Monday, October 4, 2010

How To Spot A Good Trade Part 4

This featured column is based purely on volume, breakouts, hence very little fundamentals for me to write about. I have to say, I never studied any technicals topics or read even any chartist books. The closest I can say its intuition. I get a gut feel from the way it moves, the range it traded, the underlying stock and its characteristics, and most important the volume formation.



The track record for this feature "How to spot a good trade" has been pretty good. But I still get whacked by some readers as they expect a stock to make money "immediately". I mean 4-8 weeks is not too long, is it?

How to spot a good trade (parts 1, 2, 3):


17 August 2010 GOPENG (~RM1.02) Current: 1.18, 10 week high 1.34

24 August 2010 LION FIB (~RM1.48) Current: 2.09, 10 week high 2.14

20 September 2010 UEM LAND (~RM2.00) Current: 2.29, 4 week high 2.37

Plus, there is no need to chase, you have plenty of time to buy and still make a decent trade. Mind you, its a trade, not a fundamentals type thing, so do not question what they are doing etc. ... AND NEVER, EVER (for the love of God) WRITE TO ME TO ASK WHAT PRICE TO SELL AT!!!!!!




Well, first breakout from RM2.50 to RM2.75 was significant. Last Friday's breakout to RM3.12 was significant. Some charts will tell you the stock is headed for a triple top, like I said, I don't know what that means really. My gut feel was triggered because it gap up to RM3.16 on opening today, went to RM3.32 and closed at RM3.20 on very good volume.

The fact that it did not retrace back to close the gap, which some chartists will tell is very important, was significant. Short term traders who bought below RM3.00 had ample time to sell, and most did. I really liked the way it closed, the stock pattern and volume are telling me a nice story behind it. Don't know what it is, but it should be good.

I couldn't really care about the rumours surrounding the stock but if you like you can read below. To me, if the pattern of movements does not feel good, it does not matter what the rumours are about.

http://www.asianbite.com/photos/aibu-saki_14575.jpg

In the news: Syed Mokhtar Al-Bukhary, the Malaysian billionaire, has written to the country’s government offering to buy 1,200 hectares of Rubber Research Institute (RRI) land outside of Kuala Lumpur, the Malaysian Insider reported today online, citing an unidentified government official familiar with the matter.

Syed Mokhtar, who controls MMC Corp, has also offered to buy a police training center in the capital, according to the report. -- Bloomberg

http://www.tnt.net.my/home

MMC MAKES OFFER FOR ENTIRE UEM GROUP


Proposal hangs by a thread as EPF and PNB chafe at being relegated as junior partners to MMC, while the company’s already high debt gearing at 2.6 poses hurdle in raising fresh debt

KUALA LUMPUR. Sept 29: MMC Bhd’s formal bid to the Ministry of Finance to acquire the entire UEM Group Bhd is hanging by a thread as the Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB) has refused to join the bid as junior partners.

The proposed buyout sees MMC valuing UEM Group at RM15.6 billion and sees it planning to raise RM16 billion, which would include a working capital of RM500 million.

UEM Group’s listed entities include Plus Expressways Bhd, Faber Group Bhd, UEM Land Holdings Bhd and Time Engineering Bhd.

Among the group's business includes UEM Builders, part of its unlisted stable, which is undertaking a large portion of the construction of the second Penang bridge, along with wholly owned subsidiary Penang Bridge Sdn Bhd which holds the concession on the 25 year-old Penang Bridge.

How does MMC intend to acquire PLUS via takeover of UEM

posted Sep 29, 2010 8:02 PM by CT Print
Along with the very very interesting story of how we now know that MMC has been pursuing PLUS is the even more exciting way of how they are going to do it.

This is what TnT has been told:
  • The Proposal submitted by MMC was done when PLUS's share price was quoted at RM3.80
  • MMC proposes Special Purpose Vehicle (SPV) to acquire PLUS through the acquisition of UEM at toal cost of RM15.5 Billion
  • Plans to raise RM16B including working capital of RM500M
  • Plans to keep toll rates staus quo till the end of concession in 2035
  • does not intend to seek compensation until the end of concession
  • Word was that MMC will reduce toll collection by 20% by giving discounts, but such has not been mentioned in the purported proposal
  • Funding structure tri-party; MMC - 40%, EPF and PNB - 30% each, amount to be raised in market RM11.2B
  • (This is the clincher) SPV requests corporate tax to be capped at 15% or lower for PLUS for the entire duration of concession; in addition SPV to be able to utilise all unabsorbed tax losses and capital allowances of other entities within the group
  • SPV to also seek concessions from government which includes tariff increases after a few years, as well as financial assistance by means of getting government involvement to provide 'below market level funding' or better still the taking over of existing debt
TnT was given a long list of other details, but right now, all that is important is this very interesting proposal by some big wig Taikors.

PM says MRT among large projects, MMC Corp shares up on upgrade
The Edge - Business (1 October 2010)

Shares of MMC Corp rose in the morning session on Friday, Oct 1 after Credit Suisse upgraded it to an Outperform and raised the target price to RM3.80.

At 11.17am, MMC Corp was up 12 sen to RM3.12 with 4.13 million shares done.


The positive sentiment was also boosted by a wire report that the government would soon announce seven large projects including the mass rail transit (MRT) soon in Kuala Lumpur.

Prime Minister Datuk Seri Najib Razak was quoted saying the government was ready to announce the seven huge projects soon. “The MRT will be one of our largest projects and it will have a huge impact to the country’s economy,” he said.

Meanwhile, Credit Suisse upgraded MMC Corp to an Outperform (from Neutral), as the market had underappreciated two key developments on the stock. They were the South Johor land and the Kuala Lumpur MRT. It viewed MMC as a laggard play on these developments




NOTE: The above opinion is not an invitation to buy or sell. It serves as a blogging activity of my investing thoughts and ideas, this does not represent an investment advisory service as I charge no subscription or management fees (donations are welcomed though). The content on this site is provided as general information only and should not be taken as investment advice. All site content, shall not be construed as a recommendation to buy or sell any security or financial instrument. The ideas expressed are solely the opinions of the author. Any action that you take as a result of information, analysis, or commentary on this site is ultimately your responsibility. Consult your investment adviser before making any investment decisions.

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