PECCA trade ideas
PECCA - Laggard counter for automotive sectorLet's look at automotive sector:
30 April 2020: Numbers from the Malaysian Automotive Association (MAA) show a staggering 44% drop in the number of cars sold, with just 22,478 units. MCO people just stay home, there is literally no reason to buy new car...demand keep dropping, so do their share price
End of May 2020: The Edge markets released the news that the demand for automotive sector will start to increase back starting June onwards.
5th June 2020: Our Prime Minister recently announce PENJANA with part of the focus on automotive sector. No sales tax on locally-assembled cars purchased between June and end-December and 50% discount for imported car. Starting from the news, directly related i.e. MBMR, BERMAZ, TANCHONG, DRB HICOM all spikes.
If all related stocks rallied increase, then what's left to enter?
Well, this is where sectoral play came. We know for a fact that MBMR, DRB is the leader for the automotive industry in Bursa. If you think you are already late, let's focus on counters that indirectly related to automotive.
Think this way, if sales of the car increase, of course the sales of car leather seats will also increase. Think of their supplies, maintenance work..
This is where Pecca came.
Fundamentally quite strong company:
- EPS: 6.37 (OK)
- ROE: 6.98 (OK)
- NTA: 0.912 (Undervalue)
- Dividend: 6 (OK)
- Financially in positive net profit since 2017.
Technically, the price is in support right now with visible spike of volume :) However the price hasn't move that much!
