Latitud:Moving to a Record High Altitude !

Latitud closed at RM3.55 on 22nd August 2014

All time high at 3.34 was broken on 13th August 2014.

Fundamentally, If we compare the net profit  last 3rd quarter this year 12.75 million with the same quarter last year which was merely 4.3 million net profit (a fantastic gain of 196%).Historically,3rd quarter net profit for 2010, 2011, 2012 year were profit 2.4 million, loss 0.6million,loss 1 million respectively. However, if we compare this 3rd quarter with previous 2nd quarter, there is a drop in net profit of 32.8% (Eps for Q2=19.54; Q3=13.12) due to long festive holidays which fall on the 1st quarter of calendar year and low demand in US which normally slow down after Christmas and New Year as reported in the last Quarter announcement. Personally, the last 3rd quarter result was slightly below my expectation. (I expect the eps to be higher at 15.4 cents based on a higher total net profit of 15 million this 3rd quarter where my ‘too optimistic’ estimation of 5.5million and 9.5 million net profit contributed by Malaysia and Vietnam subsidiaries respectively, with a paid up outstanding shares 97.2 million; RM 15 million /97.2million=15.4 cents).Conservatively, if this coming 4th quarter (which will be released by end of August 2014) can hit eps of at least 12.3 cents, which I think a bit challenging  to reach that due to the recent Vietnam riot (which affected its production  for around one week) However, US home sale during April was rocketing and contribution by Vietnam subsidiary may help to counter the Vietnam riot effect. If we annualize the eps for this year:15.02cent+19.54cents+13.12 cents+*12.32 cents (estimated)=60 cents. If PE is 7, target price:RM4.20

 Technically, On 20^th August 2014, chart was not looking good-upthrust bar or shooting star was formed ,which might be affected by the massive selling of penny stocks eg sumatec,pdz and marco that day itself. However,technical analysis is about probability (no guarantee of success).It may trend higher after this in view of 'expected good result' coming soon.(But chance is slim,  upside is limited due to its over bought condition, RSI>70, plus the recent surge from support RM2.96 to a new high at RM3.64 has been factored in the coming good result, hence correction may happen  soon) .Overall, Latitud will remain her bullish up trend as long as she is still above her long term Uptrend support MA200 as shown in the chart.

Again, on 21^st  august 2014: up bar narrow spread, with volume lesser than previous 2 bars-Sign of weakness.Lower volume may indicate a lesser supply left to be distributed by smart money.Personally,I think it is near the end of recent smart money campaign, correction may happen in next one to two weeks time.Today (at the time of writing this) is 23^rd August 2014.We will see.

Take home message: Up-thrust bar or Up-bar with low volume will usually appear near the end of distribution phase.

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