Thursday, 4 August 2011

Focus on stock earnings, fundamentals, investors told

Take note on this commets for long term investman.
KUALA LUMPUR: After Catcha Media Bhd, another ACE Market-listed firm was in the limelight yesterday as news that Tun Daim Zainuddin's son has become Sanichi Technology Bhd's substantial shareholder.

The counter was the most actively traded until it was halted at 4.05pm at 10.5 sen, up 1 sen with over 76 million shares exchanging hands. Trading is to resume today.

Analysts said the heavy trading of the otherwise low-profile stock was mainly due to investors getting overly excited over Datuk Md Wira Dani Daim's investment in the precision plastic injection mould maker.

"It's just a knee-jerk response and the fact that he is Daim's son made it even more dramatic," said one.

Sanichi had later in the day, filed a statement to Bursa Malaysia, updating that its memorandum of understanding (MOU) with a German party will be going through a due-diligence process between now and September.

The MOU, signed in June this year, was with Projektarbelt Technische Beratung Venretung International (Protev) for a one-stop plastic injection mould fabrication solution centre.

Under the MOU, Protev had expressed interest to explore the possibility of taking up a strategic stake in Sanichi.

Whether it is the MOU or Md Wira's entry into Sanichi that is steering up the stock, analysts opined that investors, especially retail ones, should be more cautious when buying.

Mercury Securities head of research Edmund Tham said investors should always buy on fundamentals and earnings.

"However, many punters or retail investors tend to buy on exciting news or rumours, irrespective of the earnings," he said.

TA Securities head of research Kaladher Govindan said in investing, fundamentals come first while personalities "come into play only if they can really add value on their own accord (not through connections) or have a clearly stated plan when they acquire the company".

He added that even if these young corporate persons have a specific plan, there is still no guarantee that it will materialise if the major shareholders cannot reach a consensus.

He cited several cases or situations in the past, whereby, the entrance of new shareholders did nothing to the companies they bought shares into.

Govindan said when the Naza group brothers took a controlling stake in Kumpulan Jetson Bhd, things did not work out and when they left, the share price nose- dived.

There was not much excitement either at Petra Energy Bhd when new shareholders from Sarawak's Datuk Bustari Yusoff's Shorefield Resources came in or when KFC's Datuk Ishak Ismail came into Kenmark Industrial Co Bhd, he said.

News flow like new shareholders, he added, should be taken with a pinch of salt and can only be useful for short-term traders.

"For real investors, it is worth every penny to really look into the fundamentals of a stock first before investing than being excited about the entry of a new shareholder," said Govindan.

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