OCNCASH - Post Q2 2016 Result

This post is going be a short update on OCNCASH after it released its Q2 2016 result on 26 August 2016[1].

1. Fundamental Analysis:

OCNCASH Net Profit and Revenue by Quarter

As we can see, this Q2's net profit is the highest since it's listed[2]. The net profit is RM2,659k. The net profit recorded yoy of +9% and qoq of 127%, while for revenue, OCNCASH posted yoy of -4% and qoq of 13%. 

2016 Q2 posted the highest net profit since it was listed in 2004[2]

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As OCNCASH is deploying in felts division and non-woven division, its major customers are Japan, Malaysia, Thailand, Indonesia and others. Just to summarize the whole QR, by comparing the qoq net profit, the increase in sales in non-woven division to Thailand and increase in sales in felts division in Malaysia and Indonesia. 

By comparing the revenue of geographical section for yoy, revenue actually dropped 6%, all the regions dropped except for Japan, which increased 13%. The main reason for the drop for Malaysia (-1%) due to the slow down in the automotive sector for felts division. For Thailand (-22%) and Indonesia (-21%), the decrease is due to the decreased in non-woven for both countries.

Regional Comparison between 2015 and 2016

But despite all these, the management actually pledged that FY 2016 performance will be better than FY 2015. If we compare cumulative 2 quarters of 2015 and 2016, the revenue and net profit is lagging behind by RM2,650k and RM842k respectively. If the management is daring enough to make the promise, then, i am sure that it is worth to look into the possibilities of OCNCASH breaking 2015's revenue and net profit.

Snapshot from OCNCASH Q2 Report[2]

Not to forget in OCNCASH Annual Report 2015, there are 2 emergences of two local fund houses, namely RHB Dynamic Fund and RHB Malaysia Diva Fund. Well, i certainly hope the OCNCASH is dynamic enough to break 2015's performance.

2. Technical Analysis:

OCNCASH Daily Chart

If you had been following me in my FB page, i did mentioned about OCNCASH on 18 August after it formed a golden triangle, but it had retraced to 0.35 since that day. But do notice of the volume is low. On T+7, which is on 26 August, a hammer was formed with lowest of 0.34 and closed at the opening price of 0.35. The share price rebounded after it touched the lower band. And the volume of the day is quite promising as well. However, MACD is still in a bearish mode.

The next resistance of OCNCASH will be the gap of 0.39. The gap was previously due to unsatisfied Q1 result announced. In the next day (26 May 2016) , OCNCASH was having selling pressure and closed at 0.38. If we compare the volume, on 26 May, the volume was 1.5 Mil vs 0.6 Mil (26 August 2016). For me, the volume for the hammer was not strong enough, however, i still hopeful for OCNCASH to close the gap and also to challenge 0.42 in a few months time.

3. Projection Analysis:

If you guys did notice, the haze is coming back to visit us in this month. This cycle of haze is always happening around August to September whereby the harvest had been done and the farmers who use the slash-and-burn method to clear the vegetation for palm oil, pulp and paper plantations. The fires often gone out of control and spread into protected forested areas. But the lucky thing is now is La-Nina season, which there are more frequent rains. When there is haze, more people will be wearing masks. And OCNCASH non-woven division is producing the non-woven fabric inside the masks. This is just a minor factor for OCNCASH. 

Masks produced by OCNCASH Non-woven division[4]

And not to forget the OCNCASH felts division, whereby i talk about the felts division in my previous  post, Perodua BEZZA vs Proton PERSONA. (You can click HERE to see my previous post).

OCNCASH Felts Division

Based on the statistics provided by MAA (Malaysia Automotive Association) and the information shared by Paultan.org, for July 2016, Malaysian car sales dropped by 26% from June 2016, 28% lower than June 2015 and year to date it is down by 16.5%. And in the month of August, whereby Perodua BEZZA and Proton PERSONA had come into the market, i believe the statistics of car sales for August and September will be better. And also due to the Merdeka and Hari Raya sales, the total sales for local affordable cars is expected to be higher.

Thus, I think this might be some of the reasons that the management think the OCNCASH performance for this year will be better than last year. Maybe there are some other reasons, which we do not know.

Summary:

OCNCASH should be in our watchlist due to:

- Posting the highest net profit since the day it was listed.
- Non-woven products exported to Japan is still growing, with potential foreign exchange gain.
- Felts division will be growing aligned with the projected increasing sales of our local cars, Proton PERSONA and Perodua BEZZA.
- A hammer was formed on 26 August with volume, the next resistance is to fill the gap between 0.39 and 0.405, which was previously formed due to unsatisfied Q1 result being announced.
- However the volume on 26 August was not enough if compared to the volume on 26 May 2016.
- In the prospects column, the management pledged that the performance for this year will be better than last year.
- There are emergences of 2 fund houses in its Annual Report.

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Let's Ride the Wind and Gainvest

Gainvestor 10sai

29 Aug 2016
2.00am

Info: 

The Gainvestor Sharing Session in Sibu dated 3 to 4 September 2016 is CANCELLED due to insufficient participants. For Miri and KL session, the session is still available, please click HERE. If there are not enough participants for Miri and KL session, i will call it off and wait for better time.

Sources:

[1]: http://www.bursamalaysia.com/market/listed-companies/company-announcements/5188409

[2]: Q2 2016:http://klse.i3investor.com/servlets/stk/fin/0049.jsp

[3]: Annual Report 2015

[4]: http://www.oceancash.com.my/oceancash-nonwoven/

[5]: http://paultan.org/2016/08/19/july-2016-malaysian-car-sales/