APM rising to the occasion?

In the past 12 months, we had seen a sharp rise in the price of TChong (from a low of RM1.00 to a recent high of RM3.50). At the same time, its sister company, APM has also enjoyed a strong rally (from a low of RM1.30 to a recent high of RM3.30). Today, APM rose to a high of RM3.83 (from yesterday's close of RM3.30), surpassing its all-time high of RM3.78 recorded in 2002. TChong has also rallied today to hit a high of RM3.22 from overnight close of RM3.10. Why the sharp rally in APM?

APM & TChong are both controlled by Dato' Tan Heng Chew, mainly through Tan Chong Consolidated Sdn Bhd ('TCC'). As at 31/3/2009, Dato' Tan & TCC together owned 52.8% & 50.85% of APM & TChong, respectively. TCC is a private company owned by the two brothers who founded the Tan Chong empire years ago. The two families were at logger heads up until recently when a solution was reached on how to divide up their interests in TCC.

A corporate exercise involving APM & TChong either in the form of the takeover of APM by TChong or the merger of the two companies or the sale of the business of both companies to a Newco could be in the final leg. Looking at the fact sheet below, I think it may involve a share exchange between APM & TChong at a ratio of 5 APM shares for either 6 or 7 TChong shares, if the exercise is a takeover of APM by TChong or a merger between APM & TChong. If it's a sale of the their business to a Newco, the valuation of the business/shares of APM & TChong may reflect the same ratio of either 5:6 or 5:7 in favor of APM.


Table: APM & TChong's Fact Sheet


Chart 1: TChong's weekly chart as at Feb 24, 2010 (Source: Tradesignum)


Chart 2: APM's weekly chart as at Feb 24, 2010 (Source: Tradesignum)

UNISEM ... Feb10

S&P Results Review & Earnings Outlook

- Unisem’s full year net profit of MYR61.8 mln (+211.6% YoY) was above our expectations, mainly due to a MYR2.4 mln tax credit for the year (vs. our MYR6.9 mln tax expense estimate). Excluding this, pretax earnings and EBITDA were in line with our estimates.

- On a QoQ basis, net profit soared 35.9% to MYR35.1 mln in 4Q09, driven by its Chengdu operations which now accounts for 24% of revenue and more than 50% of the group’s bottom line. Segment wise, all units except for Unisem-Advanpack Technologies (UAT) – which undertakes packaging and bumping of semiconductor devices, have returned to profitability. Nevertheless, management expects UAT to
turn around in 2010, backed by stronger demand in mobile phones.

- Despite the typically slower period in 1Q10, management expects 3%-5% sequential growth, and sees a more positive 2010 coupled with healthy EBITDA margins (above 25%), driven by improved demand visibility and stronger chip recovery. According to management, there is currently a shortage of capacity in the outsourced assembly and test market, with no signs of inventory build-up. Management is guiding for a 50%-100% increase in capex for 2010 and expects 2010 to be the best year ever for the group in terms of revenue and earnings.

- We maintain our revenue forecast for 2010-2011 but raise our EBITDA margin assumption to 24.5% from 23% previously. As a result, we are now increasing our net profit projections by 5%-13% for 2010-2011.

Recommendation & Investment Risks

- We maintain our Strong Buy recommendation but raise our 12-month target price to MYR2.70 (from MYR2.10 previously) given our earnings upgrade and higher valuation amid the improving outlook.

- Unisem is expected to benefit from the recovery in chip demand and rising outsourcing trend in the region. We also like Unisem for its hands-on-management, conservative balance sheet (0.35x net gearing as at Dec. 31, 2009) and clear growth strategy.

- Our target price continues to be based on P/BV valuation. We are raising our target 2011 P/BV multiple (previously 2010 P/BV) to 1.1x (from 1x previously), based on a 15% premium (previously no premium) to Unisem’s historical 5-year median P/BV. We attach a premium to reflect the sector’s improving outlook. At current price,
valuations are attractive, in our opinion, trading at 2010 and 2011 PERs of 8.6x and 8.0x, respectively. Additionally, our target price also includes a projected tax-exempt DPS of 2.5 sen (from 2.3 sen).

- Risks to our recommendation and target price include a slower-thanexpected recovery in the semiconductor sector and appreciation in the MYR.

Litrak & PLUS- time to take profit

The last few days, I was tracking the share price of Litrak very closely, with a view for calling a trading BUY on the stock. On closer study & much reflection, I became somewhat concerned. I began to compare the long-term chart of Litrak with PLUS (see Chart 2 & 3 below) as well as comparing these two stocks with the movement of our interest rate (see Chart 1 below). From these studies, we can make the following observations:
1) From April 2007 to August 2008, the rate of 10-year Government Bond increased from 3% to 5% (see the gray line on the top chart of Chart 1). At the same time, the price of Litrak & PLUS peaked & dropped (see the middle & bottom charts on Chart 1).
2) From September 2008 to December 2008, the rate of 10-year Government Bond dropped from 5% to 3%. This coincided with a strong recovery in the price of Litrak & PLUS which persisted until today.

Since the indications are interest rate is expected to normalize (read: move higher) in 2010, there is a good chance that Litrak & PLUS may decline in the months ahead (see BNM Governor, Zeti's comment here). With this insight and guided by the charts, I think this is a good time to take profit on Litrak & PLUS.


Chart 1: Malaysian interest rates & monthly charts of PLUS & Litrak from 2007 to Feb 2010 (Source: The Edge)


Chart 2: PLUS's monthly chart as at Feb 24, 2010 (Source: Tradesignum)


Chart 3: Litrak's monthly chart as at Feb 24, 2010 (Source: Tradesignum)

Latitude's bottom-line inched higher

Results Update

Latitude has just announced its results for 1H2010 ended 31/12/2009. Its net profit increased by 2.5% q-o-q or 2-fold y-o-y to RM11.4 million while turnover increased by 6.6% q-o-q or 21.3% y-o-y to RM135 million. The improved perfromance 'was mainly attributable to the increase in sales as a result of the improvement in global economy and in particular the US consumption which has continued to improve'.


Table 1: Latitude's 8 quarterly results


Chart 1: Latitude's 18 quarterly results

Concern for 2010

I am a bit doubtful that Latitude can maintain its sales volume given the precarious financial position of US consumers, which accounts for a significant portion of its customers. Just this morning, we have learned that '(s)ales of new homes (in US) plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades' (for more, go here). The sales of furniture is closely correlated to the sales of new homes. Does this mean that Latitude's sales volume going forward may suffer a similar decline?

Valuation

Latitude (closed at RM2.23 at the end of the morning session) is now trading at a PER of 4.6 times (based on last 4 quarters' EPS of 49 sen). At this multiple, Latitude is deemed attractive. However we cannot assign too high a multiple for Latitude due to the concern on the sustainability of its sales. Based on a PER of 6 times, Latitude's fair value is about RM2.94.

Technical Outlook

Latitude broke above its long-term downtrend line resistance at RM1.50 in November last year. Early this month, it surpassed its horizontal resistance at RM2.00, to hit a high of RM2.63. Its next strong resistance is at RM3.35-40 while there is also some resistance at RM2.85-90.


Chart 2: Latitude's weekly chart as at Feb 24, 2010 (Source: Tradesignum)

Conclusion

Based on good financial performance & attractive valuation, Latitude may still have further upside. However, we need to be a bit cautious about Latitude's prospect for 2010 as its main customers in US are showing some signs of weakness.

BHIC ... Feb10

TA on BHIC Target Price : RM5.70

Weak 4Q09 Earnings
4Q09 results were generally below our expectations. Revenue actually rose 13.4% QoQ to RM163.6mn, thanks to higher progress billing. Pretax profit on the other hand
declined 21.5% QoQ to RM22.0mn as a result of 23.6% contraction in operating profit. We understand that operating margin was affected by some cost overrun in relation to the chemical tanker contract as well as RM6mn in LAD booked in the quarter. In addition, contribution from Boustead Naval Shipyard S/B (BNS) also declined by 14.2% due to lower progress billing. However, YoY, net profit rose 24.2%, indicating the pace of work continued to increase.

Full Year Earnings Below Expectations
Consequently, FY09 earnings fell short of our expectations. Bulk of the discrepancy was attributable to higher cost incurred. Revenue though was in line with our estimate. All in, revenue increased 9.6% to RM543.9mn on the back of higher progress billing. Operating profit however declined 17.9% YoY due to the cost overrun and LAD payment mentioned above. Associate contribution declined by over 50% YoY to RM22.1mn. The comparison was distorted by a reversal of notional tax charge amounting to RM21.2mn in FY08. Excluding the one-off item, associate contribution would have declined by only 7.1% YoY due to lower progress billing. As a consolation though, the group declared 6 sen single-tier dividends (5.5 sen in FY09), translating
into 1.3% yield at the current price.

Submarine Issue Being Resolved
We understand that the technical defect that caused KD Tunku Abdul Rahman unable to dive is close to being resolved currently. At this juncture, we do not expect any
material impact on BNS arising from this issue. As for the life extension contracts for the two military corvettes, we understand that the contract details are being
finalized and expected to start contributing to bottomline in 2H10.

Order Book Replenishment High On Agenda
Current order book amounted to c. RM850mn and management continues to be upbeat on securing new contracts in FY10 although they are tightlipped on thedetails. Out of the RM850mn, RM600mn is for construction of OPVs (under its 20.77% associate, BNS).
According to management, the fifth OPV is already close to being delivered to the navy and the work on the sixth OPV is expected to complete by mid-2010.

Recommendation
Earnings Forecast Revised Lower
We have made several changes to assumptions, 1) FY10 revenue estimate revised lower by 13.4% after imputing a more conservative outlook in the potential new order book.
We now assume RM500mn worth of new contracts in FY10, 2) updated balance order book for the Ops contract, and 3) margin assumption adjusted higher as we do not expect
further significant cost overrun or LAD payment in FY10. The net impact is a 12.9% downgrade in FY10 net profit estimate to RM118.6mn.

Lower TP But BHIC Remains A Buy
Target price revised lower to RM5.70 but BHIC remains a Buy as the 24% upside potential to the share price. The target price is based on 12x target PER, a slight premium compared with long term average PER of 11x. We think the modest premium is justified given the relatively conservative earnings assumptions and high likelihood of BNS securing fresh OPVs contract by the end of the year.

Axiata surpassed its recent high of RM3.50

Results Update

Axiata has just announced its results for FYE31/12/2009. For QE31/12/2009, its net profit increased by 10.8% q-o-q to RM558 million on the back of a 9.2%-increase in turnover to RM3.69 billion. The improved performance was attributable to increased turnover from all its operating units coupled with lower finance cost & positive contribution from AxB, which offset against lower forex gains & higher depreciation charges incurred by Celcom. Axiata has turnaround from a net loss of RM515 million recorded in QE31/12/2008.


Table 1: Axiata's 8 quarterly results


Chart 1: Axiata's 12 quarterly results

Valuation

As at 10.00am, Axiata was trading at RM3.61. From its last 3 quarters' EPS which averages about 6.5 sen each, Axiata's full-year EPS is estimated to be about 26 sen. As such, Axiata is now trading at a PER of 14 times.

With top-line growth of 15% last year, Axiata's Price/Earnings To Growth ('PEG') ratio is about 0.93 time. A PEG ratio of less than 1 means that the stock is attractive.

PEG ratio = PE / (Growth Estimate + Dividend Yield)
= 14 / (15 + 0)
= 0.93 times

Note: I have substituted Revenue growth for Earning growth due to volatility in Axiata's earning.

Technical Outlook

Axiata broke above its recent high of RM3.50 this morning. Its next resistance is at RM3.70 & thereafter at RM4.00.


Chart 2: Axiata's daily chart as at Feb 24, 2010 (Source: Tradesignum)

Conclusion

Based on improved financial performance, fairly attractive valuation & positive technical outlook, Axiata could be a good stock for either a trading BUY or for long-term investment.

Stock to Watch - Thursday, 25 February 2010

– AE Multi Holdings
– Supportive International
– Scomi Group
____________________________________________________________________

1. AE Multi Holdings (RM0.80, SELL) – Still room to the downside.

AE Multi Holdings is an investment holding company. Through its subsidiaries, the company manufactures printed circuit boards and provides waste water treatment facilities and waste water recycling services.
_____________________________________________________________________

2. Supportive International (RM1.44, BUY) – Uptrend remains intact.

Supportive International Holdings manufactures and sells cable accessories and connectors, AC sockets, optical digital cables, security intercom, and elevator interphones.
______________________________________________________________________

3. Scomi Group (RM0.41, SELL) – Take profit on rally.

Scomi Group is an investment holding company. The company, through its subsidiaries, sells drilling mud and chemical products, provides drilling fluids materials, equipment, and services, manufactures and fabricates road transport equipment and material handling equipment.

Axiata Group Bhd posted net profit of RM558.28 million in the fourth quarter ended Dec 31, 2009

Axiata roll out 4Q2009 financial result for FY09, net profit jumped 230% to RM1.65 billion from RM497.98 million in FY08. Base on the chart, Axiata price is forming a bullish W patten and likely today will bounds up higher. However due to increase risk in Europe market I think the up rally may limited.

MMC- a trading BUY

MMC broke above its medium-term downtrend line resistance at RM2.45 yesterday. MMC's 20 & 50-day SMA line supports are at RM2.40 & RM2.35, respectively. As such, this is a relatively safe trading BUY. 1st target: RM2.60. 2nd target: RM2.80.


Chart: MMC's daily chart as at Feb 22, 2010 (Source: Tradesignum)

Evergreen's top-line & bottom-line continued to climb

Results Update

Evergreen reported its results for QE31/12/2009. Its net profit increased by 34% q-o-q or 8-fold y-o-y to RM41.6 million while turnover increased by 5.8% q-o-q or 30.5% y-o-y to RM224 million. The improved performance was 'mainly due to higher sales volume as demands have started to recover following the sharp collapse triggered by the global financial crisis late last year. As a result of such recovery and coupled with the cost cutting measures implemented and improved operational efficiency, the group was able to turnaround quickly to register a significant increase in profitability.'


Table 1: Evergreen's 8 quarterly results

We can see Evergreen's top-line continued to grow in the past 2 quarters after surpassing the previous high recorded in QE30/9/2007 but its bottom-line is still short of its previous high achieved in QE30/6/2007 (see Chart 1). What's surprising is that the prices of MDF & Particleboard actually peaked in the 2nd half of 2008 (see Chart 2).


Chart 1: Evergreen's 22 quarterly results


Chart 2: Prices of MDF & Particleboard from Jan 2007 to Jan 2009 (Source: ITTO)

Valuation

Evergreen (at RM1.60 as at 4.00pm) has a PER of 9.4 times (based on last 4 qaurters' EPS of 17 sen). If it can maintain the same level of profitability of the past 2 quarters, then its full year EPS may hit 28 sen. This would translate to a PER of 5.8 times. At this multiple, I believe Evergreen is fairly attractive.

Technical Outlook

From the chart, we can see that Evergreen is rising in an uptrend. It should have good support at between 50 & 100-day SMA lines (say, RM1.30-40) & could potentially hit a reaction high of RM1.80-90.


Chart 3: Evergreen's daily chart as at Feb 23, 2010_11.00am (Source: Quickcharts)

Conclusion

Based on satisfactory financial performance, attractive valuation & bullish technical outlook, Evergreen is a good stock for long-term investment.

Maybulk's bottom-line boosted by POSH

Results Update

Maybulk has just announced its results for FYE31/12/2009. For QE31/12/2009, Maybulk'a net profit increased by 27% q-o-q or 26-fold to RM88.4 million while turnover dropped by 15.7% q-o-q or 40.2% y-o-y to RM82.6 million.

This is a fairly good set of results, which reflects the strong contribution from its associates (of RM97 million for FYE31/12/2009 as compared to RM21 million previously), such as PACC Offshore Services Holdings Group ('POSH') as well as Eminence Bulk Carriers Pte Ltd & Novel Bright Assets Ltd, owners of bulk carriers Alam Penting (GT 46982) & Alam Murni (GT 29979). Its investment in POSH allows Maybulk to have a small foothold in a burgeoning Oil & Gas industry sector, which helped to cushion the drop in shipping rates (see Chart 2). As a result of the contribution from the above associates, Maybulk's bottom-line staged a steady recovery in the past 3 quarters (see Chart 1).


Table 1: Maybulk's 8 quarterly results


Chart 1: Maybulk's 27 quarterly results


Chart 2: Baltic Drybulk Rates' daily chart as at Feb 22, 2010 (Source: Investment.tools.com)

Valuation

Maybulk (at RM3.12 as at 4.00pm) has a PER of 13 times (based on its EPS for FYE31/12/2009 of 24 sen). At this multiple, I believe Maybulk's upside is quite limited (say, 10%). However, the Kuok group's DNA may shine through again for this company. With that, I think Maybulk deserves a HOLD rating for now.

Technical Outlook

Maybulk is likely to move sideway within a range of RM3.00 & RM3.40.


Chart 3: Maybulk's weekly chart as at Feb 22, 2010 (Source: Quickcharts)

Conclusion

Based on adequately satisfactory financial results, Maybulk should remain a stock to watch. Upside is however limited as I expect a range bound trading for this stock, between RM3.00 & RM3.40.

Maxis & MPHB- stocks to watch

Maxis has a strong rally today. It closed at RM5.49 after making a high of RM5.00. Volume traded was above average at 9.6 million units. The RM5.00 level is the high for this stock since its listing on November 19. An upside breakout above RM5.00 could signal the beginning of the uptrend for Maxis.


Chart 1: Maxis's daily chart as at Feb 23, 2010 (Source: Quickcharts)

MPHB has been in a medium-term downtrend line since October last year. An upside breakout above the downtrend line resistance at RM1.93 could also signal the continuation of the prior uptrend for this stock. MPHB closed at RM1.93 on volume of 3.0 million shares- the highest volume traded in the past 3 months.


Chart 2: MPHB's daily chart as at Feb 22, 2010 (Source: Tradesignum)

Based on the above, Maxis & MPHB could become good trading BUY candidates tomorrow.

Latexx's successful ongoing expansion plan should ensure strong growth for FY2010 and FY 2011.

Latexx CEO Low Bok Tek revealed an aggressive expansion plan to boost the company's rubber glove capacity in May 2009.

Planned targets were:

• beginning of 2009 - 4 billion pieces per year
• end of 2009 - 6 billion pieces per year
• end of 2010 - 7.5 billion pieces per year
• 2012 - 9 billion pieces per year.

Present targets:

• Latexx completed 3 double former lines at its newly built Plant 1 before Chinese New Year, increasing capacity to 6.6 billion from 6 billion at the end of 2009.
• Additional lines will be added to Plant 1 to up capacity to 9 billion pieces a year by the end of 2010 - 2 years ahead of target.

Latexx was successful in clinching new multinational customers to take up the 3 billion pieces a year capacity at Plant 1 even before it was completed.

• In 2008, it sold 2.68 billion pieces.
• It sold 3.82 billion pieces in 2009, 43% more than 2008.
• In Q4 2008, Latexx sold 750 billion pieces.
• In Q4 2009 alone, Latexx sold 1.15 billion pieces.

All of Latexx's plants are located on a 50-acre site in Kamunting, Perak. Latexx still has 12 acres of unutilised land to build plants 7 and 8. Each plant has the capacity to produce 3 billion pieces of gloves a year.

• Plant 7 has already been cleared, which could boost its capacity by another 3 billion to 12 billion by the end of 2011.

Although the lines can be used for the production of both nitrile and natural latex gloves, Latexx is focusing on nitrile gloves for its new lines, because the margins for nitrile are higher than for natural rubber glove.

• Nitrile accounted for 20% of glove production in 2009.
• By 1QFY2010, this percentage will increase to 35%.

Latexx's successful ongoing expansion plan should ensure strong growth for FY2010 and FY 2011.

Net profit surged:

• from RM15.2 million in 2008
• to 52.2 million in 2009
• as net profit margin expanded from 6.8% to 15.9%.

Judging from the company's

• rapid expansion plan and
• rising margins arising from economies of scale and
• higher nitrile production,

a FY2010 net profit of RM 100 million is within reach.

Successfully boosting capacity by 3 billion pieces of gloves a year in 2010 will set the stage for a surge in 2011 profits, which will benefit from

• Plant 1's full-year contributions, and
• additional contribution from Plant 7.

Latexx is conserving its cash flow for growth, so dividend yield may not be so attractive.

Net debt at end of 2009 - RM 57.4 million
Net gearing: 47% in 2008 declined to 33.7% in 2009.

Estimated cash flow in 2010 - RM 110 million
Capital expenditure in 2010 - RM 75 million.

The share prices of rubber glove companies have corrected on fears of an impending oversupply in 2011. Although the new supply will reduce the current shortage, it need not necessarily lead to a price war, which is detrimental to all players.

Margins may be squeezed but industry growth will continue at 8% to 10% per annum, probably faster for Malaysian rubber glove companies due to outsourcing by multnationals and the exit of small players.

In a world where growth is uncertain, rubber glove companies are attractive because:

• they enjoy steadily rising demand which is recession proof,
• pricing power to pass on rising raw material costs, and
• low PERs of less than 10 x compared with almost 20 x for the large plantation and construction companies with cyclical earnings.

Ref:
Latexx: Overachieving its growth promise
by Choong Khuat Hock
The Edge Malaysia 22.2.2010

Supermax: Future Prospects and Internal target for FY2010

Prospects

The rubber glove industry continues to be on a strong growth path despite the current global financial challenges and global economic uncertainties. In addition to the organic growth of 8-12% annually, global demand has been boosted by the ongoing H1N1 pandemic and growing demand from emerging markets as well as the healthcare and hygiene sectors.

The Group currently operates 8 wholly owned manufacturing plants and has 5 overseas distribution centres. The growing demand which is continuously being tapped by the Group’s wide global network of 750 distributors in over 145 countries and 5 distribution centres augurs well for the Group in terms of business stability and sustainability in the long term. The Group’s investment in overseas distribution since year 2001 has benefited and yielded greater market penetration in selected market territories.

The ongoing refurbishment works as well as the construction of its new Meru plant which encompasses the installation of 16 new lines with added capacity of 2.3 billion pieces of gloves per annum, is also expected to contribute to the Group’s performance going forward.

For the current financial year, the Group has achieved earnings per share of 48.37 sen, which had already surpassed its original internal target of a minimum 27 sen for year 2009 as well as the revised target of 44 sen. In view of this better than projected performance, the Company has now revised the internal target for FY2010 from the initial target of 50 sen earnings per share to 62 sen or RM168 million Profit after Tax for FY2010.

Market Outlook as at Feb 22, 2010

Like other equity markets, our market has continued its recovery after the CNY break. FBM-KLCI broke above its short-term downtrend line on Feb 17. Indicators (MACD & RSI) continue to improve. ADX reading is still weak at 24.9 but the +DMI looks set to cross above the -DMI.


Chart 1: FBM-KLCI's daily chart as at Feb 22, 2010 (Source: Quickcharts)

While most stocks have recouped some of its losses, some stocks are racing to new high. In this very small field, we can find names such as Daiboci & Tomypak. Daiboci proves that a stock can do wonderful things when it has the wind of momentum to its back. I remained skeptical of its success story. Go to Chart 2 for the daily chart for Daiboci.


Chart 2: Daiboci's daily chart as at Feb 22, 2010 (Source: Quickcharts)

Other stocks which look very promising, include the rubber glove manufacturers (such as Supermx, Kossan, Adventa & Latexx); Unisem; and, TChong. These stocks have broken above their respective short-term downtrend line. For the daily charts of Supermx, Unisem & TChong, see below.


Chart 3: Supermx's daily chart as at Feb 22, 2010 (Source: Quickcharts)


Chart 4: Unisem's daily chart as at Feb 22, 2010 (Source: Quickcharts)


Chart 5: TChong's daily chart as at Feb 22, 2010 (Source: Quickcharts)

Finally, some stocks are resting on strong support level, with no sign of the next price direction- Up or Down? Among them are Freight.


Chart 6: Freight's daily chart as at Feb 22, 2010 (Source: Quickcharts)

In this environment, what shall we do? If you think that the uptrend of the market will continue, then you should buy into the market as soon as possible. Your risk tolerance would determine whether you should buy stocks which show more bullish outlook (such as those which had already broken above their short-term downtrend line) or stocks which haven't moved up yet but are resting at strong support level. On the other hand, if you think that the market is enjoying a short rebound with uncertainty ahead, then you should remain at the sideline. Times like these are tough on both investors & traders because they have to decide on a course of action where the outcome is anybody's guess.

Masteel ... Feb10

The company is expanding its bread-and-butter steel production capacity to capitalise on the anticipated higher demand and prices for the building material and taking firm steps to turn its new biotechnology venture into a regional business.

Masteel planned to more than double the annual output capacity for its downstream steel products from some 280,000 tonnes now to 580,000 tonnes by 2012. This is in line with the group’s intention to boost upstream operations involving the production of billets, by a third to 600,000 tonnes by then, and secure new foreign buyers for its steel products.

Masteel also plans to invest around RM300 million to expand its downstream operations to meet rising demand for steel products in the domestic and overseas markets. The expansion, involving an additional 300,000 tonnes of steel products, will be undertaken at a new plant on some eight hectares of company-owned land adjacent to its billet factory in Klang.

The initiative, to be completed by 2012 and financed via internally generated funds and bank borrowings, will see Masteel widening its product range to cater for more market segments.

The firm was eyeing new business opportunities in Sri Lanka in anticipation that reconstruction of the war-torn island nation would fuel demand for steel products. Masteel has been expanding its global reach to include South Pacific countries like Australia and New Zealand, apart from buyers in several Southeast Asian countries.

In October 2007, the company signed an off-take agreement with Stemcor Australia Pty Ltd, a steel products trading house based in Sydney. The two-year arrangement involved the export of some RM120 million worth of steel bars by Masteel to Australia via Stemcor.

Masteel’s biotechnology arm is a new source of income to cushion the firm’s financials againsts a cyclical steel industry, which is subject to the ups and downs of the construction sector.

In November 2007, Masteel surprised the investment fraternity when the steel producer announced its intention to collaborate with a European company to produce fluorodeoxyglucose (FDG), a chemical substance also known as radiopharmaceutical which is injected into the human body for cancer detection during Positron Emission Tomography scans.

Masteel had set up a wholly owned unit Bio Molecular Industries Sdn Bhd (BMI), which is intended as a joint-venture (JV) entity with Belgium firm IBA Molecular.

Masteel is also offering its expertise in complex- manufacturing processes, thanks to its years of experience in steel production. IBA, meanwhile, will provide cyclotrons, the equipment for producing a range of radiopharmaceuticals.

Take chance, but honor your trading plan.Last week, we mentioned some steel counters, and let us follow up one steel counter this week, together with

Last week, we mentioned some steel counters, and let us follow up one steel counter this week, together with a counter from the Properties and Finance sector.
Steel: Lionind.


Chart 1: Lionind, from 30/07/2009 to 20/01/2010.
As shown on chart 1, price of Lionind retreated after resisted by the RM1.71 level, but it managed to rebound precisely from the 14, 21, 31 EMA, which is still serving as the dynamic support. After rebounding from the dynamic support, price of Lionind re-tested the RM 1.71 level.
As indicated by A, on the 20/01/2010, price of Lionind rose sharply, with its intra-day high reaching all the way up to RM 1.84, marking a 17 months new high. However, profit taking soon took place, and pulled the price back to RM 1.71.
As a result, it formed a long upper shadow candlestick, with huge volume, as circled at B, which suggests that the selling pressure was strong, and the RM 1.71 resistance remains intact.
If price of Lionind should remain resisted by the RM1.71 level, the uptrend for Lionind is less likely to sustain, but still, it has not formed a downtrend yet for it is still supported by the 14, 21, 31 EMA. If price should break below the 14, 21, 31 EMA, it would suggest an end to this rally, thus a signal to take profit or to cut loss.

Leading PER	4.22 times	Dividend Yield	0.61%
Dividend		Dividend Yield	Net Profit Ratio
30/06/2009	1 sen	0.8%	-6.06%
30/06/2008	1 sen	0.38%	12.43%
30/06/2007	1 sen	0.57%	4.36
30/06/2006	0.5 sen	0.52%	-0.29%
30/06/2005	1 sen	0.81%	8.26%

Table 1: Lionind, yearly Dividend, Dividend yield, and Net Profit Ratio.
Properties: IJMLand


Chart 2: IJMLand, from 24/09/2009 to 19/01/2010.
As indicated by A, price of IJMLand rebounded from the RM2.17 support level on the 29/12/2009, and tested the RM 2.40 level. Despite closing marginally above the RM 2.40 resistance level, volume did not increased substantially, as indicated by B, thus giving no confirmation to the break out signal.
Nevertheless, price of IJMLand remains above the 14, 21, 31 EMA, and the immediate outlook remains positive bias. But still, the lack of volume remains a major set back.
Technically speaking, if volume should increase with price of IJMLand remain above the 14, 21, 31 EMA, it would be a good signal as chances of price to start rising is high, and it could test the next resistance at RM 2.68 too. However, if price should break below the 14, 21, 31 EMA, it would be an end to the upside biased movement, it would be a signal to take profit or to cut loss. And the next support is at RM 2.17 level.

4 Q Rolling PER	25.97 times	Dividend Yield	0.00%
Dividend		Dividend Yield	Net Profit Ratio
31/03/2009	0 sen	0%	7.62%
31/03/2008	0 sen	0%	14.13%
31/03/2007	0 sen	0%	-2.76%
31/03/2006	0 sen	0%	9.07%
31/03/2005	0 sen	0%	9.56%

Table 2: IJMLand, yearly Dividend, Dividend Yield, and Net Profit Ratio.
Finance: CIMB


Chart 3: CIMB, from 25/09/2009 to 20/01/2010.
As shown on chart 3, price of CIMB broke above the RM 13.30 resistance level on the 8th of January, 2010, touching its new high of RM 13.58 level, and followed by a consolidation. Despite the consolidation, price of CIMB remains supported by the RM 13.30 level. As indicated by A, the 14, 21, 31 EMA is still rising while still supporting the uptrend as well as serving as the trailing stop reference.
Technically speaking, the uptrend for CIMB remains intact and it is only a consolidation of an uptrend. Nevertheless, if price should remain supported by the rising 14, 21, 31 EMA, the uptrend is expected to carry on, and investors could hold on to their positions, until price should break below the 14, 21, 31 EMA, it would be a signal to take profit or to cut loss.

4 Q Rolling PER	20.36 times	Dividend Yield	1.87%
Dividend		Dividend Yield	Net Profit Ratio
31/03/2009	25 sen	4.27%	25.22%
31/03/2008	25 sen	2.27%	31.00%
31/03/2007	15 sen	1.94%	23.53%
31/03/2006	15 sen	2.63%	17.51%
31/03/2005	15 sen	3.19%	18.01%

Table 3: CIMB, yearly Dividend, Dividend Yield, Net Profit Ratio.
Conclusion:
The overall uptrend for the KLCI remains intact, despite the negative performance across the regional markets. Still, there is always risk in trading, and investors should always equipped with a sound trading plan before taking up any positions, and cut loss if the uptrend should be violated.