Mr Investor

Author: mrinvestor12   |   Latest post: Thu, 9 Nov 2017, 9:21 AM


Moved to ------------- >>> www.mrinvestor12.com

Author: mrinvestor12   |  Publish date: Thu, 9 Nov 2017, 9:21 AM   |  >> Read article in Blog website

Hey guys,

Sorry if I did no reply to any of your messages --- but I have moved to this address ---- www.mrinvestor12.com

I have set my mrinvestor12.blogspot to redirect people to the new address, but it seems sometimes i do get comments. Apologies for not answering your queries, yes, the blog ate up the comments and I do not know why. 

Could you put comments on the new address and I will revert to you. 

Sincere apologies,

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Trading Ideas: Success Transformer Corporation (7207)

Author: mrinvestor12   |  Publish date: Sat, 4 Nov 2017, 2:45 PM   |  >> Read article in Blog website

Success Transformer is a company that I have been monitoring for some time. I previously made some money investing in it, and thought it would be a good idea to revisit this company now. It is involved with the industrial lighting and electric transformer manufacturing business. It has a listed subsidiary, Seremban Engineering Berhad (5163), which is involved with the process engineering industry.
Its share price has been consolidating for some time, and I think there may be opportunities to invest in this company.

Chart 1: Success Transformer Corp share price


From 2014 until 2016, Success' process equipment division was hit by cost overruns on certain projects which resulted in it reporting losses. Looking at its price chart, its share price has not progressed much from 2014 - 2016. Post financial year 2016, business operations seemed much better. It appears that its process engineering division has since gotten out of the red and is now reporting profits. Even the profit margins of its process equipment division in 2017 are back to its pre-2014 profit margins of 10%. Refer Chart 2 below:
Chart 2: Financial Results of Success Transformer Corporation
 Note the change in financial year end from 31 December to 30 June. Hence, for financial year ended 30 June 2016, the results were for 18 months.
Hopefully, after leaving its loss making ventures behind, this company can continue to make sustained profits. A noteworthy point is that despite its process equipment division recording losses in 2014 and 2016, it still managed to record a net profit as the losses were cushioned by its transformer and lighting division. It was noted that the profit margins for its transformer and lighting division were consistently above 20%. 

Chart 3: Technical Chart of Success Transformer







The share price of Success has been consolidating for almost 6 months since May 2017. Its share price reached a high of RM 4.26 in May 8, 2017, before retreating to RM 3.37 in Nov 3, 2017. 

Probably there will be more consolidation ahead. Judging from its price action, there are no clear indications that price consolidation may be ending. There is just a lack of  momentum in its share price. However, I noticed that there are some accumulation going on when prices trade close to support at RM 3.22; this was evident in the spike in volume -- refer Chart 3 above. 

Below are the key support / resistance levels for Success:
S1: RM 3.22
S2: RM 3.00
S3: RM 2.80

R1: RM 3.60
R2: RM 4.17

Low trading volume.
Bearish market sentiment.

Market sentiment is still as bearish as ever. Despite the announcement of the 2018 Budget, the market is still anaemic.  

Refer to my article on market sentiment HERE.

Final thoughts
In light of the improvement in its process equipment division, Success Transformer should be poised to trade higher. Its EPS for financial year ended was its highest in 6 financial year ends, 40 cents -- see Chart 2 above.  


Note: This is not a recommendation to buy or sell this stock. The writer does not own shares in this company. The writer intends to share his view point on this stock's potential investment value, any decision to invest or sell shares in this company is entirely at the reader's own risk. 


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Technical Analysis Review: HeveaBoard (5095) 25/10/2017

Author: mrinvestor12   |  Publish date: Thu, 26 Oct 2017, 12:59 AM   |  >> Read article in Blog website

This counter had recently rallied and closed at a high of RM1.75 on October 23, 2017. What followed in the subsequent days were 2 straight days of profit taking. This was evident by the 2 significant black bodied candles which closed lower until October 25, 2017. 

Refer Picture 1 below on the technical chart of HeveaBoard.

Picture 1:HeveaBoard Chart 25/10/2017





For any investor, testing a high 3 times at RM1.75 in 3 months would be an important indicator of a potential change in trend. 

Currently, HeveaBoard is trading at an important price "zone" - immediate medium term support level of RM 1.62

Knowledge sharing
For all support/resistance levels, there is a +/- variance of approximately 1% from the support line indicated. Hence, support at RM 1.62, can be interpreted as support at RM1.61 or RM 1.63. 

Can the support zone hold?

Probably, because prices retraced about 50% from its previous rally. Note that the previous rally began in the highlighted RED rectangle - September 2017 - in Picture 1 above. Also note that the current retracement to RM 1.64 is a 50% retracement from its previous rally; in Fibonacci terms, it has retraced to a healthy level for prices to continue on its uptrend. 

In my opinion, the consolidation zone in the highlighted RED rectangle in September 2017, was a healthy consolidation zone which led to a breakout on October 11, 2017. 

Key Support Levels:
S1: 1.62
S2: 1.59
S3: 1.55

Key Resistance Level:
RM 1.75

Since my last review of Hevea, the USD has appreciated against the MYR from 4.2050 (12 September 2017) to 4.2352 (25 October 2017). This does not immediately improve the results of Hevea's Q3 2017 results, but this is a sentiment booster for exporters like Hevea. 

Picture 2: USD vs MYR (25/10/2017) 









So what's up for us?
I will be monitoring this stock for some time. However, the zone in which Hevea is trading at deeply intrigues me. If the support level holds, no issue. But if prices break below support, I will probably look to add my position. 

Key Risks

For me, it would definitely be market sentiment. Despite price action showing some promise, if overall market sentiment is bearish, Hevea's prices may be pressured lower. Check out my analysis of FBMKLCI's bearish sentiment lately HERE.

Final Thoughts
For those who are wondering when is Hevea's next quarterly announcement for Q3 2017, it will be at the end of November. 

I strongly encourage those who want to know more about the FUNDAMENTALS of HeveaBoard to check out my analysis HERE.

Note: This is not a recommendation to buy or sell this stock by the writer. The writer owns shares in this company. The writer intends to share his view point on this stock's potential investment value, any decision to invest or sell shares in this company is entirely at the reader's own risk.



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Beza Sell first lah.
26/10/2017 8:06 AM

Technical Analysis Review: FBMKLCI 21/10/2017

Author: mrinvestor12   |  Publish date: Sat, 21 Oct 2017, 1:14 AM   |  >> Read article in Blog website

The FBMKLCI has been depressed lately. Looking at the chart below, it makes me feel uneasy. 

Charting the FBMKLCI is more for determining the overall market sentiment, and may have no relation to individual stocks. 

Picture 1: FBMKLCI - Key Support / Resistance Levels










Market sentiment has been bearish. This is evident by the string of black candles in the past 2 weeks. Sentiment became more bearish as the week progressed as the index made 4 consecutive lower closes towards the end of the week. On Friday, October 20, 2017, the market closed at 1,740.65 - immediate support level.


A brief background on the bearish trend

On October 9, once prices failed to rally above resistance at 1,766 - zone of price rejection, prices immediately turned south. Prices broke below key support level of 1,752. 

Based on the current trend, the bear trend will most likely resume until it finds support. Currently, the index is trading at its immediate support 

Key support levels

If the support level of 1,742/1,741 fails to hold, further downside is expected. I
 expect the next support level to be at 1,731. The MACD is looking bearish, and the down trend seems to be persisting until it reaches its support; hopefully, the down trend in the index will be halted at its immediate support level of 1,741 / 1742. 

Listed below are the Key Support and Resistance levels based on Fibonacci levels:

Key Support:
S1: 1,742
S2: 1,736
S3: 1,731
S4: 1,726

Key Resistance:
R1: 1,752
R2: 1,760
R3: 1,767

Final thoughts
The chart above resonates with bearish sentiment. As we know, the FBMKLCI tracks 30 companies. Hence, selective stock picking is essential during this time. 

Personally, I will be staying at the sidelines looking for an opportunity when things are bearish.

Check out The Star Business's Friday 20/10/2017 end of day report >> HERE.











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Technical Analysis Review: Homeritz Corporation Berhad (5160) 15/10/2017

Author: mrinvestor12   |  Publish date: Mon, 16 Oct 2017, 12:24 AM   |  >> Read article in Blog website

Just a brief technical analysis review of this company:

Medium Term Trend Analysis:

Chart 1









The trend for this company seems decent. A healthy consolidation pattern with a bullish bias. Forming a base above RM 0.93. And price action has been trending above its 20-day exponential moving average.

Key support areas:
S1: RM 0.940
S2: RM 0.930 (Stop loss)
S3: RM 0.910 (Stop loss)

Key resistance areas:
R1: RM 0.965
R2: RM 0.975
R3: RM 1.000

Momentum indicators:
Both the MACD and the RSI have been holding up fairly well indicating consolidation.

Potential Entry point:
A good entry point (buy) to this counter would be at around the price range on RM 0.93 - RM 0.94. 

Potential Exit point:
Suggesting to exit at RM 0.98 and RM 0.99.

Low trading volume. 
Appreciation of MYR against USD.
External factors.

Short term chart:



















If you want to FIND OUT MORE on the FUNDAMENTALS of this company check out my article  HERE.

Note: This is not a recommendation to buy or sell this stock by the writer. The writer owns shares in this company. The writer intends to share his view point on this stock's potential investment value, any decision to invest or sell shares in this company is entirely at the reader's own risk.
















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Bison Charging Ahead !

Author: mrinvestor12   |  Publish date: Thu, 5 Oct 2017, 11:43 PM   |  >> Read article in Blog website

Bison Consolidated Berhad (5275) is a dynamic convenience store company listed on the Kuala Lumpur Stock Exchange (KLSE). It has grown many folds since it first opened its myNEWS.com store in 1996. 11 years later, it has opened about 300 stores in Malaysia. In 2012, Bison entered into a joint venture with WH Smith Travel Limited to operate WH Smith news, books, travel and convenience stores in Malaysia. My first impression about the convenience store business was that this is a saturated market - apparently NOT. The thought of many convenience stores come to mind - 7 Eleven, 99 Speed Mart, KK Super Mart, NZ Magazine Centre, Family Mart, K Mart and etc.. All of the stores aforementioned compete within the convenience retail segment.   

Picture 1: myNEWS.com in Bangsar LRT Station

Picture 2: myNEWS.com in Masjid Jamek LRT Station
Since its listing on the KLSE, the share price has surged almost 100% from RM1.10 to RM2.38 in one and a half years. The surge was mainly driven by the growth story that the convenience market in Malaysia is under-served and there is ample opportunity to add more stores in the future. From an investor's standpoint, I'm trying to relate the growth in share price with its growth in the number of stores and improvement in its revenue and profits.
Chart 1: Bison Consolidated Bhd's share price since its listing
Chart 2: Quarterly Results of Bison Consolidated
(Source: Quarterly Reports)
Let's see how its financials stack-up against the growth in its share price. Chart 2 above is a chart on its quarterly results.  Based on an analysis of its quarterly results, revenue and profit after tax have been growing steadily.
Chart 3: Financials of Bison for the past 4 years
(Source: Annual reports and prospectus)
Cumulative Q3 2017
Chart 3 above is a summary on the financials of Bison. Compounded annual growth rate (CAGR) for the past 4 years for revenue was about 14% while total stores was 15.2%. A key takeaway from Chart 3 is that its joint venture had an impressive CAGR of 135%.
On a side note, the higher profitability in 2013 was due to a gain of RM6.1 million from the disposal of property, plant and equipment. If this one-off gain were to be excluded from the financials, profit before tax margin was 10% while profit after tax margin was 7%.
7 Eleven - the convenience retail giant
Since this industry is expected to experience growth, let's look at how its biggest competitor has performed historically. The idea of analysing how its competitor has performed is a good indication of growth in this industry. Further, 7 Eleven is an established convenience retail store with a proven track record. In the next few paragraphs, we will explore the growth of 7 Eleven in the convenience retail segment and relate it to Bison.
Chart 4: 7 Eleven Malaysia Holdings Berhad
(Source: Annual Reports)
Growth is evident in 7 Eleven; it added 586 corporate stores from 2013 to 2016 and recorded a CAGR of 9.2%. During the same period, Bison recorded a CAGR of 15.2% and added 131 new stores. It should be noted that Bison's profit after tax margins are much higher than 7 Eleven's throughout the comparative period. 7 Eleven's price to earnings ratio (PE) averaged 33 times. 7 Eleven's share price, however, has not made much progress since its IPO, and now it trades at a PE of around 45 times. Refer Chart 5 below on the performance of 7 Eleven's share price.
Chart 5: 7 Eleven Share Price Chart

Recent Corporate Proposal
Bison recently announced a private placement to raise additional capital of approximately RM77.5 million through a rights issue. In addition, a 1-for-1 bonus issue, and an employee share option scheme (ESOS, 10% of total share capital) was also announced together with the placement. The purposes of the private placement are to purchase industrial warehouse land for warehousing space (RM50 million), construct and develop its food packaging and preparation facility on a piece of land in Rawang (RM20 million) and for working capital purposes (RM4 million). 

In a recent announcement on October 5, 2017, Bison has entered into 2 Joint Venture agreements, both entities which are 51% held by Bison, are called:
1. MYNEWS KINEYA - to develop, produce and sell ready to eat (RTE) food
2. MYNEWS RYOYUPAN Sdn Bhd - develop, produce and sell bakery products

Both JVs will be housed in Rawang. The products of both JVs are to be sold by Bison convenience stores. The funding of both JVs totals RM35.7 million, which will be funded partially by internally generated funds, and the balance of RM20.4 million by the private placement. 

For those wondering how many shares will potentially be introduced in the market, below is a table extracted from its recent announcement:
Chart 6: Potential Shares after corporate proposal
Things to consider for the average investors
The company's expansion plans seem to be on-track. Growth is evident in this industry - even 7 Eleven which had over a thousand stores in 2006, added 901 stores over a span of 6 years (refer Chart 4). And in 2015, based on the market research by Smith Zander attached in Bison's prospectus, Malaysia had 135.1 convenience stores per million persons, which is lower than most developed countries.
As of April 2017, approximately 65% of its issued share capital are held by the major shareholders. Also, retail participation in this company is noted to be low.
The average investor should be aware that investing in Bison does not come cheap as its share price is over 30 times its earnings per share (PE). Even its competitor 7 Eleven, trades at a PE of over 40. Opportunity for growth in the convenience store segment is evident as long as the company manages to identify urban spots where foot traffic is high - which I do not think is too difficult. Through its concerted efforts, Bison has been striving to increase its market presence in Malaysia. 7 Eleven adds on average of 150 stores per year from 2010 - 2016, which is much more than the number of stores Bison adds per year.

Moving forward, from the JVs entered into with its Japanese partners, Bison's convenience stores will be able to sell attractive Japanese food products; similar to how QL's Family Mart sells its food products in Malaysia. This will give it a wider array of products to sell and will definitely capture on-the-go hungry customers. 
However, with the potential increase in shares due to the corporate proposal which has been approved, EPS would be diluted. Also due to a high PE, growth expectations are high and if investors' expectations are not met, prices can easily be pressured lower. The lay investor does have a reason to be sceptical due to the relatively high PE this company is trading at. Considering the potential introduction of additional shares in the market from the corporate exercise, investors should question whether the additional capital investments will bring in future growth and profitability to this company before committing to this investment. Nevertheless, the writer opines that growth in the convenience retail segment is obvious and the valuation of Bison Consolidated is attractive.

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Thanks !

Note: This is not a recommendation to buy or sell this stock by the writer. The writer does not own shares in this company. The writer intends to share his view point on this stock's potential investment value, any decision to invest or sell shares in this company is entirely at the reader's own risk.
  xcel8 likes this.
xcel8 Well presented with facts and data.
11/10/2017 11:31 PM


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