KPJ- may have a bullish breakout

KPJ broke above its recent high of RM4.65 as well as the line connecting the past 7 months' high this morning. Is this a fake breakout, coinciding with the last day of trading for 2011? See Chart 1 below.


Chart 1: KPJ's daily chart as at Dec 30, 2011_10.00am (Source: Quickcharts)

KPJ tested its long-term uptrend line (SS) at RM3.80 in September.


Chart 2: KPJ's daily chart as at Dec 23, 2011 (Source: Quickcharts)

For 9-month ended 30/9/2011, KPJ reported a net profit of RM92 million on a turnover of RM1.385 billion (go here). The annualized EPS for FY2011 would be about 23 sen. Based on current price of RM4.68, KPJ is trading at a PE of 20 times. KPJ could be re-rated in line with the expected listing of Integrated Healthcare Holdings Bhd ('IHH')- Khazanah's controlled healthcare subsidiary- on both Bursa & SGX next year. For more, go here & here.

If KPJ can maintain above the breakout level of RM4.65 over the next few days, we can conclude that this breakout is genuine. In that case, KPJ could be a trading BUY. The potential target is RM5.45 (arrived at by adding the depth of the recent correction of RM0.80 to the breakout level of RM4.65).