KFima- preferred over Fimacor

There was a report in The Edge newsletter last week which opined that KFima might privatize its 60.9%-owned subsidiary, Fimacor. Looking at the chart of KFima & Fimacor below, we can see a divergence in the share price movement- with KFima going higher while Fimacor going sideway (with a downward bias). To me, this seems to rule out the privatization of Fimacor, unless the price to take it private is lower than the current market price. As noted in my earlier post, Fimacor is a very profitable company and if KFima is serious about its privatization, the price must be higher than the market price. As such, I believe KFima does not intend to privatize Fimacor for mow. However, the article has alerted investors to the attractiveness of KFima, which is a profitable conglomerate with interest in many growing sectors, such as manufacturing, bulking, plantation, property investment, etc. The result is a bullish breakout for KFima. Based on this technical observation, I believe KFima could be a good trading BUY.


Chart 1: KFima's daily chart as at July 6, 2011_11.00am (Source: Quickcharts)



Chart 2: Fimacor's daily chart as at July 6, 2011_11.00am (Source: Quickcharts)