New Myvi & Perodua’s Suppliers

Pecca Group

This is a good stock to look at, if you are expecting to sell plenty of the new Myvi models which indeed looks promising. Selling plenty of cars mean more seats are needed and Pecca Group is closely related to supplying Perodua on its Bezza models previously.

Perodua Bezza drives Pecca to highest level since IPO – The Edge

We aren’t sure about current Myvi model taking up the seats from Pecca but the likelihood is high. Pecca’s customer base is still diversified throughout different car makers but Perodua still contributes a big chunk close to 30% of their revenue. Note that Pecca will only

A quick check from the chart, we found that the stock price continues to see weakness after the Malaysian automotive sales numbers continues to decline and expect an even slower growth ahead.

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Technical analysis showed that MACD is currently turning up which makes it a good time to collect, OBV already saw a good support and the volume from current drop is much lower compared to the stock going upwards.

The downside in technical analysis could be show clearly here. We can’t determine a cut loss point due to insufficient data since the company just launched its IPO last year.

Cut loss point would have to be determined by your tolerance and understanding towards the stock. Recorded results from future earnings would be able to assist in finding more accurate valuations.

APM Holdings

Another company to benefit from the latest Myvi would be APM Holdings where it derives a huge chunk of its revenue from Perodua. APM supplies interior equipments, suspension, electrical & heat exchange equipment to the Perodua.

Again, we do not know whether the new Myvi comes with parts from APM Holdings but based on limited suppliers in Malaysia, it is likely that the use previous suppliers.

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Stock chart looks fine, but liquidity is still a major concern. We think that you would need a lot of patience buying into this counter as mostly move movements are hard to read and transacted volumes are small.

We recommend buying based on fundamentals but not our most preferred due to liquidity risk. Stick with Pecca at the moment…

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Why Did we Call a Buy on MIKROMB Yesterday?

As retail investors, one thing that is common to us is where to buy or to hold when a stock price declines rapidly. Since we recommend a falling knife catching trade yesterday (didn’t turn out good due to decline in earnings), I would highlight the criteria of a ‘safe trade’ catching a falling knife.

Intra-day Catching

First, let’s look at intra-day movements where the stock price had been subjected to intense selling pressure or merely consolidating at previous closing price.

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Usually when one sees illustration A, it might seem like the sign is clear where there are plenty of buying quantity and buyers are coming up to support the price.

This market forces are almost the opposite of what the naked eye sees. To an untrained eye, illustration A is a buy while B is a sell. But buyers and sellers queuing are never sincere with their orders. Orders are subjected to change and in modern times, it gets worst with computerised algorithm making these queues.

But always remember that the volume rule of thumb is still in play.

Low volume price rise = Temporary price rise

Condition 1

If the stock would to go up without much volume in play, the response might be lackluster towards the price increase. Sellers might not queue their stock but immediately they might realize that price had gone up and the stock they are holding to (probably stuck for a long time) needs to be unloaded.

Condition 2

High volume drop = Permanent price drop

The availability volume on the buy side is key for an institutional investor. A person who wants to unload big amount of share looks upon volume to unload. Illustration A fits the criteria.

In fact if you look at illustration B, one couldn’t unload much under these circumstances unless fraudulent cases hit the company so bad that everyone is planning to leave the shareholding immediately.

This is why initiating a buy on illustration B with thin volumes could benefit you more than buying with mostly where all the buyers are in illustration A. A low volume drop ensures that a stock could rebound quick similarly to sell, buyers would begin to realize it hits their target price.

Another bonus rule of thumb to remember always would be…

Think like an Institutional Dealer

These guys like to do block trades as it is easier to compute on the back end. As institution holding large percentage of a company it is hard to find the same party on the buying end to take up your stock. When opportunity comes, it is now or never. That is why a stock may lag years but could move in a blink of an eye.


So Why Did we Call a Buy on MIKROMB Yesterday?

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  1. Did you realize that with the OBV indicator, the rise previously was much higher than before? When OBV rises and forms a higher high, it is a sign of accumulation. We know that people are accumulating this stock prior to the release of results expecting good earnings report.
  2. If your accumulate the days since 1st November, you will find out similar data where accumulated net volume was up 11 million shares.2.jpg
  3. Probably the most important thing and you should never catch a falling knife unless you stock fits this criteria. Based on research, we know that MIKROMB is poised to continue its growth that it is showing so far.

    If you buy at the wrong point this time around but knowing that the stock still has plenty of room to grow, the decline would open up opportunities to buy lower. That is by far the best thing that could happen.

    Buying stocks with good fundamental still ensures that you win the long term game while suggestions in catching the falling knife provides an edge by possibility accumulating at low prices.

New Myvi & The Related MBMR

Well the new Myvi is out! Very Jazz looking and with those specs I don’t think sales is going to be slow. Malaysia’s best selling car driven by almost all 1st time car buyers entering the workforce should show some promising sales this time around getting lower end imported car buyers to get this instead!

 

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Credits to PaulTan.org

MBMR stock price had been on a run from RM 2.10 where we felt it is till not to late to acquire. Expect to see volatility in the first few months before actual numbers for the new sales comes out.

Meanwhile, technical analysis points towards the positive side for now. Look forward to collecting if you beleive that the new Myvi model will propel forward this company.

Insurance Sector New Rule by BNM

Under the latest Bank Negara compliance issue, foreign insurers listing in Bursa Malaysia requires a 30% shareholding by local investors. In the report below by CIMB, they view that we would likely see IPOs coming in for large cap insurance companies such as AIA, Great Eastern and Prudential coming into the market.

They would be required to open up their holdings to local investors let it be retail or institutional.

Another alternative would be seeing more and more M&A activities happening. Nothing much to recommend here but its a good head up for now.

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LCTITAN So Many BUY Calls, So Much Room to Grow

8 Buy calls with zero HOLDS and zero SELLS. Still need any question to buy? Indeed one would always be looking for the best price to acquire and we are telling you RM 5.20 just seems nice at the moment.

Forget about getting it below RM 5.00 as market had strengthen so as price of petrochemical products. Increasing crude prices might affect LCTITAN’s cost but never forget refined products are also seeking higher prices moving hand in hand with crude.

From the chart, a trend line has formed with low going higher and eventually creates a short term uptrend. What we should be able to see is that it eventually forms an ascending triangle and puts itself inline with a break out happening!

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Guocoland Taking the Turn Higher?

If you look at iSaham’s data (click for link) and sort if by 3 year revenue growth, one of the biggest would be GUOCO which currently sees very little movement on its stock price.

Based on the chart, a very strong support can be seen at RM 1.10 and merely the recent turn up might be a good sign to buy. The good thing about this chart is that there are plenty of support while resistance merely has one that is significant which is at RM 1.41.

We haven’t back check the facts on where iSaham get the numbers for revenue growth but the estimate should fair just right for now.

We think that this stock isn’t something that would move rapidly but more like a 2018 story. We suggest that you could start acquiring now or wait for weakness depending on your risk appetite. It would definitely take awhile before markets begin to revalue the stock.

In the meantime, keep this in your watchlist!

Unisem Nice Chart Good Industry!

UNISEM just posted the latest quarterly report with record revenue. Higher revenue growth but lower earnings is always a good sign and it could signify that the earnings lagged due to reasons such as deferred cost, etc.

Once margin normalizes, it would grow accordingly catching the growth in revenue. If the revenue grow or maintain in for the next quarter’s earnings report, then we should see share price reacting aggressively catching the ideal price to earnings target eventually.

Note that we always prefer signs of revenue growth rather than stagnant revenue. The reason being revenue can be used as a key estimate for actual size of the business. Higher earnings without revenue growth would actually mean that the size did not grew but just operating efficiently. A simple value trap scenario that we commonly see.

Chart wise, we see some pull back after the earnings were report a couple of days ago. But we are confident that this pullback is temporary and has the legs to trade the stock above RM4.00 permanently.

Any entry price below RM4.00 seems to be good for the time being.

Have a look at the latest CIMB Report on Unisem