Common Cents:Let your Money Work harder For You

Will Airasia (5099) break out from its ‘sideway box’soon?

2014-09-16T08:49:00.000-07:00

Airasia is forming triple bottoms?

Airasia has been trading in a sideway range from RM 2.20 to RM2.62 since 12 November 2013 until now. On 2^nd September 2014, price has cross-overed its long term Resistance MA 200.Since then, its trend was turned to uptrend as shown after the MACD and Signal line cross-over (MACD value is positive).Plus, RSI and Price is showing bullish convergence, however its upside is limited by overbought condition as showed by (RSI>70).Last bar on 15^th sep 2014, up bar closing mid may mean supply coming in-sign of weakness. So, I may expect a small retracement and may retest its support MA200 before moving up again. Besides, Airasia is forming triple bottoms. Do watch out VERY VERY CLOSELY, the activity around the resistance line at around RM 2.62.If there is very high volume around this supply line, plus if the smart money expect a higher price, most likely they will be pushing up via supply or gap up to discourage the lock-in traders around the sideways area from selling as the lock in traders will start to see some profits after the resistance line broken. A high chance of real break-out! Then the next resistance will be around RM2.97.

Disclaimer: It is just for sharing and educational purposes, it is not a buy call.The author will not be responsible for any loss incurred from this trade.The information being shared here might not be accurate and up-to-date.Do consult your remisiers or financial consultants before taking any actions.Invest at your own risk!!!TQ

TA or FA or both?

2014-09-10T08:00:00.002-07:00

Last time, I was a hard core fundamentalist, analyzing mainly Price Earning Ratio (PE), Return on equity (ROE), Dividend yields (DY), cash flow etc for stock selections.As for macroeconomic study, one has to know about the fiscal and monetary policies that may affect the stock market in each country.As the time passed, I slowly realized that if no smart money to push up a counter regardless of how undervalued or good a stock is, it will not go far. Always remember that stock market is a money or number game! Hence, following the smart money footsteps will not go wrong! Of course, FA is still important. Buying a stock with a good FA to me is just as important as buying an insurance for myself, if financial crisis happens, although initially its price may tumble a lot but it will eventually rebound back to its fair value one day. However,the chance is slim for poor FA stocks. Not all good FA stocks will move as there is no big boys supporting it.To me, good FA stocks serve as a catalyst or theme for the smart money to "fry". Later on, I started to learn technical analysis and volume spread analysis myself to strengthen my skills in trading.It works and it increases my chance of winning! However, Big crocs may purposely use TA to trap the retailers eg purposely breaking major support in order to shake out retailers, then buying back at low. (False break out).So one should be able to easily distinguish if it is a shake out or distribution by big crocs. Personally, I prefer leading indicators eg support and resistance plus Fibonanci retracement and also some lagging indicators eg RSI, Moving average (MA 200 for long term trend), Bollinger band. Among all the informations available from a chart, which I think can not be artificially manipulated, that are always true, these are PRICE and VOLUME only. Hence, I think that volume spread analysis is logical and effective in trading, as it based on the most accurate datas found from chart-price and volume, plus it helps me to track the foot prints of smart money. A little bit more about the qualities of a good trader. A good trader needs 3Ms:Good method. Mindset and money or risk management.You do not have the win all the trades (even the professionals do not manage to do so), you just have to ensure that you lose little or gaining big in every single trade, in the long run, u are making profits from your trades. Be a disciplined traders, setting a stop loss and target or exit price before u trade. (Cutting loss is important but not in extreme oversold condition). Rule of thumb for trading: Do not risk more than 2% of your capitals used for every single trade. Eg, if you have RM 20 000, the maximum amount you afford to lose in every single trade is RM 400 in order to preserve your capitals.

Generally, FA tells u what to buy, TA tells u when to buy!

Kindly share your valuable comments here about your strategy in stocks investment by selecting Fundamental Analysis (FA) or Technical Analysis (TA) or both?

Option 1 - Look at FA first , followed by TA. Option 2 - Look at TA only
Option 3 - Look at FA only
Option 4 - Look at TA first, followed by FA.

TQ!

The purpose of this blog is to share knowledge, news and personal opinion on investment, economy, stock market etc. There is no guarantee that all the information in this blog is accurate and up-to-date. Invest at your own risk! TQ.

Technical Outlook For Prestariang (Updated 1):

2014-09-03T09:40:00.001-07:00

Presbhd closed at RM2.01 On 3rd September 2014.The last bar higher volume closing mid may mean supply coming in. Its price has formed a bearish flag as shown in the chart. Once the lower trendline of the flag at around 1.95 sth is broken, then the trend may change. The prices and RSI are showing Bullish Convergence (Both price and RSI is showing higher high and higher low). This means that the uptrend momentum is strong, plus it is oversold, hence there is a high chance that the trend will continue. Plus,EPF has just acquired its shares on 27.8.2014.Surprisingly, the amount of shares EPF its acquired this time is more than what had been disposed on 25/8/14 as reported by Bursa.For time being, EPF has a direct interest of 7.27% of its shares.Why EPF acquires more shares this time? Something big is going to happen? Plus, the ex date of the coming interim dividend will fall on 10/9/2014.With all these factors considered, will its share price surge again? Personally, based on the technical and long term fundamental outlook,i think most likely it will go up.I might be wrong.The next few days we will know.

Latitud- A slightly disappointing Quarter (Q4FY14) (Updated 1)

2014-08-30T00:16:00.000-07:00

Latitud closed at RM3.33 on 29th August 2014 Before Merdeka Day

SUMMARY OF KEY FINANCIAL INFORMATION
30/06/2014

			INDIVIDUAL PERIOD		CUMULATIVE PERIOD
			CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
			30/06/2014	30/06/2013	30/06/2014	30/06/2013

			$$'000	$$'000	$$'000	$$'000
1		Revenue	142,759	124,417	651,025	493,687
2		Profit/(loss) before tax	10,283	9,352	71,867	35,658
3		Profit/(loss) for the period	8,631	8,230	64,333	32,046
4		Profit/(loss) attributable to ordinary equity holders of the parent	8,681	5,949	55,008	24,366
5		Basic earnings/(loss) per share (Subunit)	8.93	6.12	56.59	25.07
6		Proposed/Declared dividend per share (Subunit)	0.00	0.00	0.00	0.00
			AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7		Net assets per share attributable to ordinary equity holders of the parent ($$)	3.1700		2.3900
	SUMMARY OF KEY FINANCIAL INFORMATION 31/03/2014

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31/03/2014	31/03/2013	31/03/2014	31/03/2013

		$$'000	$$'000	$$'000	$$'000
1	Revenue	146,773	107,218	508,266	369,270
2	Profit/(loss) before tax	14,809	5,822	61,584	26,306
3	Profit/(loss) for the period	13,573	5,769	55,702	23,816
4	Profit/(loss) attributable to ordinary equity holders of the parent	12,752	4,304	46,327	18,417
5	Basic earnings/(loss) per share (Subunit)	13.12	4.43	47.66	18.95
6	Proposed/Declared dividend per share (Subunit)	0.00	0.00	0.00	0.00
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	3.0500		2.3900

Source: Bursa Malaysia

Latitud Q4 FY14 result was just released on 28^th August 2014. Latitude's FY14Q4 revenue (RM142.7m) has dropped 2.7% if compared to FY14Q3 revenue (RM146.8m) while the EPS for FY14Q4 (8.93cents) (which is below my expectation of at least 10 cents) has dropped 32% if compared to EPS for FY14Q3 (13.12 cents).The main reason for this drop is due to the loss of one week productions in its Vietnam factories as a consequence of the recent Vietnam riot, together with delay in goods delivery. However, both revenues and net profit if we compare qoq and yoy, it improves by 14.7% and 45.9% respectively. Besides, its NTA has improved by 3.9% from RM3.05 to now RM3.17. So any price below RM3.17 is still a good buy for time being.

The EPS for whole FY14 is 56.6 cents, with closing price on 29^th August 2014 RM3.33, Latitude is trading at a PE of 5.88x.If we give Latitude of conservative PE of at least 7, then its target price should be RM3.96 and above.

On 29^th August 2014 (after the result day), Latitud has gapped down from previous closing price on 28^th August 2014 (RM3.60) to RM3.46 and eventually closed at RM3.33 with a high trading volume of 16.9k.The gap down was mainly to the poorer than expected quarter result due to recent Vietnam riot and also ‘recent excessive surge or profit taking before result out’as predicted in my previous post:

http://commoncents2011.blogspot.com/2014/08/latitud-moving-to-greater-altitude.html

As long as Latitud is above her long term uptrend support line MA200, her bullish trend still remain intact.

In addition to this, I will expect there is a slight pull back or correction in this 1 to 2 months time before the next wave of rally.There will not be any big move for Latitud unless there is a sudden breaking news/announcements.

The main catalysts/themes for Latitud next surges:

1) Continuos and Increasing demand of furniture from US as a result of US economic recovery, home sales and increasing consumer spending sentiment, strengthening of US dollars which facilitates the export of furniture and etc.

2) Possible proposed of 1:2 bonus issues due to its abundant reserves as a reward for the shareholders

3) Special dividend or higher final dividend pay out ratio?

Historically, Latitude will only pay dividend once a year during December. As according to FY13, the company paid out 25% from its net profit as final dividend to reward its shareholders. Conservatively, if I assume that its company still maintains its current dividend pay out ratio of 25% this means that it might pay 14.15 cents (56.6 cents x 25%) for FY14. If we calculate it in dividend yield, that will be 4.25% yield based on its closing price at RM3.33 on 29^th August 2014. In view of its abundant capital reserves and increasing net profit , the final dividend of >25% pay out or special dividend is very likely.

4) Full contributions from Vietnam operations or factories will only be seen in FY15.

The possible risks to be weighed:

1) Latitude is a cyclical stock-which depends very much on US

economy. A hiccup in US economy will have a great impact on

its share price.

2) Vietnam issues

Prestariang-Possible Selling Climax?

2014-08-28T09:27:00.003-07:00

Prestariang 2^nd quarter result was just released on 27 August 2014.Result seems disappointing for this quarter as Prestariang‟s net profit of RM7.04m for this 2^ndquarter, which was 29.7% lower compared to last year 2^nd quarter (RM10.02 m)The weaker results were mainly due to slower software training contributions caused by delays in training projects. Meanwhile, a second interim dividend of 1.44sen per ordinary share was declared for this 2^nd quarter. Exdate will be 10 september 2014 and entitlement date will be 12 September 2014.

Technically, on 28^th August 2014, Prestariang closed at RM1.90 with an ultra high volume of 99 868 transactions.I interprete this down move on ultra high volume, accompanied by narrower spread as compared with the previous down bar, with the price entering a low ground as SELLING CLIMAX, this is only confirmed if next bar is an up bar.For the last phase of selling climax, the price will be seen to close in the mid or at low of the bar with exceptional high volume,certain degree of buying or accumulation is there.So, it may be a sign of strength (SOS).Plus, it is oversold now (RSI<30), so downside is limited.Hence, I may expect some technical rebound soon.

Always remember that strength will be found at the bottom and weakness at the market top.

Ireka 8834-The next gem in the making?

2014-08-23T07:41:00.000-07:00

IREKA 8834 closed at RM0.68 on 22nd August 2014

Background is showing sign of strength (SOS) as the recent surge in volume at all time low since 20 may 2014 indicates something big is going to happen.This must be the accumulation phase.If not price will most likely to fall and not sustaining there. The previous 2 test bars or shake out bars with higher volume as indicated by red arrows may indicate that smart money is trying to shake out the supply or sellers before pushing it high,but volume seems higher than average bar (More tests or shake out were expected until we see a lesser volume, then it is time to start the real rally as indicated by the last test bar with very low volume on 22^nd August 2014 (sign of strength-SOS).So I may expect some upside soon.Plus , it seems it is well supported by short term support MA 20 as shown by the blue line.

Ireka closed at RM0.68 on 22^nd August 2014. My short term target price for Ireka:RM0.90 and long term TP:RM1.20.

Besides,Will the cup and handle pattern form?we will know in these coming few days. Technical analysis is about probability, hence there is no guarantee of success.I might be wrong.This is what i can read from the chart.

Latitud:Moving to a Record High Altitude !

2014-08-23T06:13:00.000-07:00

Latitud closed at RM3.55 on 22nd August 2014

All time high at 3.34 was broken on 13th August 2014.

Fundamentally, If we compare the net profit last 3rd quarter this year 12.75 million with the same quarter last year which was merely 4.3 million net profit (a fantastic gain of 196%).Historically,3rd quarter net profit for 2010, 2011, 2012 year were profit 2.4 million, loss 0.6million,loss 1 million respectively. However, if we compare this 3rd quarter with previous 2nd quarter, there is a drop in net profit of 32.8% (Eps for Q2=19.54; Q3=13.12) due to long festive holidays which fall on the 1st quarter of calendar year and low demand in US which normally slow down after Christmas and New Year as reported in the last Quarter announcement. Personally, the last 3rd quarter result was slightly below my expectation. (I expect the eps to be higher at 15.4 cents based on a higher total net profit of 15 million this 3rd quarter where my ‘too optimistic’ estimation of 5.5million and 9.5 million net profit contributed by Malaysia and Vietnam subsidiaries respectively, with a paid up outstanding shares 97.2 million; RM 15 million /97.2million=15.4 cents).Conservatively, if this coming 4th quarter (which will be released by end of August 2014) can hit eps of at least 12.3 cents, which I think a bit challenging to reach that due to the recent Vietnam riot (which affected its production for around one week) However, US home sale during April was rocketing and contribution by Vietnam subsidiary may help to counter the Vietnam riot effect. If we annualize the eps for this year:15.02cent+19.54cents+13.12 cents+*12.32 cents (estimated)=60 cents. If PE is 7, target price:RM4.20

Technically, On 20^th August 2014, chart was not looking good-upthrust bar or shooting star was formed ,which might be affected by the massive selling of penny stocks eg sumatec,pdz and marco that day itself. However,technical analysis is about probability (no guarantee of success).It may trend higher after this in view of 'expected good result' coming soon.(But chance is slim, upside is limited due to its over bought condition, RSI>70, plus the recent surge from support RM2.96 to a new high at RM3.64 has been factored in the coming good result, hence correction may happen soon) .Overall, Latitud will remain her bullish up trend as long as she is still above her long term Uptrend support MA200 as shown in the chart.

Again, on 21^st august 2014: up bar narrow spread, with volume lesser than previous 2 bars-Sign of weakness.Lower volume may indicate a lesser supply left to be distributed by smart money.Personally,I think it is near the end of recent smart money campaign, correction may happen in next one to two weeks time.Today (at the time of writing this) is 23^rd August 2014.We will see.

Take home message: Up-thrust bar or Up-bar with low volume will usually appear near the end of distribution phase.

Invest Fair 2014 at Mid Valley

2014-08-22T22:40:00.001-07:00

Mr Hu Li Yang Paid seminar at MVEC on 2nd August 2014

Last three weeks ago, I had attended the Invest Fair 2014 at Mid Valley.The speaker of this paid seminar was the Well known Asia’s Leading Investment Guru-Mr Hu Li Yang.The topic of this seminar was about the impact of the end of Quantitative Easing (QE) and the rise of global interest rate and avoid being ‘eaten’ by the ‘bad wolf’ or bear market.I have summarized the essence of this seminar as below:

1) The end of QE and rise of global interest rate, reducing the market liquidity (bad wolf coming) may lead to the collapse of stocks market, properties and etc.No one knows when the us interest rate will be raised. All depends on Janet Yellen.Mr Hu said that by watching out the US treasury 10 years yield can help to determine the turning point from bull to bear market. FYI, at the time of writing this, the yield is around 2.5%.Beware when it starts to spike, especially when it breaks 3% and goes higher(red alert-bear market is jst ard the corner).The previous 3% yield were ard September and end of 2013-the start of rumours about the end of QE and rise of us interest rate).He predicts that there may be bull reversal to bear ard the end of November and December this year and 2015. However, since now the yield is 2.5% and market liquidity is still good, hence any corrections in this 2 months time is still a buying opportunity.Be extra cautious after that!!!

2) Beware of the reversal of US bull market, this is confirmed using his method:

- Either one of these happens: any monthly drop (long black candlesticks) more than 12% or any 3 continuous monthly drop (3 continuous black candlesticks) or any US index drop more than 20% from peak.

3) Most of the Asian stock market has reached the ‘high risk areas’-layman term or high PE. Beware of bull trend reversal starting from 4th quarter 2014.

- eg KLSE index if more than 1955 point and above (high risk area), STI (>3450),

hang seng (>25,300), Nikkei(>16 100) etc. He has developed a special formulae himself to calculate all these resistance and support lines above.

4) Mr Hu predicts that Gold price will drop again. (but personally I dun quite agree with him this, as I think silver and gold price now is approaching its mining cost, plus the shortage of silver due to the close down of mines (low supply) and increasing demand of silver due to its wide range of usages-so downside is limited).He will only consider Gold again if it break below its $ 1000.

5) If money game(QE) ends and rise of global interest rate happens in 2015-US dollars, Reminbi strengthen, gold price drops,overall bond market drops,share market drops and lastly property market drops.

6) I like his sense of humour-He said that the 1st priority of share investment is NOT MAKING MONEY but for entertainment/for play play only.So if u invest RM 10000 in shares and get back RM 10 000 in the end, dun b depressed.He said only abnormal people can make money.If u are too rational, u cant make money from stock. If u dun make money, congrats you are very normal.HAHA.I agree totally with him this, eg y the share price drop after the release of good result?if ur thinking is too straightforward and rational and rush in to buy after good result, u are trapped! Coz the market has factored in the good news!Haha!

7) He focuses much more on Price investment (价格投资) which means purely buying low and sell high rather than value investing alone.(Ya, if no sm to push how good or undervalued is also useless la, Remember stock market is a money game!!!)

8) The rest can be obtained from his books.

Disclaimer: What I share here might not represent 100% Mr Hu’s view as my translation might not be 100% accurate.I just share what I can digest.Hope u all find this useful.TQ

Put All Eggs Into One Basket?

2011-05-14T04:17:00.000-07:00

“Diversification is a protection against ignorance,” Warren Buffett told the investors in a 1996 annual meeting of his company, Berkshire Hathaway. His tactics of investing is putting all his focus on one or a few stocks that he knows very well instead of diversifying the risk by investing in many stocks.Besides that, Warren Buffett always emphasizes on the intrinsic value of companies while investing. I do agree with him to certain extent, saying that investors have been oversold on diversification that fear of having too many eggs in one basket has caused them to invest in too many companies that they do not actually know well. This in turn will increase the risk of losses. Imagine that if you were having 50 wives,i am sure that u can't know each of your wife very well. However, the degree of loss due to investing one shot into one or a few selected stocks is very massive. In my opinion, if u can't really afford to lose much, then it is advisable to diversify your portfolios to between 5 and 10 stocks that you know very well. Spread your capital so there is never more than 20% in a single stock. However, remember don't take this to extremes and over-diversify by investing in too many stocks at once. ''No pain and no gain''. Of course, if you are confident enough that a few stocks you have chosen will benefit in the long run, then just go ahead and focus on them.

Kindly leave your comments here, i appreciate it very much.Thank you.