DPS (7198) DPS RESOURCES BERHAD DIS PROPERTY STOCK BROKE A 9 YEAR DOWNTREND !!!
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
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
Considering all the above, I opine that current price for DPS is attractive due to below:
i) Lumber prices skyrocket between April - August 2020 to contribute better earnings for MINHO
ii) Trading at 72% to NTA of RM 1.09, and Net Asset Versus Liability
iii) Breakout of Cup and Handle pattern in daily chart, moving towards next resistances 34c and 39c
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.