Saturday, May 24, 2014

Vietnam Riot Blessing in Disguise for Latitude

- Riots in Vietnam arising from Vietnam and China dispute over Paracel Islands in South China Sea

Further to our announcement dated 14 May 2014, we wish to inform that the manufacturing facilities of the Company’s subsidiary, Latitude Tree Vietnam Joint Stock Company (“LTV’) has resumed operation today, 22 May 2014.

The shut-down arising from the riot has resulted in a loss of 8 production days. The customers have been informed of the delays in delivery and rescheduling of delivery has been made.   

Asset losses arising from the incident were limited to office equipment and computers, glass doors and windows of the main office building and a small portion of the packing section. The insurance adjusters are in the process of assessing the losses arising from the damages. Claims will be made against loss of business interruption and other damages. The losses are not expected to have any material impact to the financial earnings for the financial year ending 30 June 2014.

This announcement is dated 22 May 2014. (Filing of Lat. with Bursa)

Last Friday, Latitude (Lat) closed at RM3.24 for a gain of 19 sen. In the last 3 candles, there are 2 gaps. These gaps are a reflection of eager buyers. 

The chart clearly shows that the stock has been in an uptrend.  As a trend in motion is likely to continue, Lat in now in a good position to move higher. 

The recent riot in Vietnam is no longer a concern. The above announcement says it all. The Vietnamese government has also assured that all companies affected by the riot will be compensated by way of a tax cut.

Lat is actually a Malaysian-based company. It has three factories in Malaysia, two in Vietnam and 1 in Thailand. The major share owners are Taiwanese, not Chinese from mainland China. 

From an optimist point of view, the souring of relationship between Vietnam and China may turn out to be a blessing in disguise for Lat simply because it does not belonged to the Chinese but to some Taiwanese. 

Lat will announce its third quarterly result, latest by end of this month. If showings in its chart is anything to go by, the result is mostly likely to be good. 

The chart below gives you an idea as to how Lat has been faring when compared to some of its peers in the last one year. Have a good look, it easy to see the trend.

The red line is Lat. The others are: Lii Hen, Poh Huat and Homeriz.

I am long on Lat. I believe the stock deserves a better rating. 

Sunday, May 04, 2014

Latitude, What's On My Mind

In the daily chart shown above, I  see higher highs and higher lows. This means an uptrend is in progress. My focus now is in the last two candles where there is a gap between them. 

This gap signified eagerness to buy at the opening bell. As the day progressed, demand continued  to come in culminating the stock to a high of RM3.08 for a gain of 33 sen at the close of trading. This the best one-day performance of the stock so far. 

Daily skillful traders should have jumped in to buy soon after the opening bell and made a good profit by cashing out at the end of the day. Day traders do not hold position over night. 

The last candle is a bullish Marubozu. The validity of this candle is confirmed by the high volume traded. 

I always sell some of my shares whenever I get that feeling of elation. In fact I sold 5400 shares in Latitude at RM3.08 per share towards the close of trading on Friday. Please do not be misled by this action. These shares were bought in early December 2013 at RM1.60 CD per share. They represent only a tiny fraction of my total holdings of the stock. At RM3.08, the price has gone up by 92.5% in 5 months. I sold simply because I wanted to lock in some of my profit. In the stock market, we can't be sure of what is going to happen next. 

Now, let us have a good look at the chart again. The price shot past the overhead resistance at RM2.85 in style with high volume. As such, RM2.85 has now become the support level of the stock. Because the stock has risen too much too soon, profit taking is bound to set in, come Monday morning. So It will be interesting to see how the bulls react. I think the stock will hold up well because its fundamentals is extremely strong. (Please refer to my post on March 04,2014 under the heading, "Latitude (LT) Too Good To Ignore" on why the stock is worth RM4.83 per share.)

The stochastic indicator is close to its overbought level. Another few percent rise in the price will sent this indicator into the overbought region. This does not mean it will quickly reverse direction, but it does mean that you have to be on the alert for any bearish signal to emerge. 

If you are ignorant about charts then you have to depend on your feel. Intuition, that's what they call it. 

A correction to around the RM2.85 level is an opportunity to buy. 

Whatever action you take is your full responsibility. 

You buy, sell or hold at your risk.