Wednesday, August 19, 2009

Dgate- to sell into strength, if opportunity prevailed

On August 13, I recommended a trading BUY for Dgate (here) when it had broken above its triangle at RM0.20. Like many breakouts that happened last week, DGate's bullish breakout could well turn into a bull trap in the present market. The saving grace is that the uptrend is still intact as the share price hasn't broken below RM0.18.


Chart 1: Dgate's weekly chart as at Aug 18, 2009 (Source: Quickcharts)

Besides the market correction that has spooked many an investors, Dgate was affected by the results for 2Q2009 ended 30/6/2009, which was announced on August 17. The results is presented in the table & chart below. You can see clearly that Dgate's financial performance has not shown any sign of recovery. This poor set of results will likely to act as a drag on the share price for the near-term.



Table 1: Dgate's 8 quarterly results


Chart 2: Dgate's 13 quarterly results

With no sign of recovery in sight, I think that Dgate's near-term outlook will not be good. As Dgate is still in an uptrend, I think we do not have to sell off the stock immediately. However, we should sell into strength if the stock were to rebound. A good level to aim for is RM0.20- the earlier bullish breakout level- as this will act as a strong resistance.
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4 comments:

  1. hsunlWednesday, August 19, 2009 12:48:00 PM

    Hi, Alex. Very informative site. Thanks. Appreciate if you can write something on the latest result on Hupseng, and the forthcoming result for CIHolding and LonBisc, Willow.

    My opinion they are worth to WATCH. Company performance is absolutely good. How abt beverage com pe ave?

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  2. Alex LuWednesday, August 19, 2009 2:55:00 PM

    Hi Hsuni,

    Ok, I will try. I have a glance at Hup Seng this morning after it announced its results for 2Q2009. The net profit for 1H2009 is 68% higher than IH2008 while turnover was 9% lower. The increased net profit was "contributed by the cumulative effects of lower material input cost and improved contribution from costs recovery exercise during the financial period to date". Sharply higher profit on lower turnover? I find that a bit hard to believe.

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  3. UnknownThursday, August 20, 2009 1:11:00 PM

    Hi Alex

    Can you give comment on Sitatt 1Q2009 result. Profit of Rm30.606 mill. An increase of 46272%. Is it for real? Why stock not moving much with such a big leap in profit?

    ReplyDelete
  4. Alex LuTuesday, August 25, 2009 11:01:00 AM

    Hi Wang,

    I had a quick glance at Sitatt's last 4 quarterly results. The latest results for QE30/6/2009 shows a net profit of RM30.6 mil; a pre-tax profit of RM30.7 mil; and a turnover of RM11.4 mil. Prior to this, it was a loss-making or marginally profitable company. The change of fortune is attributable to a net appreciation of RM32 mil in the fair value of a newly-acquired investment property. If that is excluded, the company will still be making a loss.

    Chartwise, Sitatt was trapped between RM0.30 & RM0.60 for the past 4 years. A break above the RM0.60 could signal a recovery for this stock. I am not sure what would be the catalyst for this recovery.

    ReplyDelete