KBunai poised for correction

From the 60-minute chart below, KBunai looks poised for correction. Look at the divergence between the volume & price movement as well as cross-under of the MACD indicator.


Chart: KBunai's 60-min chart as at Oct 20, 2010 (Source: Quickcharts)

The gift that keeps giving! First, Pemandu at the Economic Transformation Plan (ETP) open day on September 22 announced that an integrated resort (IR) - including a mangrove centre, water theme park and waterfront properties- will be developed on a 500-acre “eco-nature” resort in Karambunai, Sabah. This IR may come with the option to build a casino to ensure a higher return on investment (ROI). Later, Karambunai denied that the IR would include the development of any casino (here).

At the Budget announcement on October 15, it seems that the government would be developing this resorts at a cost of RM3 billion. Now, it is made clear that it’s a public-private partnership with the government contributing RM100 million to the total development cost of RM3 billion (here).

Like the saying goes, “If wishes were horses, then beggars would ride on them.” My concerns are as follows:

· Would the project be any more successful than MK Land’s Bukit Merah resort?

· Should the RM100 million be spent to build up an area which can cater for more than one resort? Taman Negara could be a good model to follow. Imagine a similar RM100 million allocation for Mutiara Taman Negara as compared to funding the development of the infra-structure around Taman Negara.

· Would a RM3 billion “eco-nature” resort be so massive that you can’t see any more “eco-nature” in the resort?

All in all, I am not sold on the idea of Karambunai as a stock nor Karambunai as “eco-nature” resort, with or without a RM100 million contribution from the government.