T

spring onion

Some interesting to see.....

Remember or have you heard one of the popular thinking/saying/teaching in the market is to 'buy stocks at their support'?

Take a look at the zoomed in XDL chart.



Does the XDL chart shows it had form a 'good' support around 23 / 24 sen?

Stock held firm that position for slightly more than 10 trading days.

That would easily viewed as a support, yes?

Look at what happens next.



See the positive movement on 24/4 and the surge in volume?

Breakout from 'strong' support, riding on good volume...
Some more... they might use the comparison (personally I don't like such comparisons) of recent high vs current price, where the recent high was 44 sen vs price of 23 sen. Big discount wor....
Many would buy the stock.... 
Right?

People who had bought at the support or bought at the breakout of the support would be grinning ear to ear.

However....   

this is what happens next....



Stock breakout turns out to be a trap... 
And the 23/24 sen 'support' did not even hold....
Stock hit a low of 20.5 sen.....   

Point?
Buying at supports is not a 100% sure win strategy.....     

Overall, the XDL chart is not looking nice.

In fact, some might even describe this as a head and shoulders chart pattern.

You might want to incorporate the TTM profits into your brief analysis.

TTM = trailing twelve months earnings.

This TTM gives a more 'current' earnings compared to the previous year (in this case) 2013 numbers.

Half year profits 811.098 million.
At this pace, if you use the simple annualised calculation, 2014 could easily reached 1.6 billion.
Which is a much better number than 1.3 billion.

Anyway, TTM profits for YTL is 1.490 billion.
Share base is 10,738,000,000.
TTM EPS is 13.87 sen.
PE at 1.65 is ~ 11.9x.
However to complicate things (which makes shares so fun.. ) if you read the latest profits report, there was a one off gain from an adjustment of property value. This resulted in an accounting gain of over 353 million.

If you take out this gain, this change the whole picture.....
ie.. minus out 353 million from 811 million (this half profit)...
you would see that current half year profit is actually not as good compared to last year.....

ok so far?

There is one myth about YTL companies....

Ask you first, how do you define cash rich for a person?

Do you just look at his cash accounts, current accounts,, fixed deposit accounts etc etc.....

But what about his debts?
For example, credit card debts, car loans, house loans, student loans etc?

You would need to make those comparisons to ascertain his cash richness, right?

Same with YTL Corp (and even YTL Power)

Why do we keep hearing that these companies, are so cash rich.

Yes, they have a lots of cash but then, they have their mountain of debts too.

For example, from their last profit report, you can see that they have big money..... 



* cash is actually less compared to last year *

but then, you can see their mountain of debts.

i do notice they have a large borrowing in terms of bond. but it is not completely a bad thing right?

no it's not a bad thing.
Like I said I just want to point out this myth.
So many people in forums, they just say, YTL is cash rich.
I just feel they need to be more accurate.
Yes, they have plenty of cash but they just have that plenty of debts too.

if it's loan at 12 bil i dont understand why they putting money on FD instead of clearing some, since they are not very active these years.

For this point, I think you need to do some homework. LOL!
If you tabulate their cash balances since 2010, you would see a pattern (ie you can guess/understand the management mindset)....
cash amount in the bank has always been high over the years......
it's like their so-called war chest ....

but over the years....
YTL have been acquiring companies here and there ....
and they use loans to do so (not say is a bad thing.. )

which is where I think things stand......
high cash but also heavy leverage also......

and the price to pay?
it's not tally very efficient as a company....
as a company, despite its huge cash balances, it pays more interests than receiving interests.... (again not saying it is a totally bad thing... )

Actually not bad what.
You have put in plenty of effort....
Actually the price is not really stagnant.



Price has been declining from 2.10 to 1.50+...

However, recently there are signs of change.....



zooming in....



Worth a buy?

Besides the 'green shoot' seen in the chart...
do you see any positive catalyst for the stock?

What is going to make buyers rush to buy this stock?

spring onion

And the reason?

Share buybacks or some pasar traders would describe as 'company goreng sendiri' ...     



See the transaction? It started on 6/5

refer to the earlier chart....



See how the volume increased on 6/5?

The active share buybacks from the company is driving the stock higher.
.... and this is what I will call 'an event' (share buybacks) driven trade.


ok.. let me find you a possible 'chart driven' trade. 

Here's a 'chart driven' sort of trading..... 



See the big jump in volume on 9/5?

This chart event would probably trigger some alert chart traders.

Zooming out...



and out....



.... so what's causing the sudden interest?

Ok, there's one non independent director, Hassan bin Hussain disposing some 1,200,000 shares at 30 sen on 5/5.
This is an off market transaction as the highest traded price on 5/5 was only 26 sen.
Some party was positive enough about the stock to buy the stock 4 sens higher....

Time to dig other info?

Profit track record...

2010 - 1.9 million
2011 - 16.7 million
2012 - 7.8 million
2013 - 17.2 million
ttm - same as 2013...

LOL!

The skeptical perspective?

One year good, one year bad....
would this up-down-up profit trend continue?
How to trust this stock?

The optimistic perspective?
The company had recorded 5 consecutive quarters of positive earnings trend.
Company's profit increased from 7.8 million to 17.2 million.
Fantastic growth.
At 28.5 sen, the company EPS is 2.61 and a pe of 10.92x.
Option for the speculator?

Wait for T+3 and observe how the stock digest that big volume.
If it holds or if it makes a move up, time to jump in?

Your opinion spring onion ?