Jaks Resources Bhd (4723.KL) listed in the Bursa Malaysia
Jaks Resources Bhd: A relook into Jaks Resources from Profitability, Volume Spread Analysis and what’s Insiders Report are telling they are doing Now ?
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Jaks Resources Bhd (4723.KL) listed in the Bursa Malaysia
Background of Jaks Resources Bhd (4723.KL)
Originally involved in the plumbing business when it was founded, JAKS is now principally engaged in two inter-related core businesses of Construction and Property Development/Investment (Property). As can be seen in the Segment Disclosure, the Construction arm topped sales (95% of the group’s total) and single-handedly contributed to profits in 2018. Although not yet listed as a core business, the venture into the power generation business in Vietnam has contributed significantly to the superior profit performance of the Construction arm in the last two years.
Property Segment, on the other hand, has underperformed. In 2018, the sales and profits of the Property arm was eroded by RM50.0m charged out for disputed performance liability (DPL) and RM32.3m of provision for liquidated ascertained damages (LAD). The twin drags contributed 75% of the y-o-y decline in the Property division’s sales and 93% of the increase in the division’s loss last year.
JAKS’ five-year performance (2014-2018) was affected by sizeable non-recurring items recognised in 2017 (RM76.8m gain on disposal of land held for development in USJ) and 2018 (RM50.0m provision for DPL & RM32.3m provision for LAD). The cumulative EPS for the latest five-year period (2014-2018) at 4.04 sen rose well above 0.87 sen recorded in the earlier period (2009-2013), reflecting to a large extent the positive impact of good profits from the EPC contract in Vietnam which commenced in 2017. Coupled with the substantial one-off gain from land sale, the NTA has doubled in five years to RM1.22 as at 31.12.18. The combined impact of lower net debts (-21%) and a sharply expanded shareholders equity (+78%) also more than halved the net gearing ratio in five years to 0.33x as at 31.12.18.
A Quick Fundamental View for Jaks Resources:
- PE = 14.78
- ROE = 5.34 %
- DIY = 0.00 %
- Mkt Cap: 746.0M (RM) in Mid Cap, Construction, Main Market. (3-Yrs CAGR: +4.8% p.a.)
- Trading at Overpriced (relative).
Recent Insider Report for Jaks Resources Bhd (Bursa Malaysia)
In the Insider Report of Jaks Resources, we didnt see any disposal other than GE Assurance and Original Invention S.B. Jaks Resources previously known as Wing Teik Holdings Bhd, the company was taken over by Lam Poah’s father Datuk Ang Ken Seng in 2004. The elder Ang worked as a plumber servicing homes in his early days, before passing the baton to his two sons Lam Poah and Lam Aik, who, as JAKS’ executive director running the company. In Jaks Resource Insider Report, I believe Original Invention S.B belongs to the Ang Family. The recent purchase or transfer of shares holdings from Original Invention and Mr. Ang Lam Poah may have caused the Jaks Resource to break out from the support and stage 1 accumulation. With reasonable amount floating shares of 48.5%, it was easy effort to move the shares price after stage 1 accumulation as shown in this Jaks Insider Report
Known Major Shareholder(s) As at 3rd April 2019
12.97 % Ang Lam Poah
5.42 % Original Invention Sdn Bhd
Insider Report Jaks : Market Cap: 823 M. Number of Shares: 584 M. Float: 48.47%.
Profitability Analysis of Jaks Resources Outlook
The Jaks Resources Outlook in term of profitability is nothing to shout about. At a paltry amount of less than 6% and PE of 17x, the share is trading less than fair priced. The debt situation is reasonable as it is not too excessive to delve on heavy financial leverage at this point of growing the company Jaks Resources. The lower ROE and ROA isn’t look very positive for Jaks Resource Outlook.
Jaks Resources Bhd (Trading) – Weekly & Daily Chart VSA (Volume Spread Analysis) Review
Weekly TradeVSA chart for Jaks shown a nice trading setup from accumulation. In the weekly chart, we notice the climatic volume with Sell-Off (end of Nov 2018) have changed the direction of the market from Mark-Down stage to Accumulation stage. The chart has confirmed the strength with bullish pentagon signal in March 2019.
Price subsequently moved sideways with several No Supply (NS) and Spring (SP) bars at support. This show Smart Money are still accumulating and keen to mark-up the price. Also, we can notice down bar volume are generally lower as lesser seller in the accumulation.
Finally, another change in trend appeared again with Line Change and climatic volume in early October 2019. This have confirmed the Mark-Up stage and price likely to head towards the resistance at RM1.83. Trades can look for pullback with Spring or No Supply signal for lower risk.
Daily chart in Jaks (updated on 14 November 2019) show pullback pattern after breaking above the accumulation. From the chart, we notice high volume on 10 October 2019 and subsequently market test the new support with low volume.
The filling date for both Ang Lam Poh & Original Invention appeared at the support in the accumulation. Currently trend is still healthy with average volume in the upbars.
*Pentagon Guider System has Buy or Sell Indicator indicated by Green Pentagon Icon and Red Pentagon Guider Icon in the field of Volume Spread Analysis. However, we advised reader that not all pentagons are buy or sell taken literally 100% of the time in Volume Spread Analysis method.
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