Wednesday, October 10, 2012

Scomimr- the gem in the Scomi group

Scomi group has been in the headline for the past few days after IJM took a stake in Scomi. As you may know. Scomi is undergoing an internal reorganization which will see Scomi Marine ('Scomimr') emerging as an integrated oil and gas marine and drilling services provider. As part of the exercise, there will be a reverse take-over (RTO) exercise where Scomi's eastern hemisphere oilfield services will be injected into Scomimr; thus enlarging the latter's current business of offshore support services. Scomi's stake in Scomimr will be increased from 43% to 66%. Interestingly, IJM will subscribe for RM110 million of Scomi Redeemable Convertible Secured Bonds, where the security provided is Scomimr shares.

Look like the focus for the Scomi group as well as the reason why IJM bought into Scomi is the Oil & Gas sector. Since this business will be parked in Scomimr, this company is where we should concentrate our attention.

Chartwise, we can see that Scomimr has just broken above the intermediate downtrend line (AB) at RM0.35 yesterday and the strong horizontal resistance at RM0.38 this morning. See Chart 1.

Chart 1: Scomimr's daily chart as at Oct 9, 2012 (Source: Quiccharts)

If you look at the ling-term monthly chart, plotted on semi log scale (Chart 2), you will see that the stock had broken above its long-term downtrend line in 2010. Despite that breakout, the stock did not rally but instead moved sideway for 2 years in the form of an irregular pennant/frag formation (ABCD). The last time this stock was in a similar formation was in 2002-2005 (OPQR). In early 2006, Scomimr broke above that formation at RM0.40 and rallied to a high of RM1.80. Today, the stock appears to be breaking above the current formation. 

Based on the exciting prospects of Scomimr (following its restructuring & new shareholders) and the mildly bullish outlook, Scomimr could be a good stock to consider for long-term investment.

Chart 2: Scomimr's monthly chart as at Oct 8, 2012 (Source: Tradesignum)

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Scomi & Scomimr.


luckystock2 said...

Hi Alex ,
Can you comment on TWS technical outlook ?

Alex Lu said...

Hi luckystock2

TWS broke the strong horizontal support at RM7.40-7.60 as well as the horizontal-cum-psychological support at RM7.00. It is now hanging onto the last decent support at horizontal line of RM6.30. If it breaks this support, it will go down to RM4.00.

I think it should hold at the RM6.30 support for a while because I don't think the market is ready for RM4.00.