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Thursday, August 28, 2014

Armada: Cash Call Fright?

Armada announced a 1-for-2 bonus and a 1-for-2 Rights Issue at RM1.35 yesterday and the share went down like a rock. Stranger things had happened before...

From the daily chart, we can see that there is a bullish divergence formed prior to the sudden drop yesterday. However, Armada was well supported today. Nearly 10 million shares changed hand and the stock is only down 2 sen to RM3.02.

I believe this is an over reaction to a cash call for a company with strong management & substantial exposure in the O&G sector. As such, this could be a good buying opportunity.


Chart 1: Armada's daily chart as at Aug 27, 2014 (Source: Tradesignum)


Chart 2: Armada's weekly chart as at Aug 27, 2014 (Source: Tradesignum)

Note:
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, Armada.

6 comments:

Andres Kwan said...

Hi Alex, can u share ur thought of Success. I personally think to he share price stil has potential to up further with low PE 6.46 and NTA 1.99.

Ks said...

Hi Alex, whats your opinion on MKH.

Alex Lu said...

Hi Ks

MKH has corrected quite substantially. It may find support at the psychological RM3.00 mark or the uptrend line at RM2.90 (based on semi-log chart).

Alex Lu said...

Hi Andres Kwan

Success is fairly attractive, trading at a PE of 6.3x (based on its close of RM1.70 & trailing 4-Q EPS of 27.35 sen).

Immediate resistance at RM1.85 & immediate support at RM1.65. Its technical outlook is still bullish as it is in an accelerated uptrend line with support at RM1.55.

Andres Kwan said...

Thanx Alex. Recently, I have monitoring Bonia share and it has dropped from 1.5x til nw 1.18. Any idea of this share? Is it reach bottom limit and is time to enter?

Alex Lu said...

Hi Andres Kwan

Bonia has gone through a big capital exercise; a 1-for-1 bonus and then 1-to-2 split. The end result is that if you started out with 1000 shares, you would end up with 4000 shares.

This exercise is great on your MCD statement but it leads to share overhang that needs to be digested.

While the company is pretty doing fine, the share price had risen exponentially from Feb to Jul 2014. All these come together for a perfect smack down.

I see the next support at the uptrend line at RM1.10 or at the psychological RM1.00 mark. These would be good entry levels for the stock.