End of Year Message And Appreciation

Dear All Members of BBO Telegram Group,

On behalf of the Management Team, I would like to wish all of you a Happy New Year and Prosperous 2016. It is a time for reflection on things done for 2015:

The BBO Private Telegram Group was started on early October 2015 by a group of professionals and businessman from various investment background. Initially is was a closed group for the selected and invited few to share their investment opinions and research done for the benefit of the members in early 2015. Fast forward 3 months, we have a small family of 700 plus in the Telegram Group as at end 2015 and 2.7k likes in FB Page.

How is BBO Group different compare to the other Groups you are joining?

1. We are run by professionals (members with the background from Corporate Finance, Fund Management, CFO of listed entity, Investment Bankers, Full Time Traders, Savvy Businessman). Posting and info done are base on figures and facts.

2. We do not condone the act of :
i. Pump and Dump Activities
ii. Operators Stocks / Syndicated Activities
iii. False Rumor Spreading and Distribution of Shares
iv. Analysis base on numbers and info pluck from the sky

3. Sharing and analysis done is a mixture of 3 elements:
i. Fundamentals & Tecnical Analysis.
ii. The Listed Company's Management Team (background, success stories and trustworthiness)
ii. Theme Play (are they on the right rotational play & Fund Manager's Radar)

Moving Forward for 1st Half 2016:

1. BBO Technical Trading Team will be doing monthly sharing/education for aspiring Traders who love charts. Tentative date January 2016.
2. Enlarging BBO Working Committee Team for events / roadshows and other BBO Private / Public activities. Tentative  date January 2016
3. Creation of BBO Fundamental Analysis Team. After CNY 2016.
4. BBO Investment Day 2016 - 2nd Quarter 2016.    

We would like to take this opportunity to say thank you for those members who have been contributing consistently on the daily information posting and sharings:

CH Seow, Nuren, Quantum, Ong Ah Sun, Fang, David Ting Ting, Su Kwok Tung, Augustine Bong, Tan Gim Hong, Pinko Heng, Sean Yong, Teo Kim Soon, Selina Loh, Anthony Ng, Steven Lee, D Salman and others that in our BBO telegram Group. Hope to see more of your sharings in 2016!

For BBO Committee Members:

Thank you for your hard work done on year 2015. We have a commentable year as our own investments and group portfolio is above KLCI Index. Let's work hard as a team to achieve a greater 2016. With the current team we have, I believe more people will be benefitted from what we are doing and sharings done.

Till then Happy 2016 and let's start the challenging 2016 year with a positive note and mindset.

Thank you

Regards,

Management Team
BBO Group

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)

Please like us at our facebook page - Bursa Blue Ocean