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Wednesday, February 10, 2016

The Predator's Eye - Monkey Business in the Year of the Monkey



For a market-maker or stock operator, managing the second-wave of a bullish cycle has always been the toughest part of the business. Firstly, you got to flush out most of the stale-bulls. In the case of VIOVCOM, there is a mixture of the tired bulls. Some are sitting on massive profits and have no confidence that prices would advance and have taken the opportunity to sell in waves each time the stock attempted any mild rally.

Some are truly exhausted-bulls who have lost their marbles due to the prolonged sideways trading conditions and are keen to get out with minimum losses.

This has been a proven fact. Each time prices rallied over the last 9-months, sellers came out in many waves to realize their profits or reduce their positions by cutting loss. The situation facing this stock-operator presently is just like monkeys playing up on a coconut tree. If you can shake the tree hard and long enough they would fall and would not be there to bother you get up that tree!

It was obvious that the prolonged 9-weeks price congestion at 0.27 to 0.30 sen has enabled much long-liquidation profit-taking selling as 1.89 billion shares changed hands over this period. The vital question now is how much free-float or not friendly shares still out there? A large number would mean that the narrow-band price congestion would be extended untill a larger portion of these shares are un winded.

There are two sides to a coin. It is all about market psychology. Some viewed the stock’s inability to advance as price resistance. Others viewed it as a price support level and hold and accumulate further. I think it is a support level.

Strictly from a quantitative analysis point of view, the congestion period is viewed as a consolidation and accumulation phase. The smart-money is on the long-side and had built up a strong volume base in anticipation of the next-move or second-wave, which is up.

What does the congestion period means?


Price break-out after an extended price congestion signals a cycle-change or change in the trend. VIVOCOM price congestion has lasted 9-weeks. The period of the time-frame break-out is crucial. Price break-out after a short price consolidation time-frame is not significant.

Break-out after a prolonged price consolidation time-frame as in the case of VIVOCOM is very significant. Break-out of all 9-week tops is more significant than a break-out of all tops for the last three weeks. Watch for the upward price break-out for VIVOCOM.

Volume would surge and that would confirm the start of the 2nd wave of the bullish cycle. Deng Shou Peng once said: White cat or black cat? The colour of the cat is irrelevant as long as it catches mice!

What should Vivocom traders be looking for?

Success in stock market is not so much a matter of knowledge and analysis as it is a function of consciousness, of being able to let go and  flow   with the continually-changing way it is. Let us look at the reality.

Any serious trader or investor of VIVOCOM should not be influenced by what happened in the last rally. That was a completely different technical game and it is now over.

Vivocom is in a new trading phase. Traders should re-focus their focus. They should look at what transpired over the last nine weeks and look seriously at the volume and the implications of the tight-price actions.

They have to consider who actually absorbed, like a sponge, the 1.89 billion shares that were ditched out and start to understand what it means by “smart-money” or “people with deep pockets”. Investors must understand that for every share sold there is a buyer. With a proper understanding, they will then know that the setting for the next bullish-wave is been established!

VIVOCOM Price Trend- What’s Next?

People make markets and they are irrational much of the time. Markets are not random – because they are based on human behaviour, and human behaviour especially mass-behaviour or Madness of Crowds, is not random.  It never has been. It probably never will be!

How long would the price congestion last? That is a few- million- dollar question! I honestly do not know. Only the market-makers know. What I really know is that the start of the next big upward move in VIVOCOM would catch many by surprise! When traders least expected it to happen, it happens! This I guarantee!

My Monkey Crystal Ball Calls:
1st upside objective:  0.335
2nd price-target : 0.40
3rd price-target: 0.475

CONCLUSION: If the Sun rises from the West, I would certainly dare to call a sell on VIVOCOM. But, the Sun does not!
Happy and Prosperous CNY. G.M.Teoh

Note:
G.M.Teoh is an independent market analyst who has successfully defied the conventional wisdom of trading.
His analytical research work on stock market were published by Star Publications weekly under the column name  “The Stock Market Signals” from 1986 to 2009. He is currently the chief coach of the Master Trader Tutorial (MTT) conducted in Singapore, Malaysia and Indonesia.  


Wednesday, February 27, 2013

Censof (5195) - A Strong Financial Performance that Exceeds Analyst Expectations, A Research House Revised Target Price to RM0.61


While most companies would be contented to just breakeven or post a slight profit amidst the slowing economy and market uncertainty, Censof Holdings Bhd (Censof) surpassed analyst expectations by posting a stronger financial year 2012 (FY12) net profit of RM9.4 mil. 

According to industry sources, Khazanah Nasional Berhad had recently shortlisted Censof as one of the five candidates to submit an indicative bid to acquire its 45.03% stake in Time Engineering Bhd. The Group is definitely building on solid fundamentals and paving its road to an exciting business potential  into the near future.

YoY, FY12 revenue rose slightly to RM44.5m (+2.7%) due to higher revenue contribution from projects e.g. ICMS & Outcome Based Budgeting (OBB) project, which has been c.80% completed thus far according to management. The net profit increased further to RM9.4m (FY11: RM8.8m) due to: 1) higher contribution from its higher GP margin maintenance project i.e. the LHDN maintenance services project, which lifted the EBIT margin to 22.7% (vs. 22.3% previously), and 2) a lower effective tax rate incurred of 2.5% (FY11:2.6%).

QoQ, 4Q12, revenue rose RM17.9m as compared to RM5.3m in 3Q12, boosted by 1) higher revenue from FMSS segment at RM14.5m (vs. RM4.3m previously) as a result of higher revenue recognition from Outcome Base Budgeting (OBB) project and 2) an additional revenue contribution of RM1.5m from KnowledgeCom, a new subsidiary acquired by the Grop in Nov12, which mainly provides corporate IT training services. 

A prominent Research House (Kenanga) revised up FY13-14E net profit by 3.7% - 4.8% to RM17.5m - RM15.9m, with an increase in topline by 1.2% and 4.2% to RM73.4m and RM81.1m from additional revenue contribution from KnowledgeCom. 



Forecast and Valuations
FY 2012(A)
FY2013(E)
FY2014(E)
Turnover (RM Mil)
44.5
73.4
81.1
EBIT
10.1
18.7
16.9
Profit after Tax (RM Mil)
9.4
17.5
15.9
Consensus (NP)

15.0
16.7
Earnings Revision

+3.7%
+4.8%
EPS (Sen)
2.7
5.0
4.5
PER
14.1
7.8
8.5


Inline with its performance and forecast revenue and profitability, Kenanga revised its target price upwards to RM0.61 and provide a market OUTPERFORM call on the counter. 

Investors should look out for moves on good volume. Right now, the counter is testing the proverbial waters and drifting upwards.


Future Prospects Censof’s long term outlook remained intact, underpinned by its active tendering of contracts for both the Indonesian and Malaysian markets for its Financial Management System Solutions (FMSS) segment. Other positive factors were continued projects flow from the various government agencies where it is now serving over 27 ministries and 80 government agencies in the country. It is also anticipated that Censof may very well benefit from the potential implementation of GST after the imminent General Election.


Projects   Century Software (Malaysia) Sdn Bhd, a wholly owned subsidiary of Censof, has been awarded a new project by Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) for the upgrading of the latter's financial management system worth RM1.7m over a 2-year period commencing from 5 February 2013 until 4 February 2015.

The Group’s subsidiary, Knowledgecom Corporation Sdn Bhd has also received a Letter of Award dated 21 February 2013 (Ref No. : (42)PSMB/27/55 Klt.3) from Kementerian Sumber Manusia of Pembangunan Sumber Manusia Berhad (545143-D) (“PSMB”) for a project named “Specialised Training and Advanced Recruitment (“STAR”)” for a contract sum of RM1.05 million from PSMB (“the Project”). 
Bearing any unforseen circumstances, the Board is of the opinion that the Projects will contribute positively to the earnings per share and the future earnings of Censof Group. 
Last June, Censof won a project with the Ministry of Finance,to develop a state-of-the-art system to cater for outcome-based budgeting (OBB). This national project is a catalyst to Censof and the Group sees this as a stepping stone to a new market. OBB revolutionised the budgeting and planning process, promoting performance and result as key objectives, focusing on the outcome of the programs and activities in line with national key results area.
The Group also expects Censof ’s business to grow at a rapid rate in the foreseeable future as the government as well as the corporate sector, in their quest to strengthen effectiveness and efficiencyin delivery systems, execute initiatives to improve security and connectivity infrastructure.


Awards    Censof has bagged numerous awards in the past few years. Last year, the company’s 100% fully home-grown software, Censof Government, clinched the ‘Best Software Product’ award at the NEF-Awani ICT Awards 2010 which was presented by the Prime Minister. 

Censof recently won the top honors when it bagged the Prominent ICT Company Award at the 3rd Malaysia Independence Award 1957 @ Anugerah Merdeka dinner, co-hosted by SME Global Centre and Branding & Franchise Magazine.

The Group aims to be a regional player within the next three to five years with plans to establish its presence into countries like Vietnam, Thailand and Cambodia and further afield. Censof is currently in talks with companies from Taiwan and South Korea.

Its wholly owned subsidiary, Century Software (M) Sdn. Bhd (“CSM”), is presently the only one of two companies recognised by the Malaysian government to be a Standard Accounting System for Government Agencies (“SAGA”) compliant FMSS provider.

Friday, January 11, 2013

Market Food for Thought

Nowadays, we just can't judge a stock by its daily volume and price movement. There's so many counters practicing 'Pump' and 'Dump' .... if you know what i mean. Best still, these stocks usually trade up few hundred % in a matter of days for no apparent reason with no substancial news. When queried by the authorities under UMA (unusual market activity), the Board of Directors will (most if not all the time) denied knowing anything that contributed to the substancial price movement.

The question here is, where does all these trading volumes come from. In some cases, the total trading volume for 1 or 2 weeks exceeds MULTIPLE TIMES the company's total Shares Issued. Other than the principal shareholders, would retailers have so many shares to churn the market.

On a brighter note, these are the same counters that keeps the stock market alive and liquid. So, should the authorities just legalised 'Market Management' across the board. To look good in the eyes of foreigners and to uphold our Malaysia Boleh principle, we need to also show that most of the 2nd liners in Bursa are doing well (in terms of share price), not just the Composite Index points (which is made of of selected Blue Chips).

Friday, December 21, 2012

Just for Laughs

One day, Jimmy Jones was walking down Main Street when he saw his buddy Bubba driving a brand new pickup.Bubba pulled up to him with a wide grin. 
"Bubba, where'd you git that truck?"   "Tammie give it to me." Bubba replied. "She give it to ya?
"I know'd she wuz kinda sweet on ya,but a new truck?" 


"Well, Jimmy Jones, let me tell you what happened. 
We wuz drivin' out on County Road 6, in the middle of nowheres. Tammie pulled off the road, put the truck in 4-wheel drive, and headed into the woodsShe parked the truck, got out,threw off all her clothes and said'Bubba, take whatever you want.' 

So I took the truck!" 





------------------------------------------------------------------------------------------

Four brothers left home for college, and they became successful doctors and lawyers. One evening, they chatted after having dinner together. They discussed the 85th birthday gifts they were able to give their elderly mother who moved to Florida .

The first said, "You know I had a big house built for Mama."

The second said, And I had a large theater built in the house."

The third said, "And I had my Mercedes dealer deliver an SL600 to her."

The fourth said, "You know how  Mama loved reading the Bible and you know she can't read anymore because she can't see very well. I met this preacher who told me about a parrot who could recite the entire Bible. It took ten preachers almost 8 years to teach him. I had to pledge to contribute $50,000 a year for five years to the church, but it was worth it. Mama only has to name the chapter and verse, and the parrot will recite it."

The other brothers were impressed. After the celebration Mama sent out her Thank You notes.

She wrote: Milton , the house you built is so huge that I live in only one room, but I have to clean the whole house. Thanks anyway."

"Michael, you gave me an expensive theater with Dolby sound and it can hold 50 people, but all of my friends are dead, I've lost my hearing, and I'm nearly blind. I'll never use it. Thank you for the gesture just the same."

"Marvin, I am too old to travel. I stay home; I have my groceries delivered, so I never use the Mercedes.The thought was good. Thanks."

"Dearest Melvin, you were the only son to have the good sense to give a little thought to your gift. The chicken was delicious. Thank you so much."

Love,
Mama

Monday, December 10, 2012

Which type of Investor are you ?

A good friend of mine once asked me this simple but very pertinent question
Is there a one size fits all style of trading or investing in the stock market ? Interesting question considering that we all know that there are countless methods ranging from the software based "scientifically" packaged to the rule of thumb guess work style adopted by many. 
That said I would like to add my 2 sen worth as follows....
Instead of deciding on any one style it may be better to categorise stocks according to their historical movement trends  and only then decide on the best method to apply....A practical but realistic approach may be as follows...
Heavy weights ( blue chips ) : These are fund managers favourite haunts and hence the the fundamental analysis based method may be most suitable. Changes in performance  ( profits /div yields ) will affect the share price. So it is only logical one should pay close attention to such data and analyst writeups...
Growth stocks : These "aspiring " counters are plentiful and are the favourites of middle level investors, mainly individuals who love a good story line and will lap up well researched reports. As the mix between mid term players and short term opportunists are quite balanced here ,the best suited method could include a combination of technical analysis, fundamental analysis and other momentum based techniques...
Lower liners ( speculative ) : These are the volume kings and form the main stay of top 20s day in day out. Being mainly retail based and where price movement not necessarily driven by fundamentals nor corporate developments, momentum or trend based trading methods are most suitable. Imagine trying to apply fundamental analysis on a PE 100 stock and trying to "justify " its share price climb...You either join the band wagon or sit out the bulk of the trading action everyday in a bear and quiet market as is the case now....
In short it may make sense to know the type of trader or investor you are before you worry too much of the trading methodology.

The above is an article by Chris Choo of Jupiter Securities. Chris will be holding a talk on "Price Action Technique" in selecting winning stocks for intraday and short term trading this coming December 15 (Saturday) from 9am to 1pm at Jupiter Securities Sdn Bhd, Level 9, Menara Olympia. Contact customer service for more information.



Tuesday, December 4, 2012

AIRASIA - Good Buy or Goodbye

AirAsia’s 3QFY12 net profit stands at RM163.9 mil, dropped by 10.4% compared to the previous year. The decline was mainly attributed to the higher start-up losses in its Japan and Philippines associates and delayed recognition of airport incentives which amounted to RM22m in 3QFY11. In other parts, Thai AirAsia reported an increase in net profit of +3%yoy to THB199.1m and contributed RM9.0m to the group in 3QFY12.




According to management, the group will launch more new routes and increase frequencies on a few routes for FY13 upon taking delivery of 28 A320 aircraft in 2013 (+7 from 21 aircrafts guided previously), which will be deployed in Malaysia (10), Thailand (9) and Indonesia (9). Next year, the group will add 4-5 aircrafts for AirAsia Japan and 3 aircrafts for AirAsia Philippines.


November 2012 Call and Target Price by Research Houses


MIDF  -  Maintain BUY with unchanged target price of RM3.84
TA  -  Maintain BUY with a revised lower target price of RM3.50
RHB  -  Upgraded to OUTPERFORM with fair value of RM3.61
OSK  -  Maintain BUY call with a target price of RM3.39
KENANGA  -  Maintain BUY call with a lower target price of RM3.07
HWANGDBS  -  Maintain HOLD with a targer price of RM2.90
CIMB  -  Maintain HOLD with a target price of RM3.00
AMMB  -  Maintain HOLD with an unchanged fair value of RM2.80

Will the entry of Malindo Airways in 2013 pose a significant treat to AirAsia. It is a fact that there is a certain over reaction by the market to the Malindo news which causes the stock price to dive. AirAsia reiterated that low cost is its key weapon against any new competitor.

AirAsia is last traded at RM2.83.