Tuesday, 31 December 2013

Farlim - Never Too Far

The market had continue to regain their momentum from the fear of tapering, Dow Jones continued to rally on strength with DJIA gaining strength above 16000 and lingering around 16500 zone. Probably some would refer this bullish spike as a window dressing for the year 2013, or is this bull going to continue their charge in the 1st quarter of 2014?

As you are hearing from others that our local market is currently too expensive to trade with stock trading easily above a PER x12 for most of the prominent/popular stock, while some undervalued stock are not fancied after as trader/investor are afraid of the value trap and the illiquid situation of the stock.
While our market had start to regain some retail participation, I had tumbled upon Farlim for a revisiting after a few weeks.

While the news are not new for Farlim, the reason for it's share price spiking upwards towards hitting 60 cents is sparked by the interest in the sale of land in Bandar Air Itam, Penang measuring 116.89 acre for a consideration of RM 112.5m offered by 1MDB.

The price offered by 1MDB comes with a 12.5% premium appraised by independent valuer. While Penang had been the hot and sought after state for FDI under the helm of Lim Guan Eng as the Mentri Besar for Penang, Bandar Air Itam is a very strategic location in Penang. With an estimated profit of RM46m from the sale, pegged under 140m of shares issued, the disposal will easily reflect a 32 cents gain for each share of Farlim.

The latest development had seen that AmInvestment Bank Berhad, on behalf of the Board of Directors of Farlim, wishes to inform that, Farlim had on 20 December 2013 received a written request from 1MBD RE (Ayer Itam) Sdn Bhd dated 20 December 2013, for an extension of time of up to 30 January 2014 to make payment of the Balance Disposal Price to their solicitors.

In this regard, the relevant clause of the SPA shall be amended to the effect that the Purchaser has As stated in the Circular, the Proposed Disposal is expected to be completed by the second (2nd) quarter of the calendar year 2014.  
For more info, you can refer to http://www.bursamalaysia.com/market/listed-companies/company-announcements/1499565

Looking at the technical outlook for Farlim will suggest that Farlim had seen saturation at 50 cents region as volume had been drastically low. A fresh price will definitely be needed in Farlim to see more shares change hand in the coming days as shareholder might be looking for a special dividend from the land disposal.

Farlim might be trading at RM 0.80 on the special dividend announcement from the disposal of the land. As the time frame is getting shorter, Farlim might be expecting the payment from 1MDB as soon as the first 2 weeks of January 2014. A quick technical outlook might suggest that Farlim could be poised to challenge RM 0.60 in the shorter frame outlook as volume dried up at the 50 cents region as the time frame goes nearer to the payment date from 1MDB.

So had you decided for your ride?

Bone's short term TP: RM 0.60

Cheers and happy trading.



Wednesday, 25 December 2013

Wishing You A Merry Christmas

Wishing you a Merry and Prosperous Christmas and New Year.

Good health always.


Friday, 13 December 2013

Pesona - Of Bridges and Roads

While the market had been on the hype with the recent oil and gas awards and contracts from Petronas, the local market had continue to see more interest in splashing hot money to the oil and gas counter with the likes of Puncak, Barakah and SKPetrol which are the designed winner for the T&I projects. While our nation move forward in developing towards a high income nation, equipped with better infrastructure, the local construction company which is closely linked with the government are in the high notes for the incoming projects from Putrajaya.

From highway to river, highrise to low rise building, Pesona Metro Holding Berhad, through the RTO of Mithril Berhad had came to light in the KLSE market and had since been performing.

Under Pesona Metro belts are services like ranging from construction business on both buildings and infrastructures, medium to high-rise buildings, roads, bridges as well as heavy civil engineering works which includes refurbishment of river and dams.

Pesona had gained famed on their latest undertake of the revitalization of Melaka River, which had brought value the places beside the Melaka River.

With their latest prominence, Pesona is standing good in their book orders which comprises of good government pay master on the contracts which consist of:
- 1 Block of 16 storey office tower at Jalan Inai, KL.
- 126 units Sastra U-Thant Luxury Condominiums at Jalan Ampang
- ECER road works at Federal Highway, Central Spine Road.
- Design & build of a bridge across Landasan Keretapi Jalan Pelabuhan, Klang
- Proposed construction and completion of the remaining and rectification work of Government office building in Putrajaya
- Proposed Construction and completion of government building complexes in Johor Bahru.

The group had been managing well under the helm of Mr Wie Hock Beng, it had been forecast that more projects will be kicking in the coming days as the recent monsoon season had saw many infrastructural damages in the affected area. Pesona Metro is high possibly in the line to redo the river bank and roads from the damages of the flood and the upcoming prevention method in the northern region of Malaysia.

With the latest award of Best Contractor for 2013 under category exceeding RM 50m in the infrastructure sector, Pesona is on the high notes to strike more government projects in the coming days.

At the technical side of Pesona, we can see a series of consolidation on price and volume for the past 2 to 3 months. However as of lately, Pesona had regained activities where substantial amount of interest had been poured into the company. Pesona had been rumored in obtaining several government rebuilding and refurbishing contracts that could worth up to RM 300m into their book order. A quick technical outlook will be looking at Pesona breaking the psychological barrier of RM 0.50 in the coming day with a projected volume of more than 20m in the coming days.

At their current book order and the upcoming projects, Pesona might be looking to trade above 50 cents with a foreseeable longer term target of RM 0.60. A short term outlook will see an appreciation of 10% in Pesona which will put them at RM 0.55.

For more reference

Bone's short term TP: RM 0.55.

Cheers and happy trading.


Wednesday, 11 December 2013

Supermax - The Rubber Taper

While the market continue to move cautiously after a series of big bulls to mini bulls, it seems that the only main concern that is holding the world at stake now could be the tapering issues in the US currently. Back then, there are European financial meltdown, Greece stunner, Government going bust and bankrupt, or some natural disaster like Fukushima's Tsunami made disaster. Then we have warlords waging wars in the middle east with Egypt unrest, Libya war, North and South Korea drama. I believe those traders or investor that had lasted through all this had somehow became immune and for some - complacent.

Probably it would strike your mind again - Is the world economy too big to fail?

I always believe that in any worsening situation, there will be a hero. Back then during the Japanese earthquake cum tsunami, the world is literally looking to see the end when everyone is dreaming of breathing, eating, drinking and sleeping in a radioactive contaminated environment. The equity market did took a big drop, however, the timber industry in Malaysia had saw this opportunity as the rebuild of the Japanese nation will require a huge amount of timber.

With the recent talks of "tapering of QE" lingering around in our midst, let's have some in depth study on what could be the beneficial on the tapered result.

Looking back on the recent September which had been taken as "Septaper", the USD had been rising consistently and reached a peak of RM3.30 for USD1. Bigger player will tend to turn to the USD when the global economy is at stake as people will find security in the USD rather than other currency. While we can foresee a next upcoming Federal Meeting that could possibly be featuring the tapering issues, what could be the next foreseeable USD in the coming days?

Gloves sector had always been trading using USD. A stronger USD will always be an additional advantage for gloves. Let's have a quick outlook at Supermax.

Supermax had on September taken a huge surge due to the stronger USD against MYR. As the price and volume consolidate at around RM 2.75, I would believe that the talk of taper will possibly spark the USD to grow stronger, and hence benefiting the glove industry on the currency advantage. On a side note, the pandemic flu on the rise had been a major concern for country like Hong Kong, and it had been reported that Malaysia will not be spared by the Influenza A virus as Malaysia had start to quarantine people that are coming into Malaysia. The pandemic flu will definitely put a huge boost on the glove sector despite the rises of the electricity tariffs by TNB which could be possibly passed on to the consumer.

On a technical outlook, Supermax will be poised for a surge on a upcoming large volume trading day. Upon consolidation for around a month, I believe that Supermax will be ripe for a run up. A mid term outlook will put Supermax to challenging RM 3.00 in no time, while a short term outlook will see Supermax touching RM 2.85.

Are you game in or out? You deicide.

Bone's short term TP: RM 2.85

Cheers and happy trading.


Tuesday, 3 December 2013

Barakah - Raging Storms Drilling Oils

As the market had traded in a more cautious manner for the time being with the DJIA index consolidating at the range of 16000 after the bullish run up, could there be a Santa Claus coming on the December to give some winter boost this year?

Malaysia is very unique of it's own. Frankly speaking, the Malaysia KLCI had not seen any major changes back then after the post election in May 2013 this year as it had spent more than 6 months lingering at the 1800 range. While counter part had shown their interest on the upper side of the market by challenging higher mark, is Malaysia market, somehow, delayed? I would probably leave this to you to interpret.

While the current sentiment might not be so encouraging for investor to invest, or even trader to trade, however, one of the sector that might keep your interested could be the Oil and Gas industry in Malaysia. Locally and globally well known Petronas will be announcing their mega projects soon in the month of December 2013. As we can see many local players and sub contractors like Coastal, Scomies, Perdana, Perisai, Sumatec, Daya, Dayang, KNM, SKPetrol had been seeing more volume. While we are talking about more than RM 3billion worth of projects, the listing of UMWOG and Barakah in this intense period of time had definitely raised some eye browns and O&G watchdogs group.

Barakah Offshore Petroleum Bhd

UMW Oil & Gas Corporation Bhd

Both IPO, listed around the same time frame had display a stronger outlook in the market with their shares grabbed up in the open market and consolidating on lower volume at a higher price which had maintained for around a month. While both are performing well, it came to my interest on Barakah Offshore Petroleum Bhd after studying their background.

Barakah, through the RTO of Vastalux on 28th November 2011, had relisted back on the 6th of November 2013. With a total shares issued of 624 millions shares, Barakah is spearheaded by some noticeable top management team that consist of a few heavyweight from Petronas.

With Encik Nik Hamdan on the Deputy Executive Chairman position, well verse with the Oil and Gas industry for over 20 years. Founder and managing director of PBJV Group Sdn Bhd, Nik Hamdan client profile includes prominent corporates such as Petronas Carigali, Sarawak Shell Berhad, ExxonMobil, Petrofac, Newfield, Murphy Oil, Talisman Malaysia Pte, VietsoPetro and some others. With his expertise in upstream pipeline services, his management team is further strengthened with Abd Hamid presence where En Abd Hamid had spent 28 years of his total 35 years career in the O&G industry with Petronas. En Abd Hamid highlights includes appointment of Managing Director/CEO of Petronas Gas Bhd in 1999 until 2003. While other figureheads like En Azman Shah, En Rasdee and Datuk Azizan are on the line, En Sulaiman, attached with Petronas for more than 25 years in areas such as engineering, construction and installation of the structural, tendering exercise, procurement, fabrication, hook up and commissioning of offshore facilities is another huge backbone for the whole team.

In my opinion, the backdoor listing of Barakah via RTO on Vastalux, the management team that consist of core people from Petronas, and the high anticipation season on the Petronas huge projects is definitely something that one should take some time and think about it.

While there are certain solid sources on huge proxy buy back on the shares from open market on Barakah, and with this, I believe that the bagging in of projects by Barakah from Petronas can be almost certain. Barakah via PBJV had tendered for Package A shallow water with a possible head to head battle against Target Energy where it carries out a maximum of RM900k per day on operating day rates.

In a short conclusion, with Barakah background of expertise and ex-Petronas members on the line, coupled with the buying back of the shares, you decide your game.

Bone's short term TP: RM 1.60.

Cheers and happy trading.