclaimer and Declaration

The full content of the article is for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. Examples of specific shares is citied for illustration purposes.

Regards,

Humble Pie

Pestech International Bhd - Prudent Strong Management Team

Dear Readers,

Selamat Hari Raya to all Muslim friends in Malaysia! While enjoying a cup of latte, I am browsing through an interesting company with 3 years of listing record.

Today sharing will be a bit different. Generally sifus will be using Fundamentals to analyze a company moving forward for their future growth. My 2 cents are included other factors for sharing purposes.

1. Management Team / Major Shareholders:

i. Bear in mind, good company is run by Great People. The brains and movers behind. If the bosses are reliable and generally sincere in doing business, you shall see their words/promises are kept.

Back to May 2012 IPO, if you browse through their Annual Report, one weird issue generally normal people won't notice, Pestech's Principle Advisor is Bank Islam. Why Bank Islam and not the other Investment Banks that are Small and Mid Cap IPO Specialist? Personally I guess if they are engaging 'The Small Cap IPO Specialist', the IPO valuation might be slightly better considering their ability/database available to push the Private Placement to Institutional Clients.     

Bank Islam is one of the best practitioner of Shariah Principle in Malaysia and it carries a premium in the eye of our Muslim Institutional Funds and Muslim Investors. An engagement with Bank Islam generally it carries the understanding of prudent business.

ii. For the past 2 years, the CEO/ED Mr. Lim Pay Chuan has been buying back his own shares. He is doing Dividend Reinvestment Plan too. For lay man like us, dividend means income from investment received. For him to exercise this activity, he himself would not be getting monies from the dividends declared, only shares. For this idea to be successful, the owners must have confident with their own listed vehicle to continously generating good profits. 

  iii. A lot of young investors have not heard about Share Grant Plan (SGP). SGP is different from ESOS. ESOS is to be given to staffs who work about 3 years and above for their loyalty and a scheme to hold the staff for another few years. SGP is free shares to be rewarded base on achievement/KPIs met.  

2. Fundamental Analysis

Sept 14 + Dec 14 + Mac 15 = EPS of 22.29 for 3 Quarters

(22.29/3) X 4 = 29.72 (annualized 4 Quarters)

Price 5.15 / 29.72 = PE 17x 

For the pricing, definately it is not cheap. Comparable to PE for FD of 18X.

3. Economic / Industry

Pestech's business rely on Tenaga a lot. For the past few years they have diversified to few countries especially Cambodia and their reputation there is recognize by the government. They have reduced their dependancy to Tenaga for the past few years. I would not want to touch the FA in details, you may read it @ 

http://www.bursamarketplace.com/index.php?ch=44&pg=158&ac=16504&bb=research_article_pdf

TP: 6.11

Being a construction company focusing on utilities, this sector are generally defensive and niche. For their competitors to emulate what Pestech can do, it is tough. 

4. A quick glance on their shareholdings, Mr. Lim Ah Hock and Lim Pay Chuan controls more than 55% of the shares. Inclusive of their Directors and Friendly Institutional Funds who enjoy the ride for the past 3 years, I believe collectively they can reach up to 75% of the public spread. As long as the bosses keeps on accumulating from the market, I believe he would not bring me to Holland. Sellling the shares to institutional I believe it part of their strategy to introduce their company to Foreign Institutional Funds as they are actively involving business in Asean Market.

  

Conclusion:

PE 17x is not cheap. For those investors looking for a very safe and high dividend yield stock, this is not for you. For investors who are willing to look at this counter, do prepare to hold mid to long term with less dividends given (it is normal for construction company to give less dividends). Personally I am monitoring this counter, if the bosses keep accumulating from the open market even though it touches RM5, I do not mind to follow his foot steps. 

I believe Pestech is joining the billionaire club soon. 

Disclaimer and Declaration

The full content of the article is for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. Examples of specific shares is citied for illustration purposes.

Regards,

Humble Pie

Reviewing Stocks Shared Since May 2015

Dear All,

I have selected some stocks since May 2015 :

YSP   - First posted               @ 21/2                                           = Price 1.42 

           2nd time highlighted @ 1/5                                             = Price 1.58 

           Price has run up to 2.90 @ 15/7 = From 1.58 to 2.90     = Profit of 84% 

CCMDuo - First highlighted @  21/2                                            = Price 2.83

            2nd time highlighted @ 1/5                                            =  Price 3.84 

            15/7 Adding the right issue @ 1.80 on 1/5 purchase ( 2nd purchase date), my cost around 2.83                                                                                                        = Profit of 2%

            15/7 closing price 2.88 

  

Hovid - First highlighted @  21/2                                                   = Price 0.44

            2nd time highlighted @ 1/5                                              =  Price 0.5

            Using the 2nd purchase date @ 0.5 vs 17/5 closing 0.485 = Loss of 3%  

 

Can One - First posted @ 2nd May - Price RM 2.71 - Now @ 2.52 - Loss of 7%

I am preparing to hold this counter as posted.  

BJauto - First posted        @ 20/2                                               = Price 3.45 

           2nd time highlighted @ 2/5                                             = Price 4.04 

           15/7 Adding the right issue @ 1.80 on 1/5 purchase, my cost =

           3.45 + 4.04 = 3.75 (after dividend and bonus issue, cost is = RM 2.68 , Loss of 2%

Focus Lumber First discovered @ 2/6                                                 = Price 1.34

           15/7                                                                                      = Price 1.48 - Profit of 10.5%

UEMS - Trading Buy @ RM 1 now RM 1.02                           = Profit of 2% (will take out as it does not uses FA Model)     

Matrix Concept  posted on 22/5 @ 3.33, after Bonus Issus of 1 for every 6 held =  Average Price 2.63

                             = After adding the free warrants, my Profit should be around 2 ~ 3%

To be meaningful, I am not using the 1st calling Price on YSP, CCM DUO and Hovid on Feb 2015. It would be more fair by using May's closing price. Generally during the tough time on May ~ July period, my portfolio still giving me a stabilize return. 

Why we are using FA for analysis and stock picks?

Simple: 'Head I win, tail I won't lose much'

Happy Trading ! 

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Disclaimer and Declaration

 

The full content of the article is for educational purposes only and should not be used as investment recommendations. We are not responsible for all investment activities conducted by the participants and cannot be held liable for any investment loss. Examples of specific shares may be citied for illustration purposes.

 

Regards,

 

Humble Pie