This post for MAXS is the first response to the request of our Facebook page follower. If you are still unaware about QuantDS Free Analysis feature, you can read the full details and instructions on the right hand side of this blog page.
Continue reading below and you will see our brief review, research, and outlook about MAXS including its 1h 2016 Financial Results, stock price review for last week, and our forecast for MAXS based on Quantitative Analysis. This will help you answer the question "Can I apply Bottom Fishing strategy for MAXS or not?".
1H 2016 Financial Results
For 1H 2016, Max's Group, Inc. net income is up by 4% from Php284.67-M in the same period last year to Php295.33-M this year. Restaurant and commissary sales also increased 9% from Php4.16-B to Php4.53-B and 13% from Php559.63-M to Php630.87-M. Revenues from franchise, royalty, and continuing license fees rose 28% from Php211.66-M for 1H 2015 to Php270.52-M this year, while system-wide sales grew 13% from Php6.55-B to Php7.43-B. Fundamentally, it is totally positive for the first half of MAXS this year compared to the same period last year.
|ITEM||1H 2015||1H 2016||% DIFFERENCE|
|Net Income (Php)||284.67M||295.33M||+4%|
|Restaurant Sales (Php)||4.16B||4.53B||+9%|
|Commissary Sales (Php)||559.63M||630.87M||+13%|
|Franchise, Royalty, and Continuing License Fees (Php)||211.66M||270.52M||+28%|
|System-wide sales (Php)||7.43B||6.55B||+13%|
According to the President and CEO of MGI, Mr. Robert F. Trota, the financial results are consistent with their growth story and the overall state of the economy, and they will continuously execute a balanced store rollout in key strategic areas for the rest of the year.
Still for 1H this year, MAXS has opened 35 new store including an outlet for Max's Restaurant in Kuwait, so totally, MAXS operates a network of 600 stores which includes 38 international branches. They also finalized development agreements this 2016 for their offshore business comprising of 70 Yellow Cab Pizza stores across China, KSA, UAE, Egypt, Jordan, and Singapore, 13 Pancake House outlets between Qatar and UAE, 10 Sizzlin' Steak branches in Vietnam, and 3 Max's Restaurant in San Diego. Combining existing operations, Max's Group has a secured overseas pipeline of over 130 stores slated to open in the coming years.
Due to the very strong response of foreign markets, MAXS has surpassed expectations and this clearly shows that their brands are well-primed for the global stage according to Max's Group International CEO, Mr. Peter H. King.
Let's take a look at how the price of MAXS performed last week. (Click photos to enlarge.)
- Monday (05 Sep 2016)
MAXS price was able to touch the Uptrend Support level but didn't manage to stay above it. Looking at the photo below, QuantDS PSE data shows the Uptrend Support is at 32.90. MAXS breached that price hitting up to 32.30 but the volume is not big enough. The heavily traded price is 32.80 (also the closing price), which is below the Trend Reversal price of 32.86. This explains that MAXS failed to reverse its trend.
- Tuesday (06 Sep 2016)
As you can see on the photo below, the Uptrend Support price of MAXS were adjusted from 32.90 on Monday to only 32.60. MAXS previous close price was 32.80, so it is now above the current day's Uptrend Support price. But MAXS wasn't able to stay on the Uptrend level, and it fell swiftly down to 31.15, breaking the Bottom Support price of 31.20 before closing slightly above it at 31.40.
- Wednesday (07 Sep 2016)
Following the previous day selloff and breaching of major support level, MAXS finally broke down the current day's Bottom Support price at 31.15 and stayed below it.
- Thursday & Friday (08-09 Sep 2016)
For the rest of the week, the price of MAXS remain unchanged. The price just move within Accumulation and Breakdown prices during intraday trading for two (2) days.
MAXS stock price performed well for 1H 2016. If you bought MAXS late January this year at a price of around 13.50 and sold it on or near its year-high this mid-August, it would have given you more than 150% gain in just 6 months.
The half-year uptrend might come to and end as a lower high was spotted only this early September. If the Ichimoku Cloud would not provide a strong support, MAXS price migth fall continuously. Even if the price will bounce in the coming days, a breakout above downtrend resistance and a higher low is needed to discontinue the bearish reversal and go back to the previous healthy uptrend. RSI and Stochastic are on the oversold territory so we can expect a short term price rally, but MACD is about to enter in the negative area.
We suggest for risk averse traders to wait for the price to break above downtrend resistance and form a higher low before entering. A 'buy' is also advisable if the price moves up (bounce on Ichimoku Cloud), but traders should keep tight stops.
MAXS QUANT OUTLOOK
Looking at the results of our Quantitative Analysis above, the stock price of MAXS is currently between Accumulation and Downtrend Continuation levels. We suggest to accumulate shares only if the price breaks and holds above 30.70 (your cut-loss price would be 29.85). For safer positions, wait for the price to break and hold above the Uptrend Support at 31.10, and Trend Reversal at 30.00 should be your cut-loss point.
A breakout above the Uptrend Support price at 31.10 is also a breakout of Price Trigger at 30.80 which indicates a Bullish Reversal for MAXS.
Summarizing our Quantitative Analysis, MAXS is on the lower level of the Price Spread and a breakdown is very possible so watch the price closely before entering. A 'test buy if moving up' is our recommendation for MAXS.
If the price moves down even lower and you want to bottom-fish, 29.00 is our recommended entry position. But given the unstable price situation last week where MAXS was breaking below the Bottom Support price, Bottom Fishing is a very risky strategy for MAXS.