Are these penny stocks really cheap?

Today penny stocks occupied most of the top 30 most active stocks spots. I took a quick look at those stocks I highlighted in red (e.g. Digiland, Unifiber, Infinio, Sapphire, etc) and found that most of them are losing money as expected. The stock price looks cheap (only a few cents) but in fact they are very expensive and risky. The upside of Rewards vs Risks is limited because the company is not going to pay dividend & the fund managers are not interested in investing in these companies, thus we should not put too high expectation that the stock price will go up. Anything can happen if the company is not making money because the company may go bankcrupt anytime, delisted or issue new rights (which dilute the stock price even more).

There are only two things will move the stock price, i.e. Earnings and News. The stock price will not move if the earning is bad or the company is losing money. Unless there is big news like Merger or Acquisition, win new businesses, company successfully launches new product, etc, don't expect upside price movement which is sustainable for long term.

History always repeat itself, I am seeing people are making the same mistakes as mine previously and they are going to lose lots of money! I doubt they know what they are doing.

Datapulse Fundamental & Intrinsic Value

Datapulse is not a sexy stock but it is a good stock to collect dividend.

Base on Q2, 2009 financial report:

• PE = 11
• Dividend Yield = 8%
• NAV = $0.1187
• Net Earning = 22.1%
• Current Ratio = 3.75
• ROA = 13.4% (Base on 2008 Full Year)
• ROE = 17.5% (base on 2008 Full Year)
• Cash Flow = S$43.5Million (10.3% increase with reference to 2008 Full Year)

Stock Background

• 3 years historal high = $0.32
• Current Price = $0.25 (78% of 3 years high)

Intrinsic Value Calculation

• EPS Annual Growth = 8.9% (from 2004A to 2009F)
• Discount Rate = 5%
• Intrinsic Value = $0.33 (24% Discount of Current Price to Intrinsic Value)

Best World enters consolidation phase

Best World is undecisive whether the bull or bear takes charge. Short term it probably goes into consolidation phase where the stock price may move horizontally. Very unlikely the stock price will go up due to dropping in volume.

Best World's Fundamental & Intrinsic Value

Base on Q2, 2009 financial report:

• PE = 6.8
• Dividend Yield = 4.8%
• NAV = $0.2546
• Net Earning = 15.6%
• Current Ratio = 4.63
• ROA = 16.1% (Base on 2008 Full Year)
• ROE = 21.4% (base on 2008 Full Year)
• Cash Flow = S$35.8Million (11% increase with reference to 2008 Full Year)

 Stock Background

• 3 years historal high = $1.26
• Current Price = $0.35 (only 27% of 3 years high)

 Intrinsic Value Calculation

• EPS Annual Growth = 15.7% (from 2004A to 2009F)
• Discount Rate = 5%
• Intrinsic Value = $0.87 (60% Discount of Current Price to Intrinsic Value)

Raffles Education - Testing its strong support of $0.535

Raffles Education closed at $0.55 with some heavy selling by unknown big institutions (two big transactions of S$ 500k & S$ 1million each).

Looking at the chart, the stock price is below 20D & 50D MA line and very close to 200D MA of about $0.52 and 61.8% Fibonacci retracement line of $0.535. MACD shows bearish convergence & 20D MA shows a short term down trend.

It will be interesting to see whether the stock price can hold above $0.535 and bounces back from this critical support level. If it breaks below the 200D MA, the selling pressure will be even greater and down trend may start. In addition, we are entering Sept period when STI may start a big correction and this may exert additional selling pressure to all other stocks. I will stay out of this stock for the time being.

Synear - Bearish Doji candles formed after 22% gain in a week!

Synear probably takes a breather after a week gain of 22% from $0.275 to $0.335. This bearish doji candles end the uptrend and the stock price may go into consolidation. If next Monday trading ends with a bearish long candle, Abandoned Baby pattern will be formed showing a reversal bearish trend. The stock price may retrace back support line between $0.27 and $0.28. If the Abandoned Baby pattern is not formed, the stock may reach $0.365 after a temporary consolidation.

Don't chase the price!

A lesson I've learnt recently is not to chase the price no matter what the technical indicators showed. I chased the price of Hongguo at $0.34 (at the top) when I saw all Standard Six indicators showed bullish convergence, however the price retraced back to $0.27 within one week. Currently I am still at lost with Hongguo's $0.31 today with thin trading volume. I will probably hold the stock for a longer term and wait to reach the my calculated intrinsic value of $0.85 (calculated before the recent Q2 2009 financil result).

The hardest part of the stock trading is to control the emotion, however I was able to control my emotion by delaying the action by one part after seeing Synear breakout from its triangle. I was very tempted to enter the trade at $0.285 but I kept reminding myself not to chase the price. Eventually I was able to enter at $0.275 and today Synear closed at $0.305, a handsomely 9% paper gain in one day!

Today I almost go to chase China HongXing stock price at $0.215 before the market close. Fortunately I was disciplined enough to wait for another day. Base on the candle sticks, the stock price failed to break the resistance and would probably retrace back to between $0.18 to $0.20. This gave me another opportunity to buy on a dip.

Lesson Learnt: It is OK to make mistakes but must learn how to prevent making the same mistake for the second time.

China HongXing - trying to break strong resistance of $0.215

Another hot China stocks trying to breakout from the strong resistance with increasing volume.


Resistance at $0.215. If the stock price break the resistance, it may go up to $0.268 (161.8% Fibonacci). The next strong support at $0.183 (61.8% Fibonacci retracement) and $0.156.

PE = 6.8
Dividend Yield = 1.25%
NAV = $0.3359

Base on Q2 2009 result:
Current Ratio = 25
Cash = $520 Million
Net Earning = 9.5%
ROA = 10.1% (2008 Full Year)
ROE = 11.6% (2008 Full Year)
3 Years Historical High = $1.42
Current Price = $0.215

Synear - another stock breaking out from triangle!

Synear had a breakout from triangle and closed above $0.28 resistance. If the stock price can hold above this resistance line for the next few days, $0.28 will become a very strong support line.

All Standard Six Technical Indicators shows Bullish Convergence.

Base on Q2, 2009 financial report:
PE = 8.9

Dividend Yield = No Dividend.

NAV = $0.4778
Net Earning = 10.5%
Current Ratio = 7.48
ROA = 7.1% (Base on 2008 Full Year)
ROE = 7.7% (base on 2008 Full Year)
Cash Flow = S$235 Million (41% increase with reference to 2008 Full Year)

Stock Background
3 years historal high = $2.44
Current Price = $0.285 (only 11% of 3 years high)

China Fishery breakout from triangle and looks really bullish!!!

China Fishery has a breakout from triangle and close the session at $1.28 with a hanging man candle today. It has chance to go up to $1.422 (161.8% Fibonacci line) and a very strong support at $1.127 (61.8% Fibonacci retracement) with raising volume.



All Standard Six Indicators showed Bullish Convergence.

• Stock price above 20D, 50D and 200D MA.


• Stock price at the upper band of Bollinger Band.


• Stock price above Parabolic SAR


• MACD blue-red crossover at upper half to show bullish convergence.


• RSI & Stochastic on rising trend.


• Volume is increasing for past few days and 1.6 million shares traded today.

Market sentiment is good today and hopefully will still be good for the next few days. If the stock price can stay above $1.24, short term the stock price may have another 10% upside potential. I will continue to monitor the stock to see whether it will reach $1.422.

If all my Technical Analysis goes wrong, I will hold the stock as Value investment and collect dividend because the company's fundamental is good and the stock is still cheap.

Base on Q2, 2009 financial report:

• PE = 8.1 (Historial high PE is 21.6 in 2005)


• Dividend Yield = 4.3%


• Net Earning = 23%


• Current Ratio = 1.79


• ROA = 12.9% (Base on 2008 Full Year)


• ROE = 28% (base on 2008 Full Year)


• Cash Flow = S$31 Million (Already 50% more than 2008 Full Year for the first 2 quarters due to capacity expansion)

Stock Background

• 3 years historal high = $2.564


• Current Price = $1.28 (only 50% of 3 years high)

Invest Fair

Helped out in the INVEST FAIR for past two days, I have a feeling that the talks in the INVEST Fair probably may have some influence over the Singapore Stock market in the coming weeks. There were talks and sharing sessions to show that Singapore stock markets are going to become bearish and having a big correction. The investors who attended the fair have a little bit more insight of the stock market sentiment and the future STI movement. For me, I will stay out of all Blue Chips stock for the time being until the correction is over. I am planning to sell off some penny stocks in the next one or two weeks because any big correction in STI will also affect the penny stocks. The probability of share price going down is higher than share price going up, so why take the risks? Furthermore, the two big drops (5.8% on Monday and 4.3% on Wednesday) last week at Shanghai stock exchange had raised some alarms. I am not going to take any risks.

STI : End of Elliot Wave 5. Big correction is coming?

I am very tempted to pick up some stocks this week after seeing some selling off. However, I changed my mind and decided to ENDURE and wait for the big correction. I have to be very disciplined for these two months.

STI had completed the Elliot Wave 5 and started the correction. The next support will be probably around 2420 points (61.8% Fibonacci retracement of Wave 5).

The index will probably retrace back to 2220 points (61.8% retracement of full Elliot Wave 1- 5), ie. there is another 300 points to go! STI is really looking bearish, isn't it? However, it is a good news for those who have missed the April-July rally. I am loaded, and I am ready to go!

Capitaland DOUBLE TOP formation - down trend started?

A double top had been formed on Capitaland indicating the trend reversal. In addition, all Standard Six Indicators are showing bearish convergence. Capitaland closed at $3.63 today with hanging man candle. Stock price broke the 20D & 50D MA support and at the lower end of Bollinger Band. MACD is very close entering bearish convergance at lower half, RSI & Stochastic are showing bearish convergence as well. All technical indicators showed that down trend is going to start. I am sitting back, relax and wait for the big correction before I long this stock. I hope I am right!

Watch out for the volume change!

I get caught in a few occasions that my predictation using technical indicators went haywire when there were sudden drop trading volume. On Aug 6, everything looked good on this chart. The stock price breakout from consolidation and broke the resistance of $0.13 with 63.5M shares traded. The stock price was above 20D, 50D and 200D MA, at the upper Bollinger Band, on top of the Parabolic SAR, MACD confirmed bullish convergence, RSI & Stochastic were bullish. All Standard Six indicators showed bullish convergence and looked really good to enter the position. The next day the volume dropped to 14.2M shares and end up with a bearish marubozu candle. For the subsequent days, the volume getting lower and lower and out of the sudden the stock was losing momentum. Now I have to hold on this stock as a longer term investment.

Courage Marine – is it getting bullish?

This week this counter has a very long marubozu candle and close the week at $0.235 with a volume spike of 13.9M shares traded in one day (on Aug 14). Standard Six Technical Indicators are signaling short term bullish convergence.

Week TA Summary
* Stock price above 20D, 50D and 200D MA and all three MAs are in uptrend. 20D MA crossed 50D MA.
* Stock price on the upper boundary of Bollinger Band.
* MACD crossover (blue over red) on upper half showing bullish convergence.
* Stock price on top of Parabolic SAR.
* RSI at 55%.
* Stochastic blue-red crossover in the up trend.

The chart is also having a very nice Fibonacci retracement back to $0.197 (61.8%) and should form a very strong support line. If the stock price can break the resistance of $0.25 and stay on top of $0.25 with healthy volume, it may go all the way up to $0.337 (161.8%) by Jan 2010 base on Fibonacci fan.

Stock Background
3 Years Historical High = $0.51
Current Price = $0.235

WOW! I have my own investing 10 commandments now! :)

1. I am 100% responsible for my own decision. I have to digest those information or data for whatever tips, information, recommendation given by anyone, do my own analysis and make my own conclusion.
2. I need to filter noises in the market. Need to differentiate facts and rumors.
3. Be disciplined in my investment plan and investing strategy. Don't get influenced easily by others.
4. Learn from others and never stop learning.
5. Don't be hero in the market. I can never beat the market.
6. Be firm when it is time to get out of the position and cut loses. (this is quite tough to me for the time being but I have made some good progress)
7. Endure, endure, and endure! Wait for the right time to buy. (Now I start to understand what the trainer taught me: the toughest thing to do is to wait!)
8. Invest what I can afford to lose.
9. Don't put all eggs into my basket. Diversify my portfolio but don't over diversify.
10. Don't be greedy!

I have to make a disclaimer. Murphy's Law!

Thanks for my buddy's reminder that I better make a disclaimer here just in case. Murphy's law always applied and I don't want to get into any trouble in future by sharing my ideas and stock analysis here.

Whatever I write in this blog is my personal opinion and ideas. I am not a stockbroker, broker dealers, or any registered investment advisors. I am just a beginner learning how to invest using technical analysis and value investment methods learnt from my course. If any particular stocks and investments are mentioned, they are just my "homeworks" (I have buddies system to kick each other butt) or "leisure works". It is not a recommendation to purchase or sell any of the securities, businesses or investment discussed in the blog.

I base on my own understanding to do the analysis but I cannot provide any warranty or guarantee regarding the accuracy, reliability, veracity or completeness of the information provided herein. The author and those are so kind to provide comments here disclaim any responsibility for any liability, loss or risk, which may arises as a consequence, directly or indirectly, from the use and application of any of the ideas, strategies or techniques I share here.

End of the serious stuff!

Sunningdale Tech - good momentum with good volume

I have been avoiding over-value STI index component stocks and just investing in penny stocks with short term momentum. Sunning Tech has been active with good volume recently and expect the company to turn into black pending for the last quarter financial report announcement.

Using Standard Six Technical Analysis Method to analyse the stock momentum.

• MACD - still bullish converge (bullish)
• Parabolic SAR - Stock price on top (bullish)
• Boilinger Band - at upper band (bullish)
• Moving Average (MA) - stock price above 20D, 50D, 200D MA lines.
• RSI - around 60 (less bullish)
• Stochastic - going to hit 80% (bullish)

The support level at $0.10 and $0.12. I think the downside possibility is minimal for a few reasons:

• The worst crisis has gone. Economy seems to have bottomed up and the fear factors are no longer there.
• The company expect to make profit again after in the red for so many quarters.
• The NAV (Net Asset Value) is $0.33. Current stock price is only $0.135 which is way below $0.33. (Layman term: if the company goes bankrupt and liquidated, you can get back $0.33 per share)
• The company is still generating positive cashflow base on Q109 financial result.
• Current Ratio is 1.2. Short term will not have any liquidity issue (layman term: the company will not go bankrupt)

WORST CASE: If all my Technical Analysis are wrong, I just keep the stock and wait for the price to go back to the fair value. I still be able to make money if I can hold the stock long enough.

Chartered has a nice uptrend wave with a solid Fibonacci fitting!

I am still losing money with Chartered shares. Besides waiting for the semiconnductor manufacturing recovery, the beautiful wave shown by CharteredSc tell us some story.


In addition, the stock price retraced back to 61.8% which is a solid Fibonacci retracement level. I should have bought more shares when the share price at $1.80. Frankly speaking, I was panic when it hit $1.80 and worried that whether the stock price will go lower WITHOUT looking at the chart (another lesson learnt for not analysing the chart constantly!). I am waiting for a big correction to happen before I invest this stock again. Isn't it a good stock to monitor as the company is going to be profitable again in the next one or two quarters and the chart is showing us a very nice wave? It looks more predictable on the stock price now.

IPO Stocks

Looking back, one of the mistakes I made previous was to buy IPO stocks. I still can remember using ATM to subscribe IPO stocks that I did not even know what is the company is about. The impression I had last time was it was very easy to make money from the IPO offering. You subsribed the share for $0.10 and the 1st trading days it would shoot up to 100%! It was the easy money, wasn't it? However, we would never go and sell the share as our greed told us that it would go higher and higher and made money $$$! At the end of the day, the price would drop back to even lower than the IPO price. I have lost money with Del Monte, Dynamic, Giant Wireless, Valuetronics and Eastgate that my record is almost 100% (LOSING MONEY!!) I have got rid of Del Monte and Dynamic two weeks back and still holding Valuetronics.

Lessons learnt: Do not anyhow buy IPO stocks unless you are VERY VERY SURE it is a good company with very good business prospective and fundamental. Anyway, it is always a gamble to buy IPO stocks as there is no historical data for us the assess the stock price. It can make money very fast and also make us lose money as fast!

Singapore Stocks

Personally I feel that those STI index component stocks prices were over value. I am waiting for the correction before re-look into those blue chip stocks again. At the moment, I am investing with those penny stocks with good fundamental and have shown some good bullish momentum lately.

Stocks with good fundamental & good future prospects:
(1) Best World
(2) Hongguo
(3) China Fishery

Stocks with bullish momentum recently
(1) Meiban
(2) Sunning Tech

I started to clean up my old portfolio (1 lot Del Monte, 3 lots Dynamic) that I don't even know why I bought them at the 1st place. However, it is never too late to correct my past mistakes and start my proper investing again.

When I first started investing....

I have been "investing" in stocks since 1998, but maybe a more appropriate work is "buying blindly". What I did was to hear from my colleagues what shares to buy and just throw my hard earn money to buy the stocks he recommended. I did not know how to analyse & evaluate a company, did not know how to analyse the stock chart & totally lost with those jargons like support & resistance, correction, candle sticks, etc. I was just like those retail "investors" out there (uncles & aunties) and did not even know what kinds of risks I was putting myself into. I bought Keppel Land, UOB KayHian, Chartered Semiconductor (when the stock price was S$10!), JIT (later acquired by Flextronics) in my initial first few years of investing. As expected, I lost money and I am still holding my Charted Semiconductor share today! But I have started to average down my ChartedSc stocks as I know semiconductor recovery is around the corner and I can minimise the loses when the stock price goes up.

Recently I decided to take up some investing courses and it reaps benefit. I've learnt how to analyse a good company and evaluate the stock price whether it is under value or over value. I also learned how to use Technical Analysis to analyse the stock price trend to time my entry and exit points. I decided to share my learning experience and stock analysis in this blog space after encouragement from my classmate. I will be sharing some company analysis and stock charts I have done. Welcome for any comment as this will help me to learn.