Trump has been dishing lots of “bomb” to the world which
badly affected the financial market and causes a lot of volatility around the
globe.
From Canada to Europe to China and the latest casualty is
Turkey. This had causes a lot of rebellion and a lot of financial market
crashed. However, there is 1 thing that is keep going up is USD and this USD
index formed a technical break up at the 95 level.
At the same time, Ringgit had also depreciated against USD.
RM had fell back to the level which we had seen in August
2015, May 2016, and September 2016.
Do you still remember what happen that time?
Let’s have a look at FBMKLCI, coincidently, the 3 month
mentioned above also almost the bottom of FBMKLCI, will this time the same
again? Well, we are not so interested in this topic but we are more interested
in the topic below.
BCF remember that there are a lot of export stocks which had
rally quite a lot due to the RM depreciated a lot, this is due to most of the
export counters are selling their products in USD while most of their cost is
in RM. As a result, the revenue of the company will balloon while the cost
still remain, and this causes the profit of the company to rocket. This huge
profit had become the supporting for the share price to move up.
Now the million dollar question would be, will the history
repeat again?
Looking back at all the sectors, BCF found that there are a
sector where the share price had just started to move up from its bottom. That
is the wood and furniture industry!
1.Liihen
2. Homeritz
3. Poh Huat
4. Latitude
5. Jaycorp
6. Wegmans
7. Hevea
8. Evergreen
If we were to look at the chart of all these counters, you
can see that the industries had started to move up from bottom where it is
accompanied by bankers chip from the homily chart (red chip).
So which is the best counter to look at?
1st we will look at the FA of the counter, which
counter has the most exposure towards USD?
1.
Liihen:
87% revenue from USD, 80% of product exported to US & Canada, 2800 workers.
Factory got burnt down and rebuilt, expected to resume production in June 2018.
(95% revenue from USD in 2016).
2.
Homeritz:
99% revenue from USD and 70% purchase from USD
3.
Pohuat:
69% & 22% of revenue are from US & Canada, 1000 workers in Malaysia
& 4700 in Vietnam. (Binh Duong expansion in 2016 due to fire and increased
20% production)
4.
Latitude:
Expansion in 2016 and 2017 which already completed. 97% of revenue and 84% of
cost are denominated in foreign currency. 7000 workers.
5.
Jaycorp:
27.6% of the revenue derive from North America. This would be the last among all this Cos.
6.
Wegmans:
approximately 98.42% and 9.53% of the revenue and purchase are denominated in
USD. While the 1.58% and 90.47% of revenue and purchase are denominated in RM.
They are also expanding where their capacity can grow by 100% after their new
production completed
According to what being written in their Annual report, we
can see that Wegmans are the company that has the most exposure towards USD.
This is because most of their revenue is in USD while it has the least cost
exposure in USD.
2nd Comparison of banker chip
1.
Homeritz: 81.41% : RM0.81
2.
Wegmans: 77.12%: RM0.35
3.
Liihen: 62.37% : RM2.99
4.
PohHuat: 60.54% : RM RM1.52
5.
Evergreen: 55.71%: RM0.58
6.
Latitude: 45.18%: RM3.75
7.
Hevea: 36.96%: RM0.945
8.
Jaycorp: 7.94%: RM0.89
After looking at the bankers chip as well as the share
price, my top 3 wood related counters would be:
1. Wegmans
Newly listed on March in ACE market (consider virgin
stock) IPO to increase production line by 100%, price just move up 20% from its
IPO price. Have the most exposure towards USD while having a lot of banker
chips. However, company making losses in last Q, hence the coming Q result will
be crucial to decide its’ direction. The price in terms of quantum is the
cheapest among the peers, should be able to attract a lot of traders. I think
this could be the best among the 3 counters.
2. Homeritz
Could be good as well, however share price
had shoot up 35% from its bottom, and it had shot up on 14/8/2018 as well,
maybe its better to wait for T3. On the other hand, it has the highest banker
chips among all. The share price is consider the 3rd lowest among
all.
3 3. Evergreen
This is consider the 2nd
cheapest among all in terms of quantum. The banker chip is above 55.17%,
however, they have been having issue with the labour which causes their result
to be at the low side.
Even though this sectors looks promising with the
appreciation of USD, it is also important to take note that this is the quarter
result month. This counter will be facing huge selling pressure if they failed
to deliver favourable result. Hence, we will have to monitor closely their Qr
and react accordingly. Big Canon will try to write more to update once the
result of this counters are being release.
Please always bear in mind that Big canon is
not giving any buy or sell call, always bear in mind, Big Canon don’t give buy
or sell call. Our articles only serve for education & sharing
purposes.
May all the HUAT be with us!
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