Telecommunications Sector: Riding On The Data Traffic Wave

♦ Key investment themes. We see the following key investment themes for the telecommunications
sector this year:

1) Data traffic – the next wave of growth. While we expect voice revenue to see slower growth ahead, we are more optimistic with respect to broadband and data revenue. Factors such as an unusually large gap between the number of internet users in Malaysia and broadband penetration, a young demographic profile that is internet and tech savvy, an increasing range and choice of handsets and smartphones and rising popularity of social networking services all lead us to believe that the non-voice revenue segment is poised for significant growth ahead.

2) Strong cash flows, healthy balance sheets and well articulated dividend policies lend visibility to attractive yields. Cash flows for both Digi and Maxis remain strong while we expect TM’s cash flows would be sufficient to cover its capex requirements. Based on their respective dividend policies, we project FY10 net yields of between 4.8% and 6.3%. This is relatively more attractive as compared to the average net yield of 2.4% for the top 10 stocks in the FBM KLCI (within RHBRI’s coverage) and would help lend support to share prices, in our view.

3) Capital management activities still on the cards. We believe capital management would be a recurring theme for the sector this year. Digi remains committed to moving towards a more efficient balance sheet while the management of Maxis has reassured investors that the balance sheet would not be left idle. As for TM, after the generous capital repayment last year, management has yet to make any firm commitments with respect to capital management initiatives. However, we believe the door is still open as TM has the capacity to pay out cash in excess of the minimum RM700m dividends.

♦ Risk. The key risk is still, in our view, competition. Despite the number of new operators that have come into the market, we think that the direction of tariffs would still depend heavily on the pricing behaviour of the incumbent mobile operators. More importantly, while we expect tariffs to continue to remain under pressure due to competition, we do not expect irrational pricing to set-in.

♦ Recommendation. We are maintaining our Overweight stance on the telecommunications space. The sector has underperformed the benchmark FBM KLCI over the last 1-2 years, held back largely due to the market’s focus on the maturity of the voice segment of the industry, while under-appreciating the expected growth of the non-voice segment, in our view. Generally, we see the sector offering a broad appeal to investors of various risk appetites. For investors with higher risk appetites, Axiata (Outperform, FV=RM3.85) offers investors strong earnings growth and exposure to a recovery in emerging markets, where mobile penetration still remains relatively low. We believe a new economic cycle has begun and Axiata would be a major beneficiary, in our view. At the extreme, we see TM (Outperform, FV=RM3.55) maintaining its minimum dividend commitment of RM700m p.a. (or 6.3% net yield) and this should appeal to the risk adverse. For a balance, we like Digi (Outperform, FV=RM24.00) and Maxis (Outperform, FV=RM6.30) as both offer investors decent earnings growth and yields. We see further upside to yields as the balance sheets of these companies would appear to be rather underleveraged by end-2010.

By RHBINVEST
Analyst: David Chong, CFA

Daiboci- time to take profit

Background

Daibochi Plastic & Packaging Industry Bhd ('Daiboci') is involved in the production packaging materials for many applications such as food, beverage, FMCG, pharmaceutical and industrial uses.

Strong Rally in Share Price

Daiboci has rallied from a low of RM0.50 in March last year to a recent high of RM3.30 on Jan 26. The basis for this strong rally is Daiboci's improved financial performance. Is the recent improved financial performance sustainable? Or, is it an exceptional fortuitous period for Daiboci which is difficult to sustain?

Historical Financial Results

I have appended Daiboci's top-line & bottom-line for the past 10 years. While the estimated pre-tax profit for the current year (FYE Dec2009) is sharply higher than the preceding 5 years, Daiboci's top-line has risen very little in the past 4 years. So, the increased bottom-line for FYE Dec2009 is not due to increased business volume, but higher profit margin. How did this come about? Is this a result of higher selling prices? Is it a result of lower input cost? It may not be significant whichever one is the answer because in the commercial world, exceptional profit margin seldom persist for long.


Table 1: Daiboci's last 10 years' results


Chart 1: Daiboci's last 10 years

Recent Financial Results

Daiboci's top-line & bottom-line has been flattish in the last 3 quarterly results (QE31/3/2009 to QE30/9/2009). In fact, its top-line took a dip in QE30/9/2009. It would be interesting to see Daiboci's results for QE31/12/2009, which is expected to be released in mid-February. Unless a very convincing set of results is issued, I believe the rally in Daiboci would end abruptly.


Table 2: Perstima's last 8 quarterly results


Chart 2: Daiboci's last 8 quarterly results

Technical Outlook

I have appended Daiboci's weekly chart from 1992 until today. You can see that Daiboci is now deep in the overbought zone (look at RSI & Slow Stochastic indicators). In the past, Daiboci had similar sharp run-ups which ended very unpleasantly.


Chart 3: Daiboci's weekly chart as at Jan 28, 2010 (Source: Quickcharts)

Conclusion

Based on the extreme overbought condition & doubts as to the sustainability of Daiboci's current profitability, I would recommend profit-taking on this stock.

Harta- another great quarter

Results Update

Harta has just announced its results for QE31/12/2009. Its net profit increased by 12.4% q-o-q or 67.4% y-o-y to RM37.2 million, while turnover increased by 10.4% q-o-q or 24.8% y-o-y to RM149 million. The company attributed the continuous growth in its top-line & bottom-line to increased production capacity & demand; more efficient production process; higher premium nitrile gloves; lower input cost; and favorable exchange rate. In another word, everything worked out in its favor.


Table: Harta's last 8 quarterly results


Chart 1: Harta's 9 quarterly results

Valuation

Harta (closed at RM7.31 yesterday) is now trading at a PER of 13.8 times (based on last 4 quarters' EPS of 53 sen). At this multiple, I believe Harta's upside would be limited (say, about 10% from the current price), especially so due to the present cautious overall market sentiment. However, Harta's earning could increase and this should lead to a lowering of Harta's PER as more production lines are added in the future.

Technical Outlook

Harta is still in an uptrend, with support from either the 50-day or 100-day SMA line (at RM6.00-6.50). Since the MACD has done a negative cross-under, there is a likelihood that Harta may come under some selling pressure.


Chart 2: Harta's daily chart as at Jan 29, 2010_9.15am (Source: Quickcharts)

Conclusion

Harta still deserve a HOLD rating. A good entry level to this stock would be at RM6.00-6.50.

During 2008 KLCI Drop 10% from History High Before CNY

If you still remember, during early 2008 KLCI is hitting history high above 1,500 level and drop 10% in continues 7 trading day before a small bounds up and move sideways before a big drop into 2008 crisis. So now same thing is happening, just that the drop is not yet 10% and FBM KLCI already drop for continues 5 trading days.

For FBM KLCI to hits back 1,300 level may likely by end of the year and base on the chart FBM KLCI may hits bottom at 1,000 level. Next week FBM KLCI may likely to have a bounds up so to maximum the profit in short term is buy into good quality share call warrant.

Broker's Call - Friday, 29 January 2010

* Land & General (RM0.515, SELL) – Unload on strength.
* Supportive International (RM1.31, SELL) – Gains are likely capped.
* Malaysian Resources Corp (RM1.48, BUY) – Potential breakout from trend line.
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Land & General (RM0.515) – SELL
FY10P/E: N/A, P/BV: 1.4x

• The stock took a sharp correction shortly after hitting its 52-week high of RM0.64. The pullback almost reached the 50% Fibonacci Retracement (FR) level (measuring from the RM0.31 low), and we think there is a possibility that a mild rebound may kick in soon.
• Yet, its upside could be meagre as gains are likely capped at RM0.525-RM0.535 in the near term. Hence, the best strategy here is still to unload on strength. Unless the rebound inch above the RM0.565 level, the bears seem to have a slight advantage.
• Indicators remain fragile. MACD is still skidding while its RSI has also retraced from its peak. Immediate support is around RM0.485-RM0.475 (coincidently also close to its 30-day SMA). Further correction would drag the stock towards RM0.44 and RM0.425 next.

Land & General is an investment holding company. The company, through its subsidiaries, manages and develops properties and provides education services.
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Supportive International (RM1.31) – SELL
FY10P/E: 25.7x, P/BV: 4.0x

• The stock broke below its support trend line in mid-Jan. Since then, it has been gyrating sideways, barely holding above its 30-day SMA. As its 30-and 50-day SMAs are about to converge, we doubt prices could swing up strongly in the near term.
• Indicators are already showing signs of weariness. MACD signal line continues to fall while its RSI has also flattened out.
• If prices fall below the 50-day SMA at RM1.25, it could also mean more downside ahead. Further pullback should drag the stock towards RM1.18 and RM1.12 next. Resistance is at RM1.38-RM1.40.

Supportive International Holdings manufactures and sells cable accessories and connectors, AC sockets, optical digital cables, security intercom, and elevator interphones.
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Malaysian Resources Corp (RM1.48) – BUY
FY10P/E: 28.5x, P/BV: 2.1x

• The bullish engulfing pattern formed yesterday could indicate that a rebound is taking place now. Recent correction dragged prices to its 61.8% FR and buying interest is picking up again. Another white candle today should lift MRCB closer towards its next resistance at RM1.55 and RM1.62.
• MACD histograms are falling at a slower pace while its RSI has also hooked upward again. A breakout above the stipulated resistance levels may also push the stock to re-test its January’s high of RM1.72.
• Risk takers may take position now and ride the potential breakout run. Always keeps stop tight at RM1.44-RM1.42 in case this is just a dead cat bounce.

Malaysian Resources Corporation is an investment holding company. Through its subsidiaries, the company provides construction and engineering services, multimedia, property development and management, information technology services, and independent power producer.

Perstima- an attractive stock for long-term investment

Background

Perusahaan Sadur Timah Malaysia Bhd ('PERSTIMA') is involved in the production of high quality Tinplate for both domestic and export market. The Malaysian operation has a production capacity of 260,000 MT per annum. In 2002, it established PERSTIMA (VIETNAM) Co. Ltd. which also produces prime grade tinplate, with a rated capacity of 90,000 MT/annum.

Recent Financial Results

Perstima has just announced its results for QE31/12/2009, where its net profit increased marginally q-o-q but jumped by 16-fold y-o-y to RM20.7 million. Turnover was mixed, down by 25% y-o-y but up a meager 3.2% q-o-q.


Table: Perstima's last 8 quarterly results

Perstima's Performance & Tin Prices

I have appended below the last 22 quarterly results of Perstima (the lower chart, with chronological order running from right to left) & the price movement of tin during the same period (the upper chart, with chronological order running from left to right). We can see a close correlation between these two charts. So, if tin prices continued to trend higher, Perstima's bottom-line would continue to rise.


Chart 1: Tin Prices & Perstima's 22 quarterly results (Source of Tin Prices: LME)

Financial Position

Perstima is in excellent financial position. Its liquidity position is very good as reflected by a current ratio of 5 times while leverage position is negligible as reflected by its borrowings to shareholders' funds of only 0.05 times.

Valuation

Perstima (trading at RM3.80 as at 11.15am) has a PER of 6 times (based on last 4 quarters' EPS of 65 sen). At this PER multiple, Perstima is deemed very attractive.

Technical Outlook

Perstima is in an medium-term uptrend, guided by either the 50-day SMA line or 100-day SMA line (see Chart 2). However, Perstima seems to be range-bound in the past 5 years, with support at RM2.00 & resistance at RM4.00 (see Chart 3). As such, Perstima's short-term upside may be limited, unless it can surpass the RM4.00 resistance level.


Chart 2: Perstima's daily chart as at Jan 29, 2010_9.45am (Source: Quickcharts)


Chart 3: Perstima's weekly chart as at Jan 29, 2010_11.30am (Source: Quickcharts)

Conclusion

Based on good financial performance & attractive valuation, Perstima can be a good stock for long-term investment. Its upside potential is somewhat limited if viewed from the technical angle. In the current uncertain market condition, you can wait for better prices to appear (say, a pullback to the 50 or 100-day SMA line).

RSawit- an attractive fast-emerging plantation stock

Background

Rimbunan Sawit Berhad (RSB) group is engaged in cultivation of oil palm (based in Sarawak), which are carried out via its subsidiaries such as R.H. Plantation Sdn Bhd ('RHP'), Timrest Sdn Bhd ('TR'), Baram Trading Sdn Bhd ('BT') and Nescaya Palma Sdn Bhd ('NP'). For details of their respective planted area & output, see Table 1 below.


Table 1: RSawit's current plantation estates & hectarage

Recent Acquisition

RSawit has recently completed the acquisition of 2 companies, each with a sizable vacant land earmarked for oil palm cultivation located in Batang Baram. The acquisitions are:

1) 100%-stake in Lumiera which owns a piece of vacant land measuring 6071 ha for RM31.0 million; and
2) 85%-stake in Woodijaya which owns a piece of vacant land measuring 5000 ha for RM27.6 million.

The financial commitment for future plantation development of these 2 piece of land amount to RM113 million (i.e. RM53 million for the Lumiera estate & RM60 million for the Woodijaya estate). For more details on these completed acquisitions, go here.

On Dec 30 last year, RSawit announced another large acquisition- acquiring equity interests in nine plantation companies and the commercial rights to a plantation estate from several vendors (some of which are related to RSawit's shareholders) for RM286.1mil to be satisfied via the issuance of 28.33 million new shares and 191.75 million new irredeemable convertible preference shares (ICPS) shares at a price of RM1.30 per share/ICPS share. The total hectarage of the estate land managed by these companies is about 21680 ha. For details of the pricing & hectarage of the new estates to be acquired, see Table 2 below. For further details of the proposed acquisition, go here.


Table 2: Latest Acquisition- pricing & hectarage

When the latest acquisition, RSawit will own or control a total planted hectarage is about 42254 ha, plus vacant land measuring 11071 ha that is slated for future plantation development.

Recent Financial Results

RSawit has just announced its results for QE30/11/2009, where its net profit increased by 189% q-o-q or 198% y-o-y to RM9.0 million while turnover increased by 16.7% q-o-q or 11.6% y-o-y to RM48 million. The improved financial performance is due mainly to better prices for CPO & Palm Kernel. A closer look at Table 3 below shows that RSawit could be returning to the level of profitability it has achieved before the sharp plunge in the prices of CPO in 2008.


Table 3: RSawit's 8 latest quarterly results


Chart 1: RSawit's latest 8 quarterly results

Valuation

RSawit (closed at RM1.48 yesterday) is now trading at a PER of 5.3 times (based on annualized EPS of 28 sen). At that multiple, RSawit is considered attractively priced.

Technical Outlook

From the weekly chart, it seems that RSawit is trapped within a rising trading band, with support at RM1.30-33 & resistance at RM1.52-55. A break above the resistance could signal the next upleg for this stock.


Chart 2: RSawit's weekly chart as at Jan 27, 2010 (Source: Quickcharts)

Conclusion

Based on a recovery in its financial performance, attractive valuation & positive technical outlook, RSawit could be a good stock for long term investment. However, in the current uncertain market condition, you can choose to wait for better prices to appear.

Broker's Call - Fri, 28 January 2010

* Zelan (RM0.725, SELL) – Barely holding above its 30-day SMA.
* SapuraCrest Petroleum (RM2.42, SELL) – Hanging by a thread.
* Time Engineering (RM0.41, SELL) – Unload on strength.
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Zelan (RM0.725) – SELL
FY10P/E: N/A, P/BV: 0.6x

• The stock is barely holding above its 30-day SMA. This is a critical support and if breached, would have a negative implication on its short term outlook. Once the RM0.72 level is violated, next downside targets are RM0.67 and RM0.63.
• Even if there is a rebound, gains are likely capped at RM0.765. Only a strong run-up above RM0.80 with volume would negate our cautious view on the stock.
• Indicators are showing signs of exhaustion. MACD has staged a dead cross while its RSI is also dwindling towards the lower band of the neutral zone. Until prices inch past RM0.80, our strategy now is to sell into strength.

Zelan is an investment holding company. The company, through its subsidiaries, operates civil engineering and building turnkey contracting services.
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SapuraCrest Petroleum (RM2.42) – SELL
FY10P/E: 18.5x, P/BV: 3.0x

• SapuraCrest is hanging by a thread now. Looking at its daily chart, the candle has just violated its uptrend channel. Currently, it is just holding a tad above its 30 & 50-day SMAs. If the RM2.40-RM2.34 levels give way, most probably the uptrend from March has ended.
• The bearish divergence on its MACD indicates that buyers are turning more
cautious now. Meanwhile, its RSI has begun to hook down again. Initial support is weak at RM2.34, followed by RM2.24 and RM2.12 next.
• Unless the stock can swing back above the RM2.50, we see any rebound as an opportunity to take profits. Our bearish view would be wrong if prices bounce above its recent high of RM2.58.

SapuraCrest Petroleum is an investment holding company. The company, through its subsidiaries, charters vessels, installs offshore platforms and marine pipelines, drills offshore oil wells, manages rigs.
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Time Engineering (RM0.41) – SELL
FY10P/E: N/A, P/BV: 2.4x

• Time Engineering is testing its key support line. Although there is a slim chance that it might bounce back from here, we think the bulls need to be cautious now. As the 30-day SMA has cut below its longer-term 50-day SMA, follow through buying is likely to stay weak.
• Technical indicators look fragile at the moment. MACD has staged a negative crossover while its RSI is below the 50-neutral mark. If the support line fails to hold, the next downside targets are RM0.385 and RM0.365.
• On its upside, a rally above its key SMAs at RM0.435-RM0.44 will tone down the negativity of the stock. If this is the case, thenTime could swing higher towards RM0.47 next. Unload on strength is probably the best option.

TIME Engineering is an investment holding company. Through its subsidiaries, the company constructs and operates an independent open cycle gas-fired power station, supplies and sells electricity, and manufactures electrical switchgears.

CIMB & Bursa- more downside ahead

One of our most distinguished blue chips, CIMB broke below its medium-term uptrend line support at RM13.30 yesterday. It failed to recover today as it lost 22 sen to close at RM13.06 on increased volume of 10 million shares traded.


Chart 1: CIMB's daily chart as at Jan 27, 2010_4.50pm (Source: Quickcharts)

One stock that tends to track our stock market very well is Bursa, the listed company that owns our stock exchange. From Chart 2, we can see that Bursa share price has been moving sideway for the past 3 months after hitting a high of RM8.59 on Oct 20 last year. When we compared this to the steady uptrend in the FBM-KLCI (denoted by 'A'), we should have noted this bearish divergence (denoted by 'B') & the danger it forewarned.

We note that Bursa has now broken below its very strong horizontal support of RM8.00 yesterday. At the close today, Bursa lost 12 sen to end at RM7.68. Its next horizontal support is at RM7.50. I have displayed Bursa's weekly chart together with FBM-KLCI's weekly chart to show how well the FBM-KLCI has performed vis-a-vis Bursa. The reverse of the coin would be the potential downside for FBM-KLCI if & when the players give up & cash in their chips.


Chart 2: FBM-KLCI & Bursa's weekly chart as at 26/1/2010 (Source: Tradesignum)

Broker's Call - Wed, 27 January 2010

* LBS Bina Group (RM0.74, SELL) – Hanging by a thread.
* Top Glove Corporation (RM11.30, SELL) – Broke below key support.
* AirAsia (RM1.37, BUY) – Banking on a breakout.
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LBS Bina Group (RM0.74) – SELL
FY10P/E: N/A, P/BV: 0.7x

• The stock is hanging by a thread as its candles are just sitting above its support trend line. Although there is a slim chance that it could bounce back towards its recent high of RM0.81, sustainability is a key concern here.
• Its indicators are showing some signs of exhaustion. MACD is losing pace fast while RSI has also retraced from its peak.
• Risk adverse investors may take some profits off the table now instead of waiting for a break below the RM0.725 support trend line. Once this level is violated, selling could be sharp and likely to push its prices towards RM0.705 and RM0.63 next.

LBS Bina Group is a management and investment holding company. The company, through its subsidiaries, operates property development and investment. LBS also provides project management and contractor services for property development, turf and landscaping contracting, insurance services, sells motor vehicles, and trades building materials.
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Top Glove Corporation (RM11.30) – SELL
FY10P/E: 14.4x, P/BV: 3.8x

• Top Glove broke below its support trend line yesterday. This is a bearish sign as it would likely confirm that the RM12.12 level was its intermediate high. There is a minor support at RM11.16. Failing to hold above this level could result in more downward drift, likely towards RM10.74 and RM10.54.
• MACD is poised for a negative crossover while RSI has also fallen below the overbought territory.
• Traders may want to lock in some profits on rebound, preferably near the RM11.62-RM12.00 resistances. If prices fail to move above the supportturned-resistance trend line over the next few days, broker will prefer to stick with the bears’ camp.

Top Glove Corporation manufactures a wide range of latex gloves. The company's products include latex examination powdered, latex examination powderfree, nitrile examination gloves,soft nitrile examination gloves, vinyl examination gloves, surgical gloves, and other related products.
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AirAsia (RM1.37) – BUY
FY10P/E: 6.6x, P/BV: 1.5x

• AirAsia is gyrating in a triangle pattern. Recent selling was well-absorbed and we are banking on a potential breakout run. As long as the support trend line (currently at RM1.28) is not violated, we think it may swing higher again, likely towards its recent high of RM1.45, and possibly even RM1.57 next.
• MACD indicator is still falling but at a slower pace. In addition, its RSI has begun to hook upward, suggesting that selling pressures are slowly tapering off.
• Despite our bullish stance on the stock, it is critical to put a stop at below RM1.28. A break below this level could entice greater selling pressure and dragged prices towards RM1.22, RM1.15 and RM1.10 next.

AirAsia Berhad provides low-cost air carrier service. The company provides services on short-haul, point-to-point domestic and international routes. AirAsia operates from hubs in Malaysia, Thailand and Indonesia.

"

Chinese New Year Panic Selling

Look like this year Chinese New Year rally ended vary early and from CNY rally now become CNY panic selling. So now is the best time to buy good quality share like PBBank and TopGlove or high dividend share to keep.

Broker's Call - Tue, 26 January 2010

* Tomypak Holdings (TOMY MK; RM2.28, BUY) – Likely another up leg.
* IJM Plantations (IJMP MK; RM2.53, SELL) – Strong roadblock ahead.
* Integrated Rubber Corporation (IRCB MK; RM1.51, BUY) – Selling pressure tapering off.
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Tomypak Holdings (RM2.28) – BUY
FY10P/E: 4.6x, P/BV: 1.1x

• After its recent breakout from its strong resistance channel, Tomypak continued to rally to a new 52-week high of RM2.36 before consolidating at current levels.
• Broker believes the bulls can still hope for one more upleg. If prices can take out the RM2.36 level, there is a high chance that it might inch closer towards RM2.55, RM2.65 and RM2.83. On the flip side, try to keep a stop at its recent low of RM2.15.
• Technical indicators remain positive. MACD is still rising while its RSI has hooked upward again. A fall below its key SMAs at RM1.89-RM1.83 would conclude that this is a fake out.

Tomypak Holdings is an investment holding company. Through its subsidiaries, the company manufactures and trades plastic packaging materials, polyethylene, polypropylene films and sheets, and thermoforming sheets.
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IJM Plantations (RM2.53) – SELL
FY10P/E: 21.6x, P/BV: 2.1x

• Despite recent rally, the stock failed to penetrate above its resistance trend line (currently at RM2.67). This may suggest that there is a strong roadblock ahead. Once the 50-day SMA cut below its 30-day SMA, expect selling pressure to accelerate.
• Technical landscape is weak. MACD has just confirmed its dead cross while its RSI is dwindling towards the lower band of the neutral zone. Sellers at RM2.67 would undermine any recovery effort.
• Sell into strength is probably the best option here. If RM2.39 is violated, its next supports are RM2.32 and RM2.22. To negate this bearish mode, IJM Plantation needs to inch past RM2.72, which has a low probability.

IJM Plantations is an investment holding company. The company, through its subsidiaries, cultivates oil palm and milling..
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Integrated Rubber Corporation (RM1.51) – BUY
FY10P/E: N/A, P/BV: 5.1x

• The stock is still consolidating in a triangle. With selling pressure slowly tapering off, we may see a resurgent buying interest over the next few days. Another upswing would push IRCB towards RM1.62 resistance trend line, and probably even RM1.87 next.
• MACD histograms are losing pace but remain positive, while the correction tone on its RSI has also flattened out. All these point to potential upward breakout.
• As the consolidation phase could be prolonged, it is always wise to put a stop at below RM1.39. In case this level is reached, traders should be firm in cutting losses as next downside targets are RM1.32 and RM1.20.

Integrated Rubber Corporation is an investment holding company which manufactures and sells powdered and powder-free examination gloves.

Broker's Call - Mon, 25 January 2010

* Public Bank (RM11.98, SELL) – Strong resistance ahead.
* Alliance Financial Group (RM2.55, SELL) – Sell into strength.
* AMMB Holdings (RM5.21, SELL) – Uptrend losing a bit of steam.
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Public Bank (RM11.98) – SELL
FY10P/E: 14.7x, P/BV: 3.8x

• Since our “Buy” rating in the 4th Jan issue, its share prices had rallied to a record high of RM12.14. Although this may be a sentiment booster, the daily chart suggests that the bulls need to be cautious here. Prices are now challenging the resistance trend line, which is a tough level to break.
• In the past few attempts, the breakout run failed to materialise, and broker thinks this time may be indifferent. MACD histograms are losing some pace here while its RSI has also hooked downward, suggesting that underlying tone has weakened.
• Sell into strength is likely the best option here. Unless it can break above RM12.14 and holds steady, we believe the bears are slowly creeping in. Support is seen at RM11.30 and RM10.60.

Public Bank provides a range of banking and financial services which include leasing and factoring, stock and futures broking, financing for the purchase of licensed public vehicles, and other financial services.
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Alliance Financial Group (RM2.55) – SELL
FY10P/E: 15.2x, P/BV: 1.4x

• The daily chart for Alliance Financial Group is showing some signs of exhaustion. The first wave of selling (from its peak of RM2.95) ended near RM2.29, and prices have rebounded since then. Yet, this recovery appears to be weak, as it has failed to break above the key RM2.60 resistance line.
• Its recent rebound also failed to move above the support-turned-resistance trend line, a sign of dwindling buying interest. This coupled with the weak MACD and RSI readings, shows that there is still room to the downside.
• Any upswing towards the RM2.60 level is an opportunity to take profit. Even if this level is taken out, there is also a cluster of resistances at RM2.65-RM2.70 (between its 50-day SMA and support-turned-resistance trend line). Support is weak at RM2.40 and RM2.29.

Alliance Financial Group is an investment holding company. Through its subsidiaries, the company has operation in commercial and merchant banking, provides financing and nominee services, and invests in property.
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AMMB Holdings (RM5.21) – SELL
FY10P/E: 15.8x, P/BV: 1.7x

• On the daily chart, AMMB is still holding on to its uptrend channel. However, broker believes it is losing a bit of steam here. The 30-day SMA is about to cut below its 50-day SMA, suggesting that its underlying sentiment has weakened. In fact, the monthly chart shows that it is testing a key resistance level (at RM5.30)
• The bearish divergence on its MACD does not bode well for its uptrend. Meanwhile, its RSI has also hooked downward. If prices fall below RM5.00, then expect a deeper correction to be underway. Next downside target is at RM4.75 and RM4.55.
• Traders should do well taking some profits now, or sell-into-strength towards the RM5.30 resistance level.

AMMB Holdings is an investment holding company. The company, through its subsidiaries, provides merchant and commercial banking, retail financing, stock and futures broking, and investment advisory.

Now Is The Time To Buy In some Good Share

Due to bad news roll out from US and China, share around the world drop. FBM KLCI drop below 1,300 but still hold on 1st support line. For me the news roll out is to cause some panic for fund manager to buy back some share in lower price from retail investor. This week is the best time to cause panic is due to retail investor may likely need to cash out their profit for Chinese News Year at mid of Feb 2010 so by causing this panic more retail investor will sale they share with less profit or no profit at all.

The policy make by US and China is a man make news and pick last week to roll it out into market to cause panic or make the market lower for retail investor to sale and for fund manager to pick good low price share. So we also not miss the bot! For me this week is a good time to pick some good share like Axiata and AMMB due to both share financial result will be out on Feb 2010.

Base on the chart, for FBM KLCI to go higher sure the index need to drop 1st so the best way to do it is cause some panic.