Thursday, March 18, 2010

Waseong- a good trading BUY

According to the Starbiz, Wah Seong Corp Bhd ('Waseong') has submitted a bid to buy over Italian company Socotherm SpA ('Socotherm') three weeks ago. The later appears to be in a tight financial position as it had sold off its 32.5%-stake in its JV, PPSC Industrial Holdings Sdn Bhd to Waseong. According to the Starbiz:
Listed on the Italian Stock Exchange, Socotherm has a strong foothold in South America and Gulf of Mexico. However, the group has been weighed down by debts of some 250 million euros and been making losses since its 2007 fiscal year. On Socotherm’s strengths, Maccagno said it was in markets that Wah Seong was presently not.

“The integration of Wah Seong’s and Socotherm’s pipe coating businesses would catapult us to be the biggest in terms of geographical spread and the second largest global player of this sector in the oil and gas industry,” said Maccagno.

I would rate the chance of success for Waseong's bid to be fairly good due to the following:
1) Waseong & Socotherm have a close working relationship;
2) Waseong's deputy MD, Maccagno was a former employee of Socotherm; and
3) Both companies are in the same business of pipe-coating and would derive tremendous synergies if both companies merged.

From the daily chart (Chart 1), it appears that Waseong has broken above its horizontal resistance of RM2.48 this morning. From the weekly chart (Chart 2), we can see that Waseong may encounter some resistance from a slanting 'horizontal line' ('AA') at about RM2.50. If it can convincingly break above these 2 resistances, Waseong would likely to enter into its next upleg. The next resistance & the minimum target is at RM2.70-75.


Chart 1: Waseong's daily chart as at Mar 18, 2010_9.10am (Source: Quickcharts)


Chart 2: Waseong's weekly chart as at Mar 15, 2010 (Source: Tradesignum)

Based on technical breakout, Waseong could be a trading BUY.

10 comments:

Unknown said...

Hi Alex, just like u to know that yr blog is one of the few that is of substance. Tks for the selfless sharing.

Layman said...

Dear Alelx,

I share the same view. It is so difficult to find good opinion of substance and gist for our independent consideration.

Good job and good day, Alex. Thanks.

MaxWealth88 said...

Good job on your great sharing each day. Salute u r passion in this field.

By taking over a debt laden company, not sure Waseong will become like KNM. KNM never recovered after Borsig deal.

thanks
cltee

Alex Lu said...

Hi guys,

Thank you for the generous compliment. I hope that I can continue to blog & contribute to the improvement of investment performance for all the readers of this blog.

Unknown said...

Hi Alex ,

Thanks for your feeback.as you mention about Waseong ,mean short -term invesment or long term? short term mean can go for 2.70-2.75 .

Layman said...

Dear Alex,

I bought success @1.23...now seems has moved uptrend.

thanks.

kh7878 said...

What is the immediate target price for Waseong in the next few days ?

Thanks for your generous sharing .

Alex Lu said...

Hi Layman,

Success seems to be taking off now. Listed in early 2005, Success's recent high at RM1.35-36 (recorded in Oct last year & Jan this year) is also its all-time high. If it can surpass this level, wonderful things can happen. Let's give this stock some room to show us its full potential.

Alex Lu said...

Hi kh7878 & phkoay,

Waseong has broken above a strong resistance that has capped its upside for 6 months. As such, it may come in for a decent move, say 10%. If you look at the chart, you may say RM2.60 may be a resistance. A stock that has just achieved an important upside breakout at RM2.50 cannot be satisfied with a 10-sen gain. It could easily surge 10% from the breakout level. And, that's my minimum target. Anything more is possible but at a longer time frame.

kh7878 said...

Hi Alex ,

I will pay attention on "Success" and "Waseong" as per your analysis.

How do you perceived Scomi and Scomi-WA in the long term ? i have 20,000 share @RM0.48 (SCOMI) , 20,000 shares @ RM0.29 (SCOMI-WA).

Thanks in advance.