China Technology Stocks Reviews (11 Feb 2019)

By Soh YJ

 

KWEB is the china technology ETF that consists of the majority of internet technology stocks that is traded in US Exchange. The china technology had fallen 47% since Jan 2018. Current resistance is at $45.

 

KWEB Month candlestick

KWEB daily candlestick

 

 

Other indicators on KWEB

Simple Moving Averages: 20 > 50 SMA, 50 < 150 SMA. Mild Bull.

MACD: Above the 0 line but flattening. Mild Bull.

Force Index: Above 0 line. Positive buying volume, but sloping down. Mild Bull.

 

Top 3 Holdings of KWEB (08 Feb 2019)

Ticker YTD 1 WK 1 MTH 3 MTH 6 MTH 1 YR 2 YR 5 YR
KWEB 0.91 -1.50 6.18 4.90 -19.22 -26.09 8.10 22.70
0700.HK -0.58 0.23 5.49 23.78 -7.25 -15.17 62.87 215.04
BABA 0.24 0.22 10.16 15.54 -5.55 -5.27 66.49 78.25
BIDU -0.98 -3.12 -1.96 -7.54 -22.73 -21.22 -8.25 1.44

Performance in %

Ticker Last close price

08 Feb 2019

Immediate Support Immediate Resistance 50 / 150 SMA 20 / 50 SMA
KWEB 43.25 42.42 45 41.13 / 46.3 42.01 / 41.13
0700.HK 345.60 337 376 321.05 / 326.00 336.86 / 321.05
BABA 167.36 164.50 170.84 151.91 / 160.71 160.10 / 151.91
BIDU 169.90 165.00 170.01 / 202.18 168.51 / 170.01

 

Opinions

Some of the china technological stocks are trending up since January 2019 and the 20 /50 SMA show mild bullish. In addition, the MACD have broken up the 0 line for the first time since early 2018. It may be an reversal for the china technology stock, but investors may exercise caution as the 50 / 150 SMA remain bearish.

China Technology ETF and Stocks (NSYE & NASDAQ)

By: Soh YJ

 

There are 3 china focused technology ETF that is traded in NSYE and NASDAQ. (1) BCNA, (2) CQQQ, (3) KWEB and the sector weighting are as below:

ETF Summary

KWEB is the better long term investment for china technology ETF. Due to relatively lower expense ratio, higher average volume. However, the expense ratio is still considered very high when compared with US Technology ETF, XLK (0.13%).

 

 

Top 10 Holdings of the ETFs

 

 

Performance of Individual Stocks VS KWEB

The below shows the growth of KWEB and its top 5 holdings. For china technology sector it would be better to focus on individual potential stock for higher growth and avoid unnecessary expenses. Buying individual Chinese stock will have a higher growth rate compared to ETF.

Top 3 Holdings of KWEB

The intrinsic value is calculated using 2 stage DCF model- 10yrs

[1 CNY = 1.16 HKD = 0.15 USD]

Cross Profit, Operation Cashflow and Net income of Top 3 KWEB Holding

NASDAQ Composite Index [^IXIC] (28 Dec 2018)

By: Soh YJ

 

Overall the ^IXIC continue a downward pressure. As the moving averages and MACD remain bearish.

 

Performance as at YTD 1 WK 1 MTH 3 MTH 6 MTH 1 YR 2 YR 5 YR
28 Dec 2018 0.08 4.19 -9.47 -18.08 -12.33 4.62 19.26 59.36

*Performance in %

 

 

After continuous of red candles over the month of December, ^IXIC gain a strong rebound on 26 Dec 2018 and ended the week with a doji candlestick, indicating the market is not certain the direction of the prices.

 

 

Events happen between 24 Dec – 28 Dec 2018

 

 

Annual Changes in NASDAQ 100 Index (24 December 2018)

NASDAQ-100, NDX, index is composed of the annual 100 largest non-financial companies listed on the Nasdaq. Nasdaq-100 is re-ranked annually.

 

Inclusion Exclusion
AMD, LULU, NTAP, UAL, VRSN, WLTL ESRX, HOLX, QRTEA, SHPG, STX, VOD

 

How it affects me?

ETFs are designed to track the index, the rebalancing means the stocks in the basket would be sold or added, potentially changes the component’s position size. Meaning, individual stocks will increase it volatility during the rebalancing period.

 

 

Most Positive Movement (24 Dec – 28 Dec)

 

Criteria for screening:

 

  • Market capital (Over 300 million)
    • Small to Mid-cap ($3m to $2b) stocks may not fall into most investor radar yet, potential to grow. Too small may have higher risk

 

  • IPO more than 10 years
    • Have a history, less risk of the business failing

 

  • Current volume (over 200k)
    • Typical stocks have at least 100k trade volume per day

 

  • Price (Over $10)
    • Stock less than $5 are risky and prone to speculation

 

  • Institutional ownership (Over 40%)
    • Institute have more information than retail investors. If institute don’t own any of the stock, you should not too.

 

  • The price changes should be < index movement
    • Should be more volatile than index, else buying an Index ETF will be more efficient.

 

AMAT and ENTG is more suitable for Mid to long term investment as the gross profit, net income and cash flow is more stable.

 

ENTG AMAT ACLS PAR
Price (28 Dec 2018) 27.47 32.38 17.76 22.14
Performance Week[7] 8.11% 4.79% 7.05% 24.66%
Zack Ranking[9] Hold Hold Strong Sell Not available
Consistent increase in Gross profit  4Yrs [6] Yes Yes No Yes
Consistent increase in Net Income 4Yrs [6] No No No No
Consistent increase in Operation cash flow  4Yrs [6] Yes No No No
Mean projected growth rate[8] 18.03% 16.98% 20.00% Not available
Outstanding shares (Millions) [8] 141.79 982.99 31.22 15.91
Net Profit margin compare to industries 5Yrs [8] Lower Higher Lower Lower
ROE >12%[7] 12.7% 45.40% 34.20% -35.90%
Current ratio >1[7] 3.9 2.6 5.5 1.5
Debt/Equity ratio <1[7] 0.6 0.78 0.12 0.14
Calculated Debt servicing ratio <30% 11.02% 14.70% 0.89% 5.76%
Calculated Intrinsic Value 27.45 46.01 31.51 0.65
Current Trend Down Down Down Down

*The intrinsic value is calculated using 2 stage DCF model- 10yrs

 

News

PAR [17 Dec 2018]- PAR Technology SureCheck Food safety solution named to food logistics’ 2018 FL100 + Top software and Technology Providers [11]

 

 

 

Reference

[1]https://www.bloomberg.com/news/articles/2018-12-22/trump-said-to-discuss-firing-fed-s-powell-after-latest-rate-hike

[2] https://sg.finance.yahoo.com/news/stocks-wall-street-falls-mnuchin-163300626.html

[3] https://sg.finance.yahoo.com/news/trump-just-told-buy-stocks-141420498.html

[4] https://sg.finance.yahoo.com/news/faang-kicks-losing-streak-post-210800875.html

[5] https://sg.finance.yahoo.com/news/us-stocks-resume-retreat-huge-153326611.html

[6] https://finance.yahoo.com/

[7] https://finviz.com/

[8] https://www.reuters.com/

[9] https://www.zacks.com/stocks/zacks-rank

[10] https://business.nasdaq.com/mediacenter/pressreleases/1862596/annual-changes-to-the-nasdaq-100-index

[11] https://www.partech.com/news/par-technologys-surecheck-food-safety-solution-named-to-food-logistics-2018-fl100-top-software-and-technology-providers/