Penny Stock Pick

Tips On Trading In Penny Stocks (Part 1)

2006-09-16T06:49:00.000-07:00

1. Warren Buffet’s Rule

Warren Buffet’s Rule Number 1: Never loose money and Rule Number 2 : Never forget Rule Number 1. This is my most important rule that guide my trading in penny stocks. Without this rule as my guidance, I may loose my capital easily. After all earning profit is our first reason trading in stock market, otherwise do not trade at all.

2. Inculcate the burning desire to succeed

This is my second most important rule because the desire to succeed can drive us to learn, search and analyse information for making trading decision that is more superior than other stock traders. If trading in stock is our passion, research on information becomes easy and enjoyable. Joe Ross, a professional trader said: “Work brings profit, talk brings poverty”.

3. Learn and understand how economic activity affect market

This is a must for every investor because stock prices are not random numbers but move in line with underlying forces and logic of their own. Investors who understand how economic activities create stock market cycle and affect stock prices can position themselves first before the other investors. Knowing market stage and economic cycle is very important to determine the right time to buy and sell. Buy when others are fearful and sell when others are bullish and greedy. John Hayden, a Hedge Fund Manager said, “The more distinction you can make about market behaviour, the more successful you will be as a trader”

4. Combine technical and fundamental analysis

As the saying says “two head is better than one”. This is true in stock trading because fundamentals assist in the selection of the stocks we want to invest in and technical analysis provide the timing of buying and selling. Trade in penny stocks that are fundamentally strong and use technical charts to avoid short term dangers and obstacles. We must use everything at our disposal because trading is tough and demanding. After all there is no easy money in the stock markets.

5. Treat trading seriously and as a business entity

Trading in stocks can be treated as like doing any other business. It is a profession to some and therefore should be treated like any other business with proper planning, controlling, record keeping for profit and losses and risk management for capital control. Since trading is a business, we must plan and the business plan must have goals, psychological strength and weaknesses, capital allocation, data base of information, trading strategies, mentor who can review and advise our plan.

Disclaimer

I am not a stockbroker or investment advisor or a registered financial advisor. I am neither licensed nor a qualified to provide investment advice. The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

For information on motivation, general health and herbs, visit: http://motivation-for-you.blogspot.com, http://herbal-remedy.blogspot.com/ and www.pure-herbal-remedy.com

Stock With Penny Price-MQ Technology Berhad

2006-08-23T16:57:00.000-07:00

Background Information

The company was listed on the MESDAQ of Bursa Securities on 25th January 2005.

The company is operating a single business segment, namely design and manufacturing of actuator magnetic coils and coil assemblies for hard disk drive; manufacturing of moulds, tools, dies, jigs, fixtures, advanced suspension toolings, encapsulation moulds use in hard disk drive and semi conductor industry, plastic moulds and products for electronic and semi-conductor industry.

Financial Performance

Revenue and Profitability

For the first half for the year ended 30th June 2006, the company registered a profit after tax of RM3.394 million on the back of revenue of RM25.446 million against a profit after tax of RM2.707 million and revenue of RM23.230 million for the corresponding period.

Past Year’s Performance
(RM’Million)

FY2005: Net profit after tax: RM5.319; Revenue: RM47.315
FY2004: Net profit after tax: RM4.113; Revenue: RM4.638

Financial Position

As at 30th June 2006, the financial position of the company is as follows:
( all figures are expressed in RM’million )

Share Capital: 11.5, Share Premium: 9.7, Retained earning: 10.5
Shareholders Fund: 31.8
Cash: 8.8,
Bank Borrowings: 11.7,
Net Current Assets: 8.3
Net Tangible Asset: 0.28 cents
Free Cash Flow: 2.6
Return On Equity: 20.75%

Comments, Business Outlook And Current Development

1. The company has a high return on equity of 20.75%. Since this is the first year of operation, just keep tract of its performance before you buy.

2. In its latest announcement, the company proposed a bonus issue of 2 shares for every 3 share held currently. This amounting to 76.666 million. At the same time the company proposed special issue to bumiputra investors, amounting 82.143 million shares of 10 cents par value. I believe that with this corporate exercise going on, the counter will be actively traded and possible price being pushed up to have a fair value for the bumiputra issues.

3. With the bumiputra share issues, the amount of bank borrowings may be reduced substantially. Assumed that the issue price is at 45 cents ( today’s closing ), the total proceed would be RM36.96 million. After fully paid the loan, the balance of cash is RM25.26 (RM36.96 – RM11.7 ), plus the current balance of RM8.8; total cash balance is RM34.06 million. With this amount of available cash, the company earns interest and at the same time there is also saving from the RM11.7 million paid in advance.

4. Profit and revenue is on the up trend.

My Opinion

Good stock to watch and accumulate when the price dip. The par value of the stock is RM0.10. Target buying price is at 35 - 40 cents.

Disclaimer

I am not a stockbroker or investment advisor or a registered financial advisor. I am neither licensed nor a qualified to provide investment advice. The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

For information on general health and herbs, visit: http://herbal-remedy.blogspot.com and www.pure-herbal-remedy.com

Penny Stock - Leader Universal Holdings Bhd

2006-08-23T04:52:00.000-07:00

Background Information

The company was listed on the Main Board of Bursa Securities under the Industrial Sector. Its principal activities are in the manufacturing of cables and wire, power generation and property development.

Financial Performance

Revenue and Profitability

For the 6 months period as at 30th June 2006, the company registered a profit after tax of RM28.364 million on the back of revenue of RM1.07 billion against a profit after tax of RM17.063 million and revenue of RM733.3 million for the corresponding period.

Past Year’s Performance
(RM’Million)

FY2005-Profit After Tax: 21.827, Revenue:1.6 billion
FY2004-Profit After Tax: 15.162, Revenue: 1.26 billion
FY2003-Loss After Tax: 98.174, Revenue:1.009 billion
FY2002-Profit After Tax: 24.698, Revenue: 1.055 billion

Financial Position

As at 30th June 2006, the financial position of the company is as follows:
( all figures are expressed in RM’million )

Share Capital: 436.459, Other Reserve: 108.3, Accumulated Loss: 188.213
Shareholders Fund: 356.60
Cash: 136.2
Bank Borrowings and bond: 575.3,
Net Current Assets: 294
Net Tangible Asset: 0.82 cents

Comments, Business Outlook And Current Development

1. The increased in turnover is due to high price of copper, aluminum and oil price thus translating into higher selling price. The company undertook rationalization and cost cutting exercise, thus contributing to higher profit. ( extracted from notes to the accounts )

2. If the profit is being annualized, return on equity is about 16%.

3. As mentioned in its latest announcement, the company’s performance is expected to be satisfactory for the financial year ending 31st December 2006.

4. EPF is one of the major shareholders.

5. Potential to be the supplier or vendor for cables for the Bakun project.

6 Always one of the active counters traded in the KLSE.

My Opinion

Good stock to watch and accumulate for penny stock hunters because its performance has improved as shown by its latest quarter result. Profit increased from RM17 million to RM28.3 million and sales too has increased.

Monitor the price movement before you commit to buy.

Disclaimer

I am not a stockbroker or investment advisor or a registered financial advisor. I am neither licensed nor a qualified to provide investment advice. The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

For information on general health and herbs, visit: http://herbal-remedy.blogspot.com and www.pure-herbal-remedy.com

Stock With Penny Price-Elsoft Research Bhd

2006-08-21T04:48:00.000-07:00

Background Information

The company was listed on the MESDAQ of Bursa Securities on 22nd August 2005 for a price per share of RM0.60. The company is in the business of test and burn in system, specifically in the camera module tester.

Financial Performance

Revenue and Profitability

For the 1st six month period as at 30th June 2006, the company registered a profit after tax of RM6.671 million on the back of revenue of RM12.383 million against a profit after tax of RM6.656 million and revenue of RM14.220 million for the corresponding quarter.

Past Year’s Performance
(RM’Million)

FY2005-Profit After Tax: 17.444, Revenue: 35.827

Financial Position

As at 30th June 2006, the financial position of the company is as follows:
( all figures are expressed in RM’million )

Share Capital: 18, Share Premium: 14.5, Retained earning: 13.9
Shareholders Fund: 46
Cash: 29,
Bank Borrowings: 0.00,
Net Current Assets: 26
Net Tangible Asset: 0.26 cents
Return On Equity: 28%

Comments, Business Outlook And Current Development

1. The company has a high return on equity of 28%.

2. No borrowing, cash hoard of RM29 million.

3. Has the potential to issue bonus issue since its share premium accounts and retained earnings is high.

4. Included in the cash is a short term investment, amounting RM14 million. The company may benefit if the market price of the shares move up.

My Opinion

Good stock to watch and accumulate when the price dip. The par value of the stock is RM0.10. Target buying price is at 70 cents.

Disclaimer

I am not a stockbroker or investment advisor or a registered financial advisor. I am neither licensed nor a qualified to provide investment advice. The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

For information on general health and herbs, visit: http://herbal-remedy.blogspot.com and www.pure-herbal-remedy.com

Stock with penny price-Jadi Imaging Berhad

2006-08-19T07:33:00.000-07:00

Looking for good stock with penny price? Jadi Imaging Berhad may be the answer. Financial details are as follows:

Background Information

The company was listed on the MESDAQ Board of Bursa Securities. Its principal activity is manufacturing toner for photocopying machines and printers. Listed on 20th April, 2006, for RM0.22 per share.

Financial Performance

Revenue and Profitability

For the 6 months period as at 30th June 2006, the company registered a profit after tax of RM5.9 million on the back of revenue of RM26.8 million. There were no comparative figures as this is the first year in operation.

Past Years performance (Extracted from the Edge)

FY2003: Profit: 2.7, Revenue: 23.6
FY2004: Profit: 8.0, Revenue: 35.9
FY2005: Profit: 8.5, revenue: 44.8

Financial Position

As at 30th June 2006, the financial position of the company is as follows:
( all figures are expressed in RM’million )

Share Capital: 45, Share Premium: 4.4, Other Reserve: 1, Retained Earning: 14.5
Shareholders Fund: 65
Cash: 30.5,
Bank Borrowings: 6
Net Current Assets: 36
Net Tangible Asset: 0.14 cents

Comments, Business Outlook And Current Development

1. Biggest producer of toner in this region with 5 plants in operation. Has more than 100 clients, with most revenue comes from overseas (95%). Its biggest market is China, but has made inroad into Indonesia, Brazil and Ukraine. (the Edge ).
2. A sixth line of production line, producing colour toners will be in operation next year. It mentioned that it is logical for the company to expand its capacity as it enjoys a high profit margin of 19%. (the Edge).
3. The company is likely to exceed its forecast net profit of RM10.9 million for the year ending 31st December 2006. It would, if it maintains its Q1 earnings of RM2.9 million, annualized, would be almost RM12 million, giving rise to ROE of 18.6%.
4. The company is in a net cash position of RM24 million. There is so much room for expansion, even without borrowing.

My Opinion

The par value of the share is 10 cents, thus the number of share in circulation is 450 million.

The company’s business is simple, only producing toner and competition is less, not at the moment, especially in the technology of chemically produced toners (CPT). Good for medium term investment. Its ROE is 18%.

Note: If you have any comment, please click on the comment at the bottom and write as much as you can. I need your feedback for me to make improvement.

Disclaimer

I am not a stockbroker or investment advisor or a registered financial advisor. I am neither licensed nor a qualified to provide investment advice. The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

For information on general health and herbs, visit: http://herbal-remedy.blogspot.com and www.pure-herbal-remedy.com

Penny Stock-Asia Pacific Land Bhd

2006-08-16T05:46:00.000-07:00

Background Information

The company was listed on the Main Board of Bursa Securities under the Property Sector. Its principal activities are property development, property investment and hotel business.

Financial Performance

Revenue and Profitability

For the 1st Quarter 31st March 2006, the company registered a profit after tax of RM1.250 million on the back of revenue of RM21.301 million against a profit after tax of RM0.295 million and revenue of RM42.969 million for the corresponding quarter.

Past Year’s Performance
(RM’Million)

FY2005-Loss After Tax: 8.440, Revenue: 112.148
FY2004-Profit After Tax: 9.060, Revenue: 169.216
FY2003-Profit After Tax: 17.782, Revenue:240.355
FY2002-Loss After Tax: 118.714, Revenue: 173.820
FY2001-Loss After Tax: 33.776, Revenue: 222.067

Financial Position

As at 31st March 2006, the financial position of the company is as follows:
( all figures are expressed in RM’million )

Share Capital: 710.3, Share Premium: 62.3, Other Reserve: 90, Accumulated Loss: 90.4
Shareholders Fund: 772.3
Cash: 3.3,
Bank Borrowings: 351.6,
Net Current Assets: 73
Net Tangible Asset: RM1.087
Property Development Costs: 154.3
Land held for development: 145.2

Comments And Current Development

1. The company made an announcement to sell its Empire Tower, Crown Princess Hotel and City Square Shopping centre for RM680 million in cash ( The Edge dated 16.8.2006).

2. Based on company’s latest quarter result announcement, the company proposed to dispose its land for RM3.8 million, Ferringhi Beach Hotel for RM43 million and a freehold land at Jalan Sultan Ahmad Shah for RM14.25 million.

3. The total proceeds expected to be received from the above transactions amounting RM741 million. After paying its debts of RM351, the company still has excess cash of RM390 million. It was mentioned that the balance is for working capital, acquiring land for development and for share buy back.

4. The company also mentioned that it has formed a JV with IJM to develop 30 acres of land located at Mount Pleasure Resort, Batu Farringi.

My Opinion

Good stock to watch and accumulate for penny stock hunters because the company will be debt free, concentrate on property development as its core business and have excess cash for future expansion. It is a penny stock trading below its NTA of RM1.087

Lowest price was 15 cents and highest price was at 49 cents, happened in Jan/Feb 2006. Current price is 36 cents. Accumulate at a price between 25 – 30 cents. Hold for medium term investment.

Disclaimer

I am not a stockbroker or investment advisor or a registered financial advisor. I am neither licensed nor a qualified to provide investment advice. The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

For information on general health and herbs, visit: http://herbal-remedy.blogspot.com and www.pure-herbal-remedy.com

Penny Stock - MBF Holdings Berhad

2006-08-14T05:10:00.000-07:00

Background Information

The company was listed on the Main Board of Bursa Securities under the Finance Sector. Its principal activities are in the card and payment services, property and hospitality, financial services, trading and manufacturing and business of oil palm plantation in Fiji and Papua New Guinea.

Financial Performance

1. Revenue and Profitability

For the 1st Quarter 31st March 2006, the company registered a profit after tax of RM7.661 million on the back of revenue of RM339.098 million against a loss after tax of RM2.693 million and revenue of RM298.336 million for the corresponding quarter.

2. Past Year’s Performance
(RM’Million)

FY2005-Profit After Tax: 50.638, Revenue:1,430.628
FY2004-Profit After Tax: 15.699, Revenue: 1,189.394

3. Financial Position

As at 31st March 2006, the financial position of the company is as follows:
( all figures are expressed in RM’million )

Share Capital: 570, RCSLS: 79, Other Reserve: 3.2, Accumulated Loss: 438.041
Shareholders Fund: 214
Cash: 111.4,
Bank Borrowings and bond: 491.5,
Net Current Assets: 23
Net Tangible Asset: 0.33 cents

Comments, Business Outlook And Current Development

1. The high profit achieved in the financial year ended 31 December 2005 was due to exceptional gain of RM55 million resulting from deconsolidation and liquidation of subsidiary companies.

2. For the first quarter 31 March 2006, the company achieved a profit of RM7.661 million. As explained in the notes to the accounts, the higher profit and revenue is due to contribution from the Card & Payment Service Division and Trading and Manufacturing Division in Fiji and Papua New Guinea. The notes also mentioned that this trend of growth is expected to be maintained for the rest of 2006. This is a positive comment by the company and let see how the company perform in the second quarter.

3. Based on its latest announcement, the major shareholder, Impact Action Sdn Bhd made a general offer to acquire the remaining shares that are not own at 21.5 cents. Based on the recent announcement dated 24 July 2006, Datuk Dr. Ninian has acquired 354,931,169 shares ( 62.26%). He acquired the shares through Impact Action Sdn Bhd.

4. The company is highly geared with total borrowing of RM491.5 million, comprises og bank loans, RCSLS and bond.

5. Has numerous legal suits pending to be settled.

My Opinion

Good stock to watch and accumulate for penny stock hunters because its majority shareholder is going for a general offer. The ultimate “offeror” is the chief executive officer of the company, Datuk Dr. Ninian Morgan Lourdenadic. The question we ask ourselves before we purchase the shares is why its majority shareholder went for a GO if the company is not doing well going forward?

Buy at the offeror’s price of 21.5 cents or below. The lowest price was 9 cents. The par value of the stock is RM1.00. Today the stock closed at its highest price of 27 cents, up 4 cents.

Disclaimer

I am not a stockbroker or investment advisor or a registered financial advisor. I am neither licensed nor a qualified to provide investment advice. The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

For information on general health, men's health, women's health and herbal remedy, visit: http://herbal-remedy.blogspot.com/ and http://www.pure-herbal-remedy.com/

GHL System Berhad

2006-08-13T05:51:00.000-07:00

Background Information

The company was listed on the MESDAQ market of Bursa Securities on 9th April 2003. Its principal activities are supply of EuroPay-MasterCard-Visa “EMV” chip-based cards, sales and rental of electronic draft capture “EDC” terminals and other related services, supply of computer hardware and software and sale of payment solutions.

Substantial shareholders are Goh Kuan Ho and BSNC Corporation Berhad.

Financial Performance

Revenue and Profitability

For the 1st Quarter 31st March 2006, the company registered a profit after tax of RM1.630 million on the back of revenue of RM7.466 million against PAT of RM1.017 and revenue of RM12.291 million for the corresponding quarter.

Past Year’s Performance
(RM’Million)

FY2005-Profit After Tax: 11.656, Revenue:52.166
FY2004-Profit After Tax: 7.652, Revenue: 64.172
FY2003-Profit After Tax: 6.003, Revenue: 63.000

Financial Position

As at 31st March 2006, the financial position of the company is as follows:
( all figures are expressed in RM’million )

Share Capital: 55.1, Retained Earnings: 26, Shareholders Fund: 81.10
Cash: 23.20, Bank Borrowings: 7.3,
Net Current Assets: 39.70
Net Tangible Asset: 0.14 cents
Free Cash Flow: 2.60
Return On Equity: 14%

Business Outlook And Current Development

Interesting developments going forward are:

a. Corporate exercise involving proposed bonus issue on the basis of 1 bonus share for every 10 existing ordinary shares held; proposed consolidation of every 5 shares of 10 cents into 1 ordinary share of 50 cents each; transfer to the Main Board. The rationale of the transfer is to enhance its standing and attractiveness amongst investors; strengthen the Group’s profile among its bankers and improve its standing and profile for overseas expansion.

b. The Group is currently expanding its market reach in overseas such as Singapore, Indonesia, Thailand, the Philippines, China, Hongkong and Macau,( extracted from circulars to shareholders dated 8 August 2006)

c. The company recently secured 2 contracts worth more than RM10 million in Thailand and the Philippines. ( New Straits Times dated 12 August 2006).

d. Plus point about the company is that it has a cash of RM23.2 million and a free cash flow of RM2.60 million as at 31 March 2006 and profit is on the rise.

Trading Strategy

The company is trading around 21 cents recently. It’s lowest and highest trading price for the year is 9 cents and 38.5 cents respectively.

For those with thick pocket, the counter is a good buy for medium term investment.

Disclaimer

I am not a stockbroker or investment advisor or a registered financial advisor. I am neither licensed nor a qualified to provide investment advice. The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

For information on general health and herbs, visit: http://herbal-remedy.blogspot.com/ and http://www.pure-herbal-remedy.com/

Penny Stock - Tebrau Teguh Berhad

2006-08-11T07:29:00.000-07:00

Background Information

The company is listed under the property sector on the First Board of Bursa Malaysia. Its principal activities are property development, construction and property management.

Financial Performance

Revenue and Profitability

For the 1st Quarter 31st March 2006, the company registered profit after tax of RM0.061 million on the back of revenue of RM33.945 million against a loss of RM26.799 and revenue of RM60.809 million for the corresponding quarter. The improvement in performance is merely due to write back of provision of doubtful debts provided in the last quarter.

Financial Position

As at 31st March 2006, the financial position of the company is as follows:
( all figures are expressed in RM’million )

Share Capital: 334.8, Share Premium: 225.8, Accumulated loss: 88, Shareholders Fund: 472.8
Cash: 17.4, Bank Borrowings: 20,
Development properties: 404.4
Land held for development: 189
Net Current Assets: 430
Net Tangible Asset: 0.71 cents

Business Outlook

According to the note to the accounts in its recent announcement, the company’s performance is not going to improve significantly in the coming quarter. However there are many interesting development going forward:

a. Contract given by Jabatan Perumahan Negara to build 1,500 unit of low cost houses worth RM83.6 million has not been completed.

b. The company owns the last piece of large undeveloped land (1,012 acres) near Johore Baru city centre, away by 5 km. Recent transaction of commercial land in JB was done at RM110 per sq ft and it is significantly above Tebrau’s book value of RM13.40 psq. Its land value is further enhance by 26 km of waterfront features which allows its properties to be price at a premium ( quoted from the Star dated 1st July 2006 ).

c. The company is 42% own by Johore state government development arm’s company. Other notable shareholders are See Hoy Chan Properties Sdn Bhd ( developer of Bandar Utama and 1-Utama) and Vincent Tan ( quoted from the Star dated 1st July 2006).

d. In the accounts, Tebrau has development properties and land held for development worth RM593 million. May be the land has not been revalued since there is no revalued amount in the accounts.

e. Impending legal suit of claim by it's subsidiary company against the defendant for an amount of RM12.6 million, ( as mentioned in the notes to the accounts ).

Trading Strategy

The company is trading above 50 cents recently. It’s lowest and highest trading price for the year is 10 cents and 73 cents respectively. Good for swing trading since its price has some volatility and volume is good. A good buy if it’s price dip down to 40 – 45 cents. But mind you, the number of shares is 669.6 million ( par value is 50 cents ).

For those with thick pocket, the counter is a good buy for medium term investment after all it is trading below its net tangible asset value of 71 cents.

Disclaimer
The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

For general information on health, visit: http://herbal-remedy.blogspot.com and www.pure-herbal-remedy.com

Penny Stock- MP Technology Resources Bhd

2006-08-09T06:39:00.000-07:00

Background Information

Listed under Industrial Sector on the 1st Board. MP Tech took over the listing status of Kelanamas Industries Berhad in February 2004 under a restructuring scheme which involved in the issuance of loan stocks.

The company’s principal activities are manufacturing and trading of plastic related machinery, recycling of waste plastic materials, related plastic products and assembly of electronic PCB boards.

Financial Performance

Revenue and Profitability

For the 2nd Quarter 31st May 2006, the company registered an accumulated loss after tax of RM7.549 million on the back of revenue of RM15.450 million. The high loss is due to stock written off amounting RM3.7 million.

Financial Position

As at 31st May 2006, the financial position of the company is as follows:
( all figures are expressed in RM’million )

Share Capital: 229, Accumulated loss: 149.2, Shareholders Fund: 79.7
Irredeemable Convertible Unsecured Loan stock: 11.5
4.5% Redeemable Convertible Secured Loan Stock: 13
Convertible Loan Option Stock: 40
Cash: 1.6, Bank Borrowings: 28.8,
Trade debtors: 104
Net Current Assets: 62.4
Net Tangible Asset: 0.35 cents

The high accumulated loss is due to the loss taken over from Kelanamas Industries Berhad in 2004. However auditors gave a clean audit report since its shareholders fund is still positive and not likely to be under PN4 category in the near future.

Risks

Two legal suits by vendors amounting RM0.439 million. At the same time the company is claiming damages from certain parties of RM3.1 million for non compliance of profit guarantee.

Three banks had recalled certain facilities, amounting RM4.3 million.

Performance Outlook

According to the note to the accounts in its recent announcement, the directors expressed that their diversification into electronic business will contribute positively towards its performance in view of the growth in global electronic products going forward.

Trading Strategy

The company is trading at its lowest price of 9 cents recently. The following are the trend of its prices for the past years:

September 2004: 85 cents
November 2004: 60 cents
March 2005: 70 cents
August 2005: 30 cents
February 2006: 25 cents
June 2006: 20 cents
July 2006: 10 cents

In my opinion, buying at 9 cents has less risk since its NTA is 35 cents and the par value is RM1.00, a good example of penny stock. Its cash position can be improved if collection from its trade debtors is looked into seriously.

Disclaimer
The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

Good Penny Stock - Hil Industries Berhad

2006-08-01T07:09:00.000-07:00

Background Information

Listed under Industrial Sector in the 2nd Board. Dalta Industries Sdn Bhd and PNB, being the substantial shareholders held 51.844% and 5.068% of the shares respectively. The MD is Mr Milton Norman. Hil’s principal activities are manufacturing and selling industrial and domestic moulded products. Its secondary activities include spray-painting, silk screening, ultra-sonic welding. Its productions are for the electronics, electrical and automotive industries. Major customers include Sharp, Matsushita, Goldstar, Samsung, OYL, Perodua, Proton and Motorola.

Financial Performance

Revenue and Profitability

For the 1st Quarter 31st March 2006, the company registered a 44% increased in revenue to RM20.924 million, ( 2005: RM14.539 million ) resulting in a profit after tax of RM3.281 million ( 2005: RM1.335 million ). Profit increased by more than 100%.

Past Years Performance (RM’million )

Year 2002, Turnover 40.50, PAT 5.7
Year 2003, Turnover 29.30, PAT (1.8)
Year 2004, Turnover 53.38, PAT 2.42
Year 2005, Turnover 71.93, PAT 13.12

Financial Position

As at 31st March 2006, the financial position of the company is as follows:
( all figures are expressed in RM million )

Share Capital 130.8, Other Reserve 1.2, Retained Profits 46.0
Cash 26.6, Bank Borrowings 0.4, Free Cash Flow 10.5
Net Current Assets 96
Net Tangible Asset is 68 cents

Business Outlook And Corporate Exercise

According to its MD (source of information: The Edge), the company is expanding to Penang and China and its two plants in Malaysia are operating at 60-70% capacity.

On the corporate front, the company is seeking to transfer to the Main Board and is proposing to dispose two of its subsidiary companies for RM12.4 million.

Trading Strategy

Hil is a good example of penny stock. It is trading below its NTA and the price is below RM1.00. It is in a net cash position and has a free cashflow of RM10.5 million.

As a swing trader, target buying price is in the region of 33 – 35 cents and target selling price of between 40 – 45 cents.

Assume you have RM10,000. The number of unit you can buy at 35 cents is 28,000 units. If you sell at 40 cents, your gross profit is RM1,400, giving you a return of 14%. If you buy and sell twice a month, your gross profit will be RM2,800. This amount of profit is earned while you are working. Isn’t this wonderful?

As a medium term trader, accumulate to buy at 32 – 35 cents.

Disclaimer

The information above is for information purpose only and should not be construed as a solicitation to buy or sell. Investments involve risks. Investor should consult a licensed broker before investing in any of the stock above.

Selling signal with Japanese candlestick

2006-07-28T06:59:00.000-07:00

SELLING SIGNALS USING JAPANESE CANDLESTICK TECHNIQUES

Fred K.H Tam said, “ the candlestick technique is the most leading of all technical indicators that I have come across…….because candlestick signals are based on an analysis of price itself.”

The following are some of the characteristic of candlestick that indicates a SELL signals:

Shooting Star

Shooting star is an inverted umbrella candle found at the top. This candle’s close is greater than the open and has short white body with long upper shadow. If found after a market advance, is a signal of a possible market top and has a bearish implication. However a bearish confirmation is required before selling.

Hanging Man

Hanging man is a white umbrella candle found at the top. This candle’s close is greater than the open with short white body and a long lower shadow. If found after market advance is a signal of a possible market top and has bearish implication. However a bearish confirmation is required before selling.

When a black spinning top becomes a top reversal pattern

Black spinning top is when the close is lower than the open price. The total length of the body must be smaller than the sum of its upper and lower shadow. A black spinning top seen after a rally with a long white candle before it is a signal of a bearish market. However a bearish confirmation is required before selling.

Gravestone Doji found at the top

Gravestone doji is formed when the open, close and low are at the same price. It has a long upper shadow. Gravestone doji if found after a strong up trend has bearish implication. However a bearish confirmation is required before selling.

Long legged dogi at the top

Long legged dogi is formed when the open and close are at the same price, with long upper and lower shadow. If found after a strong up trend has bearish implication. However a bearish confirmation is required before selling.

Dragon fly dogi at the top.

Dragon fly doji is formed when the open, close and high are at the same price. It has a long lower shadow. If found after a strong up trend has a bearish implication. However a bearish confirmation is required before selling.

Dogi at the top

A dogi is a single candle where the open and close are at the same price. It has no real body and the upper and lower shadow can be short or long. If found after a strong up trend has a bearish implication. Bearish confirmation is required before selling.

Bearish Engulfing

Bearish engulfing is when a thick black candlestick totally engulfs the previous day white candlestick. The shadow is not important. It is a bearish signal and no bearish confirmation is required, immediately sell.

When to sell penny stocks

2006-07-25T07:34:00.000-07:00

WHEN TO SELL PENNY STOCKS

Personally I do not have a specific selling strategy but the following may act as my guidelines and yours too:

1. Cut Loss When Trend Reverses

Most of us won’t sell stocks when the price goes down. We simply won’t cut our losses because we do not like to admit our failure. But it makes no sense to hang onto a plummeting stock, as we will loose the opportunity to replace bad investment with good ones.

2. Sell When The Stock Drops by X %

When the stock falls below your cut loss point; SELL. There is no fixed rule on this as it depends on the nature of the stocks. For example blue chips stocks can be 10-20% whilst technology stock is 5-10%.

Always cut short and limit every loss is the number one rule of a highly successful individual investors. However to do this takes discipline and courage. There should not be any sentimental feeling towards the stock. The whole secret to wining big in the stock market is not to be right all the time but to lose the least amount possible when you are wrong. You are wrong is when the price drop. Bernard Baruch said, “ Even being right 3 or 4 times out of 10 should yield a person a fortune if he has the sense to cut his losses quickly on the ventures where he has been wrong.”

When does a loss become a loss? It is when we say, “ I can’t sell because I don’t want to take a loss.” But the stock doesn’t know who we are and it couldn’t care less what we hope and want. The larger the paper loss, the more real it will become. You’d be better off selling and going back to a cash position, where you can think far more objectively and buy other good stocks and eventually recover your loss or make more profit.

It is a dangerous fallacy to assume that because a stock goes down, it has to come back up. Many don’t and it may take years to recover. The policy of limiting losses is similar to paying insurance premium where we are reducing the risk to the level we are comfortable with and to protect ourselves against the remote possibility of a serious loss.

3. Sell When The Stock is over-valued

When the stocks are pushed way past their true value, they are more vulnerable for a plunge. The strategy is to sell when the stocks are over-valued and buy back later during market correction. Be prepared to watch it keep going up after you sell as happens sometimes. Don’t regret as it could have gone the other way.

4. Sell when there is fundamental change in the company

We bought the company because of its fundamental and its business plan. When there is a change and the market do not agree with it, SELL.

5. Sell when the stock price reaches your target

Apply the 3-to-1 reward to risk ratio strategy. That is: if your target profit is 30%, your cut loss point should be 10% below the purchase price. If your target profit is 60%, cut loss is at 20% below the purchase price. So when the stock reaches the pre-determined target, SELL.

Take heed to the following quotes from some of successful investors on why cutting loss is very important:

William J Oneil “ The way to make investment decisions is always take your losses quickly and your profits slowly.”

Investors are always hoping rather than being realistic. There are only two emotions in the market…hope and fear. The only problem is we hope when we should fear and we fear when we should hope.

A typical investor tend to wait when he have a loss. However we should be selling our worst performing stock first and keep our flower patch free of weeds.

“ I am not worried about my stocks being down because they are good stocks and I am still getting my dividend” However good stocks bought at the wrong time can go down as much as poor stocks and it is possible that it is not a good stock in the first place because it may be your own personal opinion that it is good.

Forget your ego and pride, stop trying to fight and argue with the market and don’t get emotionally attached to or fall in love with any stock that is losing you money. Remember, there are no good stocks; they are all bad…unless they go up in price and you make profit.

Joe Kennedy, father of President J.F Kennedy, said “ Only fools holds out for the top dollar” The object is to get out while a stock is up before it has the chance to break and turn down. The secret is to hope off the elevator on one of the floors on the way up and not ride it back down again.

Two things to remember about selling; First, buying right solves most of your selling problem. Second, beware of big block selling just after you buy a stock during a bull run.

Five questions you ask yourself whenever you think about selling a stock, according to Pat Dorsey:

A. Did you make a mistake? If your analysis was wrong, cut your losses and move on.

B. Have the fundamentals deteriorated. Is cash is piling up, no new investment, no growth and competitors join the industry.

C. Has the stock risen too far above its intrinsic value.

D. Is there something better you can do with the money that gives you higher yield.

E. Do you have too much money in one stock?

Timing of buying and selling penny stock

2006-07-20T08:51:00.000-07:00

WHEN TO BUY AND SELL PENNY STOCK

After deciding which penny stocks to buy, it is very important to buy the stock at the right timing. Buying a good penny stock at the wrong time will not guarantee higher return or you might end up holding the stock for a long period of time. If this is the case, you loose the opportunity to buy other stocks when the price looks attractive.

Investing in stock market is not a science so there is no scientific ways of calculating the right time to buy and sell stocks. However there are various tools and techniques used to find out.

My strategy of finding the right timing of buying and selling penny stock is simple. If you follow my strategy very closely and with discipline you too can earn profit.

Step 1

Find out the highest and the lowest price for the year. Share price graph can assist you on this or look at any local newspaper. Log on to the Star website under business column and click on the company’s name itself.

Step 2

Monitor the price movement for at least one month or more. Keep record of price movement. You will notice that the price will go down to certain price when the market or index is down and move up to certain price when the general market moves up.

Step 3

After getting yourself familiar with the price movement and how the price behaves with the general market condition, it is time for you to do paper trade. Paper trade is basically trading on paper or trading without cash outlay. You carry on paper trade until you are confident of your trading skill and of course you make profit most of the time.

Step 4

Now is the time for you to trade using cash. Start with small amount first and increase the capital outlay as your confidence level increase.

A word of caution, do not be greedy. Sell when the price move up by 5 cents to 10 cents and make sure you monitor the price very closely, preferably every minutes or better still watching the price movement online. Cut losses when necessary and do not get your emotion control your action. Aim to be a professional player.

Since our market is very much influence by US market, check the Dow Jones index first thing in the morning before KLSE open for trade. A fall in Dow Jones is a sign to sell and vise versa. Book your price before 9 am so that you will be one of the first in the queue.

A good case to illustrate the above is a second board company, Hil Industries Berhad. Buy at 32 – 34 cents and sell for 38 – 42 cents.

penny stock pick

2006-04-23T07:32:00.000-07:00

How To Select Good Penny Stock

Penny stocks are usually priced below their par value. Most penny stocks are risky and unpredictable and investors should carry out detail analysis and research of the company before buying. Here are the steps involved:

Look for company whose share price is below its par value. Par value or face value is a nominal ringgit amount assigned to a security by the issuer. List all these companies with name, par value and market price.
From the list, eliminate those companies with weak fundamentals and they are:

i. Shareholders fund is negative or near negative.
ii. Accumulated loss is high even though its shareholders fund is positive.
iii. Current and previous quarter earning is negative or the company is making a loss.
iv. High borrowings. Borrowings include bank loan, hire purchase, redeemable preference shares/ loan stocks, term loan and bonds.
v. In a net borrowing position. If the cash as appears under current assets is lower than bank borrowings, then the company is surviving on borrowed money. The danger is that the company may not be able to service even the interest portion of its borrowings.
vi. The company is under PN4/ PN10/ PN17.
vii. In a net liabilities position. The company is in net liabilities position when its current liability is more than current assets.
viii. The company is in a sunset industry.

After carry out the elimination process as above, the next step is to look for companies which meet the following criteria:

i. Return on equity (ROE) is reasonable. ROE is calculated by dividing the company’s after tax profit by its total shareholders funds (TSHF). TSHF includes paid-up share capital, revenue reserves and capital reserves. ROE of 10% is acceptable. Warren Buffett requires his stocks to have at least 15% ROE. ROE measures the company’s ability to make use of its assets to generate profits.

ii. Earnings and revenue is rising. Just compare the current year earnings and revenue with last year earnings and revenue, if there is a growth, it means the current year earnings and revenue are better than previous year. Higher earning shows that the company is doing well.

iii. Cash is higher than borrowings. A financially strong company is one with more cash than borrowings. When times are tough, highly geared company is vulnerable. This is especially true when profits are falling coupled with high interest, the company need to generate more profit to cover the interest expenses. Always look for company with more cash than borrowings, after all there are so many companies to choose from and why invest in penny stocks with less cash.

iv. Free cash flow. Free cash flow is the cash generated after deducting capital expenditure. It is the amount of money that can be taken out to pay dividend without harming its operation. It is the free cash flow that truly increases the value of a company.

v. Trading volume is rising or reasonably high at about 500,000 units of shares per trading day. This makes it easier to trade the shares.
vi.

After deciding the best penny stocks the next question is timing in buying. Buying the best penny stocks at the wrong time and price will not make it the best penny stocks. Penny stocks become the best penny stock pick is when you can make money from it. After all stock market is about making profit. So when to buy penny stock is a very critical question. I will elaborate more in my next posting.

Penny Stock Pick

2006-04-08T00:48:00.000-07:00

Benefits And Risk of Investing In Penny Stocks

Penny stocks may not be exciting and rewarding investment for every one. However it is very rewarding for investors who have limited amount of spare cash. Why, because you can earn thousands from a few hundreds buck, just by investing in the right stocks at the right time.

Investing in penny stocks is a great way to learn about the market. It is highly recommended for beginners. If mistakes were made, the risk exposure is small because the amount of cash invested is small. In addition, beginners can learn more about the company’s nature of business, financial details, how the company makes money and what to expect the future performance of the company.

From the risk point of view, investing in penny stocks is less risky because you are exposed to few hundred buck than hundreds of thousands of buck you are expose to when investing in blue chip stocks. Ever since I am investing in stock market, penny stocks are my pick. I have not graduated to the mid-cap or the blue chip stocks. Why, because I make more money or high return from the small capital I invested. My risk is also small.

In my next posting, I will show you how to select penny stocks with great potential of capital appreciation.

Penny Stock Pick

2006-04-07T08:27:00.000-07:00

What Are Penny Stocks

Before we understand penny stocks, first of all we have to understand what is penny. Penny as defined in the Oxford Advanced Learner’s Dictionary as British bronze coin worth one hundredth of a pound. One hundredth of a pound is the smallest denominator of a pound, therefore a penny stock is one that is very cheap. In the world of investment, penny stocks are shares that trade from a fraction of one’s currency to less than RM1.00 in the case of Malaysian currency.

Investing in the right penny stocks can have tremendous reward potentials. Before investing in penny stocks, there are many financial considerations and aspect of a company that you have to look into. In the next posting, I will show you the benefits and the risk of investing in penny stocks, how to select the best penny stocks with great potential capital gain.

Penny Stock Pick

2006-04-04T02:44:00.000-07:00

Please visit my penny stock pick blog. From time to time I will be posting some of the best penny stock pick for the KLSE market. I will also be showing a step by step process to select the best penny stock that will provide maximum return.