Investhor's Mighty Hammer of Wisdom
Breakaway Gap - Turning Point for This Company !!!
Investhor
Publish date: Sun, 01 Sep 2019, 11:23 AM
Investhor
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This is a blog I created as an information sharing to all the BSKL community. Hopefully it will bring benefit any of you in some way.
All the posts I make in my blog are purely my own personal opinion and shall not be regarded as a buy/sell call for the said counter.
Every investor is responsible to make their own decisions for their investments.
All the posts I make in my blog are purely my own personal opinion and shall not be regarded as a buy/sell call for the said counter.
Every investor is responsible to make their own decisions for their investments.
Hi to all fellow investors and traders !
Today I would like to highlight the following counter:
MELEWAR INDUSTRIAL GROUP BERHAD or MELEWAR (Main Market, Industrial Products & Services)
MELEWAR - Breakaway Gap - Turning Point for This Company ???
Here are my thoughts :
1. Recently Posted Superb QR - Huge Earnings of RM 46.2 million or EPS 12.85 cts !!!
Refer below summary of last 3 years MELEWAR QR.
The company had posted 4 quarters of losses in a row prior to August 2019 QR. Recently, it had posted a whopping PBT of RM 47.7m and Net Profit of 46.2m. This implies an EPS of 12.85 cts. The NTA of the company also increased to 91 cts.
I believe this company is too undervalued at this price, with the release of this latest report. Even with the previous 3 quarter losses, the full year EPS is still high at 8.31 cts. Taking a minimum PE ratio of 4-5, this gives a fair value of the company at between 33 - 42 cts range.
Therefore, the current price of 14.5 cts is far undervalued in my opinion.
2. Technicals - Breakaway Gap - Indication of Strong Turn in the Trend
Refer below daily chart of MELEWAR.
A few observations below:
i. A breakaway gap formed last Friday after the results were announced. This gap indicates a strong turn of trend from downtrend to uptrend, should the support be held.
ii. MACD and Stochastics crossing upwards indicating bullish momentum
iii. Longer term resistance seen at 19 cts
iv. Breakaway Gap is supported by significant increase in volume
CONCLUSION
Based on my opinion, I believe MELEWAR trend has changed from downtrend to uptrend. based on below:
i. Improved Financial Report with Full Year EPS 8.31 cts implying a price target of between 33 - 42 cts in longer term
ii. Breakaway Gap formed, with increasing volume indicating a change of tide from downtrend to uptrend
Thanks for reading and see you in the next post.
THE ABOVE IS NOT A BUYCALL AND ONLY A PERSONAL OPINION ARTICLE AS A SHARING TO BSKL COMMUNITY MEMBERS.
Yours Truly,
INVESTHOR
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Discussions
Be the first to like this. Showing 14 of 14 comments
Investhor, you want to unload your melewar shares to unsuspecting readers?
You put effort to include FA and TA but you choose to leave out most important info that profit include RM50.1 million compensation from past engineering project. Without that melewar is still loss making.
You have hidden selfish agenda in writing this article.
2019-09-01 16:29
@i3Value - let me ask you this, is it better to not recover a loss or to recover a loss that was recorded in the past as impairment loss?
Since you pointed out this matter, then I believe you should be smart enough to know that the sum recovered from previously declared impairment loss of RM 50.1 million is a hefty sum compared to its current market capital..this recovery is a really healthy change for its bank roll..
Therefore if we look to the future, this sum could be used by the company for expansion / working capital purposes which could further improve the financials in future..
2019-09-01 22:14
@no right nor wrong only to win - better if you share some facts with the readers on your claim..don’t simply talk down others’ businesses without backup..u simply said their core business is lump and management suck without any data to back up?
2019-09-01 22:16
No right Nor wrong Only to Win
Bidding engineering project with ridiculously low price,expose melewar in vital risk... doesnt that not convincing enough ?
Else , what do you think melewar called for a r.i. in 2018 ?
pls dig for... what has melewar did over the past 2-3 years.
2019-09-01 22:45
No right Nor wrong Only to Win
Any rebound expected from the knee jerk reaction from the write back
shud deem a good chance to escape .
0.145 -0.180 could be the exit range.
2019-09-01 22:48
No right Nor wrong Only to Win
I hv no intention to hurt any fans of melewar , if there is one.
Sorry, if my comments make whoever feel bad.
I shall rest my case.
2019-09-01 22:55
Past is past, hence why the price had went on downtrend. However, this recovery of impairment loss is a step in the right direction for the company to move forward.
Markets move based on future prospect, not past events.
2019-09-02 19:14
No right Nor wrong Only to Win
Sometimes there are stuff we shudnt forget.
As long as they are still hold under the same management.
Pls disregard my points if u r planning to punt for short term.
In a longer term investments, the corporate figure characteristic who is in charge shud be dissected.
TRUST & INTEGRITY shud be utmost importance.
2019-09-02 23:35
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No right Nor wrong Only to Win
Oh no, melewar the qtr improved
Bcoz driven by the write back.
Pls look at their core operations biz.
Still lumpy
Plus their management real suck
2019-09-01 14:32