Are "experts" idiots or are they 奸人坚 ?

Some months back when the world was still reeling under the global financial crisis, all we hear was how many of the MNC electronic firms shedding their work force, cutting work days. One of my close friends whose company is in the related industry was telling how he was worrying of have to find a new job if he got retrenched. After all he is already 50's something.

By coincidence, someone just emailed a chart on the Philadephia Semiconductor Index chart to me and after looking at it for a while, I emailed this local friend of mine telling him not to worry as the chart was indicating the bottom for the industry may has been reached.
By mid March, the Philadelphia Semiconductor Index (SOX) chart already showed higher high and higher low, a positive sign that the market has already confirmed its uptrend. The SOX is the most widely recognized index that investors use to track the performance of semiconductor makers and equipment manufacturers. Because it tracks the cyclical semiconductor industry.The Semiconductor Index is comprised of 18 stocks that almost fully represent the semiconductor industry.


And after a while , an "expert' from a local big brokeage house was writing an essay in the printed media advising investors should dump the Unisem shares (appended below) . His explaination was basically reflecting the extreme bearish market mode then, citing falling orders and basically 'explaining' what had already happened etc. As it was highly unusual that these 'experts' ask people to sell as they are always wired for the buy sides only, I went to take a look at Unisem chart and saw all the buy signals practically already in place since early April when the MACD crossed up its zero signal line and the D+ crossed up the falling D- with the ADX rising above 30's which was confirming a strong trend.


On top of those, I would heartily tell anybody to buy this stock as there is a bullish divergence in both the daily and weekly chart which qualifying this stock for a MAJOR run.

Since Unisem is doing most of her business with the US, so logics tell us that if the US semiconductor industry is recovering, then companies like Unisem should benefit from it. Furthermore we had all the confirmation from the charts. So I was thinking to myself: are these'experts' are idiots or are they 奸人坚 (telling others to sell when they will buy) ????



Unisem falls after downgraded to Sell (Friday, 15 May 2009 )
KUALA LUMPUR: Share price of Unisem fell nine sen to RM1.01 in late morning trade on May 15 after analysts downgraded the stock to a Sell due to gloomy prospects.

At 11.27am, the share price fell nine sen to RM1.01 with 1.91 million shares done.

MXXXX Investment Research said the first quarter results were worse than expected with no respite in sight.

“2009 prospects remain gloomy amid challenging business conditions in the US, which accounts for 55% of Unisem’s sales. We expect Unisem to post losses for the next two quarters before recovery starts in 4Q09. With a target price of 77 sen, Unisem is a Sell,” it said.

The research house said although a loss was expected, 1Q09’s deficit of RM23 million was higher than its estimate of RM10 million.

The 1Q earnings before interest, taxation, depreciation and amortisation (EBITDA) margin dipped 3.3 percentage points year-on-year, despite measures to reduce labour costs (20% of sales) via pay reductions and non-renewal of contract workers in Batam and Ipoh.

The 1Q09 plant utilisation was estimated to have dropped to 50% from 70% a year ago.

“We have adjusted our 2009 net earnings forecast and now project a RM3 million loss for the year, with expected utilisation rate of 50%.

“We anticipate a pick-up from 4Q09 onwards, but muted demand may be seen over the next few months for test and assembly services in the consumer electronics, communications and computers segments which form 80% of Unisem’s sales. Our 2010 net earnings forecast of RM33 million remains unchanged,” it said.

MXXX Research pegged Unisem’s target price to 11 times 2010 price-to-earnings ratio (PER), which is the average PER during the sector recovery post-2002.

It expected improving prospects in 2010, hence it changed its valuation methodology to earnings-based (from asset-based, on 0.3 times historical book value).

“The stock has risen more than 100% since its year-low on March 17, 2009. With moderate earnings going forward, there is limited upside to its current price. Unisem is also trading at 15.7 times 2010 PER, above the current domestic sector average of 13 times,” it added.