DPS - DIS PROPERTY STOCK BROKER A 9 YEAR DOWNTREND !!!

Hello to all readers out there. Today we saw lumber related stocks had surged up tracking the lumber futures commodity prices. Congrats to all those who earned from MINHO.

KLCI made a huge rebound today closing at 1,576.42 (+19.78 points), and among the sectors making a reasonable momentum are property and construction sectors.

Having said the above, the stock which I'd like to talk about today is DPS RESOURCES BERHAD (DPS - Stock Code 7198, Main Market, Property)

BASIC INFORMATION ABOUT DPS

DPS was listed in BSKL in 1991 with core businesses in a few fields:

i) Property Development - thru Shantawood Property Management Sdn Bhd

ii) Manufacturer of wood based products - thru Shantawood Sdn Bhd

Market Capitalization : RM 73.47 million

Shares Float : 587.77 million

Website : http://shantawood.com.my/

1. TRADING BELOW NTA OF 21 CENTS, ASSETS SURPLUS COMPARED TO

LIABILITIES BY RM 126.7 MILLION

Refer below image of the latest Assets Versus Liability Summary for DPS.

As we can see the total cash holding has increased from RM 5.7 million compared to RM 2.1 million in the previous year corresponding quarter.

Also we note that the total Assets of RM 148.8 million exceeds total Liabilities of only RM 22.1 million by RM 126.7 million, indicating that this company is very low in debt and financially attractive for a takeover target.

2. POTENTIAL FUTURE EARNINGS FROM PROPERTY DEVELOPMENT IN

MALACCA AS ITS KEY FOCUS

DPS key focus for property development is in Malacca state, as the state has picked up its pace for property market since 2017. A few significant projects to note which will lift up Malacca state is Hatten City, Melaka Gateway and Harbour City.

A few projects under DPS right now focused in Malacca state :

i. Taman Bukit Rimbai Putra Project - GDV RM 199.134 million

ii. Taman Krubong Jaya Phase II Project - GDV RM 7.797 million

iii. Taman Manjung Minyak Project - GDV RM 3.083 million

iv. Other projects - 8 projects in hand with expected GDV of RM 90.55 million in a land  measuring 27.28 acres

3. TECHNICAL ANALYSIS - BREAKOUT 9 YEAR DOWNTREND LINE WITH

STRONG VOLUME

Refer below the basic price and volume chart with key EMAs for DPS daily chart :

A few observations on the daily chart:

i. DPS was as high as 40c in 2011 with strong volumes and then started to downtrend

i. Refer Circle 1 & 2, the downtrend was test 2 times in 2015 and 2016, but failed to breakout and price resumed downtrend

ii. Refer latest circle in 2020, where significant volumes entered this counter, and price had broken out above the downtrend channel

iii. Next resistances appear to be 16c, 18.5c and 25c to breakout for further uptrend rally

4. CHEAPER ENTRY INTO DPS VIA DPS WARRANT-B (DPS WB)

Following is the profile of  DPS WB, for traders looking at lower cost entry into this stock. A few comments:

i. Maturity is January 2025, which means very ample time to hold on to before expired (about 51 months left)

ii. Premium of 44% is considered quite reasonable, with the amount of life left for this warrant

iii. Strike price of 10c, which means that mother price at 12.5c closing price is already above strike price

iv. Very low gearing, indicating high sensitivity of this warrant relative to the mother shares movement

CONCLUSION

Considering all the above, I opine that current price for DPS is attractive due to below:

i) Trading below its NTA price of 21c, and Assets Surplus of RM 126.7 million compared to liabilities

ii) Exciting projects in hand focusing on Malacca state projects

iii) Breakout 9 year downtrend line with significant volume buildup

LET’S SEE HOW THE SHARE PRICE MOVEMENT IN THE NEAR FUTURE FORBEARING ANY GOOD CORPORATE NEWS.

Disclaimer : The above opinion is never intended to be a BUY CALL whatsoever. I am sharing my observations ONLY based on fundamental; past history; current trading pattern; charts etc. Please make your own informed decision before buying this share or whatever share for that matter.

BURSAMASTER