Monday, October 02, 2006

Cenbond has a bullish breakout

Cenbond is involved in paper & plastic packaging. The company is planning to install a second production line for its stretchable film division, which is enjoying strong demand.

Based on the latest quarterly result for QE30/6/06, Cenbond has an annualized turnover of RM154 mil while achieving a net profit of RM9.2 mil. Its annualized EPS is about 7.7 sen. Based on its closing price of RM0.53 today, Cenbond is now trading at a PE of 6.9 times. See the table below.

Cenbond has announced a dividend of 3.5 sen, which will go "ex-div" on 17.10.2006. This is an improvement over last year's dividend of 2.5 sen. If the company can maintain this level of payout, then this stock is an attractive investment, yielding 7% return. This may be the catalyst that is currently boosting the share price.

From the chart below, we can see that Cenbond is in a short-term uptrend line, with support at the RM0.50 level. Overhead resistance is at RM0.515, which was surpassed today. This may be a bullish move, which may see the share price going possibly to the RM0.58/0.60 level.

Chart: Cenbond's daily chart as at Sep 29

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