Cocolnd could be a good BUY

Cocoaland Holdings Bhd ('Cocolnd') is involved in the manufacture of snack food, chocolate, sugar confectionery & soft drink. It is the leading fruit gummy manufacturer in Malaysia. For more, you may visit its website (here).

In mid-August, there were 2 research reports which have a differing view on this stock. S&P has a BUY call on this stock with a 12-mth target price of RM1.27 when the stock was trading at RM1.10 on August 14. Kenanga has a HOLD recommendation with a target price of 12-mth RM1.17 when the stock was trading at RM1.09 on August 13. S&P and Kenanga have forecast anEPS of 9.6 sen and 10.1 sen respectively for FY2007.

Since the reports, Cocolnd has fell back fairly sharply. Cocolnd, which closed at RM0.72 today, is still near its medium-term uptrend line support of RM0.70 This is also a strong horizontal support area. At this price, Cocolnd is trading at a relative undemanding valuation of about 7 times.

Chart : Cocolnd's weekly chart as at September 18 (courtesy of Quickcharts)

Based on good technical set-up, I believe Cocolnd is a good candidate for either a quick trade or for a medium-term hold. Those, who choose to buy for a trade, should have a protective stop set just under RM0.70, in case there is an unpleasant surprise awaits us.