Listed in June 2007, Ogawa has been in a downtrend until last month when the stock broke above its downtrend line at RM0.35. The stock is now attempting to break above the horizontal resistance at RM0.45-46. If successful, it may challenge its next resistance at the horizontal line of RM0.51-52. A break above this latter resistance could see the stock sailing up to the horizontal line at RM0.85-90.
Chart 1: Ogawa's weekly chart as at August 18, 2010_9.05am (Source: Quickcharts)
Ogawa's financial performance has turned around this year. For the 9-month ended 31/3/2010, Ogawa recorded a net profit of RM2.2 million on turnover of RM108 million. This compared favorably with last year's 9-month results where it incurred a net loss of RM15.7 million on turnover of RM87 million. Oqawa (closed at RM0.45 yesterday) is now trading at a trailing PER of 19 times or at a Price to Book of 0.9 time (based on NTA per share of RM0.49 as at 31/3/2010). At these multiples, Ogawa is deemed very demanding.
Can Ogawa duplicate the success of its close competitor from Singapore, OSIM? For QE30/6/2010, OSIM reported a net profit of S$12.1 million (a y-o-y increase of 142%) and a turnover of S$131 million (a y-o-y increase of 12%). For more, see the table below.
Table: OSIM's 2Q2010 & 1H2010 results
Due to its strong recovery, OSIM rose from a low of S$0.10 in April 2009 to a recent high of S$1.10. See Chart 2 below.
Chart 2: SIM's daily chart as at August 17, 2010 (Source: SGX)
Conclusion
Ogawa may rally if it can break above the horizontal resistance at RM0.45-46 convincingly. The catalyst for a rally could be a good set of number for QE30/6/2010 (expected any day now).
7 comments:
Hi Alex,
What is your point of view about Health Industry? example: AHealth & Kotra?
Thank you
Hi Alex,
I came across this stock called Willow (ACE). Looks pretty interesting fundamentally. Mind take a look at it?
Hi robby
I agree that Willow is fundamentally a good company. I posted on it in 2007 (see the first link below). However, I must say that the stock is in a bearish phase. Willow is a technician stock, which means that it moves fairly predictably (see the second link below). Right now, its 50-day SMA line has crossed below its 200-day SMA line. In the past, this would herald a period of decline lasting 12 to 18 month, possibly back to the RM0.15-0.20 level.
http://nexttrade.blogspot.com/2007/02/willow-reported-better-results-for.html
http://www.tradesignum.com/chart/willow
Hi Yee
Healthcare sector is very hot now. The TMC deal is a sign that we may see more play in this sector. Would it broaden out to include pharmaceutical suppliers, such as Kotra? Who knows... Kotra is a good company that trades in a range between RM0.50 & RM0.70.
As for AHealth, my recommendation is to avoid that stock. It has a great run, rising from less than RM1.00 to nearly RM2.80 recently. While the stock is still in a uptrend, I can see bearish divergence in a few indicators (MACD & RSI). I believe it has very limited upside but potentially large downside.
Appreciate it, Alex. Thanks.
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