Tuesday, March 18, 2014

IJM: Poised for an Upleg

The recent announcement that the government has approved MRT2 has given a big boost to the construction industry. While many have expected Gamuda will be the frontrunner for this project, what's surprising is that IJM share price has broken above the horizontal line at RM5.95 as well as the psychological RM6.00 mark.

Now, I am not sure whether this breakout has anything to do with MRT2. From the daily chart (Chart 1), we can see that volume picked up over the past 2 months prior to this breakout. 

Chart 1: IJM's daily chart as at Mar 17, 2014 (Source: Tradesignum)

When you look at the weekly chart (Chart 2), we can see that IJM has broken its 3-year downtrend line at RM5.90. This breakout could lead to a powerful rally, akin to Gamuda's upside breakout in early 2013 (see Chart 3).

Chart 2: IJM's weekly chart as at Mar 17, 2014 (Source: Tradesignum)

Chart 3: Gamuda's weekly chart as at Mar 17, 2014 (Source: Tradesignum)

Based on technical breakout, IJM could be a good trading BUY.

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, IJM.


lai said...

Hi Alex,

Can you share your thoughts on HLCAP? Failed takeover lead to crazy share price?

primepeng said...

Is this going to strongly influence IJMPLNT share price?

Alex Lu said...

Hi lai,

No comment on HLCap. When two rich men are fighting over a girlfriend, we better stand back.

Alex Lu said...

Hi primepeng

IJMPLNT is in a gradual upward channel with support at RM2.90 & resistance at RM4.00.

In term of valuation, this is a fairly pricey stock. its EPS for 3QFY14 (QE31/12/2013) was 4.5 sen. Full-year FY14 EPS could be 18 sen if we ignore the poor profits for 1HFY14. This will give a PE of 18-19x.

This stock is a long-term HOLD.