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M1 & Ascendas: Buy On Earnings?
Tradeable Ideas is a new weekly column by Tradeable. This column focuses on locally listed companies or particular sectors that have attracted strong interest from analysts at various research houses. Tradeable Ideas is meant to serve as a springboard for investor’s interest in specific stocks or sectors in Singapore.
As we step into the earnings season, news good and bad have been arriving into the market. This week, there are two companies in particular that have caught the eyes of analysts; they are M1 and Ascendas Real Estate Investment Trust. New on Tradeable Ideas, we have stock calls from Collin Seow’s CSI Trading system!
M1
M1 announced its earnings for 2Q13 earlier this week with earnings meeting consensus estimates. The strong earnings growth for M1 from service revenue makes it the top pick for telecommunication company in Singapore. This growth was contributed by several factors which include:
Surge in mobile service revenue (+8%, 2Q13 vs 2Q12)
Subscriber growth in fibre internet with margins near optimal
Resilient EBITDA margin
Currently, the market sentiments is in favour of M1 with a potential upside of 7.23 percent based on four different analysts. The decision is based on revenue growth, higher payout ratio, greater potential upside from 4G adoption, monetising of the surging data usage along with the potential catalyst of fibre internet.
Source: FactSet, 1 Month Technical Chart Of M1
Looking on a technical perspective, M1’s technical chart shows that it is bullish with the 2 Day Moving Average above the 19 Day Moving Average with no sign of it closing. However, investors may want to wait before entering as the current price is above the 2 Day Moving Average which may suggest that it is currently overpriced.
Ascendas Real Estate Investment Trust
Ascendas Real Estate Investment Trust (A-REIT) released a commendable result this quarter which was in line with analysts’ estimates. In the past year, A-REIT has completed several asset enhancement initiatives that resulted in an increase in total net lettable area and higher occupancy rate.
Currently, A-REIT has a healthy leverage ratio standing at 28.6 percent. The healthy leverage ratio will give A-REIT more space for growth through asset enhancement or acquisition. Recently, A-REIT purchased three new properties as part of its plan to enhance the company’s portfolio. The portfolio enhancement is expected to drive earnings growth in FY2014 to FY2015. Calls from the street are all hopeful towards the reit by giving it a potential upside of 8.88 percent.
Source: FactSet, 1 Month Technical Chart Of A-REIT
Based on the technical chart, A-REIT is currently on a bull trend which is about to end as the 2 Day Moving Average is closing in on the 19 Day Movie Average. Investors might want to sit and watch to wait for the line to cross over each other again!
United Envirotech
Source: Collin Seow, Daily Chart Of United Envirotech
The above chart for United Envirotech is selected for long.
The 2nd buy arrow is on 16/7/13.
The peak (Resistance) is at 0.975 and the trough (Support) is at 0.91.
To learn more about the CSI Trading system, please click here!
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