Airasia Msia – Worthwhile to take a look?

Airasia, along with the rest of the stocks in ASEAN have seen a big correction in their share prices due to the ongoing concern of an earlier than expected QE tapering as well as the Syria’s military intervention by the US and its allies. We have seen a deep 30% plunge in its share price against its recent peak in late May (just before the huge outflows seen in the month of June, which wiped out billions of dollars from the EMs).


Peers comparison also puts Airasia at the top, with an undemanding 10x P/E against the industry average of ~30x. ROE seems to average out around 20-30x since 2004 except 2008 (-ROE due to the losses it incurred), which was an exceptionally bad year during the european crisis.

AIRA Peers

Some of the risks include the volatility in crude oil prices due to the turmoil in Syria as well as the continual depreciation of the ringgit, which may eat into its bottom line. (not vested)


Noble, breakout of consolidating band?

noble 27 march 13

Noble recently announced earnings that were largely inline, while the operating earnings were slightly below expectations due to a weak 4Q12 agriculture performance driven by poor performance of Argentina/China crush operations.

Management is targetting US$100m of cost savings by mid 2013 and is looking at M&A opportunities. See recovery in agriculture as key earnings driver/to look out for asset recycle opportunities/oilseed processing plants in Ukraine/Brazil/South Africa to start operation in 2013 with significant contribution in 2014. Liquidity remains strong with cash/unutilized facilities @ US$5.9bn.

Technically, it has been consolidating within the band since Feb (refer to chart), a breakout today with vol might suggest that a reversal is underway. Key risk would still be the execution risk followed by country party risk.

Dyna Mac – Further upside from here?


As of yesterday, Dyna Mac has fallen almost 22% from its recent peak on Jan 29 2013 and it seems like it is positioned for a quick rebound from a reversal candle yesterday. Indicators are looking healthy and MACD might be forming the golden cross as well. Judging from the price action today, it seems like the buyers are waiting @ 0.445/0.45/0.455 to accumuate their positions before swallowing the offers.

JPM just upgraded this stock today, giving a TP of $0.64 – 50% potential upside as of yesterday’s close. Given that its the first day this stock had broken out, we stand a good chance to see its continuity of the uptrend tmr.

Further more, it had proposed a special dividend of 0.02 to be given after passing the EGM/AGM, that’s a good 5% yield as well. This piece of news will be supportive of the share price for the short term.

Wilmar set to outperform?

wilmar 3 jan 13

Take note that the benchmark – FSSTI (green line) has risen 64% since June 2012 while Wilmar has been consolidating for the longest time during the same period. It is also pretty clear to notice the divergence in the 2 charts shown above so it might be time to look beyond the corruption or insider trading and give this counter a second look.

CPO prices are set to rebound this year, crossing the 2500RM mark today, tks to the rainy season with the floods that make harvesting job difficult. This should reduce the record stockpile that is sitting in the storage. Besides, Wilmar is set for a round of earning surprises as the performance of non-oilseed and grains is solid and growing. Trader expects a recovery in oilseed & grain profit before tax due to a reversal of negative commodity speculation and financing effects as the logic for these transactions subside.

Olam – Double top incoming?

Judging from the chart above, indicators were all showing toppish signals while the price looks like it is forming the “Head & Shoulder” formation. Whether or not it is true, let’s wait and see. As for the price movement, it would be healthy to see Olam retracing down to hit the moving average @ ~$1.96 b4 making its upmove again. It just announced today that they bought over Northern Coffee Corp (largest estate in Zambia) for 6.2m and they are going to spend another 40m to fully develop plantation. This is consistent with their strategy but the impact will be limited given the size of the acquisition (small) and that the subsidiary will only contribute from FY2016 onwards.

What will happen tonight? (My View)

After the long anticipation for the ECB’s meeting tonight, I believe we are likely to see some +ve outcomes from it. In order not to openly print $$ like the US’s Central Bank, the ECB will likely to give the green light to execute the plan of sterilized bond purchase tonight. This means that the ECB will issues bonds backed by themselves (highly creditable) and use the proceeds to buy into sovereign debts (issued by PIIGS) to push down the cost of borrowing for the debt ridden countries. In addition to that, the market seems to be speculating that the ECB will further cut the interest rate by another 25bps.

Bond auction by Spain ended with a joyous note, after they succeeded in selling the max amt of debt targetted – 3.5b euro. Yields have fallen as well, across the short to medium term notes. At the point of writing, the major european indices are all in the +ve territory/coupled with strong asian closing, seems like we have something to celebrate tomorrow! Stay tune…

Noble – Key Support @ $1.20

Noble Grp has recovered a gd 18% from its low @ $1.02 just a couple of weeks back. When it touched ~1.30, a support turn resistance lvl back in Aug-Oct 2011, it quickly came tumbling down back to its near term psychological level @ $1.20. This is not a bad sign if it can continue to consolidate for 1-2 months in this range of 1.20-1.30 before finally taking out the resistance @ $1.30. Hopefully there will be some gd news (USD800mn gains from Gluocester’s deal to be included?) from the company in its next reporting: ~ Nov 2012. Fingers crossed.

FYI – They have already booked a gain of USD100m this quarter. CEO announced that their B/S is healthy for more acquisitions.