Cashing in on Pestech too

On Thursday, Pestech has finally risen above RM5.00 for the first time after the share split in 2014. During the CFA class, I have learnt about some technical indicators and so I have tried to use them on Pestech:

First technical indicator I used is the Moving Average Converge Divergence (MACD). According to Investopedia, MACD is a trend-following momentum indicator that shows the relationship between two exponential moving averages (EMA) of prices. EMA is simply the weighted average closing price of the last few trading days that gives more weight/emphasis to the latest data. MACD is calculated by subtracting the 26-day EMA from the 12-day EMA. Then we use a 9-day EMA of the MACD, called the "signal line" as a trigger for buy and sell signals. In the area highlighted by blue circle chart below, the MACD line crosses and rises above the signal line, meaning it is a bullish sign. On 28th February 2015 (red circle), the MACD is still above the signal line and thus Pestech still in bullish mode.

Second indicator I used is the Relative Strength Indicator (RSI). According to Investopedia, RSI is a technical momentum indicator that compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset. RSI ranges from 0 to 100. Once RSI hits 70, it is considered overbought and the asset is likely to experience some pullback. In the case of Pestech, it was in overbought mode in the last two trading days (26th and 27th February) as highlighted by the red circle below. However, if the RSI drops below 30, then it is technically oversold and will likely to rise.

The two technical indicators indicate that Pestech is still in bullish mode and thus likely to have some more upside. However, the cautious me decided to exit while the market is still bullish and the Pestech volume is still high. So I sold my 1000 units of Pestech @ RM4.96, earning 22% Holding Period Return (HPR). The two transactions in 2015 so far:  

After this transaction, Huat Fund looks like this:

Wa si CFA Candidate

Certified Financial Analyst (CFA) is a program that I found out a few years ago and I have always wanted to study it. Finally I got the chance to enroll in a part time workshop locally after returning to Malaysia and I am proud to say that I am a candidate for the level 1 exam in June this year.

CFA emphasizes a lot on the ethical investing. For example, the interest of clients always come first and we should take the last bite of any cherries. As a matter of fact, as a candidate or Charterholder of CFA, I am not allowed to give guaranteed returns for that is not realistic in the real world and thus considered not ethical.

Therefore, the objective of Huat Fund will have to be altered. Previously, I guarantee a 10% annual return on Huat Fund. Now, I will try my best to achieve a 10% annual return on Huat Fund.

Meanwhile, a little update on Huat Fund. Paper gain increases as the market improved over the last few weeks. Bulk of the gains come from Inari. SK Petro is almost near my 30% target and Hovid is finally showing some sign of life after hibernating for the past half a year. I suspect the renewed interest in Hovid is due to the fall in ringgit as most of it's export products are priced in USD. Heck, even Pestech and QL have broken even. Jaya Tiasa remains the problem child. Huat Fund looks like this today:

Uneven waters - New entry - Pestech

The ballooning trade volume in the stockmarket for the past few days is beginning to strike fear in me as the number of lossers consistently outnumbers the gainers. In times like this traders will thrive. A good trader must monitor the screen all the time and also act swiftly. That is too exciting for me though. So I added a boring new member Pestech to the Huat Fund instead. This blog entry is two days overdue due to my slight fever. So why Pestech?

Pestech is a leading regional electrical solution company that provide comprehensive power system engineering and technical solutions for design, procurement and installation of HV (high voltage) and EHV (extra-high voltage) substations, transmission lines and underground cables. Pestech started as a trading company that sells electrical products in 1991. Under the leadership of Paul Lim, the current CEO, who joined in 2000, the company became an established home-grown integrated electric power technology company in the power transmission and distribution business with operations locally and abroad.

The pulling factors:
1) Overseas exposure
Not many local company dare or can venture outside of Malaysia but Pestech not a typical malaysian company. It has had projects in Singapore, Australia, Mali, Ghana, South Africa, Tanzania, UAE, Sri Lanka, Iran, Papua New Guinea, Laos, Cambodia, Myanmar and even North Korea (I wonder how). So Pestech targets mainly the developing countries that have been underinvesting in their power infrastructure. As these countries develop, their demand for electricity will rise. However, by venturing into these countries, the risk of receivables is something that must be considered. Pestech had this covered by undertaking projects are sponsored by ADB and japanese funds and also making some good risk analysis of each projects so far. And Pestech is also starting to build reputation of its own in Cambodia by delivering its first project there 8 months early. Expect more projects in Indochina area.

2) Leadership under Paul Lim
I have read a lot of directors, CEOs and Chairmans' profile before and have never seen such a rapid rise. He practically became a GM from fresh grad in 6 years. With such a talent leading the company, sky is really the limit for Pestech.

3) Fast growing SCORE projects
The high energy industries that are located in Sarawak Corridor of Renewable Energy (SCORE) will need many more substations.

4) Collaboration with ABB Group
Pestech basically signed Technical Cooperation Agreements with ABB Group to get technical support, technical drawings and OEM products so that it can start produce some of its product as its own product from 2017. Getting an international group to do that is not the easiest task in the world! But I suspect there will be more tie-ups like this soon.

Risk:
-Forex risk due to overseas projects
-Fluctuation in project earnings due to project stages billings
-Changes in government policies


So, Huat Fund looks like this today after the addition of Pestech. I bought only 1000units to keep the cash level above 10% level.

Fund Portfolio at 20.08.2014
	Name	Purchase Date	Average Purchase Price	Current Price	Unit	Current Value (RM)	P/L ex Dividend (%)	Dividend (RM)	P/L inc Dividend (%)
Cash	Hle-Broking			11665.21
Stocks	Sunreit	04/10/13	1.40	1.460	5000	7300	4.5	282.75	8.5
	Inari	24/02/14	2.45	3.280	12000	39360	34.0	270	34.9
	Jaya Tiasa	24/04/14	2.74	2.270	2000	4540	-17.3		-17.3
	Hovid	14/04/14	0.38	0.415	40000	16600	7.9		7.9
	Westport	09/05/14	2.75	2.940	2000	5880	6.7		6.7
	QL	07/07/14	3.60	3.450	3000	10350	-4.1		-4.1
	Pestech	20/08/14	4.04	3.980	1000	3980	-1.5		-1.5
Total value of current Stocks				88010.00	88.3	%		552.75
Total cash in Hlebroking				11665.21	11.7	%
Total Fund Value				99675.21
Original Capital				50000.00
Addition to original capital				20000.00
Total Fund Capital				70000.00
Current paper gain				10431.78
Total dividend				1105.10
Total profit including current paper gain				29675.21	42.4	%