CEO Sells Shares In Open Market

We all know that Asia Media is under heavy selling pressure for the past 1-2 weeks. Today it takes a bit of breather, up 8% and looks good for a trend reversal.

However, here comes the news of Amedia's big boss, founder & largest shareholder Wong, disposed 22,633,800 shares (9%) in the open market. And this took place on 16th Oct 2012, which is 2 days ago!

     Ricky Wong: A young millionaire

It doesn't seem to be a good news to investors when the CEO of any company dispose so many shares in the open market. CEO is the one who knows the company best. If the company is going strong in the right way, no one would like to simply sell its shares, unless he is in dire need of a sum of money.

If Amedia's shares were sold 2 weeks ago at RM1, then may be it's still understandable. But the shares were sold at 34sen... How will the market react to this news?

Anyway, after the shares disposal, Wong still have 81+million of Amedia's shares.

Overheated Amedia

Last week, it is still well above RM1 level. It keeps on achieving new high for the past 2 months. Its chart shows a beautiful uptrend. It has a good earning record. It is ready to be transferred to main board.

Now, it is at RM0.34 level, fell 70% in just one week.

Even the announcement of proposed 1:1 bonus issue plus free warrants could not save Amedia's share from going further down. Why? Probably overheated stock, fried to too high level.

This is the risk and volatility of stock market.

      Amedia: Olympic 10m platform diving gold medalist

Amedia proposed bonus shares and free warrants:

• Proposed bonus issue of 250,800,000 new ordinary shares of RM0.10 each in AMEDIA (“AMEDIA Shares” or “Shares”) (“Bonus Shares”) on the basis of one (1) Bonus Share for every one (1) existing AMEDIA Share held at an entitlement date to be determined later (“Entitlement Date”) (“Proposed Bonus Issue of Shares”)

• Proposed issue of 250,800,000 free warrants (“Warrants”) on the basis of one (1) Warrant for every one (1) existing AMEDIA Share held at the same Entitlement Date as the Proposed Bonus Issue of Shares (“Proposed Free Warrants Issue”)

• Proposed increase in the authorised share capital of AMEDIA from RM50,000,000 comprising 500,000,000 AMEDIA Shares to RM100,000,000 comprising 1,000,000,000 AMEDIA Shares (“Proposed Increase in the Authorised Share Capital”)

Amedia: Can It Maintain Its Uptrend?

For those who dare to catch a falling knife on Asia Media, surely they will strike some handsome gain. 

Amedia's share price dropped substantially from 43sen in early March, without any obvious reason. It breached through its support at 33sen but was able to hold onto its next support level at 30sen. It stayed around 31sen for a few days before staging a slow and good rebound. For those risk takers, the best time to enter is 31-32sen when the falling momentum was halted temporarily.

      Amedia: may correct itself soon

Currently Amedia's share price has gone up and reached its resistance at 38sen. Speculators may start to sell with a gain of 20%. Its share price may head north or south after this, depends on market sentiment. If it head north above its uptrend line, then it may continue its uptrend. 

Amedia has submitted its proposal to transfer to main board to security commission on 24th April 2012. If it is approved (which should be the case), it should push the share price upwards. However, it also proposed a private placement of not more than 10% of total shares at 37sen per share.

The 2012Q1 financial result will be announced this month. Judging from the whole FY2011 financial result, it seems like Amedia has no significant growth in its revenue and net profit for the last 4 quarters. As it will need to invest quite a lot of money in the new "live telecast" thing which has still to prove its success, there is a risk that the forthcoming financial result may not be a good one.

Yesterday there is a protest claiming that Negeri Sembilan's billboard business is monopolized by a private company Semarak Media. Is it related to Maha Semarak in which Amedia hold 70% of its shares? May be just a coincidence.

Dare To Catch A Falling Knife?

Last week Amedia's share price fell 26% in 5 trading days. I'm not sure why. It seems like there is no particular bad news, YET. 

Amedia's share price has been on a nice uptrend since Oct 2011. It has just released a strong earning recently and there is rumour that it is applying to transfer to main board. However, it has proposed a private placement of less than 10% of its share capital as well. 

     AMEDIA: At 100-day MA

Until today, Amedia's share price is still falling but seems to slow down a bit. Is it an opportunity to grab it now? Will it stage a rebound at 100-day moving average support? Or will it fill the gap below RM0.31?

There are a lot of strategies that one can take to invest or gamble in the stock market. Fundamentally, we can buy and hold long term. Technically we can buy according to various indicators from the price chart such as volume spike with price increase, MACD cross-over, price rebound/breakout at support/resistance level, low RSI etc. Some can even buy and sell without fundamental and technical analysis. They just rely on their "sixth sense", corporate news or exercise, and the law that everything that goes down must come up.

Personally, though I rarely buy shares which are dropping drastically, I do put an eye on them and place them on my watch list if I encounter one. The drop should be something like 10-20% or more in few days time. Of course, there must be a reason behind a sharp price drop, which can be serious or not so serious one. Is it because of company account fraud, poor financial report, loss of contract, court case, unfavourable news, change of management committee, share dumping by major shareholders, or just solely because of bad market sentiment? 

If it is just a short bear market run, then we can take the opportunity to grab some fundamentally-sound stocks. If it is other reasons, then there is always risk if you want to try your luck on them. You can end up catching a falling knife if you are not lucky.

In the early August and mid-September last year (2011), almost all the stocks in Bursa Malaysia suffered massive decline in few days time. However, if you were brave enough to pick them up when the falling momentum was interrupted, surely you could be smiling all the way as most of them staged a V-shape recovery.

Here are some examples of falling stocks and their outcome:

(A) Fall sharply but recover quickly, most fall are with the broad market

     AirAsia: Drop 22% and rebound higher

     Dialog: Drop 19% and recover well

     Kimlun: Drop 30% and correct shortly

     SPSetia: Drop 19% and got very lucky

     Cypark: Drop 20% and recovered in 3 days

     HiapTek: Drop 18% and a double bottom recovery

(B) Fall heavily but recover rather slowly

     MahSing: Drop 30% but recover steadily

     MSM: Drop 19% but slowly recover

     Sozo: Drop 22% and crawls back

     Sunway: Drop 35% after corporate exercise but worth the wait

     XinQuan: Drop 24% and there is still hope in China stock

(C) Caught A Falling Knife

     GPacket: Drop 27% and lingering there

     MEGB: Drop 30% and having real problem

     KNM: Drop 17% and drop and drop and drop

     MPAY: Drop 24% and never pay you back

     RA: Drop 38% and becoming trash paper?

     Ramunia: Drop 20% and will never see day light?

      Silver: Drop 50% and likely to be hopeless

AMedia: Get Licenses Without Share Placement

We know that in order to obtain the Digital Terrestrial Television Broadcasting license, Asia Media needs to do a private placement of 35% of its total shares in order to meet the 30% bumiputera equity requirement. This represents a massive dilution in its EPS.

However, the plan of private placement has been cancelled. Asia Media announced in 22 Dec 2011 that it has obtained the licenses and has been given the approval to transfer the licenses to Maha Semarak Sdn Bhd, which is  70% owned by Asia media. Datuk Wira Syed Ali Bin Tan Sri Abbas Alhabshee, who is the Non-Executive Chairman of Asia Media, owns the remaining 30%. So now the license holder is Maha Semarak which has 30% bumiputera equity.

The transfer of license will not affect Asia Media plan and operation. Thus it is a rather good news for its investors.

With the various broadcasting licenses in hands, Asia Media will have the rights to operate live TV broadcast and radio on Rapid KL's buses and trains. This is said to be able to boost its income on advertisement. It has started testing the service in some of the buses and expect proper service by second quarter 2012.

The live TV should concentrate on news reporting and talk shows in English and Malay, while the radio is planned to cater for Chinese market. Nevertheless, doing live TV broadcasting requires expertise and rather big investment. If this new concept is not well accepted by the advertisers and public, then it might affect Asia Media's earning negatively. Countries like Japan, Korea and Taiwan have successfully operated the live TV broadcast.

Asia Media is applying to be transferred to the main board of Bursa Malaysia. It will give the share price a boost if it is successful.

After a 18% surge in its share price to 33sen in 14 Dec 2011, Asia Media has corrected to 30sen which should be a support for it. Currently it is trading at 29sen. Is it a good time to accumulate AMedia shares?

        AMedia at support

Asia Media: A Pearl in the ACE?

Asia Media is a company established in 2007 that mainly provides advertisement on the LCDs in public buses in Klang valley, and it can post a net profit of RM10 million in year 2010! It's better than a lot of big "main board" companies.

Initially I didn't put my attention into this company as I'm not very interested in media stocks and also ACE market. How can someone just put advertisement on the buses and make big money?

At Penang I can see lots of LCDs being put up in restaurant for advertisement purpose. For Asia Media, the LCDs are placed on buses of RapidKL, Handal Indah (JB-SG), Plusliner, Konsortium and Nice.

    LCD on bus

The one that I just aware of which makes a big difference is, Asia Media last year was awarded licenses for digital multimedia broadcasting (CAST-i, NFP-i, NSP-i and ASP). This means that Asia Media can actually operate TV/radio channel like RTM, TV3 and Astro! Currently the content displayed in the LCDs on the public transport are pre-recorded. After implementing the digital broadcasting, Asia Media will have its own bandwidth and can transmit content to the LCDs live!

Asia media has its IPO at 23sen in Jan 2011. It then announced a private placement in June which the amount comprises 35% of its original share offered during IPO. This represents a massive dilution in EPS! It is known that the reason for this private placement is to comply with the requirement of at least 30% bumiputra shares in order to get the licenses.

The CEO Ricky Wong earlier mentioned that Asia Media not only need the money from new bumiputra investors, but also wish to share the expertise in the media industry. Recently Star Publication has been rumoured to get the shares or even takeover Asia Media. However, any formal talk seems does not happen. This may be a catalyst for its uptrend share price for the last 2 months. Base on the win-win situation, I guess Star will sooner or later invest in Asia Media. Other than Star, there are other companies interested in the shares of Asia Media, according to the CEO.

Asia Media financial results

RM mil	2010	2009	2008	2007
Revenue	16.5	13.1	6.5	3.5
Net Profit	10.3	3.4	1.4	0.7

For 2010 net profit, there is a exceptional one time gain of RM4.87mil. So the actual net profit for 2010 could be just RM5.4 mil. With this earning, the EPS is only 2.4sen before the private placement, which doesn't look impressive. After the private placement, the share will increase from 228mil to almost 308mil shares, and the EPS is very much diluted.

However, there is one good sign, which is the latest 2011Q1 earning

RM mil	2011Q1
Revenue	9.9
Net Profit	4.1

I'm not sure whether there is any one-time gain in this result. Nevertheless, it is really encouraging. If you think the company will continue to grow, the revenue and profit for 2011 may grow at least 100% and 50% respectively.

Asia Media has yet to expand its business into Rapid Penang buses and LRTs in Klang valley. Since both of them are owned by the Rapid company, I guess investors can just sit back and wait for the good news. There are other big cities in Malaysia and other countries like Singapore and Indonesia, which Asia Media has plan to expand into. Besides, with the licenses on hands, who knows Asia Media later decide to have its own subscribed/non-subscribed TV channel to compete with Astro, RTM and Media prima? It could have big potential ahead.

    AMedia: May revisit resistance of RM0.325. Can it break?

CIMB gives a fair value of 53sen. If not for the crazy private placement, it can be better. There may be more positive news ahead. Is Asia Media a pearl in the ACE?