LIIHEN - Time to Shine II

FB Post on 23 May 2016 in Gainvestor Page

This is an update on LIIHEN after it released its Annual Report 2015 and also Q1 Report. On 23 May 2016, i had posted a facebook comment on LIIHEN after it announced its Q1 result. In the next week, the price gapped up and the gap became a very important support. LIIHEN formed an inverted head and shoulder which was a bullish reversal pattern. 2.5 is a breakout point for the inverted head and shoulder and furthermore 2.6 provided a very comfortable support. By looking at the closing price today (30 May 2016), it is 2.77. Based on technical chart, there are still rooms for the upside. From time to time, i will post my market ideas in my FB. Everyone is welcomed to join and share your ideas and opinions.

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AWC vs EMETALL: Analysis on Why AWC Down but EMETAL Up after QR Announcement?

I had been wondering this question, "Why after the company announced a handsome good results, the share price dropped? Doesnt it supposed to go up? And why some ballooned up like no tomorrow?" I guess some of you might be asking the same questions also. After a case study conducted on AWC (7579) and EMETALL (7217), i guess i might have an answer for the question. Most importantly i know how to ride the wind and trade next time.

1. Fundamental Analysis:

Some background on the business model of the company. AWC is a company specialising in quality engineering services. AWC provides total asset management services such as integrated facilities management and engineering services to building owners. AWC is involved in 4 major industries, namely facilities, engineering, environment and investment holding. You can click here to refer to my post on AWC[1]. EMETALL is engaged in manufacture of metalwork and industrial process machinery and equipment. EMETALL had a few subsidiaries; manufacture and distribution of steel products, IT solutions, property sector[2]. I did not go into detail for EMETALL, sorry.

But first, lets go through AWC and EMETALL Quarter Result[3][4]. 

AWC Q3 Result[3]

AWC announced a very good result. If we compare Q3 2016 with Q3 2015, the net profit improved by 901% (RM5,757k vs RM575k). If we compare with Q2 2015, the net profit improved by 54% (RM5,757k vs RM3,747k). This is definitely the result that we want. Double digit growth. Even with 3 quarters in 2016, the net profit had already exceeded the net profit for the whole 2015. With such momentum, the Q4 will continue to blossom with satisfactory results. Not to forget AWC announced a 1.5 cents of special dividend EX on 16 June 2016.

AWC had been steadily growing with an average net profit margin of 4.71% from 2011 to 2015. it is also a net cash company.

AWC: Revenue & Net Profit from 2011 to 2016. 2016 only announced 3 QR[3]

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TOMYPAK - Rights Issue Underway

TOMYPAK recently released their Annual Report 2015 and their 2016 Q1 results. Some studies had been done on the recent Annual Report and also the Q1 report. Previously, i had posted on TOMYPAK[1]. This will be the updated information on TOMYPAK. Let's go:

1) Fundamental Analysis:

TOMYPAK Q1 2016 Result

Both revenue and net profit of q-o-q had decreased 1.43% and 34.07% respectively[2]. For me, the results are within expectaion, but the share price on 19 May 2016 shows another story. From the volume, a lot of shareholders are quite disappointed with the result. Main reasons of the net profit drop were due to:

i) Slight reduction in demand from overseas customers

ii) Increased cost of production arising from increased cost of imported raw material

iii) Higher energy and labour cost

iv) Foreign exchange volatility

Impact of Foreign Exchange Volatility 

I will further elaborate on the reasons. Demand from overseas reduced 6% and 13% respectively for q-o-q and Q4 Result. Demand from locals increased 4% and reduced 4% respectively for q-o-q and Q4 Result. The cost of imported raw material increased due to the oil price had rebounded. Remember that the raw material of plastic is crude oil. When the price of crude oil increased, thus the cost production also increased. Higher energy and labour cost is because of the new foreign worker levies charges implemented by the government[3]. As for the foreign exchange volatility, this is something that we need to take note for the export-oriented companies earning USD. In Q1 2015, TOMYPAK had realized gain for the foreign exchange but for this Q1, it had a realized loss of RM454k. Although the amount is just minor, however, we need to take note of this line item. Despite with the setbacks, TOMYPAK management is still optimistic as the food and beverage sector remains resilient. Like my friend say, no matter how bad the economy was, people will still eat Maggi. In fact, more people will eat Maggi at that time, and TOMYPAK provides plastic packaging for Maggi~ haha.

Sell in May and Go Away?

Sell in May and go away... Seems like it is a mixed myth and fact throughout all these years. Will this myth continue to happen in this year? First, let's look at the FBMKLCI monthly chart and try to correlate...

FBMKLCI Monthly Chart

From the past year statistics, 2013's May shows a bullish month. 2014's May show a doji with thin body and long tails. For 2015's May, it is a big bearish engulfing which in the following months drag down the FBMKLCI to the lowest of 1503.68 in August 2015. In my previous post[3], i still remember for the month of March, there is a bullish engulfing, and this month April it forms a bearish engulfing. The market is totally unpredictable. 

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