Ezra Review- What's wrong with this company??

The very 'hot' stock recently is Ezra. Not that it is bulling in hotness, but boiling in danger and facing so much uncertainty that it is so hot. Someone very close to me is vested in it and is very troubled, so here I am, trying to offer a little advice.

Today's financial results- 10th July was released.

Oh my.. So many things that I conclude (purely based on my very humble thoughts, may not be factual so pls don't send me a lawyer's letter)

Pls read this with discretion and kindly note these are just what I THINK*

1. Company seems to show that they do not know how to control expenses
Revenue dropped by 3%. By right when revenue drops, one should see a drop in Expenses such as income/administrative. However, for Ezra, their expenses increased by so much.

Wow, cannot cut pay of high mgmt.? don't wish to retrench people? cannot control expenses? MNCs will come out with drastic cost cutting measures, including cutting high salaries of top mgmt. and board wide retrenchment. I don't see it in Ezra.

If it needs to be done, it has to be.

Which leads me to the next point.

2. Operating profit dropped 81%

Erm. That's like so close to having a negative profit already. The company still tried to sugar coat the announcement that their revenue maintained despite such challenging environment.

Pls open your eyes big big and look at the financial statements.

3. Offering rights to repay perpetual securities

I *think* this means that the company might be unable to pay off their debts, so they have to offer rights to raise money.

Not that they are raising money to fund growth. They are using it to pay their perpetual securities and bonds!

Which means.. more debt?

Conclusion: My advice
1. If you are not vested: Good for you, pls do not buy. Wait until the Saudi Arabia and the shale oil producers in USA have worked out a win win situation for the oil price to start climbing up. Otherwise, oil price is likely to remain low for a few years more.

2. If you are vested:
1. Have you bought the rights?
If yes: If you bought the rights at $0.1, you should sell it when trading commence, of course at a higher price.
If no: wait and observe today's price, since you have a week more to buy the rights.

Understanding stock price support levels of Starhub & M1

Hello,

In my previous blog post here about how StarHub was such a good buy on 29th June at $3.70, I received a comment that M1 trading at $3.23 now might be a good buy too even though I have missed SH's boat.

However, I would like to explain in detail about the concept of price support levels and how it is important in investing.

1. What is 'Support' and 'Resistance' in stock price?
Pls see figure 1.

As quoted from Investopedia, "Support is the price level through which a stock or market seldom falls (illustrated by the blue arrows). Resistance, on the other hand, is the price level that a stock or market seldom surpasses (illustrated by the red arrows)."

2. Therefore, one should buy at Support level and sell at Resistance!

3. Why StarHub was a better buy than M1 at $3.70

 

SH price support level since 2014 was at $4.00. At $3.70, it has broken the price support level and it is a rarity to drop by 7.5% of this support level on 29 June.

 

 

On the other hand, M1 at $3.23 (current price now), this price support level was already broken through in June, before the greekexit crisis. On 29 June, M1 reached its lowest at $3.16, a drop of only 1.85% of its support level.  At this price level, there is no 'rarity' in its pricing.

4.  Time value of money

 

If I had bought SH at $3.70, it was as good as buying the same stock in June 2013, this was the selling price 2 years ago.

 

However, at $3.23 for M1 now, it is only as good as buying this stock in Jan 2014.

 

If both were to maintain the same earnings as compared to previous years, by 'time travelling' to the stock price of SH 2 years ago, it is a much better buy.

 

Conclusion:

 

Understanding Price support and resistance levels is useful when discerning when to buy and sell.

 

Market sentiments seem to regard SH as a better stock due to its stronger price support levels, although M1's financials might be better.

 

StarHub- Missed the boat

So.. SH was trading at $3.70 on Monday, finally breaking through the $4.00 which it had strongly held on for the past year. Monday (29 June) was the day when major stocks experienced a terrible diarrhea.

I was contemplating so hard whether to buy as it seemed to go free fall and with so much uncertainty over the Greek bailout.

Anyway, fast forward three days later, major stocks have slightly rebounded.

At $3.94, I can't exactly say that SH is trading at a good value as it has too much debt. However, I notice that it has better resistance than M1 when the latter fares better in its financials instead.

Missed the boat. No idea when I can take such a good chance again. Arrrgh.