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Thursday, July 28, 2016

Vitrox- I bought more today because it has broken the new high resistance level

Actually did not plan to add more now, but the price keep moving up bit by bit, and has broken the resistance RM3.85 yesterday without I realising it, and today confirm broke-out. Straight away it reach the immediate resistance at RM4.00 but I couldn’t wait. Don’t want to miss the boat.Towards the end, the buying is still strong and closed at RM3.99. I don’t know what is the next resistance level, not yet learn, but based on a longer uptrend period triangle it could potentially add RM1.00 to RM5.00.

Still have a lot to learn on chart.

My first entry was RM3.4x, keep adding a bit until now.

I’m not a chartist or technical guy, the reasons are also based on fundamental below:

 
Backlog orders of about RM40mil as at early May 2016.

Pioneer status- tax exempted renewed

Uptrend of Book-to-bill Ratio.

Increased in demand for big brother MVS-T

New segment- moving up the value chain

Entry into wafer level/non-tech inspection

New offering + Wider market = Better dynamics

Higher recurring income = Improving visibility

RM120 million to expand in 2016 and 2017

PE ratio 13 times is not too high.

Net cash with 2% dividend yield.

 

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Source: Maybank May 2016

From 17 June 2015 to 16 June 2024, Vitrox will resume its 100% tax exempted Pioneer Status (PS). To recap, Vitrox’s 4Q15 profit after tax was down by 40.7% q-o-q and 40.7% y-o-y to RM9.3m, due to tax provision while waiting for its PS to be renewed.

Moving into bigger

According to Maybank, the demand visibility- which has spill over to 3Q16 with MYR40m order backlog as at early-May. Book-to-bill ratio is on an uptrend, showing signs of healthy order replenishment.

Having sold only 18 units in 2015, the MVS-T is making a strong comeback this year; 15 units sold in 1Q16 with another 25 units in backlog.

 

New Segment

ViTrox’s new inroad into wafer inspection equipment which should see the first unit delivered in 3Q16. moving up the value chain to front-end semiconductor.

 

New Prospect

Elsewhere, ViTrox has also secured 3 equipment orders for its entry into non-tech related inspection (i.e. automotive fabricated & consumer products) with its new Robotic AOI inspection systems (which employ the use of robotic arms) which can be further developed to inspect various other products. Success in these ventures could unlock ViTrox’s addressable market to a whole new level.

 

New offering + Wider market = Better dynamics + Higher Recurring income

ViTrox’s business model is changing for the better. Wider customer base, and enlarged addressable market from new forays should smoothen its business volatility. With increasing installed base of its equipment, its services and data analytics offering would also provide a higher recurring income.

 

 

With a higher installed base of its equipment globally, ViTrox has been able to reap the benefit of stronger recurring service income. In 1Q16, service income jumped 141% YoY to MYR5.3m, making up 9+% of 1Q16 revenue. Growth in service income had been tremendous, at a 2-year CAGR of 93% from a small base (MYR4.7m in 2013) to MYR17.4m (11% of 2015 Group revenue). Further growth in equipment sales would see service income growing as a more significant earnings contributor to the Group given its high margin business structure.

 

 

The Start 21 March 2016

GEORGE TOWN: Vitrox Corp Bhd is allocating RM120mil to expand its operations in Penang this year and in 2017 to meet the rising global demand for its machine vision and vision inspection equipment.

Group chief executive officer Chu Jenn Weng toldStarBiz that the amount would be spent to complete the new facility in Batu Kawan, scheduled for operation in mid-2017, and to purchase production equipment for the existing plant in Bayan Lepas, which was 80% utilised.

Chu said the expansion exercise was necessary, as the machine vision make is projected to grow at a compound annual growth rate (CAGR) of 9.1% for the 2015 to 2020 period, according to a recent Markets and Markets report.

The report said the machine vision market is projected to grow to US$12.5bil in 2020 from US$8.08bil in 2015.

“The market is growing because of the need for quality inspection and automation, demand for vision guided robotics system in the manufacturing plants, and application-specific machine vision systems among the consumers.

“Asia-Pacific is considered the global manufacturing hub which will provide fresh opportunities for machine vision systems,” Chu said.

He said the demand for surface vision and inspection equipment was also rising rapidly.

The new Transparency Market Research report revealed that the sector would grow at a CAGR of 8.9% to reach US$2.3bil in 2019 from US$1.2bil in 2012.

The report said North America was the largest regional market for surface and inspection, with a revenue contribution of US$368mil to the global market.

Chu said the group would release new equipment in the second quarter to penetrate untapped markets. “The equipment are solder paste inspection and mini advanced X-ray inspection (AXI) machines, which should contribute positively to the 2016 fiscal year ending December. The mini AXI machine caters to the automotive and telecommunications industries. These products are priced between US$100,000 and US$350,000 per unit. We compete in terms of quality and user-friendly features and not pricing.”

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Wednesday, July 27, 2016

Why EG Share Price may Go Up in mid of August

EG PE ratio is not high, less than 9 times.

Profit growth is expected. They have changed their product mix and earn higher profit margin.

In July 2014, Singapore-based Jubilee acquired a 26% stake in the Group and subsequently increased its ownership to 30.5% in January 2015. The strategy behind these corporate activities is to integrate the Group together with Jubilee  for broader customer base and wider geographical base, to form a one-stop electronics vertical integration solution provider by developing product designs and box build services for global customers.

EG has started getting orders from new customers base.

Old news: EG Industries Bhd has secured a US$36mil (RM146mil) contract to be the sole manufacturer for Flic, the world’s first wireless smart button that creates a shortcut to favourite actions on mobile devices. The electronics manufacturing services (EMS) company said on Monday it was awarded the two-year contract by Sweden-based Shortcut Labs AB to manufacture Flic.

Assumuing a profit margin of 5%, profit of 7.3mil two years, 3.65mil a year. Almost 20% of last 4 quarters profit. And this is just at the beginning stage. I expect more to come.

EG is planning to list their Thailand unit IPO.

They are reducing their gearing ratio. Last year net gearing was about 1.2.

No dividend, not sure when they are going to pay. Maybe once EG have reduced gearing and have comfortable cash level, hopefully will pay.

Cash?
Last year they had rights issue.

Purchase and upgrade of machinery. Proposed is RM16mil, but only used RM3.2mil as at June 2016. Still got plenty to be used. Proposed to be used within 24 months from Nov 2016.

Expansion and upgrade of factory. RM20mil but used only RM3.22mil. Proposed to be used within 12 months from Nov 2015.

Acquisition of new businesses or assets. RM8mil with 24 months. Zero usage.

Once the money is used up, probably stronger profits are coming. Of course it is not 100% predictable, but this is what the company has proposed. I dont think they will spend without benefits.

The Thailand IPO is big. The IPO is about RM34.3mil and its Thailand unit is worth RM114mil, its 70% stake is worth about RM80mil

EG market capitalisation is RM184mil against its Thailand unit that will be worth RM114mil market capitalisation.

Market volume for EG stock is not low. Liquidity is there. Few hundred thousand to few million shares transacted a day.

Hopefully this stock will move up in the middle of August in anticipation of better profit, target to be announced in end of August.

Once a better profit is announced, few rounds of price increases. Those who take profit and did not manage to buy back may miss the boat. Sit and enjoy.

After few weeks hopefully analysts start to cover this stock and there will be continue uptrend.

Risk? As usual, unexpected poor result and adverse news development.

Of course I have made many wrong decisions.

Recent Losses: Supermax, Prolexus, Complete.

Profit: Tguan, JHM, Superln, OCK, Vitrox, AWC, Bison.

Losses are limited, 30%? 50%? Max is 100%.

But stocks that I profited, it could be more than 100%.

Afraid to lose, but why not afraid to miss the boat.

Nothing is sure win. Assess the risk vs reward.

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Thursday, July 21, 2016

JHM stock growth story

What Growth? This is what i have picked up from The Star Article.

New markets and also broaden customers base.
JHM plan to expand their automotive LED business into Europe and Japan soon.

New Segment.
JHM Consolidation Bhd plans for its new aerospace business segment to be a major contributor to the group’s revenue by the second half of 2017.

Recurring income.
Aerospace business deals usually cover a 30-year.

Good prospect for coming 6 months.
On its automotive LED segment, the group still had orders with an estimated market value of over RM90mil to deliver for the second half of 2016, which is about 20% more than what was delivered in the same period a year ago.

Target more investors and fund managers.
JHM targeting to go to the Main Market by 2018.

I think no dividend.

What I'm going to do? Bought at RM0.70++, will hold due to the growth prospect. Will buy more? Not at this moment even if the price drop a bit.

Current PE ratio is 21 times saw from real time stock price system and also another delayed price system. Should be around there.

This PE ratio is not expensive because of the growth. The PE ratio is also not cheap. Wait for next quarterly result.

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Saturday, July 16, 2016

Why Newbie make profit while losing more than 50% in Barakah stock?

Newbie is a happy person now. He sold Barakah with huge loss, and bought OCK and EG. I think Barakah was his first trade if I remember correctly. It was end of 3rd quarter 2014, oil price was high and then plunged. All oil and gas stocks prices also down a lot.

He made more than 50% loss in Barakah shares. Sold because analysts do not have good forecast on Barakah stock.

Then he bought OCK near 0.8x, now made paper gain a little. At the same stime he bought EG at 0.8x, paper loss a little at current EG stock price.

He sold Barakah at low value, top-up some cash to buy OCK stock. Then bought EG shares, total is more than his monthly budget. No worries because he is not up to date and he missed many months buying stocks.

After about a month he then sold Supermax stock and switched to MFCB stock, Mega First Corporation Bhd. I asked him why, he said Supermax many anaysts said underperform or marketperform. I wanted to explain to him that when the analyst reports were publiched two months ago, Supermax price was RM2.50 and now is RM2.04. With the price dropped 20%, analysts may upgrade from marketperform to outperform (buy). But I didn't got the chance to explain to him.

His loss in Supermax share is more than 30%.

Lessons learned.
Don't be afraid to cut loss if the stock lack prospect or growth. The Barakah stock may rebound because price has dropped so much, but Newbie is investing in fundamental and not predicting the price.

Supermax shares. Always look at the date of the report whether is it still valid. Always look at the price of the report, and the price of the stock now.

OCK PE ratio is high around 20 times, but he said growth can justify the high PE ratio. True, if the growth is really that high and confident, let him learn this.

EG stock because PE ratio is low and with growth potential. The only thing is no dividend. He did not mention this to me. Later we see how it goes.

MFCB because PE ratio low, dividend yield also quite good, with recurring income, and realising project profit within this coming two years. But the issue is what after the two years. Maybe they may get a good project within this two years. See how.

Newbie has been doing well, portfolio is making money although the KLCI has dropped more than 10% since the day he started.

As we can see, there are still a lot of things Newbie need to learn. But that does not stop him from making money. His performance is excellent in view that the market has dropped more than 10%, many stocks he went in at the wrong timing and high price.

He is also not by luck, because he has made many transactions and over the span of two years. He has experienced few of his stocks dropped more than 50% but now he is still profitable.

We do not need to learn all in order to make money from stock market. One of the easy ways is .....
1) using dollar cost averaging DCA. This is about diversify the time.
2) investing fundamental stocks with growth potential
3)diversify into different stock different industry to minimise risk.

We shall see how he grows.

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Saturday, July 9, 2016

Superlon stock

INVESTMENT HIGHLIGHTS · Record earnings due to strong core EBIT margin · 4QFY16 earnings grew 14.2%yoy to RM3.7m  · Net cash level still strong at RM24.35m · FY17 earnings estimate increased to RM16.16m from RM14.3m  · Higher fair value of RM2.50 (previously RM2.16) based on 12x FY17F PER 

We increase our fair value to RM2.50 from RM2.16 based on 12x FY17F PER. The higher fair value is in line with higher FY17 earnings estimate and unchanged valuation of 12x PE (mean valuation). We take comfort in the company’s ability to grow sales volume amid a challenging environment while it boosts its cost management efforts. All these factors should continue to bode well for Superlon’s core EBIT margin and earnings. We also like the management’s efforts to enhance efficiency while maintaining a strong balance sheet.

Source: MIDF

Saturday, July 2, 2016

How to make good profit for us who do not know how to forecast

Recently I read an article, and it reminds me that I have written something on stock allocations. Interested, here,
http://politemarket.blogspot.my/2012/08/how-to-use-growth-share-matrix-to.html

STAR
This is where I think they have higher chance of performing. TGuan, JHM, OCK stocks are on paper gain. EG I think is on slight paper loss. Superln and Vitrox stocks slightly higher than my cost.
TGuan
JHM
OCK
EG
Superln
Vitrox

CASH COW
This is the stocks that are quite stable and pay good dividends. Some are with some growth potential. PBBank and LPI are bought by my family member, and I don't want to sell it yet, after so many years.
Malton-LA
LPI
PBBank
CSCENIC

QUESTION MARK
These are the stocks that I think have some potential, but due to price valuation, uncertainties, etc, the confidence is not that high. 
Supermax
MFCB
TSH
Tekseng
Bison (just sold this, will buy again)
Kossan
SHH
Hwang (waiting for my money)

DOGS
This are the stocks that I think the share price will not move up much but still keep due to various reasons. Actually I have a lot of dogs, but the value is too small and not worth mentioning.
Karex
Johotin (just sold)
AWC
Complet
Matrix (just sold)

Recently I have cleared almost all my stocks in one of my accounts and I'm gonna stop using that account. Out of curiosity, I accumulated all the realized gains and realized losses and put it into a graph. Total 481 trades in that account. 

Analysis based on the graph.

Note:
It is not measured by time, because I did not record the time. It is by all the sale done.
The value is not the absolute money terms, but is a multiple of the money made/lose.
It is not a reflection of performance, because it only measure the "realized" gain or loss, without unrealized gain/loss. But somehow unrealized gain and realized loss fluctuation are moving in tandem.
Almost all the stocks in that account have been sold. Current stocks are in another account.
The journey is also not a true reflection on the investing method, because few methods were used and there were buying and selling shares based on non-stock market reasons example at two occasions sold more than 80% of the shares in order to buy property.

A
It all started in 3rd quarter 2007 where I recorded down all my trades. 

B
Then due to the 2008 financial crisis, as expected I started to make losses. You can see already crossed negative.

C
Market recovered, as expected started to make profit.

D
This is the turning point where I started using Dollar Cost Averaging.

E
You can see I have patiently accumulated stocks from D to E, although not much profit. During this period I also tested out some trading methods which were not so successful.

F
Sooner or later, the profit will come. 

G
From F to G, I was curious why so long only have slight increase of profit. When I take a look, it was again, losses from trying new methods. But overall still profit.

H
G is the Ringgit crisis where I started to buy export oriented stocks. From G to H, made from these export stocks and also sold off stocks that have been holding in order to clear all the stocks in the account.

What is unexpected?
From D to E, and from F to G. I thought I would have made but losses came from "testing" which I have forgotten. Regret in my testing? Not really. If I don't test, I may not know. Theory is simple, but put it in practical is hard. I also tested Dollar Cost Averaging, which turned out to be successful. If I did not test that, I may not be making money now.

From G to H. Ever since the Ringgit crisis and 1MDB issue, I thought I would not make money. Whatever I make also may be offset by the losses. But thank God that I managed to switch to export stocks. Furthermore, sold stocks that was holding long term and realized good profit.

Lessons Learned?
I did not go into detailed, and just look at the overall chart pattern. I dont know how to forecast, dont know technival analysis, how I can make consistent profits? The same things that I have learned :

1)Buy good fundamental stock. I think to make it clearer, buy stocks with good prospect and fundamental.

2)Keep buying, example Dollar Cost Averaging

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Friday, July 1, 2016

OCK Research News- Buy. The Tower is getting higher

UOB Kay Hian starts coverage of OCK with fair value of RM1.30

KUALA LUMPUR: UOB Kay Hian Malaysia Research has initiated coverage of OCK Group with a sum-of-parts derived fair value of 95 sen while its blue-sky scenario points toward a fair value of RM1.30 a share.
It said on Tuesday OCK is an experienced network service provider poised to grow tower assets in frontier markets. 

"We project a three-year core earnings CAGR of 16.5% over 2015-18 driven by stable rents from 920 towers in Myanmar. 

"Importantly, we see deep value in the stock as rising tenancy ratio will provide scope for meaningful earnings upside. Our blue-sky scenario points toward a fair value of RM1.30 a share (upside of 57% from current share price)," it said.

UOB Kay Hian said OCK is poised to grow long-term recurring earnings via the commercial operations of 920 telco towers (capex is US$75mil or RM310mil) in Myanmar. 

It expects maiden full-year rental income of approximately US$15mil or RM62mil in 2017. We estimate the Myanmar towers (or Myanmar tower-co) will help drive a three-year core earnings CAGR of 16.5% over 2015-18.

The research house said importantly, additional site expansion and rising tenancy per tower will provide scope for significant earnings upside. 

Higher tenancy ratio (from one time to 1.15 times), taken together with stable rentals could further lift its base-case earnings projection by 26% and 41% for 2017 and 2018 respectively. 

This translates to a blue-sky three-year earnings compounded annual growth rate of 31% (vs base-case of 16.5%). 

UPB Kay Hian Research said OCK plans to place out 105m new shares to a strategic shareholder. The proceeds to be raised from the private placement (of approximately RM86mIL, based on current share price) could be channelled towards the acquisition of brownfield tower assets within the Indochina region. 

"Based on our conjecture, a tower asset acquisition of eight to nine times EV/EBITDA will likely be value accretive, as the stock currently trades at 11 times forward EV/EBITDA.

"We value Myanmar tower-co on a discounted cashflow method, to capture stable cashflow amid stable rental outlook. We have factored in up to 3,000 sites by 2020 in DCF-valuation for Myanmar tower-co. Our target price implies a 20% upside from the current share price level. At our target price, the stock would trade at 12.6/10.9 times 2017/18F EV/EBITDA. We are positive on the stock given strong earnings growth outlook, and believe the company deserves premium valuations.

"Near-term key re-rating catalysts for the stock include: a) sizeable M&A of tower asset within Indochina, including Vietnam, b) additional tenant for Myanmar tower-co, and c) eventual listing of a sizeable tower-based assets," it said.

Source: The Star 21 June 2016

=======================  

We initiate coverage on OCK Group Bhd (OCK) with a BUY recommendation and a target price of RM1.00. We like OCK for its strong growth prospects from its ongoing business expansion, both domestically and overseas, that will also provide long-term regenerative earnings. Our call is also premised on the group's position as the largest telecommunication service provider in Malaysia.

OCK has a good business mix as both its mechanical & electrical engineering services and trading segments complements its core telecommunication network services segment, creating a synergy to its overall business model. Meanwhile, its green business and power solutions segment offers stable recurring income.

The group is currently on a regional expansion phase through its relatively large scale venture into Indonesia and its long-term investment in Myanmar. Going forward, earnings growth will emanate from its Myanmar venture which will see additional income from the construction and leasing of 920 telecommunication towers by end-2016. Meanwhile, both the Malaysian and Indonesia businesses will focus on increasing the ownerships of telecommunication tower sites.

We expect OCK to register double digit three-year net profit and revenue CAGRs of 13.3% and 21.8% to reach RM31.7 mln and RM468.5 mln respectively by 2017. We arrive at our target price by ascribing a sum-of-parts (SOP) approach as we value its telecommunication network services and green energy & power solutions business segments with a discounted cash flow approach (WACC: 9.0%, Terminal Growth: 1.5%); whereas we ascribe a fully-diluted 15.0x PER to both its 2017 trading and mechanical & electrical engineering services businesses.

Source: Malacca Securities

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