Folks, Friday Brent Crude settled up 89 cents, or 2%, at US$43.24 (RM184.46) a barrel. HIBISCS (5199) MY TP 0.75/1.10.
Frankie Miller – Jealousy
KUB (6874) the stock reached a high of 74 sen, Friday 10. 70 sen was my first TP. Heading to my second TP 1.00. I felt more comfortable with Datuk Seri Johari Abdul Ghani at the helm. It is said Johari is in Media Prima as well, holding Umno’s stake in the media group. “I am only an adviser to Syed Mokhtar on Media Prima, nothing more. And I advise because I know how to restructure companies,” Johari explains, denying his involvement in the company. Johari and Syed Mokhtar are old friends. KUB (6874) My next TP 1.50. Hmm.
Bill Withers – Who Is He, And What is He To You
What is a proxy relationship? The proxy relationship explains, neatly, why things are never what they seem, and, also, why, intuitively, we know this, and we can spot a fallacy (a simple lie) a mile a way. Conservation of the circle is the core dynamic in nature. No surprises here. Or there. In the end, someone would have to pay for it. Everything costs. Hmm.
Heather Nova – Gloomy Sunday. One of my favourite songs. I’m not gloomy this Sunday LOL
Today is Friday July 10. Cats do not meow to other cats, only to humans. This is my best cat fact.
Lara Fabian – Wonderful Life
Jadi Imaging Holdings Bhd is set to make its foray into the premium stationery segment as the exclusive distributor of the Nusign brand products, after signing an international commercial agency with Ningbo Deli Import & Export Co Ltd, through its wholly-owned subsidiary Jadi Life Solutions Sdn Bhd. – EDGE
I like PELIKAN better. Hmm. And Bye Bye ROHAS.
Lara Fabian – I’ve Cried Enough
AEON Co (M) Bhd has announced that its managing director Shafie Shamsuddin and deputy managing director Hiroyuki Kotera have been appointed as managing director and deputy managing director respectively of AEON Big (M) Sdn Bhd. – EDGE
I miss Carrefour. Was a little dismayed when AEON took over all the Carrefour stores late 2012. Now the choice is limited AEON or GIANT, very similar in price and generally not much difference.
Scorpions – When you came into my life
A dealer recommended ORION & BCMALL. That was based on his TA chart readings. Hmm.
The best way to start a day is waking up early in the morning and enjoying nature with a cup of black hot coffee. I hope you’re doing this right now. Good Morning FOLKS!
Sara Bareilles – Love Song
Despite the fact that AirAsia Group Bhd has triggered the prescribed criteria of Practice Note 17 (PN17), the airline reassured that it will not be classified as PN17 in line with the PN17 relief measures implemented by Bursa from April 17 this year until June 30, 2021. Meanwhile, sources said AirAsia is considering raising about RM1 billion through a rights issue and weighing the option of raising additional funds via the sale of stakes in its digital and cargo units in order to further strengthen its financial position. – EDGE
Tony and his bag of tricks. Rights issue? Aha! So that’s your secret plan! I don’t know, this plan still sounds pretty risky to me—I’m not sold on it yet.
PDZ Holdings Bhd’s largest shareholder Pelaburan Mara Bhd has disposed of its entire shareholding of 50.62 million shares or a 5.71% stake in the company. PDZ said the disposal of the shares was done in the open market on July 3. – EDGE
It should be made clear that it is not illegal to make a wash sale. It is, however, illegal to claim an improper tax benefit. You know what I mean. Hmm.
Diane Lindsay – Shanghai Beach – Cantonese & French. Shanghai Beach is one of hubby’s favourite songs.I hope you like it.
Asian stocks set to rise as focus swings to recovery prospects
John McCrank, REUTERS via EDGE – NEW YORK (July 9): Asian stocks were expected to rise on Thursday, as hopes of a robust economic recovery offset concerns over flare-ups in the coronavirus pandemic, and as investors looked ahead to earnings season.
Australian S&P/ASX 200 futures were up 0.85%, Japan’s Nikkei 225 futures added 0.16%, and Hong Kong’s Hang Seng index futures rose 0.82%.
E-mini futures for the S&P 500 edged up 0.08%.
“Risk sentiment remains resilient ahead of next week’s key earnings reports,” said NAB economist Tapas Strickland.
He singled out earnings from JPMorgan, Citigroup, and Wells Fargo on Tuesday, as well as tech heavyweights of Microsoft and Netflix on Thursday.
Demand for technology stocks lifted U.S. shares and helped the Nasdaq add 1.44% to 10,492.50, its fourth record closing high in five days.
The Dow Jones Industrial Average rose 0.68% and the S&P 500 gained 0.78%.
MSCI’s broadest index of Asia-Pacific shares outside Japan closed 1.29% higher, helped by Chinese stocks, which have rallied for seven-straight days. Emerging market stocks rose 1.67%.
Gold also gained. Concerns over the pandemic and the extraordinary amounts of fiscal and monetary stimulus unleashed around the world to counteract its economic impact led some investors to seek safety in the yellow metal, which soared past the $1,800, its highest level since September 2011.
The passing of the key technical threshold for gold came as the U.S. coronavirus outbreak crossed a grim milestone of over 3 million confirmed cases, and as seven states reported record numbers of new infections.
In separate appearances, three U.S. Federal Reserve officials said the pace of the economic recovery may be stalling, though another, St. Louis Fed President James Bullard, said on CNBC he felt many lost jobs will be regained by year’s end.
Global coronavirus cases exceeded 12 million on Wednesday, according to a Reuters tally.
Investors will look to U.S. jobless claims on Thursday for the latest snapshot of U.S. recovery.
In China, inflation readings are on tap and expected to show factory-gate prices continued their declines in June.
Carrie Underwood – Before He Cheats
What’s Up Buddy?
Oil & Gas- Staying Grounded
After bottoming out in April 2020, oil prices are expected to hover within a recovery trajectory, on easing of global lockdowns coupled with compliance in OPEC+’s historical production cuts. Global consumption and production surplus levels may have significantly improved post-April 2020, but positive effects could still be delayed as crude inventory remains near record-high levels. Overall, we raised our 2020 average Brent price assumption to USD45/barrel (from USD40), and introduce 2021 average assumption of USD50/barrel. Nonetheless, global trend of capex and opex cuts are still expected to lead to slower activities for the year. On average, global oil majors have announced capex cut of 24%, while shale producers are far worse at 36%. Petronas has also committed to a 21% cut in capex, and 12% cut in opex budgets. While tender book values still relatively unchanged, we believe potential job awards being pushed back could possibly lead to near-term order-book replenishment risks. Additionally, we believe a broad based bottom-fishing strategy on the sector would generally be unviable at the moment, as valuations are already trading ahead of fundamentals, despite the current challenging climate. The KL Energy Index is currently trading at a forward PER of 25x – at a premium against average of 21.7x. Going into 2H 2020, while earnings recovery is widely expected, we also strongly believe that asset impairments are likely, in tandem with the lower activities throughout the year. Investors should thus be wary of names with weak balance sheets. We may also possibly see some M&A activities, especially within the OSV space. Maintain NEUTRAL, with no outright picks, although we have identified PCHEM and HIBISCS as good trading proxies for oil prices. Investors requiring sector exposure would still advised to stick to proven resilient names – e.g. DIALOG, YINSON and SERBADK.
Oil prices in recovery mode. With oil prices plunging to a bottom in April 2020, with WTI even dipping into an unprecedented negative territory, oil prices have seemingly been on a recovery trajectory since then. This was helped mainly by: (i) gradual recovery in global oil demand, as global lockdowns following the Covid-19 pandemic ease up, as well as (ii) OPEC+’s agreed record-high production cuts until end of the year. According to industry data, global oil consumption and production surplus have seen a sharp recovery post-April 2020, and expected to remain level at least until end of the year, with OPEC in compliance with its record production cuts. However, this could be slightly offset as crude inventory levels still remain near record-highs currently. Overall, we raised our 2020 average Brent price assumption to USD45/barrel, from USD40/barrel previously (versus 1H 2020 average of USD42/barrel), as well as introduce 2021 average Brent price assumption of USD50/barrel.
Expect weaker activity levels. Nonetheless, oil prices are still considerably weak against 2019 levels (end-2019 of USD66/barrel), and as such, oil majors globally have embarked on a trend of budget cuts in capex and opex spending. On average, global oil majors have undertaken a 24% cut in capex, while shale producers have been worse hit, taking a 36% cut. Petronas has also committed to a 21% cut in capex and 12% cut in opex budgets, although citing priority in retaining local investments to the best of its ability. This is expected to result in an overall reduction of activity levels across the entire oil and gas value chains, with non-essential greenfield investments expected to face the most deferments. While our channel checks with various individual companies have shown that tender-book values have thus far remained unchanged, the expected pushing back of job awards, some even indefinitely, result in order-book replenishment risks to many of the players within our coverage universe.
Is bargain hunting a viable strategy? While possible, it is certainly not a strategy that we would strongly advocate, not especially for longer-term investors. Despite the current climate, the KL Energy Index is currently trading at a forward PER of 25x – close to +1SD premium against its average of 21.7x. This was mainly caused by the massive cut in earnings expectations, in contrasts against recent share price rebounds, and thus, could possibly suggest that the rebounds may still be a little premature, and that corrections could still occur before underlying fundamental s catch up to valuations. Based on our study, we have identified several names which are still trading at steep discounts (table below), although one thing to note is that these names are generally plagued by either one or few of the various factors, such as: (i) weak balance sheet, as indicated by their high gearing levels, (ii) lack of earnings visibility, or (iii) smaller market cap, implying lower trading liquidity
Source: Kenanga Research – 9 Jul 2020
I still like KUB and I think Hibiscus at 0.625 pretty low, the price should be at least 0.75.
You know what’s kind of funny? This song.Sara Bareilles and Jason Mrazsing “It Only Takes A Taste” from Waitress.
Waitress is a musical with music and lyrics by Sara Bareilles and a book by Jessie Nelson. The musical is based on the 2007 film of the same name, written by Adrienne Shelly.
Hi Folks. I actually do love healthy stuff. Like, I love gluten free flour lempeng pisang or whole wheat flour lempeng pisang for breakfast. Breakfast is my favourite meal. In fact, it’s my main meal of the day.
LOTUS (8303) (previously known as Kuantan Flour Mills Bhd) said it will be uplifted from being classified as a Practice Note 17 (PN17) company from tomorrow, after it has regularised its financial condition and no longer triggers any of the criteria under the PN17-related clauses of the Main Market Listing Requirements.
Special Dividend of 0.5 sen per ordinary share. Ex-Date, 15 Jul 2020. Entitlement date, 16 Jul 2020. MY TP LOTUS (8303) is 0.55. Why? For the six months ended March 31, 2020, the company reported a net profit of RM5.78 million, against a net loss of RM1.22 million a year earlier. Revenue rose over 10% to RM29.86 million, from RM27.06 million.
Shawn Mendes – There’s Nothing Holding Me Back
AIRASIA (5099) external auditor, Ernst & Young PLT, has issued an unqualified audit opinion on the material uncertainty relating to the group’s going concern, in view of the travel and border restrictions implemented by countries worldwide that have led to significant fall in demand for air travel.
Kindly be advised that trading in AirAsia’s shares has been halted with effect from 9.00am, Wednesday, July 8, 2020. Accordingly, trading in structured warrants relating to AirAsia Group has also been halted at the same time. Please also be advised that trading in AirAsia’s securities will continue to be halted pending additional information from the company.
I’m not a fan of buying airline stocks right now; there are better ways to play a recovery in global travel. For example, virtual tours can take you pretty much anywhere. And I think road trips by car are going to become a huge thing, especially in Malaysia.
Sara Bareilles – King of Anything
Pertaining to news flows in boardroom changes, TH Heavy Engineering Bhd saw its chairman Izad Shahadi Mohd Sallehuddin step down from the position after less than a year, while Xinghe Holdings Bhd’s managing director Ma Guo Liang resigned today, and ARB Bhd saw its long-running managing director Datuk Yeo Wang Seng and his son Yeo Gee Kuan, an executive director, relinquish their posts. – EDGE
Hi Folks. It was too quiet – I felt that trouble was brewing.
Perak Corp sees major boardroom shuffle
Xavier Kong, FocusM (July 6) – PERAK Corp Bhd saw a major boardroom shuffle, with the resignation of five independent directors, the redesignation of its chairman, and the appointment of a new chairman and an independent director.
In Bursa filings dated July 6, independent non-executive directors Khairul Anuar Musa, Hatim Musa, Mohamed Azni Mohamed Ali, Chong Zhemin, and Ng Shy Ching resigned from their posts on Perak Corp’s board, all citing “to pursue other interests” as the reason for stepping down.
Perak Corp chairman Mohd Ariff Yeop Ishak was also redesignated as a non-independent non-executive director. Taking his place is Eco World Development Group Bhd co-founder Abdul Rashid Abdul Manaf. Appointed as independent non-executive director is Kunasingam V Sittampalam.
The five directors who stepped down were all political appointees. Khairul Anuar was the PKR candidate for Chenderoh, Hatim was the Amanah candidate for Rungkup, Azni was the PKR candidate for Tapah, Chong is the DAP state assemblyperson for Keranji, and Ng is the PKR state assemblyperson for Teja.
Having entered PN17 status on Feb 11, Perak Corp shares were last done then at 37.5 sen.
Billy Porter – For What It’s Worth
Is the tech sector still a good play?
Xavier Kong, FocusM (July 6) – THE tech sector is one of the few that have persevered through the Covid-19 lockdown fairly well, and is looking to be a good play moving forward.
“Moving forward, the sector will be getting better. The advent of 5G in Malaysia, as well as the move towards digital and the Internet-of-Things (IoT), should see the tech sector grow stronger,” LeInves PLT chief investment/research officer William Ng told FocusM.
Rakuten Trade vice president of research Vincent Lau agrees that the tech sector looks strong moving forward, noting that it is currently at an all time high, with China bullish about the sector as well.
“The glove and tech sectors are the current strong sectors. For the tech sector, digitalisation will continue, irrespective of the Covid-19 pandemic,” said Lau.
For investors, Ng pointed out that research has to be done, as there are too many tech companies in Malaysia that claim to be related to the advancement of matters such as IoT, artificial intelligence (AI), or 5G.
“Investors need to research and pick the companies they would invest in for the tech sector with care, be they hardware producers, or software or system providers,” said Ng, who personally believes companies that provide products or components to IoT, such as KESM Industries Bhd, or smart cars, such as D&O Green Technologies Bhd, would fare well.
Lau believes that it is a matter of looking for the laggards, as it would be a thematic play to invest in the tech sector.
“It is just a matter of valuation. Look for the laggards, basically those trading below 30x price to earnings,” Lau told FocusM, adding that the tech sector looks to be a strong play moving forward.
There will come a time when it isn’t ‘They’re spying on me through my phone’ anymore. Eventually, it will be ‘My phone is spying on me’. In K1 for a short while then bye bye, Folks. Huh!
Sleep is my drug, my bed is my dealer, and my alarm clock is the police. Hmm.
The Police – Message In A Bottle
Pecca Group Bhd ventures into PPE business. Caely Holdings Bhd ventures into PPE business. Notion Vtec Bhd ventures into PPE business. Jerasia Capital Bhd ventures into PPE business.
Jerasia Capital Bhd is venturing into the healthcare industry by using its production lines to produce personal protection equipment (PPE) for both local and export markets. Its units Canteran Apparel Sdn Bhd and Canteran Apparel (Cambodia) Co Ltd have expanded their product portfolios, and are now developing, producing and supplying PPE products that include non-woven isolation gowns, head covers, shoe covers, cloth face coverings and other related PPE garments. – EDGE
Heart – These Dreams
What’s Up Buddy?
RHB: Technical Analyzer
6 July 2020
FKLI & FCPO: FKLI: Tightening Up Risk Management
Maintain long positions, while placing the trailing-stop at the breakeven point. The FKLI registered a positive follow-up last Friday, after breaching the 200-day SMA line in the prior session. At the close, the index gained 18 pts to settle at 1,548 pts – crossing above the previous resistance levels of 1,534 pts and 1,545 pts. The positive observations further re-inforce the bias that the index is, at the minimum, developing a rebound. This comes after its retracement phase, which took place between 9 Jun and 29 Jun, where it reached a likely interim low of 1,476 pts. Premised on this, we are keeping our positive trading bias.
Trading Stocks: Prestariang, MTAG Group & MNRB Holdings
Yet another sturdy weekly gain on Bursa Malaysia, KLCI tops Asean markets
EDGE KUALA LUMPUR (July 3): Bullish sentiment prevailed in the past week. The FBM KLCI index was the top performing Asean market for the week as the benchmark gained 4.33% or 64.51 points weekly to close at 1552.65.
Looking at the weekly report of Malaysian stocks, the strong performance is apparent with the gainers leading weekly losers by a big gap of 557 to 142.
The sturdy share price performance was across the board, spanning from lower liners to large-cap blue chips.
Big Cap: Still not too heavy to climb higher
Among the companies with market capitalisation (market cap) above RM1 billion, Hartalega Holdings Bhd led the climb during the week.
A random check shows that there are 15 companies that saw their share prices gain more than 10% over the week.
Being the top gainer, Hartalega surged 28% for the week to RM16. The nitrile glove maker’s market cap swelled by RM13.75 billion in one week to RM54.2 bil, overtaking IHH Healthcare Bhd as the fourth largest stock on Bursa Malaysia after Malayan Banking Bhd (RM86.67 billion), Tenaga Nasional Bhd (RM67.08 billion) and Public Bank Bhd (RM66.27 billion).
Others that stood out for the week include Focus Dynamics Group, up 25% to RM1.05, followed by plantation player Kretam Holdings, which soared almost 21% to 52 sen, and Lotte Chemical Titan Holdings that gained 18.4% to RM2.06.
The upward momentum continued among the tech companies. Greatech Technology Bhd and UWC Bhd, both of which made their debuts last year, hit new peaks in the week to RM4.56 and RM4.19 respectively.
Among the losers, Far East Holdings Bhd dropped 4.58% to RM2.29 while IHH Healthcare fell 3.75% to RM5.39.
Mid-Cap: Semiconductor firms dominate the gainer list
For counters with market cap of RM500 million to RM1 billion, semiconductor test socket maker JF Technology gained the most. Its share price soared 26.07% during the week to its all-time high of RM2.66.
Its peers that fared well in the technology sector include e-government service provider Iris Corp, which soared 24.24% to 20.5 sen, followed by precision manufacturer JHM Consolidation, up 13.5% to RM1.51, and reinsurance company MNRB Holdings which gained 13.5% to 80 sen.
There are only 10 counters out of the 68 whose share prices have declined this week. Solarvest Holdings fell 5.16% to RM1.47 and Pestech International dropped 4.4% to 87 sen.
Small Cap: Furniture makers the star performers
In the small cap space, market cap of RM100 million to RM500 million, acrylic products manufacturer Asia Poly Holdings Bhd led the rally with a weekly gain of almost 53% to 26 sen.
Interestingly, particle board manufacturers and furniture makers were seen to dominate among the lower liners.
Evergreen Fibreboard gained 32.3% to 20.5 sen, followed by Heveaboard, which soared 28.2% to 50 sen and Poh Huat Resources which rose 18.45% to RM1.22. Meanwhile, Homeritz Corp went up 13.3% to 59.5 sen and Mieco Chipboard was up 12.5% to 27 sen.
Nonetheless, the pandemic thematic play might have lost some of its steam.
AT Systematization, which announced its intention to purchase an industrial glove manufacturer, led the loser’s list by falling 32% to 9.5 sen, while ventilator maker K-One Technology fell 7.45% to 43.5 sen, and Ho Wah Genting Bhd, which ventured into COVID-19 test kits, dropped 7.22% to 45 sen.
ROHAS (9741) – MY TP 0.58/0.79. PELIKAN (5231) PublicInvest Target Price: 0.335/0.355, MY TP 0.405/0.59.
Hip Hip Hooray, it’s Saturday!
Chicago – Saturday in the Park
Aha! I hate it when people text “Call me.” I’m going to start calling people and as soon as they answer I’ll say “text me,” then hang up. Hmm.
Blondie – Call Me
Why must I prove that I am me when I pay bills over the phone? Did some else call to pay my bills, and if they did, why don’t you let them? Huh.
Good morning Folks. How did scrambled eggs get stuck with breakfast exclusivity? You can put bacon on a sandwich without anyone freaking out. But the moment your sandwich has an egg, boom, it’s a breakfast sandwich. Hmm.
KLCI starts higher after US reports better-than-expected employment data
EDGE KUALA LUMPUR (July 3): The FBM KLCI opened higher today after US equity indices finished up overnight on Thursday following the nation’s better-than-expected employment data report.
At Bursa Malaysia today, the KLCI opened 6.72 points higher at 1,543 at 9am. At 9:05am, the KLCI rose 6.94 points to 1,543.22.
“Following the positive (equity) performances in the US and Europe, the KLCI could extend its rally towards the resistance of 1,550 points,” JF Apex Securities Bhd analysts wrote in a note today.
CARLY SIMON – You’re So Vain. In 2015, Carly Simon divulged that the second verse (“You had me several years ago when I was still quite naive…”) is about Warren Beatty, and said that the other verses are about two different men, whom she wouldn’t name. Hmm.
Richard Perry, who produced the album, has his own ideas about the song’s subject matter. He said in the book The Record Producers: “It’s about a compilation of men that Carly had known, but primarily Warren Beatty.”
What’s Up Buddy?
Traders Brief 3 Jul 2020- To retest 1547 levels after reclaiming above 200D SMA and LT downtrend resistance
Global: In tandem with higher S&P500 and record close on Nasdaq, Asian markets rose as hopes for development of Covid-19 vaccines and positive economic data from the US and China as both countries ramped up stimulus measures, offset concerns on resurgence in virus infections worldwide. Meanwhile, Hang Seng index rallied 2.85% despite the implementation of security law by China effective 1 July as investors sees US moves to revoke HK’s special treatment will have limited impact while closer economic ties with China will benefit the city.
Dow surged as much as 469 pts to 26204 amid optimism surrounding a robust June employment report. However, the gains were reduced to a meagre 92 pts at 25827 (+812 pts or 3.2% WoW) ahead of the Independence Day holiday on Friday, after a report indicated that final-stage trial of a Moderna coronavirus vaccine candidate was delayed and persistent spike in infections and hospitalisations could prompt states to re-schedule re opening plans. Meanwhile, the Nasdaq rallied as much as 156 pts to all-time high at 10310 before paring earlier gains to 53 pts at 10208 (+451 pts or 4.6% WoW).
Malaysia. Tracking bullish regional markets, KLCI surged 21.9 pts or 1.44% at 1536.3 (recorded a 4-day cumulative gains of 48 pts), lifted by active buying interests in oil & gas, glove and banking stocks such as PCHEM, PBBANK, MAYBANK, TOPGLOV, HARTA and CIMB. Trading volume declined to 5.90bn shares worth RM4.02bn as compared to Wednesday’s 7.33bn shares worth RM3.60bn. Market breadth was positive with 701 gainers as compared to 334 losers.
TECHNICAL OUTLOOK: KLCI
After peaking at 1591 (9 June) from bottom of 1208 (19 Mar), KLCI surrendered as much as 115 pts to 1476 (29 June low) before gradually narrowing the losses to 55 pts or 3.5% at 1536 yesterday. In wake of a decisive rebound above the 200D SMA (or 1510) and LT downtrend line (near 1530), the index is likely to retest between 1547 (61.8% FR) and 1563 (76.4% FR) region soon, supported by bottoming up indicators. On the flipside, violating 1510 support would imply further profit taking pullback towards 1500 and 1483 (30W SMA) levels.
The index may continue on its positive run in the near term towards 1547-1563 zones, riding on a highly welcomed measure by Bursa/SC last Friday to extend the short-selling ban to 31 Dec 20, ongoing rebound in oil prices coupled with a positive reclaim above the key 1510 and 1530 barriers. However, a profit taking pullback could be triggered by further surge in Covid-19 count globally, souring US-China relations, domestic political uncertainty with the focus on Parliament re-sitting on 13 July and deteriorating August results season. On stock selection, we believe MISC (RM7.85-Buy-TP RM8.98) could attract further buying interests amid a bullish flag breakout yesterday, towards near term RM8.00-8.30 upside targets. Fundamentally, the stock is a rare diamond amidst current global economic climate and is an MCO proof stock, benefitting from the strong petroleum tanker charter rates amidst global shortage of oil storage space. Besides, it offers stable DY of 3.8% to give a degree of defensiveness within the big-cap space. Support is near RM7.55-7.75. Cut loss at RM7.45
Source: Hong Leong Investment Bank Research – 3 Jul 2020
Analysts wary of Star Media’s execution of revenue diversification plans
Xavier Kong, FocusM (July 3) – ANALYSTS remain cautious on Star Media Group Bhd’s execution of its diversification strategy in response to the Covid-19 pandemic and the movement control order (MCO), which have exacerbated the group’s results for the first quarter of its 2020 financial year.
TA Securities analyst Wilson Loo noted that the measures taken to cushion the impact of the MCO included the offering of Covid-19 special ad packages, the offering of delivery listings on print and digital at affordable rates for SMEs hit by the MCO, and the introduction of webinars and virtual education and property fairs.
AmInvestment Bank (AmInvest) noted that other services included offering paid research services such as market analysis and end-to-end research by leveraging data and analytics from its platforms, and pushing its marketplace platforms such as Kuali Shop, dimsum’s Watch & Shop, and Star Mall.
“We believe that Star Media’s move to adapt its strategy to ride on opportunities arising from the pandemic and offer more digital offerings is necessary, with other media players having done so as well in order to offset the decline in traditional media segments,” said AmInvest.
“We are positive on the group’s move to diversify its revenue streams in light of its challenging operating environment. However, we remain cautious on the monetisation of its digital initiatives as Covid-19 is expected to hasten declines in traditional media segments and impact its financial performance.”
Loo, however, holds the view that the newer revenue streams have a lack of scale, which would lead to near-term contributions being insufficient to overcome the ongoing structural challenges faced by the group’s core print business.
The TA Securities analyst also pointed out that Star Media had reported a core net loss of RM4 mil for its 1QFY20, and believes that near-term ad expenditure will be weaker on a year-on-year (y-o-y) basis.
“For 2H20, management expects the operating environment to remain challenging, albeit cautiously optimistic as the group has seen adex recovering following the easing of the MCO,” said Loo.
“That said, with businesses likely to tighten marketing spend in the face of a looming global recession, we expect the strong recovery momentum to largely moderate in the months ahead and thus, for adex in the near term to remain weaker on a y-o-y basis.”
However, Star Media management has also guided that it will be pursuing mergers and acquisitions in both related and unrelated businesses, backed by its net cash position of RM378 mil.
“We note that while the group has come across interesting prospects, demanding valuations sought by the vendor has often been the stumbling block,” said Loo.
Moving forward, AmInvest noted that Star Media will be venturing further into e-commerce, and that the group does not deny that cost-optimisation initiatives such as manpower rationalisation is still in the cards.
TA Securities maintains a sell call on Star Media with an unchanged target price of 26 sen, citing a lack of earnings catalyst for the group. AmInvest maintains an underweight call as well as an unchanged fair value of 31 sen.
At 10.05am, Star Media’s shares were last done at 35.5 sen, up half a sen, with 103,100 shares traded.
Good morning Folks. Hubby sat and stared out the window while nibbling on a piece of cracker from the plate of crackers on a small table at his side. LOL
Nina Simone – Feeling Good
What’s Up Buddy
M+ Online Technical Focus – 2 July 2020 Author: MalaccaSecurities | Publish date: Thu, 2 Jul 2020, 9:22 AM
D&O Green Technologies Bhd
Brightening up the scene
One of the leading light-emitting diodes (LEDs) makers for automotive manufacturers in the world offering high-performance and innovative solutions. Opening of new corporate headquarters and manufacturing facility in 1Q2020 earmarked a new phase of expansion.
At current price of RM0.77, D&O is trading at forward PE of 19.6x for FY21, which is below the 2Y average PE of 25.5x. Technically, price has experienced a short term symmetrical triangle formation breakout above RM0.745 to target the resistances at RM0.825-RM0.865 with long term target at RM0.925.
Based in Melaka, D&O Green Technologies Bhd (D&O) is regarded as one of the leading light-emitting diodes (LEDs) makers in the world offering high-performance and innovative solutions to world-renowned automotive manufacturers. We like D&O for the rising usage of LED products that is expected to see global automotive lighting market valued at US$32.8bn in 2018 increasing to US$57.0bn in 2025. Current operations are supported by six regional offices located in Europe, the United States, China, Japan, South Korea and India will be able to provide professional sales and technical support across the globe.
The opening of new corporate headquarters and manufacturing facility (adjacent to existing facilities) in Batu Berendam Free Trade Zone in Melaka in 1Q2020 earmarked a new phase of expansion to capture the additional future market demand. Although 2QFY20 may see some weakness on the implementation of MCO, production has returned to near pre-Covid19 levels in June 2020 with the group ready to capture the higher car sales from China that grew 4.4% YoY in April 2020.
At current price of RM0.77, D&O is trading at forward PE 19.6x for FY21, which is below the two-year average of 25.5x; implying potential upside in our view. Meanwhile, D&O has been maintaining a lean balance sheet with a net gearing of 0.1x in 1QFY20.
Technically, share price is on the uptrend phase over the past week after bottoming out in mid-March 2020. Following the recent pullback, price has formed a hammer candle above the daily EMA120 level before rebounding. Price has experienced a short-term symmetrical triangle formation breakout above RM0.745 to target the resistances at RM0.825-RM0.865 with long term target at RM0.925. Support is pegged at RM0.695 and cut loss is located at RM0.69.
I never owned D&O Green Technologies Bhd before, while, or after publishing the above TA by Malacca Securities.
Most people invest in stocks by opening an account with a brokerage. Today, that’s usually done online at the brokerage’s website. Different brokerages have different strengths and weaknesses. Not all brokerages are the same.
Altimet feat Awi Rafael – Kalau Aku Kaya
The curious case of KOMARK (7017)
Komarkcorp Bhd’s executive chairman Koh Hong Muan @ Koh Gak Siong and group chief operating officer Koh Chie Jooi have ceased to be substantial shareholders of the loss-making firm. Hong Muan is the founder of the label printing and packaging solution services provider, while his son Chie Jooi also serves as the firm’s executive director. They disposed of their indirect equity interest of 40.88 million shares or 19.88% in Komarkcorp at 40 sen per share yesterday.