EOD Update (24 May, 2006)

Market direction still not clear...

Latest purchase:

OILCORP: +2,000 (1.27) ... Total 24,000


/ichithekiller

EOD Update (23 May, 2006)

Bit late with this update... although I already reported in the CBox yesterday.

Latest purchase:

OILCORP: +2,000 (1.17) ... Total 22,000


/ichithekiller

EOD Update (22 May, 2006)

Another "killer" day at the market... there goes all the retailers and stock market "kakis" coming out in the last 2 months to catch the impending "bull run". Times like these are an excellent reminder just how difficult it is to consistently make money from the market and also to never get too complacent.

I still hold to my opinion that the recent weakness in US markets is justified and should not really affect Asian markets in too big a way, as long as there is no monumental collapse. But who am I to argue against the world? As we can all see, not only has Bursa M'sia been affected, but virtually global markets as well. The only positive sign on our local market is the emergence of more and more foreign parties/funds, including Fidelity, Goldman, Atlantis, Cornell, Harris Associates, etc., picking up stakes in Malaysian PLC's. Even The Edge online had an article on this today. Is there a message in this buying, when stocks are being battered and local investors are dumping shares left, right and centre? Sure, the big boys make mistakes too, but their long-term track records should speak volumes.

In the meantime, I will continue a cautious selective buying approach, until it's clear to me that all hope is lost for now.

Latest purchases:

SAPCRES-WA: +10,000 (0.34) ... Total 10,000

OILCORP: +5,000 (1.10) ... Total 20,000

Latest disposals:

JOTECH: -10,000 (0.785) ... Balance 0

GPACKET: -3,000 (2.69) ... Balance 4,000

SCOMIMR: -5,000 (1.37) ... Balance 0

SCOMI: -6,000 (1.16) ... Balance 0

JAKS: -10,000 (0.495) ... Balance 0 (Big profit became nothing...)


/ichithekiller

EOD Update (19 May 2006)

Latest purchase:

OILCORP: +3,000 (1.28), +2,000 (1.30) ... Total 15,000

Latest disposal:

JOTECH: -8,000 (0.80) ... Balance 10,000


/ichithekiller

EOD Update (17 May 2006)

Today saw relative under-performance on Bursa Malaysia compared to strong recoveries in other Asian bourses such as Japan, Singapore and Hong Kong. The DJIA looks set for more trouble ahead though. Does this mean trouble for Asian equities and, more specifically, Bursa Malaysia?

For an extremely long time now, the world has looked at the US markets as an investment barometer and taken its cue from there. However, over the years, global currents have changed dramatically and many new factors have emerged, such as the explosive growth of China & India, the breakup of the Soviet Union, the formation of the EU, the increasing importance of Brazil, Mexico & Chile in Latin America, the defiance of yet other Latin American states such as Venezuela and now, Bolivia, to US policies and yet through all this, the perception of the US markets and the DJIA as an all-important indicator for the world to take note of has not changed.

Throughout this period, the US has become the world's largest debtor and consumer nation, while also being the largest user of the earth's energy resources. While this in itself is not necessarily a bad thing, the worry is that a large part of its spending has for decades gone to non-productive uses, such as the never-ending R&D and production of high-tech armaments and financing of numerous "conflicts" around the globe. I don't intend to turn this blog into a doomsday prophecy or something anti-American (which I'm not), but something's gotta give and I think it will be sooner rather than later.

As I said the other day, my guess is that US equities have no more room to move upward and will be on a long-term downward trend now. This follows the continued weakening of the USD which actually started many years ago. The crucial thing is how fast the bust-up in the US happens. If it's gentle, then the case could be argued that Asian equities will be a natural choice for some of the global funds leaving US assets. This could already be happening now, just look at what happened to the USD/RM over the last 2 days. The US will then have a soft landing and Asian markets should rise.

If the US markets fall at a more dramatic rate, then the old bugbear of Market Sentiment will likely prevail and drag Asian markets down as well. We could then be in for some rough times ahead, until people learn to forget about the DJIA, S&P500 and the NASDAQ indices and evaluate Asian markets based on their own attributes.

If the USD and US markets implode in a spectacular show of fireworks, then all hell will break loose. We're talking about trillions in USD foreign debt, corporate bonds, equities and derivatives held by global creditors/investors. There will surely be far-reaching implications beyond mere market sentiment, since the US also accounts for a huge chunk of the world's exports.

So the thing now is to hope for a soft landing for the US and during this process, for global investors to move away from its fixation with the US market indices, because as someone mentioned to me the other day, "the US ain't what it used to be anymore". Maybe this applies even more to an index made up of 30 stodgy, old-world stocks.

Latest purchases:

OILCORP: +10,000 (1.46) ... Total 10,000 (Back in again for 2nd round...)

TAMCORP: +10,000 (0.30) ... Total 32,000


/ichithekiller

EOD Update (16 May 2006)

Another see-saw day, with encouraging last-minute recovery in a broad range of stocks. With so many counters in my portfolio, I had to make a decision to cut some stocks (partly to protect profits, partly to limit potential losses), but later saw some opportunities for selective buying.

OILCORP did not completely tank as I was anticipating. The way it's acting, there could still be another play in the works. Those with guts of steel might be able to make a quick short-term trade on it if it starts perking up again, but remember to set a very tight stop loss and a realistic target price. Most importantly, don't hesitate to act if your target or stop is hit.

Latest purchases:

GHLSYS: +10,000 (0.245) ... Total 30,000

TIMWELL: +2,000 (1.73) ... Total 10,000

IJM-WB: +3,000 (1.01) ... Total 20,000

MAEMODE-WA: +10,000 (0.335) ... Total 10,000


Latest disposals:

PRTASCO: -10,000 (0.955) ... Balance 0

MAEMODE: -3,800 (0.98) ... Balance 15,000

AFFIN: -3,000 (1.73) ... Balance 0

NICORP: -15,000 (0.125) ... Balance 0

KNM: -3,000 (5.85) ... Balance 0

MUHIBAH: -10,000 (1.58) ... Balance 0 ( Am regretting this already...)


/ichithekiller

EOD Update (15 May 2006)

After continuous losses on US and global markets, Bursa finally broke in late afternoon trading today. For a while it seemed as if the bulls were trying to hang on, but when regional markets continued sliding, including the ASX, selling pressure on the Bursa finally overwhelmed whatever little buyers there were. Oilcorp took a big hit after first reaching 2.00, followed by massive churning with a slow drift down to 1.80, a sure warning sign of trouble ahead ... For anyone gung-ho enough to be thinking of buying this on dips, I would say it's strongly inadvisable, better to be safe than sorry.

As I'm typing this, the DJIA seems to be making a somewhat strong recovery, but for now I think the US markets have peaked already. There are just too many negatives in the form of persistently high inflation, depreciating currency, huge deficit, high commodity costs, rising fuel costs, high consumer debt spent on non-productive assets, etc. I'm no expert, but I'm thinking the global smart money will already be getting out of US equities/assets, but with the world awash with liquidity where else would they go? Perhaps this partially explains the huge run-up in gold, commodities and crude prices and the recent strong appreciation of Asian currencies.

I think mid-term Asia is still ok for now and the current sell-off in the Bursa will be short-lived, provided oil prices do not spike much higher and there is no conflict in Iran. At the moment, it's probably safer to wait a bit and see how the next few days pan out before trying to bargain hunt, but I have my sights set on IJM-WB and GHLSYS at the moment.

Latest purchase:

IJM-WB: +2,000 (1.15) ... Total 17,000


Latest disposals:

OILCORP: -10,000 (1.95), -5,000 (2.00) ... Balance 0

PRTASCO: -5,000 (0.98) ... Balance 10,000

SAPCRES: -15,000 (0.96) ... Balance 0


/ichithekiller

EOD Update (11 May 2006)

Another strong move by OILCORP... news came out about signing of agreement on deep-sea fishing consortium. This is actually old news. I find it hard to believe signing of this agreement (for a deal which had already been announced previously) would move the share price so much. It's gone up 45% over two days and 110% over my first buy price. Something else could be brewing, if this is to be a sustained push. Will have to be alert for possibly more news in coming days.

Latest disposal:

OILCORP: -3,000 (1.85) ... Balance 15,000


/ichithekiller

EOD Update (10 May 2006)

Interesting day today... makes it pretty tough to stay away from the market. LIONDIV finally showing some signs of life, closing back up at 4.40 ... whether there will be follow through buying remains to be seen, but I think the longer-term fundamentals are still intact.

The 2 surprise moves in my portfolio today were OILCORP and GPACKET. After suffering dips late last week and earlier this week, both suddenly broke out in late afternoon trade today. This again shows the prevalence of final shakeouts (presumably engineered by insiders) before strong upward moves from a recent accumulative base. This partially confirms my belief that OILCORP was being accumulated recently, probably pending some forthcoming news. Today's move could still be a last-minute distribution push (meaning end of the road), but I doubt it.

SAPCRES is also starting to show more and more strength now... should have picked up some of its warrants at 0.37 - 0.38 when I had the chance, for a double-dunk.

Latest disposal:

KNM: -1,000 (5.95) ... Balance 3,000


/ichithekiller

EOD Update (9 May 2006)

Meant to have a break, but LIONDIV acting funny...gotta be a bit careful about this one.

Latest purchase:

LIONDIV: +1,000 (4.24) ... Total 8,000


/ichithekiller

MAEMODE

*Sigh* ... just when I was thinking of taking a break, someone posted this in my chatbox:

"maemod: hey ichi, i got some maemode after analyst say buy. You seem confident it go up soon but i see smart's blog say lousy stock, so what to do now. did you see?"

So, I moseyed over to take a look at Smart's post on MAEMODE. Without spending too much time on this, I will try to address some comments made. Here's an excerpt of Smart's comments in italics:

"Net gearing of 86% is very high for a business without a steady cash flow. Earnings can be volatile and one have to be very optimistic to value it at 9-10x PE for such kind of business when debt level is so high. In fact, I will value it at 7x PE at most. To achieve a PE of 9x, MAEMODE will have to earn about 4c in the next quarter, which is a growth of 24% from the current quarter. It would not be an easy task in a business where operating margin is less than 15%. "

Me: OK, first of all, I would like to post this little comment which was in the notes section of MAEMODE's latest quarterly announcement.

Notes:

The group generated a net profit of RM3.07 million for the current quarter under review as compared to RM2.72 million for the immediate preceding quarter.

For the current year to date, the Group achieved a turnover RM172.76 million as compared to RM123.25 million registered in the preceding year's corresponding period, while net profit for the year to date increased by approximately 21.89% from RM6.48 million in the preceding years' corresponding period to RM7.90 million.

For the current quarter, the Group has written off approximately RM5.0 million as operating expenses incurred in securing the RM200 million Islamic Commercial Paper/Islamic Medium Term Notes Programmes. The better result, even after taking into consideration the above expenses, was due to the significant increase in the overall sales of the Group and the lower financing costs incurred during the current quarter under review.

Me: So you see, revenue over three quarters increased by 39.8% yoy while net profit increased by 21.9%. Nothing great, you say? But wait, this is AFTER writing off RM5 mil one-off expenses for its Islamic debt programmes in the latest reported quarter. So, if you add back RM5.0 mil to the unadjusted FY06 Q3 PAT of RM3.08 mil, you get total Q3 PAT of RM8.08 mil vs RM2.7 mil for Q2 (ie. PAT has tripled q-on-q). Against a share cap of 95 mil equals EPS of 8.5c for Q3.

Smart mentioned he doesn't think MAEMODE can grow EPS by 24% to hit 4c EPS next quarter, but this quarter is already 8.5c if you add back the one-off expenses! So why talk about trying to hit 4c next quarter? This is only relevant if you ignore the one-off expenses this quarter and take the unadjusted EPS for Q3 as 3.23 c.

RM5 mil for a Rm200 mil debt programme = 2.5%, which is on the high side but still not unreasonable, especially if you incur broker/introducer fees, on top of arranger fees, placement fees, stamp duties, trustee fees, rating fees, legal costs, due diligence costs, etc.

Do I expect PAT next quarter to be near RM8.0 mil again? Probably not, but the unadjusted RM3.08 mil is still 14% higher than the previous quarter. Even if next quarter earnings comes in at the mid-point between RM3.08 mil and RM8.0 mil, I would say it's ok. Looking at the bigger picture, Indonesia is taking great efforts to revitalise its resources sector and investors are starting to return in droves. Anyone involved in handling M&A deals on a regional basis would confirm this. An analyst sitting at a desk in KL may be oblivious to this. With soaring oil and gas prices, coal is a natural cheaper alternative. Just look at Malaysia's new Jimah IPP. What fires it? Coal. This would be positive for MAEMODE's conveyor business, especially if efficiency is stressed by foreign investors, as it sure beats coal transport by trucks.

On the borrowings side, it's a bit high but if earnings are growing like gangbusters, then it's partly justified. Also, overall finance costs have come down, probably indicating the lower costs of the Islamic CP/MTN compared to their previous borrowings. Besides, I don't believe in calculating net gearing using market cap as a base, 'cos then if the company is significantly undervalued, it would compound the calculated gearing "problem" and throw one off-track on a possibly good thing.

Anyway, I have the utmost respect for Smart's analysis, so anything he says is definitely worth pondering about. Maybe he just didn't think the RM5 mil expenses in the last quarter would be one-off in nature. Or maybe he thinks management is lying about the figures, though I should think management would be idiotic to lie about something so easily verifiable as that. Or maybe I made a mistake somewhere in my somewhat "rough" calculations. To maemod (sic) who posted in my chatbox, you should verify the figures yourself and make your own decision. Sorry, but I'm not qualified to tell you what course of action to take...

To Smart (if you ever read this, which I seriously doubt though) sorry for posting some of your comments here, just thought it would be the easiest way to address a reader's query. Hope I didn't offend you in any way.


/ichithekiller

EOD Update (5 May 2006)

No trades today. I will be taking things easy for a while. Wish you guys (& gals if there are any) all the best.

IJM-WB still continuing its strong move. I am watching LIONDIV closely, it's still not acting very well after its recent correction... same goes for OILCORP. MUHIBAH and JOTECH are still ok, I think ...

/ichithekiller

EOD Update (4 May 2006)

Pretty uneventful day for me ... getting a bit tired. Think I'll unload some stocks and take a break. I need a break ...

Latest disposals:

PRTASCO: -5,000 (0.96) ... Balance 15,000

SCOMIMR: -3,000 (1.50) ... Balance 5,000

GPACKET: -5,000 (2.52) ... Balance 7,000


/ichithekiller

EOD Update (3 May 2006)

Market getting increasingly difficult to read. Not clear what stocks are in favour now, although today was clearly plantation counters. Tomorrow could be something else. Personally, I'm not sure about the net impact on plantation companies of rising CPO prices vs. the appreciating RM, so will sit this out.

One thing though, the stocks of pipe makers and companies involved in the water industry seem to be showing some signs of life, led by JAKS of course. Stocks like ENGTEX, YLI, HIAPTEK and to a lesser extent ROHAS and BREM seem to be acting quirky. YLI has slowly and quietly (so slow that I only just noticed myself) edged up since I first bought at 2.14 a month ago. It even hit 2.45 a few days ago, but on very light volume. Think it'll be worthwhile to keep an eye on these stocks for the moment...

KNM closed 15c up today at a new high of 5.50 ... MAEMODE seemed to be starting a big move for a moment, moving up to 1.18 but faltered and closed only 1c up for the day at 1.12 ... same thing with OILCORP, big move up, then a slow drift down to close only 1c up for the day. JAKS also seems to be following this daily pattern. When this happens, you can never be sure whether it's accumulation or distribution, but my bet for now is that it's accumulation.

JOTECH underwent a dip in afternoon trade, took the opportunity (I think) to increase position a bit more. After that, it recovered slightly, but still closed down 2c for the day at 1.15, significantly below today's high of 1.22.

Latest purchase:

JOTECH: +3,000 (1.11) ... Total 18,000


/ichithekiller

EOD Update (2 May 2006)

No trades today ... still on holiday. Good to see MUHIBAH and JOTECH still continuing strong moves, closing at or near today's highs. JOTECH closed up 19c and MUHIBAH closed up another 12c, after last Friday's mild correction. Although I am up more than 100% for these 2 counters, I still think there is further upside, so am still holding on for time being.

Meanwhile, MAEMODE looks like it's perking up for a big move, after a reasonably long period of consolidation (accumulation). With some luck, it could turn out to be another 100%-bagger for me. Actually, I'm rather surprised it hasn't taken off by now, particularly after the last strong quarterly results announcement. To me, it's just a matter of time.

/ichithekiller