SJ Securities Research has come up with a new list of trading ideas subsequent to the one on March 27, as interest has shifted to second- and lower-liners, in particular penny stocks.
“The volume of these stocks has been steadily increasing. All this provides opportunities for riding the trend,” it said, adding that the stocks could have been overlooked in this round of “penny stocks attack” strategy.
“Moreover, the volume of these stocks is increasing steadily, manifesting steady accumulation before the next ‘push’,” it said.
SJ Securities Research said the new list of stocks posed lower downside risk and high potential gain.
“These stocks are low priced and are generally supported by substantially higher NTA as compared to their current share prices and are a lot lower compared to their historical prices.
“There is potential upside from the flow of the market and rotational plays,” it said.
The research house said stocks on its previous list had, on average, increased by about 50% with several rising by over 100%.
“As such, despite potentially having more upside, we believe that the stocks currently bear higher risks on pullbacks on profit taking,” it said.
Bertam Alliance (26 sen): Buy
Resistance: 28 sen, 30 sen, 34 sen
Support: 22 sen
Following the inverted head-and-shoulder breakout at the neckline of 22 sen on April 27, it is heading to target 30 sen. Overhead trendline resistance is at 34 sen.
Stop loss is at the neckline of 22 sen.
Bertam is a relatively small property developer with projects in Langkawi, Subang Jaya, Nilai, Seri Kembangan and Melaka. It targets niche developments in matured or maturing markets with small GDVs of around RM50 million or less.
Bertam trades substantially below its NTA of 67 sen. Its two-year price was 39.5 sen. The group has relatively low gearing as a developer.
At current prices, Bertam trades at a gross and net dividend yield of 6% and 5.1%, respectively. The dividend indicates good cash flow management and operations. Bertam currently trades at a trailing PER of nine times.
KPS Consortium Bhd (17 sen): Buy
Resistance: 22 sen, 25 sen
Support: 13 sen, 15 sen
Current neckline breakout at 15 sen is targeting 22 sen, with the resistance at 25 sen. Support is at the price gap of 15 sen. Stop loss is at 13 sen.
KPSCB group is engaged in plywood, paper milling, paper converting, and other timber-related activities. About 75% of its earnings come from plywood and the rest from other paper-related businesses.
KPSCB’s exposure to plywood and relatively cheap trading price offer fundamental upside when construction projects begin taking off. Globally, there has been substantial stimulus plans with allocations to the construction sector.
KPSCB trades substantially below its NA of 97 sen and a NTA of 68 sen with a trailing PER of 4.7 times.
KPSCB’s two-year high trading price was 48.5 sen. Losses for the previous quarter were partly attributable to a provision for bad debts but it remained operationally strong. The potentially stronger demand from construction activities means that KPSCB trades at highly attractive forward PERs.
Sanbumi Holdings Bhd (37 sen): Buy on dips
Resistance: 46 sen
Support: 32-34 sen
The expanding diagonal triangle since mid-March is targeting an upside at 46 sen. The current pullback from the 43 sen high of April 30 is on the support at the previous low of 34 sen of April 29. Stronger support is at 32 sen. Stop loss is at 31 sen.
Sanbumi is principally involved in timber, mobile crane and tourism activities. Its key contributor is the timber business.
Sanbumi trades at a NA of 81 sen. Its two-year recent high was 85 sen. Operationally, Sanbumi has been performing poorly for the previous year.
However, we may see a turnaround in the future with the recovery of economic activity and if a commodity play kick-starts. Sanbumi would also benefit from a kick-off in construction activities.
MK Land Holdings Bhd (35 sen)
Resistance: 38 sen, 43 sen
Support: 29 sen
Since the consolidation breakout at 18 sen in early April, the share has been trending upwards. Immediate target is at 38 sen. The 38.2% retracement level is at 43 sen. RSI (Relative Strength Index) is at a high of 88 sen. Stop loss is at 29 sen.
MK Land is a property developer and is also involved in leisure activities. The company had performed poorly for the past few years with declining turnover. This was weighed down by overleveraging and stretched cash flows.
MK Land has a GDV of over RM4 billion and a very attractive landbank. The group has improved its cash flow and managed its high debt levels, allowing it to proceed with ongoing projects.
Its net asset per share is 82 sen. However, this is highly understated as most of the landbank has not been recently revalued. RNAV of the share is estimated at RM1.80. The share currently trades at a substantial discount to this. MK Land’s recent two-year high price was RM1.45.
Cahya Mata Sarawak Bhd (CMSB, RM1.53): Buy on dips
Resistance: RM1.74, RM1.80
Support: RM1.38, RM1.43
Current upwards trend is not over yet. It is targeting RM1.74, with resistance at the previous high of RM1.80 on July 31, 2008. The RSI sell divergence at 73 sen indicates a small pullback, with support at RM1.43. Stop loss is at RM1.38.
The conglomerate is involved in various businesses, including cement manufacturing, construction and quarry operations, road maintenance, stockbroking, property development, and trading and services.
CMSB trades at a trailing PER of six times. The company consistently pays dividends, the current yield being 3.3%. CMSB is mostly exposed to the Sarawak economy. Its share trades at a discount to its NA of RM3.79. The recent two-year high was RM3.08.
TDM Bhd (RM1.66):Small correction
Resistance: RM1.75, RM1.90, RM2.05
Support: RM1.40, RM1.54
Recent run-up has been capped at the price gap of RM1.75. Current correction is not over yet. A dip below RM1.54 points to a likely downside at RM1.40.
However, a move above the price gap of RM1.75 will signal a resumption of uptrend to RM1.90, with resistance at RM2.05.
TDM is principally engaged in plantation, food and health activities. Contribution comes primarily from the plantation segment. The company has an attractive cash position of 60 sen per share with minimal borrowings. It recently announced a dividend of 14 sen per share less tax or 10.5 sen a share. This means a net dividend yield of 6.2% for the year. The ex-date is June 23.
TDM currently trades at a trailing PER of only 3.7 times with a NA per share of RM2.73. Its recent two-year trading high was RM2.71.
The group manages 12 oil palm estates with total land of 37,000 hectares with 32,709 planted hectares. Ninety-five percent of the planted hectarage is matured. The group also operates two palm oil mills with an annual capacity of 600,000 tonnes of FFB. It produced 595,001 tonnes of FFB last year.
PJ Development Holdings Bhd(58 sen): Buy
Resistance: 65 sen, 71 sen
Support: 51 sen, 54 sen
Current move is targeting 65 sen, with pullback support at 54 sen. The 38.2% retracement is at 71 sen. Stop loss is at 51 sen.
PJD is principally engaged in property investment, construction, manufacturing and trading in building materials; hotel and leisure activities and golf course operations.
PJD’s property development primarily focuses on niche projects in the Klang Valley. The group has projects in Penang, Johor and Pahang. Its hotels include several Swiss-Garden hotels and a lodge in Sydney. The group also owns Damai Laut Golf & Country Club.
PJD’s construction arm is involved in both residential and commercial properties. The stock trades substantially below its NA per share of RM1.68 and at a trailing PER of 6.7 times.
PJD has a consistent record of dividend payments with a yield of 8.6%. Considering its dividend yield and peer comparisons, PJD trades at attractive prices. Its two-year trading high was RM1.24.
Multi-Purpose Holdings Bhd (RM1.41): Buy on dips
Resistance: RM1.68
Support: RM1.30
With a small pullback support at the trendline of RM1.30, it is likely to retest the July 2008 high of RM1.68.
MPHB is involved in the core businesses of financial services, stockbroking, and gaming. The group is considered a conglomerate.
Its activities span the general insurance business, credit and related services, stockbroking services, property investment, gaming, information technology and leisure sectors.
The top-line and bottom-line are primarily contributed by its gaming and leisure segments from Magnum Corporation Bhd. MPHB trades relatively low compared with its gaming peers while having decent dividend yields. However, it is highly geared.
The number forecast operations (NFO) industry is relatively stable even during economic slowdowns. Impact on the industry is usually only felt when higher taxes are imposed on the industry.
Based on current prices, MPHB has a dividend yield of 6.3%. The stock trades at a trailing PER of 7.4 times or less than half of BJToto’s trailing PER of 16.5 times. Its two-year trading high was RM2.68.
This article appeared in The Edge Financial Daily, May 15, 2009.