This month of May is a real challenge for those who are trading for a living. The volatility is max with trade war brewing at a full scale with US imposing tariffs on China and China countered with their tariffs as well.
Market is bad, companies stocks are shaken. But I believe that every big shaking is also a big opportunity here. While trade war hurts the global economy somehow, but I think some of the Malaysian industry will stand to benefit from such event.
I believe the trade war will benefit Malaysian export market, especially the furniture market.
The key reason are
1. Malaysian furniture exporter benefit from a stronger USD
2. Demand shifting to Malaysia due to no tariff
3. US economy is still strong
While there are many key companies involved in the furniture market, namely Liihen, Latitude, Pohuat, and Jaycorp to name a few, today I will focus on the Jaycorp due to it's good prospect looking forward.
Investing in Jaycorp Berhad
1. Why is Jaycorp interesting?
One of the most important factor in investing will be the fundamental of the company. The company must be having good earning, and pay dividend.
This is the past 3 quarterly result of Jaycorp.
Sep 2018
December 2018
March 2019
So for the past 3 quarter of Jaycorp, the company already made
3.4 cent + 4.69 cent + 3.67 cent = 11.76 cent
Dividend paid in the 9 month time frame = 8 cents ( 5 + 3)
So you can see this is a company that is doing well, have decent earning and is paying dividend to it's shareholder.
2. Jaycorp is heading for a new uptrend
The share already fallen from a height of RM 1.60 and consolidating at 90 cent range. Now it is the time for the company to make a new come back after breaking away from long term downtrend resistant line that is back with good result for 3 consecutive financial reports. (9 months)
3. Jaycorp to benefit from a weaker MYR
The latest measure of BNM to cut 0.25% in OPR will also see MYR floating lower against USD.
Source: https://www.thestar.com.my/business/business-news/2019/05/07/bank-negara-lowers-opr-by-25bps-to-3pct/
According to technical chart, the USD/MYR already broke resistant and looking to trend higher, potentially visiting the range of 4.2x to 4.3x
Conclusion
Since there are a lot of indicator pointing towards the positive outlook for furniture industry, Jaycorp will be very interesting for the next coming few months.
Assuming the coming quarter report to produce 4 cents in earning, that will bring a total 4 consecutive quarter earning to 15.76 cents
Simple valuation of PE X10, Jaycorp can see valuation at RM 1.50 to RM1.60
At the current price of RM 0.95, this will be more than 50% capital appreciation for the investor now. Now is the best time to invest when Jaycorp is low while the potential is high.
