On April 12, E&O announced that it has secured the In-principle approval to reclaim an additional 740 acres of land off Tanjung Tokong for the continued development of its successful Seri Tanjung Pinang project (here). This approval was very timely for the holders of E&O-wa which will expire on May 15. In fact, this warrant has ceased trading today (here).
From Chart 1 below, we can see the selldown of E&O-wa a few weeks prior to the above announcement. After the announcement, the share price & the price of the warrant rebounded. In fact, we can see strong buying over the past two weeks as the warrant would provide a slightly cheaper entry to the share if one were to buy it & convert to share instead of a direct buying of the share. This is a pretty bullish sign which means that E&O could see more buying in the near term.
Chart 1: E&O-wa's daily chart as at April 27, 2011 (Source: Quickcharts)
Technical Outlook
Interestingly, the share has rallied today & it broke above the horizontal line (as well as its recent high) of RM1.38. If this breakout can sustain, then the share may soon test its next resistance at the horizontal line RM1.50. See the daily & weekly charts below.
Chart 2: E&O's daily chart as at April 28, 2011_11.00am (Source: Quickcharts)
Chart 3: E&O's weekly chart as at April 28, 2011_11.00am (Source: Quickcharts)
Conclusion
Based on the bullish technical breakout & the strong buying of the warrant just prior to its expiry, I expect E&O could enjoy an exciting time ahead. As such, E&O could be a good trading BUY.
12 comments:
Hi Alex,
Need your input on the below stocks.
BENALEC(5190)
CIHLDG(2828)
Pls comment.
Thank you.
Yee
TDM announced 2 interim dividend payment? one is 13.5c then another 3c? or is some mistake....
0158 SCC
5001 MIECO
Is this both good for long term investment?
Alex,
1) Axiata looks set to challenge 5.10 resistance?
2) Bkawan's has been on solid footing after company's share buyback... may have formed bottom?
Hi Alex,
Could you please enlighten me as to how the ex price of MBSB was calculated today?Thanks in advance.
Hi newbie
The computation of the theoretical ex-rights price for MBSB is not straight forward. MBSB has a Rights Issue of 5-for-7 at RM1.00 each (plus 1 free warrant for every 1 Rights share subscribed). MBSB closed at RM2.55 on the last cum date.
If we ignore the free warrant in our computation, the theoretical ex-rights price is [(7 x 2.55) + (5 x 1.00)]/12 = 1.90.
However, we cannot ignore the warrant as it has a value. The difficulty is in assigning a value to the warrant. I can't find the exercise price for this warrant. For simplicity, we just assign a value of 20% of alternative theoretical ex-rights price (assumed to be 'a'). The formula would be:
[(7x2.55)+(5x1.00)-(5x0.2a)]/12 = a
22.85 - a = 12a
a = 1.76
Thanks for the reply,Alex.The exercise price for the warrants is 1.00.How does that affect your calculations?The reference price after ex was 1.63.Sorry for being such a bother.Thanks again.
Sorry to bother you again,Alex.Think I got it.[(7 x 2.55) + (5 x 1.00) - 5(a - 1)]/12 = a.Thanks for the pointers.
Hi hkloon
1) Axiata's immediate resistance is at RM5.00 & then RM5.20. Its immediate support is at RM4.65.
2) Bkawan's movement would track KLK. The latter is trapped within a symmetrical triangle. It is now approach the apex of that triangle & if it exit the triangle at RM21 over the next 2-3 week, the stock will continue to move sideway. The same should apply to BKawan. In addition, any rally in Bkawan would be preceded by an upside breakout of the horizontal line at RM15.50.
Hi Wedding Gifts,
TDM announced 2 interim dividend payment- one is 13.5c then another 3c. You got it right.
Hi Yee
CIHLDG broke its medium-term uptrend line & horizontal line at RM3.00 in April. Its immediate support is the horizontal line at RM2.40 & then at RM2.00. To Avoid this stock.
Benalec is a fairly profitable contractor that specializes in land reclamation. It is moving sideway, with support & resistance at RM1.40 & RM1.50.
Hi Adrix Toh
My thoughts on the following stocks:
1) SCC
This new stock currently trading at RM0.50-0.56. It was listed at RM0.78 in August 2010. At the closing price of RM0.52, SCC is trading at a PE of 5 times (based on estimated EPS of 10 sen). You need to check out on this stock, but based on attractive valuation & technical support at RM0.50, SCC could be a good small-cap stock to invest in.
2) MIECO
Technically speaking, it could be a good buy at the medium-term uptrend line at RM0.50. Immediate resistance is at the horizontal line at RM0.64-0.65. Do check out on its financial statement to ascertain the EPS etc.
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