Weekly Update

Dow (26,071)

Dow continued to zig-zag higher last week without a significant pullback and in the process it gave its minor wave v a magnitude that is much larger than the magnitude of its minor wave iii. Since the third wave cannot be the shortest wave, I expect the mini wave 9 to have nine minor waves instead of five.

Based on similar reason, sub-wave iii cannot be the shortest wave, wave (v) should have nine sub-waves. This is a very bullish scenario but never forget that anything can happen in stock market and the bear usually strikes at the most unexpected moment. Be prepared to run when required.

FBMKLCI (1,828)

I expect KLCI to start forming its mini wave 9 next week.

Kluang Rubber Co (M) Bhd (Rm 4.16)

Kluang is likely to have completed its sub-wave iii. Sub-wave iv is likely to take a few month to complete. Unless the last high is one degree lower.

Kuchai Development Bhd (Rm 2.22)

I have adjusted my wave count for Kuchai as I believed Kluang, Kuchai and Sg. Bagan have to move in tandem with each other and must have a similar wave form. So, same as Kluang, Kuchai is likely to be in sub-wave iv.

Sg. Bagan Rubber Co. (M) Bhd (Rm 3.36)

Similarly I have adjusted my wave count for Sg. Bagan.

T7 Global Bhd (Rm 0.515)

T7Global has completed its mini wave 4 and mini wave 5 has started.

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T7 Global Bhd (Rm 0.505)

I was asked by a friend to have a look at T7Global, previously know as Tanjung Offshore, whether technically it is OK or not.

T7Global's business covers seven sectors as shown below.

For quarter ending 30 Sept 2017 its earning per share is 0.84 sen with net assets at 33 sens a share. Not that good.

But technically T7Global looked bullish. From its long-term chart, since 2008 it has formed mega wave (1)-(2), major wave 1-2 and wave (i)-(ii).

Its wave (ii) was ended at the end of December 2017.

T7Global was actively traded today with 39.6 million share changed hand. It went to a high of 53.5 sens before ended the day at 50.5 sens gaining 5.5 sens or 12%.

Today it started its mini wave 3 with a big gap and with a Bang. Unfortunately it did not closed at its peak.

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The Stars - The Three Musketeers of Lee Thor Seng Family

Within the top 5 gainer stocks on Friday, 3 of them, namely Kluang, Kuchai and Sg Bagan belong to Lee Thor Seng. The remaining two are the high price Panasonic (Rm 38.98) and Nestle (Rm 104.00).

Kluang (Rm 4.60) gained 95 sens (+26.03%). Kuchai (Rm 2.28) was limit up gaining 52 sens (+30%). Sg Bagan (Rm 3.85) gained 61 sens (+18.83).

The catalyst is the impending listing of Great Eastern Life Assurance (M) in Malaysia to comply with Bank Negara's ruling that required all insurance companies to have at least 30% local equity participation by 30 June 2018.

Kuchai has 3.032 million share of Great Eastern Holding Ltd (GEHL), the parent company of Great Eastern Life Assurance (M) and Sg Bagan has 1.733 million shares of GEHL.

GEHL is estimated to get about Rm 4.1 billion from this 30% disposal of Great Eastern Assurance (M) and is anticipated to declare a bumper dividend to reward its shareholders.

On Friday GEHL closed at S$30.53 or Rm91.60.

Kuchai's 3.032 million shares of GEHL is worth Rm 278 million and Sg. Bagan's 1.733 million share of GEHL is worth Rm 159 million. Kluang doesn't have any direct holding on GEHL but it is holding 45.25% of Kuchai and 43.40% of Sg Bagan.

Sg Bagan has 6.46% of Kluang and 12.19% of Kuchai and Kuchai has 27% of Sg. Bagan and 3.16% of Kluang.

I have written somethings on Kluang  on 17 February 2017. Click 'One of the most undervalued stocks' for the article.

Kluang Rubber Co (M) Bhd (Rm 4.60)

Kluang's stock price surged on Friday by 26% to form the sub-wave iii of wave (i) of major wave 3 of its mega wave (3).

With net assets at Rm 10.70 I still considered Kluang at Rm 4.60 as very cheap. Its 45.25% of Kuchai and 43.4% Sg Bagan alone is worth Rm 238 million or Rm 3.70 a share. Its Rm 270 million cash as reported in its last quarterly report (30 Sept 2017) is equal to another Rm 4.28. These two items alone is already worth Rm 7.98

Kluang has other available for sale investment as shown in its annual report.

For its quoted shares outside Malaysia, the value stated is Rm 333.5 million (another Rm 5.29 per share). And I suspect the current fair value for these quoted shares can be much higher than the stated value.

But once the current excitement is over, as I have mentioned in my February 2017 posting, holding this stock can be quite frustrating as its share price can remain flat for months.

Kuchai Development Bhd (Rm 2.28)

Kuchai closed limit-up on Friday. Will there be another limit-up on Monday? I don't know. Friday's surge is the sub-wave v of wave (i) of its major wave 3 of mega wave (3). The question here is whether sub-wave v has ended? If not, how high it can go to form its wave (i)?

Sg Bagan Rubber Co (M) Bhd (Rm 3.85)

Sg. Bagan surged in tandem with Kuchai and Kluang on Friday. Before the current up, it has completed its mega wave (1)-(2) and major wave 1-2. The surge marks the starting of its major wave 3.

Priceworth International bhd (Rm 0.295)

Pworth continues to form the sub-wave iii of its wave (v). My target for this sub-wave iii is Rm 0.38, another 28% to go.

FBMKLCI (1,822)

KLCI has just completed its mini wave 8. On whether the current run-up is the sub-wave iii or wave (iii), please refer to my previous posting on KLCI.

Dow (25,803)

Dow is about to complete the minor wave v of its mini wave 9. This is a possible point to start the anticipated 15% correction, the major wave 8.

However it is also possible that Dow may extend its current run-up with mini wave 9 having 9 minor waves instead of 5

Or it can also have 9 sub-waves for its wave (v).

The reality is Dow has reached a crucial junction but which routes it will follow only God can tell. That is why the markets can exist.

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Priceworth International Bhd (Rm 0.31)

Pworth was actively traded on Monday and Tuesday with volume of 158 million and 160 million respectively. It added 4 sens on Monday but closed unchanged on Tuesday at 31 sens.

Since it has move higher than its wave (iii) high of 29 sens and the correction from mid October to early December is of a lower degree, I have revised my wave count for Pworth as shown below.

From Mid October to early December, Pworth was forming the sub-wave i and ii of its wave (v). Since December it has been forming the sub-wave iii of wave (v). At this moment it is at the tail-end of its mini wave 3 of sub-wave iii. 

I expect Pworth to have another surge on Wednesday to complete its small v of minor (v) of mini wave 3 if this mini wave 3 has only five minor waves. However if it has nine minor waves then Pworth will continue to move higher to complete this mini wave 3 at a higher level.

Remember the article appeared in 'The Edge' in June 2017

Pworth forecasts a Rm100 million net profit for FY18 with timber production at 9.3 million cu.m. That means the monthly timber production is about 775,000 cu.m a month when Pworth starts to extract timber from the 101,161 hectares of forest reserve in Trus Madi, Sabah.

The latest monthly timber production figure announced by Pworth was 18,475 cu.m. for the month of November 2017. Has Pworth started to extract timber from Trus Madi ?

I hope it is not 'Terus Mati'.

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USD/MYR - At best Rm 3.85 to 1 USD

Looking at the daily chart, I would say, at best, the Malaysian ringgit can strengthen to around 3.85 to complete the wave 2 before weaken to above 4.50 to complete the wave 3 of B.

If my wave count for USD/MYR is correct, you can guess who is going to win the coming GE14.

Before the 1997 Asian Currency Crisis, for many years USD/MYR was able to stay around Rm 2.6 to 1 USD. I expect another 'shakeout' to complete the wave 3 of B in 2018 before the ringgit can slowly strengthen to Rm 2.6 to 1 USD again after a few years.

Based on the USD/MYR wave count, KLCI is more likely to form the wave 3 of B in tandem with the USD/MYR chart.

The 2nd scenario of major wave 5 formation for KLCI that I mentioned yesterday is less likely.

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Weekly Update

Dow (25,295)

Dow is forming the minor wave v of mini wave 9 of sub-wave v of wave (v) of its major wave 7. It has reach a possible turning point for the starting of its major wave 8 with a 15% pullback.

However instead of stopping at minor wave v, it is also possible that Dow can continue with its bull run by forming its minor wave vi, vii, viii and ix for its mini wave 9.

In fact after completed its mini wave 9 and its sub-wave v, Dow still can continue its bull run by forming sub-wave vi, vii, viii and ix for its wave (v).

FBMKLCI (1,817)

Assuming KLCI is forming the wave B of its mega wave (6)

KLCI at this moment is forming the wave (iii) of B.

If wave (iii) has only 9 waves, it is at the mini wave 7.

There is another more bullish wave count for KLCI that I have mentioned in August 2015 as shown below

But it was dropped subsequently because of the bearish sentiment in this country due to political situation, 1MDB issue and the weak Ringgit.

If KLCI can surge beyond its July 2014's high of 1,892 the alternative wave count is the major wave 5 formation.

Then the KLCI at this moment is forming the sub-wave iii of wave (iii) of its major wave 5.

ATTA Global Group Bhd (Rm 0.95)

Very likely ATTA is forming the wave B of (2).

From the 30-minute interval chart, it has one more up, the mini wave 5 of sub-wave iii of B.

Inari Amertron Bhd (Rm 3.69)

Inari continues with its major wave 7 formation.

It is about to complete the wave (vii) of  its major wave 7.

Insas Bhd (Rm 0.98)

Whether I like it or not, the correction since early July 2017 is the major wave 4 for Insas.

I have adjusted the wave count for major wave 3 as shown. there is a possibility that the major wave 5 has started. Conservatively I am looking at a target of Rm 1.80. And frankly speaking I am not satisfied with Rm 1.80 when I am considering the 402 million share of Inari that Insas is holding. That is 0.636 inari share per Insas share. At Inari's Friday closing price of Rm 3.69, the 0.636 share alone is worth Rm 2.34 without considering other assets and businesses of Insas

And I don't understand why the prices of Insas and Inari that used to move in tandem but started to move in an opposite direction since September 2017.

Initially I thought Inari was going to announce fantastic earning and Insas was going to announce very poor earning for quarter ending 30 September 2017. But by end of November when they announced their respective results, I was surprised to see Inari's earning at only 3.41 sens a share with net assets per share at Rm 0.45 whereas Insas's earning is 5.95 sens a share and net assets per share at Rm 2.41. I guess I just have to buy more Insas's share and hope for the best.

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Happy New Year 2018

A small bear is likely to come in for a 15% correction in 2018.

If you have done well in 2017, congratulation and can celebrate. If you have done not that well or you have done badly then we shall look forward to 2018 to have a better performance.

Dow (24,719)

Dow is about to end its mini wave 9. Watch out for failure minor wave v. Is this going to be the end of sub wave v, wave (v) and major wave 7?

Major wave 8 is expected to be about -15%.

FBMKLCI (1,796)

KLCI added 36 points (+2%) over the last 4 trading days of 2017 to confirm that it has yet to start its major wave C pullback.

It remained in its wave B formation. It might complete its wave B with a double-top formation. Wave C is expected to pullback about 15%.

                         

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