Monday, December 31, 2012

A perfect closing for KLCI index in 2012

What's more can you say, closing at the all time high of 1688.95 points for KLCI index in the last trading day of the year 2012, I can just say it is perfectly done, although initially I wish to say it is perfectly manipulated.

When the whole world share market is actually trading in caution with down trend, due to the uncertainty of the US fiscal cliff and debt ceiling issue, Malaysia is one of the market that defy the odd and keeping its index green for the last few trading days of year 2012.

Year-to-date, KLCI is up 10.34% , in the last trading day of 2012, the index is actually hovering at negative zone with its lowest touch 1673.69, but some late buying during the pre-closing session of the index link stock such as Maybank, KL Kepong, Guinness Anchor Berhad (GAB) which turn the index from negative zone to up 7.62 points and close at all time high.

It will be interesting on how to manage one portfolio for a better return in the year 2013, should it be maintain as it is or revising action need to be take place, mostly for the first quarter Malaysia market should be traded cautiously on the coming general election, but should we ignore that they might be a small rally before coming Chinese New Year? 

Let's have some time reading all the research house report, and analysis their point carefully.

Chart Source: Yahoo Finance

Friday, December 28, 2012

Window Dressing Myth

1,681.330 (+7.170)

High: 1,686.700 Low: 1,678.580

Today 28th December 2012, the FBM KLCI to record two milestones, which were the record intra-day high of 1,686.70 and all-time closing high of 1,681.33.

What is it mean? Is it FBM KLCI is doing the window dressing action for this last 2 trading days in the year 2012?

Let see what actually is the definition of window dressing in investopedia website,

Definition of 'Window Dressing'

A strategy used by mutual fund and portfolio managers near the year or quarter end to improve the appearance of the portfolio/fund performance before presenting it to clients or shareholders. To window dress, the fund manager will sell stocks with large losses and purchase high flying stocks near the end of the quarter. These securities are then reported as part of the fund's holdings.

Investopedia explains 'Window Dressing'

Performance reports and a list of the holdings in a mutual fund are usually sent to clients every quarter. Another variation of window dressing is investing in stocks that don't meet the style of the mutual fund. For example, a precious metals fund might invest in stocks that are in a hot sector at the time, disguising the fund's holdings, so clients really have no idea what they are paying for. 

Window dressing may make a fund appear more attractive, but you can't hide poor performance for long.

Read more:

So in the fund manager quarterly or yearly report, they normally want to stress on their fund portfolio is outperform the benchmark index, so the window dressing should be not to move the index to a very high level but push the stock price of their respective portfolio without disturb the indexing too much.

Of course as pushing up the stock price it will be hard to not effecting the index performance, but if the index is moving too high, the said portfolio may not to claim they are outperform the benchmark index.

CCM WARRANTS B is actually execised

In my earlier post on 26th December 2012, which I thought PNB is letting the 52,821,503 CCM-WB lapse on the expired date, which prove it is wrong by the latest announcement from Bursa on 28th December 2012.

The announcement details as below,

CCM-EXERCISE OF 52,825,836 WARRANTS B 2003/2012 (“EXERCISE”)



Kindly be advised that the abovementioned Company’s additional 52,825,836 new ordinary shares of RM1.00 each arising from the aforesaid Exercise will be granted listing and quotation with effect from 9.00 a.m., Wednesday, 2 January 2013.

So it means PNB actually exercised all its CCM-WB that they hold, the figure of exercised warrants is slightly bigger than the PNB holding is that there might have some minor shareholder doing the exercised process as well.

So we all well known that the exercise price of CCM-WB is RM1.36, let say we ignore their initial cost of CCM-WB, this 52,825,836 new share that will be trade on 2nd January 2013 will at least cost at RM1.36, which is way higher than today closing price of RM0.875.

Despite we see the EPF is continuously disposing CCM share, should this level consider a safe entry price?

Thursday, December 27, 2012

Felda Global Ventures Berhad

It seem suddenly got many happening in this few days for Felda Global Ventures Berhad (FGV), first the lock up period is ended for their cornerstone investor which fear by other shareholder that it may spark a sell down from them, than their 20% own Tradewinds (M) Bhd is offer by 4 joint offerors with RM9.30 per share.

For the TA Securities research report for they still have a sell call for FGV at target price of RM3.80, it is well below its IPO price for retailer at RM4.45 and institutional price of RM4.55, indeed currently its share price already start hovering near their IPO price.

TA Securities have this to say,

What’s the News?
Tradewinds (M) Bhd (TWM), a 20% associate of FGV, received a notice of
conditional take-over offer from Perspective Lane (M) Sdn Bhd, Kelana
Ventures Sdn Bhd, Seaport Terminal (Johore) Sdn Bhd and Acara Kreatif Sdn
Bhd (Joint Offerors) to acquire all the remaining ordinary shares not already
owned for a cash offer price of RM9.30/share. This represents a premium of
20% based on TWM’s last trading price of RM7.75. Currently, the joint offerors
hold approximately 45.13% of TWM.

For the take-over offer to be completed, acceptance level must be at least 90%
of the remaining portion, which will trigger a mandatory privatisation of the
company. According to the announcement, the joint offerors do not intend to
maintain the listing status of TWM, in the event the takeover offer receives
enough support. 

What’s Our Take?
All in, we are neutral on the privatisation news of TWM. In 2010, FGV acquired
the stake for a cash consideration of RM207.6mn and recognized a gain from
bargain of RM116.0mn, being the fair value of the investment acquired. Based
on the offer price, FGV’s 20% portion is valued at RM551.4mn. That will
translate to a cash gain of RM228mn, or 6.2sen/share.

The offer price translates to a PE of 40.6x based on an annualised FY12 EPS of
22sen. However, the forward FY13 PE could be lower as we believe TWM’s
profit would accelerate ahead underpinned by lower raw sugar price. YTD, the
benchmark No. 11 raw sugar price has declined as much as 22%.

Given that FGV hold 20% stake, the success of the take-over depend on whether
FGV would sell its block in the company. Looking at the handsome gain it
expected to pocket from the disposal of the investment, FGV might be tempted
to realise its investment. The cash of RM551.4mn would also generate
additional interest income of RM6.6mn, assuming effective interest rate of 1.2%
as at Sept 30, 2012.

There might be possibility that the gain might be returned to the shareholder in
the form of special dividend, in our view, as the group still has balance of IPO
proceeds of RM4bn (as at Sept 30, 2012) which has yet been utilised.

Impact on Earnings
Assuming the take-over pulls through, a back of the envelope calculation
implies a net 3.8% reduction (net off after-tax interest income from proceeds)
in FY13 forecast. However, we are keeping our earnings estimate unchanged at
this juncture pending completion of the take-over offer.

Still a Sell
We maintain Sell recommendation on FGV with an unchanged target price of
RM3.80/share based on Sum-of-Parts valuation methodology. Despite the
downside to earnings, the SOP target price will increase slightly to RM3.83,
after taking into account the cash proceeds due to the holding company. Our
key immediate term concerns are, 1) larger than expected contraction in FFB
harvest vs. the industry, 2) continued margin contraction experienced by MSM,
and 3) the group has yet to successfully deploy IPO cash to acquire earnings
generating assets. Key immediate re-rating catalyst is value accretive M&As.

But anyway, this is just a valuation base on the fundamental figure at current situation, any major changes in crude palm oil (CPO) price, and given the concern that the IPO that subscribe by the Felda settlers, it should  be have some strong support at IPO price.

Graph Source: Chart Nexus

Wednesday, December 26, 2012

Chemical Company of Malaysia

At the time of writing, Chemical Company of Malaysia (CCM) share price should be consider trading at its historical low level, this may due to it is one of the share that EPF actively dispose in the past 2 months, and one of the event for CCM on the 26th December 2012 is the expired of its warrant B (CCM-WB) which have an indicative conversion price of RM1.36, way higher than today closing price of RM0.85.

And from the Bursa announcement, you can found that PNB have 52,821,503 units of CCM-WB that is just  lapse like that after the expired date. So the actual CCM-WB that had convert to mother share should be very less and their cost will be at least RM1.36 plus the price of CCM-WB that they bought into.

With the NTA of RM1.86 it share price is just trading at 0.46X of its NTA, only it's PE of 15X and dividend yield is not so attractive at the moment, it should be a good company to be monitor under my list.

Just a side story, suddenly found the stock detail for CCM in klse.i3investor website should be an error, they write as below,

Concord Medical Services Holdings Limited operates a network of radiotherapy and diagnostic imaging centers in China. As of December 31, 2009, the Company's network comprised 88 centers based in 57 hospitals, spanning 36 cities across 21 provinces and administrative regions in China. Most of the centers in its network are established through long-term lease and management services arrangements entered into with the hospital partners. Under these arrangements, Concord Medical receives a contracted percentage of each center's revenue net of specified operating expenses. In April 2010, the Company's subsidiary Shenzhen Aohua Medical Leasing & Services Limited acquired Tianjin Kangmeng Radiology Equipment Management Co., Ltd. Effective July 1, 2010, the Company entered into a joint venture with Chang'An Hospital for the operation of Chang'An Hospital's cancer treatment facilities by acquiring a 52% equity interest in Xi'an Wan Jie Hua Xiang Medical Technology Development Limited.

The more correct introduction should be as below,

Chemical Company of Malaysia (CCM) has a significant corporate presence as a public listed company since 1966, initially as a subsidiary of ICI PLC of the United Kingdom and now as a Malaysian owned corporation.

As an independent Malaysian company, CCM Group offers a wide range of products and services to the chemicals, healthcare and agricultural industries. CCM's integrated approach to business makes them a unique 'one-stop' agency. CCM's business activities include:

- Chemical products and applications
- Fertilizers and technical advisory services
- Pharmaceuticals and healthcare products and services

CCM's business operations are structured into four major subsidiaries: CCM Chemicals, CCM Fertilizers, CCM Pharmaceuticals and CCM Duopharma Biotech that are responsible for these activities.

Today, CCM Group is one of the nation's chemicals, fertilizers and healthcare companies, manufacturing a wide range of products to meet the growing needs of the domestic and overseas markets.

Hopefully i3investor website will correct the error, indeed their website is very good for stock investor to find their information they needed.

Graph Source: Chart Nexus 

Tuesday, December 25, 2012

Malaysian Airline System Bhd

Malaysian Airline System Berhad (MAS) actually is struggling to get back in black in their quarterly financial report, its share price is sloping downward especially after the capital restructuring proposal as below,







The full announcement can be found in Bursa Malaysia website, since MAS consider trading at its history low level, do an investor should consider entering this counter if it go some more lower?

It is no doubt any further sliding of the stock price will provide trading opportunity for the technical rebound, but for the peace of mind, one should only consider this counter when they feel it can start generating profit consistently, it is quite uneasy to just received quarterly loss report for your share that you are holding.

Graph Source: Chart Nexus    

Monday, December 24, 2012

Wing Tai Malaysia Bhd

Currently not so interested in property stock, but having a different view on Wing Tai Malaysia Bhd, although it is listed under property sector, its business in retail and garment made them look slightly attractive than other property counter, which thinking that Uniqlo brand may have a great potential in the company earning.

Looking around those investment bank research report, 2 of the reports that made by HwangDBS that caught my attention.

On their research highlight on 23rd November 2012 they have a statement on Wing Tai as below,

Wing Tai Malaysia; Fully Valued; RM1.80
Price target: RM1.50 (Under Review); WING MK
Resilient mass residential demand

1QFY13 result in line; stronger quarters ahead with completion of Verticas Residensi. Nobleton Crest launched, Penang mass residential & retail projects will support future earnings. Fully Valued rating and RM1.50 TP under review.

And on the 7th December 2012 it become hidden gem on their research report as below,

Wing Tai; Buy;
Price target: RM2.10 (Prev RM1.50); WING MK

Under-researched and undervalued alternative proxy to Malaysia’s robust retail sales. Resilient Penang mass landed residential sales will cushion slower demand for high-end KL condos. Upgrade to BUY from Fully Valued, with RNAV-based TP raised to RM2.10.
Source: HwangDBS Research - 07 Dec 2012

Anyway it should be consider quite defensive during current uncertainty environment. 

Graph Source: Chart Nexus

Sunday, December 23, 2012

Is it easy to become a success Trader?

ECM Libra Financial Group Bhd

Kenanga Investment Bank Berhad had already completed the acquisition process on ECM Investment Bank Berhad on 14th December 2012, as such ECM Libra Financial Group is classified as PN17/GN3 company by Bursa after their disposal of their core business.

This PN17/GN3 classification on ECM should be not a big deal, but let see how ECM propose to distribute their cash and Kenanga share back to their share holder, on their proposal announce to Bursa on 14th December 2012, their statement as below,

(Unless stated otherwise, definitions used in this announcement shall carry the same meaning as defined in the Company’s announcement in relation to its Proposals dated 15 June 2012)
We refer to the announcements dated 15 June 2012, 21 June 2012, 6 July 2012, 31 July 2012, 10 October 2012, 2 November 2012, 5 November 2012, 26 November 2012 and 4 December 2012 made by ECM Libra Investment Bank Berhad (“ECMLIB”) on behalf of the Board of Directors of ECMLFG in relation to the Proposals.
ECMLFG is pleased to announce that the Proposed Disposal and Proposed Business Merger have been completed today and ECMLIB has ceased to be a subsidiary of the Company.
Consequent to the completion of the Proposed Disposal, ECMLFG has been issued 120,000,000 ordinary shares of RM1.00 each in KNKH, resulting in ECMLFG becoming a 16.4% shareholder of KNKH.
Based on the closing price of KNKH of RM0.585 per KNKH Share on 14 December 2012 (“KNKH Share Closing Price”), the Proposed Capital Repayment by ECMLFG shall comprise:
(i)      a cash distribution of RM442,647,000;
(ii)      distribution-in-specie of 120,000,000 KNKH Shares valued at RM70,200,000; and
(iii)     distribution-in-specie of RM47,750,000 in nominal value of RULS (Series A),
amounting to RM560,597,000. The Proposed Capital Repayment will be effected via a reduction of the par value of ECMLFG’s ordinary shares from RM1.00 to RM0.324.
Based on the issued and paid-up share capital of ECMLFG as at to-date of 828,819,091 ECMLFG Shares, the distribution to Entitled Shareholders of ECMLFG will be as follows:
RM per ECMLFG Share
Cash Distribution
Distribution-in-specie of KNKH Shares
Distribution-in-specie of RULS (Series A)
Total distribution

(1)                 The KNKH Shares were valued at KNKH Share Closing Price
(2)                 The RULS were issued at nominal value.
Following the Proposed Capital Repayment, ECMLFG will undertake the Proposed Share Split where every one (1) remaining ordinary share of RM0.324 each in ECMLFG shall be subdivided into 32.4 ordinary shares of RM0.01 each in ECMLFG.
Thereafter, ECMLFG will undertake the Proposed Share Consolidation where one hundred (100) ordinary shares of RM0.01 each in ECMLFG shall be consolidated into one (1) ordinary share of RM1.00 each in ECMLFG, resulting in the issued and paid-up share capital of ECMLFG being RM268,222,091 comprising of 268,222,091 ordinary shares of RM1.00 each.
Accordingly, ECMLFG shall make an application to the High Court of Malaya for the Proposed Capital Repayment pursuant to Section 64 of the Companies Act, 1965.

As the statement is clearly stated how their proposal work, but it didn't mention when is their dateline to complete the distribution. Anyway ECM shareholder should be alert to the second last paragraph of the announcement which show how their share will be subdivided and consolidated again, and shareholder need to follow up this matter time to time to avoid oversold their share on ECM once the consolidation process is done.

Graph Source: Chart Nexus

Oversea Enterprise Berhad

This is not a very exciting stock to trade with, most of the time only have very thin volume, I guess not many will consider this counter and most of them may be IPO holder that stuck with the IPO price of RM0.23 during listing.

Since listing it gradually drop to hovering at between RM0.11 to RM0.12, they have a sudden spike with high volume on 27th March 2012 which touch highest price RM0.21 on that day, and that also a one day show, it gradually go down again to hover at RM0.12.

With thin volume most of the day, I suddenly noted it have a very big volume Q at the price of RM0.135 at the pre-opening session on 21th December 2012, which is already 1 cent higher than its previous close, it prove that it again do a one day spike with high volume but the highest it go this time is RM0.165.

It is quite interesting if one can hold the share at around RM0.12 and only sold on the day it spike, but it prove that the spike may only last one day, which for those can't monitoring it everyday, or one may just miss the day it spike may cost them the sell opportunity.

Graph Source: Chart Nexus

Saturday, December 22, 2012

Sanichi Technology Bhd

Short selling is prohibited in Malaysia stock market accept for few stock that provide special condition to do so, but on the 20th December 2012, I think there are a lot of trader that short sell the Sanichi share unaware they are actually short selling it.

This will cause them a lot for a mistake done like this, anyway, is other party to be blame on their fault? I don't think so, one who involve in the share market trading, they at least must go through any announcement published on the Bursa Malaysia, for Sanichi case, the Sanichi shareholder should aware the below announcement from Bursa that published on 13th December 2012.

    Entitlement date to determine the shareholders of Sanichi Technology Berhad (“STB”) who will be subject to the reduction of the issued and paid-up share capital of STB pursuant to Section 64(1) of the Companies Act, 1965 (“Act”), involving the cancellation of RM0.08 of the par value of each ordinary share of RM0.10 each in STB (“STB Share(s)”) and thereafter the consolidation of five (5) ordinary shares of RM0.02 each into one (1) new STB Share of RM0.10 each (“Par Value Reduction and Consolidation”)

    Kindly be advised of the following :

    1) The above Company's securities will be traded and quoted [ "Ex - Offer" ]
    as from : [ 20 December 2012 ]

    2) The last date of lodgement : [ 24 December 2012 ]

    Remarks :- Participating Organisations are to take note of the following Capital Reduction and Share Consolidation exercise by

      The Capital Reduction and Share Consolidation comprise the following:-
      a) Reduction of the issued and paid-up share capital of STB pursuant to Section 64(1) of the Companies Act, 1965 (“Act”), involving the cancellation of RM0.08 of the par value of each ordinary share of RM0.10 each in STB (“STB Share(s)”) and thereafter
        b) The consolidation of five (5) ordinary shares of RM0.02 each into one (1) new STB Share of RM0.10 each (“Par Value Reduction and Consolidation”)
          In relation to the Capital Reduction and Share Consolidation undertaken by SANICHI as a SPEEDS Corporate Exercise, Bursa Malaysia Securities Berhad would like to highlight that:

          a) on or after the Ex-date on 20 December 2012, trading of SANICHI shares will be based on the newly adjusted share after the Capital Reduction and Share Consolidation of SANICHI shares,

          b) on the basis of settlement taking place on or after 24 December 2012 with consolidated SANICHI shares of RM 0.10 each, any entitled shareholder who owns SANICHI shares as at Ex-date may sell only up to the maximum SANICHI shares he expects to receive after the Capital Reduction and Share Consolidation, i.e. the reduced amount, on or after the Ex-date 20 December 2012.
          With the adjustments pursuant to the Capital Reduction and Share Consolidation effected on SANICHI shareholders’ CDS account at the end of the Entitlement Date (“Books Closure Date”), an entitled SANICHI shareholder may use the following basis to estimate the maximum number of SANICHI shares that he may sell from the Ex-date until the Book Closing Date which is from 20 December 2012 until 24 December 2012.

          Number of SANICHI shares that may be sold on = Number of shares held x 0.20
          20 December 2012 until 24 December 2012 (All fractional shares computed should be disregarded) 


          For example, if Mr X owns or purchases 1000 SANICHI shares (of RM 0.10 par value each) on cum basis on 19 December 2012, his CDS account would still show 1000 SANICHI shares (of RM 0.10 par value each)) until 24 December 2012. However, as a result of the above Capital Reduction and Share Consolidation exercise, Mr X’s 1000 SANICHI shares of RM 0.10 each in his CDS account will be adjusted to 200 SANICHI shares of RM 0.10 each on the night of 24 December 2012 which is the Book Closing Date. Therefore Mr X may, if he so wishes, sells only up to 200 SANICHI shares of RM 0.10 each on or after the Ex-date i.e. from 20 December 2012 onwards.

          Participating Organisations are hereby requested to caution all dealers and remisiers that, during the period from 20 December 2012 until 24 December 2012, they are only entitled to sell the maximum of 20% of the shares owned. Participants Organisations are reminded that it is important to caution all dealers and remisiers on the above to prevent the dealers and remisiers from overselling of their client’s position.
      At the end of the announcement, they even give the example on how to calculate the number of share one are holding to avoid short selling.

      Another precaution that the trader must be alert is the price matching during the pre-opening between 8:30am to 9:00am. Trader who bought Sanichi share at previous closing at RM0.045, should as why the system show previous closing reference price become RM0.20 on that day? And asking why the number of RM0.085 pre-matching price is showing as a drop price compare to previous closing price of RM0.045, in this 30 minutes time, they should rang to their broker to check what actually happening, which they may have time to cancel all the over selling amount that they key in.

      Graph Source: Chart Nexus