January Effect, Will Appear Again?

Every month of January, our stock market index goes up or higher than previous month (December of previous year) despite there are no positive events which push the stock price up.

This such a sentiment is said as natural, unless if there are serious negative events occurred then the market sentiment will be different.

How true this point of view? The statistic below will give you the answer.

The table below presents the five years KLSE index which comparing highest and lowest index between January (current year) and December (previous year).

                          

                                    Table 1: KLSE Index For January & December

                                    Begin              Highest           Lowest            End

Dec 04             919.17             919.17             897.34             907.43

Jan  05             903.84             937.56             902.49             916.27

Dec 05             887.80             900.49             885.48             899.70

Jan  06             897.13             914.01             901.32             914.01

Dec 06             1080.11           1098.59           1060.36           1096.24

Jan  07            1117.09            1189.35           1106.06           1189.35

Dec 07             1419.34           1447.04           1391.61           1445.03

Jan  08             1435.68           1516.22           1354.48           1393.25

Dec 08             848.43             876.75             835.17             876.75

Jan  09             894.36             927.62             873.41             884.45

Dec 09             1266.71           1272.78           1255.66           1272.78

Jan  10             1275.75           1308.36           1259.16           1259.16

            Source: http://finance.yahoo.com

What are the findings from the figures above?

Highest index of January always higher than highest index of December and lowest index of January always higher than lowest index of December except January 2008.

When highest and lowest index are higher in the following month, it shows that market is

uptrend. Therefore, the statistic has concluded that from year 2004 to year 2010, index of  January was always higher than December (except January 2008)

Since every January the market is uptrend, therefore,  we call this phenomenon as “January Effect”.

It can be a guideline for investors. Investors should buy stock in December (of course fundamental stock) and sell it in January.

Will there be January Effect next year (2011)?

Supported by the historical statistics, from my point of view  “January Effect” will appear again in year 2011.

- Sabri Jalil

Take Over Plan, Will KFC Go Up Further?

As reported by most main media on 20^th November 2010, Tan Sri Halim Saad has made offer to takeover KFC Holdings Berhad (KFC) by purchasing QSR Brand Berhad (QSR) shares from Kulim Berhad.

Kulim Berhad is the company owns 59.58% shares in QSR and QSR in turn owns 50.3% shares in KFC. As known by public KFC is the operator of international well known brand outlets in Malaysia (a part from Singapore, Brunei, Cambodia and India) namely KFC Restaurants and Pizza Hut outlets. Apart from that KFC is also the owner and operator of Ayamas outlets.

Since the takeover involving three public listed companies, what is the effect over the share price of those companies?

From my point of view, the news of takeover which believed to be materialized will give negative effect to QSR price  but positive effect to Kulim and KFC price based on the following analysis.

QSR

A report says that, QSR price offered by Halim Saad to Kulim will be RM5.18 namely two times than book value of RM2.59 as at end June 2010. Meanwhile the market price of QSR before suspension on 19 November 2010 was RM5.76.

Since the market price is higher that offer price, it will make the price of QSR unattractive and investors will sell QSR shares instead of buying, therefore QSR price will down once  it is resume trading in the market next week

KULIM

Five years ago, Kulim bought 43% QSR shares for RM3.20 per share. If Kulim agree with Halim Saad’s offer i.e RM5.18 per share, Kulim will gain RM1.92 per share or 60% capital gain for five years investment. As an effect Kulim will receive a lot of cash from this take over and therefore the price may go up.

KFC

Readers can refer to my previous article in this blog. KFC price was RM3.63 when I made the analysis and recommend to buy based on fundamental. Few weeks later the price was above RM4.00 i.e short term target. Since KFC has very good fundamental strengths as written in my previous article, I believe that KFC price can go higher in mid and long term even before news of takeover published.

No matter either the takeover will be materialized or not, KFC is still a good investment. Takeover plan by former influential billionaire who want to make a comeback will support and make KFC shares more attractive as well as  speed up the upward movement. Nevertheless, I do not deny should the takeover fail, the KFC price will move to the south but only in short term.

The above analysis is my point of view only.

- Sabri Jalil

 

Will Price Of KFC Go Up?

After corporate exercise (bonus issue and share split) on 8 Sept 2010, the price of KFC Holdings was adjusted from 22.12 to 2.81 and it looks more attractive and cheaper thereafter. 

KFC Holdings is owned by Johor Corporation which controlling 50.04% of shareholding via QSR Ventures Sdn Bhd and QSR Berhad.

Buy opportunity for KFC Holdings. Why?

1. Strong financial position

KFC Holdings is a company which has good financial position as follows;

a.       Current ratio is 1.22 which mean strong cash position.

b.      Gearing ratio is 0.6 which mean  very low debt.

c.       ROE measures the capability of making profit. Benchmark of ROE is 15% as recommended by Warrant Buffet where as the latest KFC Holdings ROE was 16.47 and for  4 years average ROE, it  was 17.42. Both are higher than Warrant Buffet’s benchmark.

2. Good dividend payment

Since year 2005, lowest dividend paid was 16 sen. The highest, in turn, was 26 sen which paid this year and before the corporate exercise. The par value was RM1.00 before corporate exercise. It is mean that, based on par value KFC Holdings has paid dividend ranging from 16% to 26% to shareholders since year 2005 and it was lucrative dividend.

3. Growing net profit.

The net profit growth of KFC Holdings (in million) can be seen as follows;

            Year                            Net Profit (RM million)

           

            2005                            -31.50

            2006                            99.05

            2007                            104.27

            2008                            118.54

            2009                            130.40

            2010                            140.00 (expectation)

The statistic above shows the growing pattern of KFC Holdings net profit.

4. Expanding business – local and oversea.

In term of business networks, company currently has  495 outlets nationwide (32 of them are drive-thru outlets).

In year 2011, KFC Holdings will expand their business locally and abroad.

As for local expansion plan, the company will open another 20 outlets (12 of them are drive-thru outlets) nationwide.

As for overseas business operation, as well as Cambodia, KFC Holdings has started operation in Mumbai India. KFC Holdings has been appointed as master franchisee by master franchisor in USA namely Yum! Brand Inc. As a master franchisee, KFC Holdings has a right to open outlets throughout India.

At the moment, the company has 7 outlets and in year 2011 they will open another 17 outlets. We believe that the business expansion in India will be supported by the growing middle income group in tandem with  encouraging economic growth which expected to grow at 9 to 10 per cent annually.  

KFC is the world class brand.

We can follow Warrant Buffet way who always prefer to invest in well known brand company like Coca Cola.

- Sabri Jalil

Titan's Take Over, Target Price RM2.35

It has been reported that, a second largest ethylene maker from Korea, Honam Petrochemical Corp,  will buy 72 per cent stake in Malaysia's Titan Chemicals Corp Bhd where a prominent  Malayisia’s investment agency namely Permodalan Nasional Berhad (PNM) is a one of the major shareholders.

Report also says 72 per cent stake that to be taken over by Honam are combination shares which owned by PNB, Amanah Raya Trustees Bhd and The Chao Group (a Taiwaineese company).

By acquiring 72 per cent stake from those vendors, it will enable Honam to proceed unconditional take over offer for the shares which not owned  by them especially from the minority shareholders as the objective of Honam is to fully control Titan.

The price to be paid by  Honam is RM2.35 per share. The closed price of Titan was 1.83 before suspension last week and the NAV, in turn, is RM2.42. It is still good buy for Honam as the purchase price still lower than NAV.

We expect that,  the shares of Titan will be requoted next week and the offer price by Honam (RM2.35) will be a target market price.

Titan is recommended to buy, but the question is at what price should investors buy?

It is difficult to determine the specific price to buy as we expect the price will move fast or jump. Nevertheless, investors can buy as long as the price is below than RM2.35 and if investors think that the differences  is worthwhile.

Investors will gain by reselling via open market or by accepting the unconditional take over offer from Honam.

- Sabri Jalil

Sime Darby Crisis, Any Purchase Opportunity?

                                                                   

13 May 2010 was a bussines tragedy. Investors has been surprised by the news of Sime Darby which has been reported making losses due to cost overruns  for Bakun and a petroleum project in Qatar. The amount of losses was RM1.6 billion and first big financial crisis since merger in November 2007. In 2008 and 2009 Sime Darby has made net profit of RM3.5b and RM2.2b respectively.

As an effect of the losses, share price plunged and in May 26, the price closed at RM7.60, lowest since 10 months. Based on 52 weeks highest price i.e. RM9.24, it was 21.6% drop.

Some investors raised question, can we buy the Sime Darby share at the moment?  The following  questions will help you to make decision.

As an investor, the most important thing should you bear in mind is the future of the company.

Is the existing management which led by new Acting CEO will do something to turn Sime Darby into the earlier business or financial position?  Any hope for Sime Darby to be turned around?

Are you willing to follow Warrent Buffet’s principle? “There is an opportunity in the crisis”. He spent billion dollars by buying Goldman Sach shares when it plunged in 2008 which caused by Goldman Sach financial situation.

The last, know your self  before you buy Sime Darby. Are you trader or investor?

Get an opinion from your remisier or advisor.

- Sabri Jalil

GTRONIC, Can Buy?

Low debt company with debt-equity ratio and current ratio is 0.32 and 1.93 respectively as of December 2008

Company is under electronic sector which  produces microchips and LED(light-emitting diode). Demand for microchips increases in tandem with increases in global demand.

As for LED, it contribute 20% to the company’s income and  the demand by 2012 is projected to reach USD10b with average annual growth 20-25% as LED is cost effective, longer lifetime and environment friendly light unlike the ordinary light.

Global economic recovery will support the demand of both products.

Stable net profit from 2004 to 2008 namely RM22m to RM30m, except 2009 where profit dropped but has showed the uptrend from quarter to quarter to make up RM15.9m.

Net profit in first quarter 2010 was RM6.2m compare to only RM204,000. Therefore, result for financial year 2010 is expected better.

Two goverment agencies has a big number of shares in Gtronic namely EPF which has more than 25 million shares and Tabung Haji more than 16 milliom shares.

Share price started moving up since 19 April 2010 which closed at RM1.47 and by 23 April 2010 closed at RM1.68.

 Technical target by Maybank, ranging RM2.03 to RM2.40  

- Sabri Jalil

KNM, Buy Opportunity

KNM, a company which involved in oil and gas industry, trading between 0.595 to 0.605 today. A broking house said it is a buying opportunity if the price below 0.60.

Price per book value (PBV)  is 1.32 times and average ROE (from 2004 to 2008) was 25%. Investment experts say good buy if PBV below 1.5 times and ROE above 15%.

From my point of view, buy for investment....

- Sabri Jalil

Nak Beli Saham, Mana Satu Yang Betul?

“Ada yang kata beli saham bila harga tengah naik, ada yang kata beli bila harga turun. Mana satu yang betul ni?”

Itulah pertanyaan dari salah seorang yang baru kenal dalam satu majlis. Beliau memang berhajat mahu melabur dalam pasaran saham tetapi soalan yang bermain dikepalanya selama ini membuatkan beliau menagguhkan niatnya.

Soalan beliau itu amat bagus dan biarlah penerangannya kita kongsi dalam blog ini.

Samada anda membeli ketika harga tengah menaik atau ketika turun, ia bergantung kepada siapakah diri anda.

Adakah anda mahukan keuntungan lebih cepat tetapi perlu menghadapi risiko yang lebih tinggi?

Jika ya maka anda boleh membeli ketika harga sedang meningkat dan menjual ketika harga lebih tinggi. Ia dipanggil sebagai strategi momentum. Anda perlu mempunyai displin yang tinggi jika ingin mengamalkan strategi ini. Sikap tamak perlu dijauhi.

Adakah anda seorang yang sabar dengan tidak mengharapkan keuntungan yang sangat cepat tetapi kurang berisiko?

Jika ya, maka anda perlu membeli saham ketika harga jatuh dan menjualnya ketika harga sedang meningkat. Strategi ini dipanggil sebagai kontrarian. Kontrarian bermaksud bertentangan iaitu membeli ketika ramai pelabur menjualnya (yang menyebabkan kejatuhan harga) dan menjual ketika ramai pelabur membeli (yang membuatkan harga meningkat). Strategi ini mempunyai risiko yang lebih rendah (tetapi tidak bermakna tiada risiko) dan ia diamalkan oleh pelabur terkemuka dunia iaitu Warren Buffet dan John Templeton.

Untuk makluman John Templeton telah membeli saham-saham tujuh syarikat penerbangan Amerika Syarikat yang jatuh menjunam semasa peristiwa September 11 dan meraih keuntungan berbilion dollar seminggu selepas itu akibat harganya meningkat mendadak selepas kerajaan AS mengumumkan subsidi kepada 7 syarikat penerbangan tersebut.

Dengan kata lain, kenali diri anda dan tetapkan objektif anda agar anda mengamalkan strategi yang bersuaian.

-  Sabri Jalil.

Muhibbah Engineering, Signal Appears

Buy signal for Muhibbah Engineering based on below technical indicators;

SMA

• 20-day MA (green line) has crossed 50-day MA (red line). It is buy signal
• Price moving above both 20-day MA and 50-day MA – showing moving uptrend

SLOW STOCHASTIC

• Both Stoch %D (green line) and Stoch %K (blue line) moving uptrend where blue line (%K) always moving above green line (%D) à indicating uptrend movement.

MACD

• MACD line (blue bar)has crossed signal line (green line) à good buy signal

Conclusion is good for buy....

- Sabri Jalil

Share Price Of Rubber Glove On The Way Up

Most of research houses are bullish on rubber glove sector as global demand is increasing from 8-10 percent.

TopGlove has recently announced to acquire some companies in this region as part of expansion program.

Latexx will have JV with Ducth company to operate plant and distribute product for Europe market. They will produce protein-free glove for medical usage.

Kossan will increase their output by 20%.

Due to rising demand all over the world, share price of glove companies were increasing and the target price as reported below;

Company Target price Current price

Adventa 5.44 4.24

Harta 11.24 7.34

Latexx 5.44 4.84

Supermax 7.96 6.09

TopGlove 15.9 11.76

We optimistic that, while the price moving to achive the target, the profit taking will take place thus will temporarily push down the price. Investor can take this opportunity to buy and sell when rebound if you can’t wait the price to meet the target.

- Sabri Jalil