Magni Tech Has a Bullish Breakout

Background
Few weeks back, I have made some quick analysis on MAGNI (please refer to my previous post in June 2012), a manufacturer of sportswear and it has a business partnership with one of the great companies in sportswear, NIKE.

Technical Analysis
As seen from the chart below (till 14 June 2012), we are able to spot several bullish patterns on the share price. There is a bullish breakout on its Bollinger Band. Also, other indicators such as MACD and RSI are turning bullish.

Figure 1: Trading price of MAGNI (souce: www.tradesignum.com).

It is worth to mention here that one of the major shareholders is accumulating MAGNI shares since early of 2012.


Conclusion
Based on the positive views from both the technical & fundamental analysis on MAGNI, this stock is worth for us to have a closer look.

Magni Tech - Another Undervalued Stock

Introduction
Magni-Tech is principally involved in manufacturing of garments. With more than 34 years of experience in the apparel industry, Magni has built a good reputation in this industry and manufactured high-quality and sophisticated woven sportswear. The customers are mainly from USA, Europe, Singapore, Canada, Australia and China.


Fundamental Analysis
You may refer to their financial highlights in this webpage:
http://www.magni-tech.com.my/?mod=pages&function=show_page&page_id=71

Net profit has increased from year to year since 2007. On year 2011, this company has no borrowings and stood at a cash position of RM 57mil on Jan 2012. Undoubedly, its finacial position is very healthy.

Conclusion
Its divident yield is ~5%, a relatively attractive figure. Therefore, this company is very attractive for long term investment.

Coastal Contracts Berhad - A Fundamentally Strong Counter- Is It a Good Buy?

Introduction:
I am sure most of you aware on this counter, a relatively low profile but fundamentally strong company, which is principally involved in shipbuilding.

Fundamental Analysis:
Since year 2007, Coastal managed to achieve a ROE of more than 30%, which is a remarkable figure. Profit margin of more than 23% is maintained, showing that their management is very competent in controlling the expenses to ensure maximum return to the shareholders. Also, it is worth to mention here that Coastal is able to achieve uninterrupted increasing trend of net profit from year 2002 to year 2010.

On the other hand, Coastal has just announced its 1Q 2012 result and it is simply a BIG disappointment for  investors. Profit margin has dropped signficiantly to 13%, owing to relatively low margin derived from the sales to certain "repeat" customers. Would it imply, in other words, Coastal is unable to get new customers and the management has to offer discounts in order to retain their old customers?

Let us have a look on the advance payments received by Coastal :

2011 (320 mil),
2010 (422 mil),
2009 (524 mil),
2008 (429 mil),
2007 (199mil),
2006 (91 mil).

As seen, since year 2009, the advance payments has been depleting, signifying that its order book is depleting, an unhealthy sign for sure.

Technical Analysis:

Coastal has been traded below L1 line and it is showing that Coastal share price has entered into the bearish mode.

The question is: shall we catch the falling knife?


Conclusion:

By considering its current EPS which is merely 6.37 cts (annualise estimated EPS of 25.6 cts), the current price (RM1.74, closing price at 1st June 2012)  is indeed attractive (PER = 6.8). However, this counter has been traded to a historically low PER of 3 - 4 (a very undemanding yet fundamentally strong counter). Based on this, it is not a wise decision to purchase this counter for the time being. Alternatively, you may buy in stages and keep it for long term.