Stock Investment Portfolio Review, Outlook & Strategy - 14012011

Faber - Unfavorable News

Faber shocked the investors through the news of non-renewal of its two existing contracts in Abu Dhabi worth RM129mil and RM55 mil respectively. This may subsequently dampen the stock performance and create the uncertainty of its future's perspective. Most analysts have downgraded the "Buy" call to "Hold" position and lower the 12-month target price to around RM2.60. Further to this, I have decided to kick this stock out from my Favourite Stocks List.

Top Picks within Favourite Stocks List

1. TWS

With the strong growth of Revenue & Profit achieved in the last quarters, it is forecasted to achieve an EPS of above RM1.20 in the total of last 4-quarter result. It has just surprised the investors with the generous dividend of 20% announced on 14th Jan 2011. TWS is trading at attractive price at RM7.64 as dated 14 Jan 2011 at PE of around 6.0 only. Thus, TWS is the best strong buy call counter at this moment and I project it may easily break RM10.00 in 1Q2011 or early 2Q2011.

2. KimLun & Cypark
Both of these stocks are considered the new players among the listed companies. The same characteristics between these companies are they have good management team and stand in an advantage position to be benefited directly from the government Economic Transformation Programme (ETP) such as environmental friendly and MRT projects which have just announced recently.

3. Maybank, CIMB, RHBCAP, PBBank
With the combination of several factors like stable economy growth, increase of interest rate prospect, aggressive business acquisition and investment abroad among the finance industry, and together with a large amount of money spend by the government in 10MP, the Banking playsers are definitely one of the main beneficiary.

4. Sapcres, Kencana, Dialog, Pchem, PetDag
Oil & gas sector is one of the main beneficiary which has attracted the government focus. It is anticipated that a lot of giant projects will be tendered out and began in the near future.

Overall Market Outlook
The KLCI stock market looks attractive at the current 1570 level and most analysts and investors are confident with the market performance and have revised 2011 target at 1700 level. Nevertheless, it is very much depends on the global economy recovery too. I would anticipate the global market may continue to recover and the global equity bull run would at least continue the uptrend until the end of 1st half 2011, then follow by a more severe type of retracement in the beginning of 2nd half 2011.

Trading strategy
Sell into Strength, Buy on weakness.

Favourite Stocks Recommendations
Finance: Maybank, CIMB, RHBCAP, PBBank.
Consumer: CI Holdings, GuanChg, TWS, QL,
Construction: Kimlun, Sunway, Gamuda, Wct.
Healthcare: KPJ.
Plantation: BStead, TDM, THPlant, TWSPlant, TSH.
Trading/services: Analabs, Kfima, QSR.
Gaming: Genting.
Telecommunication: Axiata, Digi.
Environmental: Cypark.
Oil & Gas: Kencana, Pchem, PETDag.
Industrial: Ajiya, CanOne, DRBhicom, Daibochi, HPI, LIONind.

HapSeng - "Burst" of the rumours / over speculated

Chart: Hap Seng daily chart (Source: tradeSignum)

Background

Hap Seng Consolidated Berhad is an investment holding company, through its subsidiaries, operates oil palm and cocoa plantations, trade heavy equipment and motor vehicles, fabricates and sells commercial trailers and tankers, provides leasing and money lending, and manufactures agricultural fertilizers, agro-chemicals. building materials, and plantation suppliers.

Recent stock movement and news

The company is financially strong with the business model and business perspective. The stock has been in a super bull run since Oct 2010 began with the price at around RM3.00 and consistently moving up till last week high of RM7.52. The main support of the uptrend was mainly due to the rumours of privatisation news which has succesfully created the excitement within the retailers. However, the company has announced a bonus and rights issue, and private placementof shares on last friday in order to collect about RM1.2bil fund for the business expansion purpose. This subsequently diluted the possibility of the privatisation case, and disappointed the shareholders immediately. It means that the shareholder has to pay extra money to subscribe the right issue in order to benefit from the whole bonus issue exercise, thus some of the shareholders have chosen to sell and take profit before the ex-date of the bonus issue so that they can avoid to pay extra money for the investment.

Comments on Hap Seng Stock Movement

1. The stock super bull uptrend was not really supported by the strong growth of the business revenue and profit generated in the past quarters.
2. The stock has shot up from RM3.00 to RM7.52 which is more than 100% in 3months time, without any major pull back or profit taking activity kicks in. The "Bull" may has exhausted after strong and long run.
3. The stock may trade in over value condition as the growth in stock price has way overrun the business growth.
4. The stock has been trading in the overbought zone in RSI data since Oct 2010 without easing off, a stock is not possible to continue staying in the overbought zone forever, thus, it has been in the very unhealthy condition.
5. The stock is over manipulated as it is not fundamentally sound anymore, it would be healthy to have some short term retreatment.

Conclusion
Hap Seng Bonus issue has way disappointed the investors as the privatisation case might not be happening in the near future anymore. Most investors have made handsome profit in Hap Seng, thus many of them still willing to sell and cut profit at current level, creating more heavy selling activity happening now.

Learning Curve
If a stock behave abnormally and price has changed directly suddenly and retreat more severe compare to normal condition, while majority of other stocks are still holding well or doing good. It shows that the stock is sending the message to the investors that "I AM SICK, PLEASE AWAY FROM ME!". In Hap Seng case, the smarter investors would have cut the profit on 10/1/11 or latest 11/1/11 just before it is too late!

KLCI Market Review, Outlook & strategy - 08012011

Chart: KLCI Chart (Source: tradeSignum.com)

Fundamental Commentary

The KLCI index was succesfully breaking several resistances at 1530 & 1550 levels with the buying supports from local institutions & foreign investors. The daily trading volume has increased from a daily average 1.0bil to 2.5bil with a lot of buying focus on the bluechips like finance, construction, plantation, property, oil & gas sectors. This shows the high confidence of foreign & local institutions towards global economy as well as Malaysia's. The KLCI index is trading at an attractive level and most analysts have upgraded 2011 year end target to 1700.

Technical Commentary

The KLCI index continued flying after successfully broken-out the upper line of "Symmetrical Triangle" as anticipated. It hit 1575 level before some minor profit taking activity kicks in. The KLCI uptrend was supported by huge trading volume of 2.5bil. Due to the strong run last week, the market may fall into consolidation mode with a little down trend in the coming week. Anyhow, the KLCI is still in a good uptrend mode as long as it stays above the long term uptrend line.

Technical Indicators
MACD: Bullish (Golden-cross signal).
KLCI above 50MA, 100MA & 200MA level: Bullish.
RSI stays at 80 level: Bullish, a little overbought.

Support level
1550, 1530, 1524.

Resistance level
1580, 1600.

Trading Strategy
Take profit & cutting down stock holding level to 30% stocks vs 70% cash. Stay sideline, Sell into Strength, Bargain hunting on good fundamental stocks when market dips again.

Favourite Stocks Recommendations
Finance: Maybank, CIMB, RHBCAP, PBB.
Consumer: CI Holdings, GuanChg, TWS, QL,
Construction: Kimlun, Sunway, Gamuda, Wct.
Healthcare: KPJ, Faber.
Plantation: BStead, TDM, THPlant, TWSPlant, TSH.
Trading/services: Analabs, Kfima, QSR.
Gaming: Genting.
Telecommunication: Axiata, Digi.
Environmental: Cypark.
Oil & Gas: Kencana, Pchem, PETDag.
Industrial: Ajiya, CanOne, DRBhicom, Daibochi, HPI, LIONind.

Bonus & Free Warrant issue ex-date in early Feb 2011

Chart: GuanChg Daily Chart (Source: TradeSignum)

Further push towards Bonus issue
With the Bonus & Free Warrant issue's ex-date fixed and to be carried out on 10th Feb 2011, the stock is anticipated to attract more buyers to bargain before the Bonus issue ex-date. The investors will be benefited from the free warrant issue directly.

Conclusion
It is still a strong buy call and it would be smarter to buy on dips.

KLCI 2011 Market Outlook & Strategy - "Perfect Super Bull Cycle"

Chart1: KLCI Chart (Source: StockCharts.com)

Chart2: KLCI Chart (Source: StockCharts.com)

Chart3: KLCI Chart (Source: StockCharts.com)

Fundamental Commentary
The KLCI index was trading in a tight range between 1480 to 1530 level in Dec 2010 as anticipated. The market volume has reduced to below 1.0bil due to the year end holiday mood and early book closing by most of the fund managers. Most analysts feel more optimistic and confident with the current economy situation, and have upgraded the market outlook for the 1st half 2011. This was resulted by the convincing economic results improvement in global markets especially in US.

Technical Commentary
The KLCI index has successfully broken-out the upper line of "Symmetrical Triangle". This provides a near term bullish signal to the near term market outlook. Nevertheless, it is importance for the KLCI index to break the strong resistance at 1530 level in order to continue the market rally in year 2011. The bullish market outlook is maintained as long as the KLCI stays above the strong support at 1480 level.

Technical Indicators
Candlestick chart pattern 1: Bearish Engulfing pattern builded on 30th Dec 2010.

Candlestick chart pattern 2: Bullish - Top "Symmetrical Triangle" line brokeout.

MACD: Bullish (Golden-cross signal).
KLCI above 50MA, 100MA & 200MA level: Bullish.
RSI stays at 50 level: Neutral.

Support level

1520, 1500, 1480.

Resistance level

1530, 1550.

Near Term Outlook (1st - Half 2011)
With the current bullish news that the global economy recovery is gaining momentum as well as the improvement in consumer confidence, the global markets shall continue the Super Bull run in the 1st & 2nd quarter 2011. The global countries governments will definitely work harder to ensure the economy recovery is on path. Thus, the near-term outlook for the stock markets are fairly bullish. The undervalue mid-cap to small-cap may again outperform the index link counters in near term.

Long Term Outlook (2nd-Half 2011)
With the expiration of $600bil stimulus package in June 2011 which was implemented in US last year, the sustainability of economy recovery will be tested & it would be a huge challenge for it to move forward then. Apart from that, the emerging markets will also face the challenge to calm down the overheated economic situation and high inflation issue in 2011. Subsequently, they have to raise the interest rates to tackle the high inflation issue. This may also impact the stock market performance directly.

Besides, the EU sovereign debt problem, war threat & political tension between North Korea & South Korea, china economy softening, and emerging properties bubble issues may continue ruin the global economy recovery in the 2nd half 2011. The equity and commodities markets are anticipated revert into bear market due to the softening economy recovery in 2nd half 2011. Thus, it would be a safe & smart decision to clear all the stock holding position or probably just holding the mininum position before entering in 2nd half 2011.

Potential Positive/Bullish News & Incidents

1. Malaysia General Election in 1st-Half 2011.
2. Huge Infrastructure development project like "MRT" worth RM35bil to start construction in July 2011.
3. Continuation of further positive 6% yearly GDP growth.
4. Maintaining Low interest rate to support economy growth.
5. High commodities prices benefit Oil & gas, metals and plantation industries.
6. US $600bil stimulus package expiration in June 2011 continue creating in-flow money to Equity & Property markets.
7. Further strengthening of global economy recovery especially in US & EU.

Risks

1. Failure of sustaining positive quarterly GDP growth may leads economy fall into "Double Recession".
2. Expiration of US $600bil stimulus package in June 2011, challenge for the self-sustaining global economy.
3. Hot money out-flow from emerging markets back to US & EU to impact the equity & property markets.
4. Increase of Interest rate to curb Inflation issue may also impact the economy.
5. Potential of property bubble burst in Asian markets especially in China, Hong Kong, Taiwan, Singapore.
6. EU sovereign debt issue may continue ruin the market sentiment.
7. War threat & political tension between North Korea & South Korea.
8. Potentially ending of a Super bull market due to the long run and overprice condition.

Trading Strategy
1st-Half 2011: Bargain hunting on good fundamental stocks into market weakness.

2nd-Half 2011: Clear/Hold minimum stock position.

Favourite Stocks Recommendations

Finance: Maybank, CIMB, RHBCAP, PBB.

Consumer: CI Holdings, GuanChg, TWS, QL,

Construction: Kimlun, Sunway, Gamuda, Wct.

Healthcare: KPJ, Faber.

Plantation: BStead, TDM, THPlant, TWSPlant, TSH.

Trading/services: Analabs, Kfima, QSR.

Gaming: Genting.

Telecommunication: Axiata, Digi.
Environmental: Cypark.
Oil & Gas: Kencana, Pchem, PETDag.
Industrial: Ajiya, CanOne, DRBhicom, Daibochi, Scientx, HPI, LIONind.

Keck Seng - In Strong Cash Flow & Financial Position, Slow & Steady Uptrend

Chart: KSeng daily chart (Source: tradeSignum)

Fundamental Review & Outlook

Keck Seng is involved in the cultivation of oil palm, Cocoa, processing and marketing of refined palm oil products, housing development, property investment and investment holding. The main factor for the recent huge income growth was due to the share disposal of its entire shareholdings of 35.58m shares in Parkway Holdings Ltd with a gain of RM260.14m. KSeng has became one of the Cash Rich company with the one-time gain income. KSeng is maintaining a slow but steady growth in the last few quarters. The company's 1-for-2 bonus issue plan is anticipated to be completed in the 1st quarter 2011.

Technical Review & Outlook

KSeng is in a steady uptrend with the supports of bullish technical data. The stock hit the record high last week with low volume transacted. It looks a bit tired and needs more convincing news to push the price higher. Otherwise, it may fall into consolidation mode and may have a pause in the bull run. The current bullish news are high CPO price, bonus issue plan, and healthy financial position.

Technical Indicators

Volume: Stock price needs further buying support to breakthough RM6.80 main resistance.
MACD: Bullish, after golden cross being constructed in early Dec 2010.

RSI: Bullish, hovering at 70 level.

EMA50, 100, 200: Bullish, as long as it stays above all these lines.

Bollinger Bands: Bullish, above mid-line.

Support level

RM6.50, RM6.25.

Resistance level

RM6.80

Risk

1. Slow down in revenue and profit due to the disposal of healthcare business.

2. Commodities prices like CPO retreated with global demand reduce and higher productivity in 2H 2011.

Near-term outlook (30-90days)

Consolidation mode after sharp gain last week.

Long-term outlook (6-12months)

Bullish, in long term uptrend, buy on weakness

Trading opportunity

Due to strong gain during the last few trading sessions, stock may falls into consolidation mode, buy on support levels.

Guan Chong - Huge Growth Potential with Production Capacity Expansion Plan in Place for the Next 3 years

Chart: Guanchg daily chart (Source: tradeSignum)

Fundamental Outlook
Guan Chong is currently one of the top 10 Cocoa-derived food ingredient maker in the world. The production plant in Johor has reached the maximum production capacity 80,000 tonnes yearly. It is investing RM80mil to setup a plant in Indonesia with a starting production at around 60,000 tonnes yearly in the 1st quarter 2011, with the potential annual capacity to reach 180,000 tonnes within the next 2 years. For the 9 months ended Sept 2010, the company revenue soared to RM836mil from RM425mil in the same period earlier while net profit jumped 6-fold to RM57mil against RM8mil previously. The company's 1-for-3 bonus issue and 5-year warrants 1-for-4 proposal has been approved during the EGM last week. The bonus issue plan is anticipated to be completed in the 1st quarter 2011.

Technical Outlook
After 2 months consolidation, GuanChg tried to test the previous high RM2.00 last week accompanied by huge volume transacted. However, stock price retreated as volume decreasing with less buying activity support. Price will only able to move up and break the main resistance RM2.00 with more volume support, otherwise it may stay in consolidation mode longer.

Technical Indicators
Volume: stock price needs further buying support to breakthough RM2.00 main resistance.
MACD: Bullish signal after golden cross being constructed last week.
RSI: Bullish signal.

Support level
RM1.80.

Resistance level
RM2.00

Risk
1. High-debt position after aggressive business acquisition and expansion plan implemented. However, it is informed that it is still under managable level as still level of debt ratio is normal in the industry.
2. Global consumer spending uncertainty.
3. Commodities prices like Cocoa increase may dilute profit margin.

Near term outlook
Consolidation mode

Long term outlook Bullish
Long term uptrend, buy on weakness

Trading opportunity
Due to strong gain during the last few trading sessions, stock falls into consolidation mode, it is good bargain hunting opportunity during profit taking.