Chiwayland chart as of 27 Dec 16Chart 1: Chiwayland - on an uptrend despite price consolidation.
Near term supports: $0.154 / 0.151 / 0.148
Near term resistances: $ 0.168 / 0.170 / 0.178
(Click on chart for enlarged view. Data: ChartNexus, 27 Dec 2016)
CWG International Limited (“CWG”), former Chiwayland, closed unchanged at $0.156 on 27 Dec 2016. Based on Chart 1 above, notwithstanding the recent price consolidation, all its exponential moving averages (“EMAs”) are still rising strongly, indicative of an uptrend. OBV is at elevated levels despite the price consolidation (i.e bullish).

Amid positively placed directional indicators, ADX is around 25, indicative of a trend. RSI closed at 56. Although the usual benchmark for RSI’s overbought level is around 70, based on historical records, its RSI can reach 90 before profit-taking occurs. All in, the chart looks positive. A sustained break below $0.135 negates the bullish tone of the chart.

Noteworthy points

Stock price 

16.3c

52-week range 4.2c – 17.7c
Market cap S$109.4m
NAV 29c
Dividend yield
(FY16)
-
Cash and cash equivalents (30 Sep 2016) S$370m
Source: Bloomberg/ Company

1. CWG – still loss-making as of 9MFY16

9MFY16 loss was RMB107.5m. However, in its 9MFY16 press release, CWG expects FY16F to be profitable.

If this is true, 4QFY16F will be a very strong quarter. However, this is contingent on the scheduled delivery of its projects.

2. Share buyback program yet to start

Shareholders approved CWG’s share buyback mandate on 7 Nov 2016. Up to now, there has been no share purchase by the company. Should this commence, there should be another layer of support for the company’s share price.

3. Management active share buyback

Management has been active in doing buybacks themselves. Although the purchased quantities do not seem significant, there are two noteworthy points.

a) CWG’s average 30D volume amounted to only 349K shares. Thus, my guess is that even if management wants to buy more, it is easy for them to do so.


b) Mr Qian Jianrong, Executive Chairman and CEO of CWG already holds around 74.9% of the shares.

Trade
Date
Buyer Name Shares Bought
(000)
Closing Price
(SGD cts)
% Held
after
Trade
14 Dec Qian Jianrong 100 15.5 74.85
14 Dec Sinway Investment 100 15.5 74.85
9 Nov Sinway Investment 200 15.8 74.84
9 Nov Qian Jianrong 200 15.8 74.84
8 Nov Chua Hwee Song 150 15.9 0.04
19 Aug Qian Jianrong 18 11.9 74.81
19 Aug Sinway Investment 18 11.9 74.81
17 Aug Qian Jianrong 120 12.8 74.80
17 Aug Sinway Investment 120 12.8 74.80
16 Aug Chua Hwee Song 150 13.2 0.02
16 Aug Qian Jianrong 200 13.2 74.78
16 Aug Sinway Investment 200 13.2 74.78

Data as at 27 Dec 2016: ShareInvestor


4. Adoption of a dividend policy

CWG announced the adoption of a new dividend policy, with a base payout of S$0.01/share annually. At the 27 Dec closing price of $0.156, this represents a potential dividend yield of around 6.4%.

5. Headwinds to China’s property sector

In a 22 Dec 2016 article, Bloomberg reported that China’s President Xi reiterated the need to “deflate property bubbles and regulate the market for rental housing to better meet people’s residential needs”. Thus, there are potential headwinds which readers have to be aware of.

ernest newphoto"All the exponential moving averages (EMAs) on CWG's chart are still rising strongly, indicative of an uptrend. The chart looks positive."


-- Ernest Lim, CFA, CA (photo)

Conclusion - CWG’s chart looks positive

In a nutshell, CWG’s chart looks positive.

However, readers should be aware that the above write-up is a technical write-up based mainly on chart observations, coupled with a summary of certain pertinent points.

There are definitely potential risks such as headwinds in China’s property sector.

Readers can refer to the following links / reports to know more about CWG:

a) Chiwayland – Aiming to be an international property developer; trading at 0.4x P/BV! (14 Sep 16). Chiwayland was trading at $0.120 at the point of my write-up. Please click HERE.

b) Chiwayland – Huge discount and hidden value in presales (11 Oct 16). UOB Kayhian research postulates in an unrated report that if Chiwayland’s estimates are used, its fair value may range between $0.370-0.570. (It is noteworthy that based on 3QFY16 results, Chiwayland’s NAV / share is around $0.290.)

c) Chiwayland – company website with its various announcements. Please click HERE.


Disclaimer

Please refer to the disclaimer HERE


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