Taking a gamble...

Yes, the title of this post is taking a gamble. That means what I'm talking about below is not considered "investment grade" from a fundamental standpoint and I'm definitely not recommending a buy. In short, I'm just bored and decided to take a punt on a stock that has been acting a bit strange lately, going counter to the overall market trend. From a recent bottom near 30c BANENG has more than doubled in price, hitting a high of 82.5 on 23rd July...before correcting slightly and then moving again.

At the same time, it has also announced that it is exploring options in the Oil & Gas sector. Most of us would know this is the best goreng theme and ordinarily I would also pooh-pooh this kind of "announcement". But the price-volume action doesn't look like it's game over yet. The other thing is it recently sold off its loss-making fabric division. In the notes to its quarterly announcement, it said this subsidiary contributed to RM12 million of losses in the financial year to 31st December, 2007. If BANENG was operating at around breakeven or a slight loss before this disposal (the total year 2007 loss is further affected by a RM3.2 mil one-off loss on disposal), it should by right have no problem recording a profit of at least RM8mil after this disposal, assuming all other things remain equal (a somewhat big if). Note though, that the 2008 Q1 profit doesn't really reflect a big jump in profits, so it's all pretty mysterious. Anyway, following this simple analysis through, based on a tiny share base of 60m, a profit of RM8mil would translate to an EPS of 13.3c ... at 70c it would mean a prospective PE of 5.25 times, before the effects of any supposedly new O&G ventures.

Therefore, with this possible earnings turnaround as a "cushion" I'm thinking it's probably worth a gamble ... just for fun... and just in case the O&G hype turns out to be real. Couldn't pick up much though... seemed to be consistent buying support throughout the day at 69c level. Considering the weak overall sentiment, was hoping it might slip to around 65c ... but no dice. Let's see if got opportunity to pick up cheaper over the next few days.... stocks tend to dive right after I put a foot in due to impatience and boredom.

Latest purchase:

BANENG +10,000 (0.69) ... Total 10,000


/ichithekiller