Technical Outlook by Nextrade

1. Long-term Potential
The chart below shows RGB breaking above the horizontal line at RM0.20. Its next resistance is at RM0.35. If the current rally can touch the horizontal line at RM0.35, RGB would give us an upside of 75%.

Estimated RM100,000,0000 Bank balance at 30/9/2016 and work out to be 6.2 cents per share. PE is less than 10x.

KUALA LUMPUR (Nov 16): AllianceDBS Research said the immediate hurdle for Gadang Holdings Bhd (Gadang) was seen at RM2.79 and that Gadang had on Nov 15 filled the downside gap left behind on Nov 8.

It said the stock subsequently settled at the day’s high of RM2.77 (up 14 sen or 5.32%).

In its evening edition yesterday, the research house said Gadang continued to stay below the 20-day and 50-day moving average lines.

“Following the up close on Nov 15, the stock is likely to move higher again with immediate hurdle seen at RM2.79.

“A crossover of RM2.79 should see further price rise to the next overhead resistance at RM2.94.

*Trading Stocks today:*

The following information is extracted from CIMB Research Report. For the full research reports and disclaimers, please logon to your account on www.itradecimb.com.my and click on Research.

Malaysia:
*Gadang Holdings (9261)* (RM2.77): Buy
Target: RM3.30
Cut loss: RM2.63

*Southern Steel (5665)* (RM1.28): Buy
Target: RM1.51
Cut loss: RM1.18

Sector Watch:
1. China Steel Sector. Sector earnings improved significantly in 9M16. 82% of the largest steel companies achieved positive earnings growth in YoY terms, 45% of them turned profitable from one year ago. The improvement was attributable to: (a) continuous rise in steel and iron ore prices amid supply-side reform, (b) efforts by steel companies to lower costs and enhance efficiency. In addition, NDRC vows to continue to cut steel capacities.

MYCRON result will better in this quarter?

Updates on South Korea.

On its proposed Resorts World Jeju development, Genting would formally file for the application for casino license in 1Q17. The official opening of the casino will take place in mid-2018.

RGB have to start production of machine in early 2017?

RHB Research - Japan

The potential passing of gaming legislation in Japan. We note that Japan Prime Minister Shinzo Abe’s Liberal Democratic Party (LDP)-led ruling coalition now commands an overall majority across both upper and lower houses of the parliament following its landslide election victory in July this year.

Subsequently in August, three pro-casino officials ie Toshihiro Nikai, Hiroyuki Hosoda and Toshimitsu Motegi were promoted to top spots during the internal reshuffling of the LDP. The trio has recently confirmed their intention to have the gaming bill passed during the current parliamentary session, which ends on 30 Nov 2016.

This, coupled with the recent decision by the LDP to extend the maximum tenure of its president to nine years (from six years) – which would then grant Shinzo Abe a chance at a third term come Sep 2018 – could finally pave the way for the passing of the Integrated Resorts Promotion Bill.

RGB is well-positioned to benefit from the increasing liberalization of casinos and gaming clubs in emerging Asian countries, such as the Philippines, Cambodia, Laos, Nepal, Korea JI and Timor Leste and coming, Japan.

Valuation by Nextrade.

RGB is trading at a trailing PER of 12.6x (based on last 4 quarters’ EPS of 1.74 sen). However, the company has cash of RM70 million as at 30/6/2016 (or 5.3 sen per share). If the cash is deducted from the share price, RGB’s trailing PER is only 10x.

The two gaming stocks listed on Bursa - GenM and Genting – are currently trading at trailing PER of 21x and 26x respectively. One can make a case that RGB should trade at similar PER as GenM or Genting.

Assuming that RGB can command a PER of 20x, then its fair value would be RM0.35 (even ignoring the cash in hand of 5.3 sen per share).

The Edge Financial Daily, on November 14, 2016.


KUALA LUMPUR: RGB International Bhd is working hard to ensure it grows its revenue by at least 20% in the financial year ending Dec 31, 2017 (FY17).

That’s because the electronic gaming and amusement machine manufacturer hopes to benefit from the government’s incentives given under Budget 2017 for companies.

RGB is going after the maximum reduction in income tax of four percentage points for an increase in chargeable income of 20% and above for assessment year 2017-2018.

According to its managing director Datuk Chuah Kim Seah, who is also a major shareholder of the group with a 26.26% stake as at March 17, 2016, the group is on track to meet its target for FY16.

“We are positive that our [financial] performance in FY16 will not deviate too much from our expectations. We have targeted for double-digit growth in FY17 and with the latest Budget 2017 announcement, we are targeting to achieve a 20% growth [in revenue] to benefit from the tax incentives,” Chuah told The Edge Financial Daily in a telephone interview.

Accumulate while you can.

Based on AR2015,
Trace Receivables : USD41.8 million
Cash & Bank: USD41.7 million
Trade Payables : USD38.5 million
Borrowing : Shall be pay off by 3rd Quarter ended 30 Sept 2016.
Net USD in holding : USD45.0 million


Assume 2nd and 3rd Quarter, net USD holding is same USD45.00 (due to repayment of borrowings)

USD/RM:
As at 30 June 2016 approximate RM3.99
At at 30 Sept 2016 approximate RM4.14

Possible foreign exchange gain:

USD45.0 million X 3.99 = RM179.55 million
USD45.0 million X 4.14 = RM186.30 million
Gain in forex = RM6.75 million.

Possible?

RGB International – BUY
- R2: 0.280
- R1: 0.245
- S1: 0.190
- S2: 0.170

The stock broke out of its rounded-bottom pattern and has stayed well above the neckline of RM0.19. Higher prices are likely soon.

Both MACD and RSI are still sitting in their positive territories.

Aggressive traders may go long now with a stop placed at RM0.18. Prices would probably climb
higher to above RM0.235, targeting RM0.28 next.

RM against UD;
as at 30 June 2016 approximate RM3.99 and at at 30 Sept 2016 approximate RM4.14.

Forex gain by approximate 3.5%.

SOURCE: GENTING

Proposed Resorts World Jeju development, management would formally file for the application for casino license in 1Q17. We believe the official opening of the casino will take place in mid-2018.

Turning positive on Japan. On a side note, management is turning more bullish on potential legalisation of integrated resorts in Japan following the landslide election win for Prime Minister Shinzo Abe’s ruling Liberal Democratic Party in July. We gather that the gaming bill will likely be debated in the current diet session ending 30 Nov.

ABOVE NEW CASINO DEVELOPMENT WILL BENEFIT RGB BECAUSE GENTING WAS EXISTING CLIENT OF GENTING

Well done Paperplane2016

Good closing ..

Each industry have competitors.

CIMB target price RM0.28

iloveshare128 for sure want to buy more..

By Alex Yu, NEXTRADE


RGB (closed at RM0.22 yesterday) is trading at a trailing PER of 12.6x (based on last 4 quarters’ EPS of 1.74 sen). However, the company has cash of RM70 million as at 30/6/2016 (or 5.3 sen per share). If the cash is deducted from the share price, RGB’s trailing PER is only 10x.

The two gaming stocks listed on Bursa - GenM and Genting – are currently trading at trailing PER of 21x and 26x respectively. One can make a case that RGB should trade at similar PER as GenM or Genting. Assuming that RGB can command a PER of 20x, then its fair value would be RM0.35 (even ignoring the cash in hand of 5.3 sen per share).

Technical Outlook

1. Long-term Potential
The chart below shows RGB breaking above the horizontal line at RM0.20. Its next resistance is at RM0.35. If the current rally can touch the horizontal line at RM0.35, RGB would give us an upside of 75%.

2. Short-term Risk
The stock has risen quite substantially from RM0.17 to RM0.22 in the past 6 weeks. It has surpassed the line, XY at RM0.215. Failure to stay above this breakout level could lead to a correction to the horizontal-cum-psychological line of RM0.20.Below this level, the next support would be the line, BC at RM0.175.

GOOD SIGN

http://klse.i3investor.com/blogs/myrgb3/107554.jsp

Refer to my write up on RGB on Nepal

Nepal casino industry continues to attract investor interest, driven by expectations it will benefit from increasing demand from India, where gambling in most states is illegal

bursa688: you have to ask CIMB.

http://klse.i3investor.com/blogs/RGBblog/107530.jsp

You can view it at iTrade@CIMB.

CIMB Research Report, 28 Oct 2016

Malaysia:
RGB International (0037)
Buy: RM0.20
Target: RM0.28
Cut loss: RM0.18

KUALA LUMPUR : Several construction counters have rallied to new all time highs following the Budget 2017 presentation last week due to the continuation of existing major infrastructure initiatives and positive earnings expectations ahead of the third quarter earnings season.

As at 1230PM, five counters, namely Sunway Construction Group Bhd, Ekovest Bhd, Gadang Holdings Bhd, Econpile Holdings Bhd, and George Kent (M) Bhd, have hit new highs or are currently hovering near record prices.

The shares of these companies have outperformed the broader market by a wide margin this year.

For example, shares of Ekovest have doubled since the beginning of the year while the shares of Sunway Construction and Gadang are up by 21% and 57% respectively to date.

The Bursa Malaysia Construction Index, which is the sector benchmark, have gained 5.72% this year, outperforming the FBM KLCI's 1% decline to date.

A slew of new infrastructure projects were announced during the Budget 2017 presentation last Friday.

Among others, they include the RM55bil East Coast Rail Line, the construction of rural bridges and roads totaling RM1.2bil, the construction new schools for RM478mil, the reconstruction of destitute schools for RM570mil, and the improvement of the water supply network for RM732mil.

Additionally, the Government had reiterated its commitment towards major projects that are already underway including the Pan Borneo Highway and the five economic corridors comprising Iskandar Malaysia, East Coast Economic Region (ECER), Sabah Development Corridor (SDC) and Sarawak Corridor of Renewable Energy (SCORE).

“The Budget confirms our view that the prospects of the local construction sector remain bright, backed by various rail projects (MRT Line 2 and LRT 3), highways (Pan Borneo and the DUKE Highway extension), and mammoth property developments (KL118, and Kwasa Damansara),” said AmBank Research in a report today.

Gadang made its fame after its wholly-owned subsidiary, Gadang Engineering (M) Sdn Bhd became the white-knight for reviving the construction of Hospital Shah Alam on Oct 11, 2011 for RM410.87 million.

The hospital, which was supposed to be completed for 24 months from Oct 19, 2011 to Oct 18, 2013, was abandoned by its major contractor, Sunshine Fleet Sdn Bhd due to cost-overrun.

Kenanga Research had also said Gadang’s previous target to replenish its construction orderbook is “highly achievable”, adding that the Gadang is also eyeing for more hospital projects.

The 600-km rail will connect townships such as Port Klang, Integrated Transport Terminal (ITT) Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu, Kota Bharu and ends in Tumpat, with an estimated cost of RM55 billion.

This will benefit Gamuda

Near term target is RM3.50.

Medium target Gadang RM4.30.

The new president will continue to support the growth of Philippine.

Reason being:

Macau has demonstrated explosive growth with a compound annual growth rate of 27.8 % over the last 10 years.

Therefore, that more Asian countries are competing for a share of the region’s gambling revenue. This includes Singapore, which has two casino, the Marina Bay Sands developed by the Las Vegas Sands and Resorts World Sentosa developed by Genting Singapore.

Similarly, the Philippines is hoping to become one of the major players in the worldwide casino industry. Manila is in the midst of various casino openings, expansions, and construction.

Investment bank Credit Suisse forecasts the Philippine casinos to generate gaming revenue of USD6 billion by 2018, potentially making the country one of the top four in the world by this measure.

According to a Bloomberg News interview with Cristino, the Chairman of the country’s casino regulator the PAGCOR, the body is willing to listen to proposals for new gambling licences outside Manila.

On an economic level, revenue from the casino industry will contribute significantly to PAGCOR’s ability to support high-impact education and grassroots sports initiatives. Opening up the industry to more operators will also further support the government’s drive to attract more foreign direct investment as well as help redefine the Philippines as a world-class gaming tourist destination potentially rivaling Macau.

A vibrant gaming industry, while undeniably contributing to the country’s economic growth, will have its attendant social costs which must be managed carefully.

Have said that, RGB is eyeing other countries.

Nepal and South America are likely to be the next main driver of the revenue.

18 OCTOBER 2016

Gadang Holdings - Adopting Twin Strategies For Growth
RECOMMENDED: BUY
TARGET PRICE: MYR 3.50
PRICE: MYR 2.97

Post meeting with management, we remain assured on Gadang’s medium-term earnings visibility, backed by its solid outstanding construction orderbook and unbilled property sales. We also deem the latest Kwasa Land rights award as value-accretive. We raise our TP to MYR3.50 (from MYR3.10, 18% upside) post our earnings revisions, GDV update and a re-rating of its construction segment target P/E to 10x (from 9x). We reiterate BUY given its solid earnings visibility and undemanding valuation.

Source: RHB Research

Performance highlight
-During the financial period under review, the Group has achieved double digit improvement for both Net Revenue (+29%) and Net
Profit Before Tax (+26%) as compared to 1H2015

-The Group will continue capturing business opportunities of key products under our SSM division portfolio, and to further improve
performance of concession machines and look for possible ways to reduce TSM operating cost

-The business performance is as planned and set on the right track, the management is confident to achieve better performance and
yield from both SSM and TSM division in Year 2016

USD settled above 4.20 lately, bullish USD against RM will benefit RGB as at 30 Sept 2016.

Based on the circular, the entitlement date shall be end of November 2016.

I hope it can reach RM4.50 in 40 days. I guess everyone will be happy too.

Would you prefer exercise price of RM1.06. ?
Then Ex Price will be (2 X RM4.50 + RM1.06) / (5+1) = RM0.615

Not easy to find a counter with free cash of estimated at least RM100 million by end of the year. Accumulate more today.

USD is bullish and its will benefit RGB

TA showing momentum

Start to collect again.

Sold first and collect when correction come.

Slowly accumulate more of Kimlun-WA.

TA proved RM2.70 and steady

Gamuda had already expressed optimism that the negotiation can be finalised by the end of 2016, as stated in the notes to Gamuda’s interim financials ended July 31, 2016.

Thus, maybe extend for another 2 months.

Good volume today and hope more to come.

TA indicate moving to RM2.70

Buy while it still cheap