Trader’s Note #28: Winners in the 2nd quarter (a)
Last year, Bursa Malaysia has fixed the annual report submission date at 31st May, instead of 30 of June previously. This means that the announcement of quarter result will also be earlier than before, this 2 weeks before June will be the peak of quarter report releasing, and so far, some company has announced their quarterly result of their specified financial year respectively. Some of them are Mmode, Wellcall, Inari and MRCB.
Increases in the net profit by great extent is the advantage, but the revenue is actually decreased, this is cause by the higher profit margin of its property development segments, which it has been transforming slowly from it purely construction business. MRCB is more on the longer term hit with target price at RM2.10.
Despite of the gap up after the announcement of quarterly result, the entire trend is still under the lower space of the Bollinger Bands, i.e. between middle band and lower band, an uptrend will require the price to move within the upper space of Bollinger band.
The theme of listing main board still doesn’t end, the sustainable result of its quarter report will encourage it to break the old time gap.
It is now testing the final level of the gap, and the possibility is very high for it to break through according to the volume action. Further acquisition of this stocks may now refer to the gap as support.
42% of net profit hike, in line with the global economy recovery, especially in Europe countries. Wellcal tailor made the mandrel hose for its customers, thus the increase in demand represent the sustainability of the manufacture industry. We are very optimistic ahead for the last 2 quarter in 2014. Not just net profit, We want to see Wellcal increases its revenue by quarters to show that the business is actually expanding, then we can further expect for the expansion plan to be complete by next year will contribute in more earning to Wellcal.
If the overall net profit will finally reach the all time high, so as the stock price, RM1.60 is the border that it needs to cross, after the RM1.60 river, there comes freedom, the price will sees the RM2 soon. the gap created on Monday is on the similar level as the previous gap, this shows the important of this gap and for further rise until its high at RM1.61, the gap shouldn’t be closed.
Profit rose for about 150% in this quarter but next quarter will remain cautious due to the business slowdown by many of the U.S. technology giant, including Samsung electric, one of the main customer of Inari.
The 21 days moving average is slowly crossing the 31 days moving average and form a crossing point, that point can be take as a rebound point, and the price is approaching to the new high level. The buying risk is high, thus trading base on 8%-10% profit arbitrage may be the right choice.