MAP Technology’s amazing recovery
Amazing! MAP's stock shot up another 22.2% yesterday (Aug 11) to close at 22 cents. MAP has experienced an unprecedented dumping of its shares followed by a whopper of a purchase.
Between July 20 and Aug 7, Jurong Technologies (which is under judicial management) dumped all its holding of 73.1 million shares of MAP.
On Aug 5, the Ferrell fund managed by MAP chairman Dr David Lee bought 15 million shares on the open market at 13.5 cents apiece. We asked a tech analyst for his 2 cents' worth about the stock.
NextInsight: In your view, was the stock price recovery to 22 cents due largely to the cessation of selling by Jurong Tech? Or are there other possible reasons?
James Lim, analyst, DMG Research: While, as you have mentioned, the selling pressure may have eased off after Jurong Tech had unloaded of all its stake, I do not really know why its share price has recovered so sharply -- less selling pressure does not equate to positive buying momentum.
My reasons for being negative on this stock remains as with what was written in my previous report:
1) possible further provisions for doubtful debts owed by HK-based Fujilink which may be unrecoverable.
2) a 4-for-1 rights issue at S$0.01 apiece that would greatly dilute its EPS and drag its theoretical ex-rights price to S$0.048 (based on MAP's share price of S$0.20).
3) There are other more competent HDD-component manufacturers to choose from (eg, Armstrong, Adampak, etc) should one really were to leverage on the HDD recovery story. I would therefore continue to avoid this stock.
*****
Top buys for the week…..
DMG Research (analyst: Terence Wong): For this week, rather than a broad sector pick, I am looking at more selective stock picking, with the defensives and value stocks hogging my ‘To Buy’ list.
The high yielding counters include NeraTel (BUY, TP S$0.39, Yield 9.5%) and Frasers Centrepoint Trust (BUY, TP S$1.17, Yield 7%), while the value stocks include ASL Marine (BUY, TP S$1.07, P/E 3.6x) and Longcheer (BUY, TP S$0.56, P/E 4.4x).
Both ASL and Longcheer are also backed by decent yields of 5.6% and 6.8% respectively, providing downside support.
Our channel checks reveal that chartering rates for tugs and barges have been stable, but not so for offshore support vessels. The shipping industry is still facing tough operating environment, with ship owners cutting back on repair works.
ASL Marine looks to be the most undervalued amongst its peers in the Oil & Gas space.
Post your views at our forum.
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