Fitters may have a bullish breakout

Fitters has three main streams: manufacturing, trading, services and theming (MTST);construction, engineering and property (CEP); and renewable energy and palm oil (RE). The excitement for this stock comes from two areas:

1. Renewable Energy sector
Fitters had commercialized its concept of sustainable palm oil mill by providing zero-waste solution via dried long fibre plants and biogas power plants.
2. Property Development
Fitters will be carrying out its maiden property development project in the prime Setapak area (with a gross development value of RM400 million) would be a major boost to FY12 to FY14 earnings.

In an April report, HwangDBS Research stated that Fitters is trading at "five times FY13 (financial year 2013) price earnings is a clear bargain on the back of three-year earnings CAGR (cumulative annual growth rate of 38 per cent while boasting solid 19 per cent FY13 ROAE (return on average equity)". In addition, it gave the stock target price of RM1.25 per share, using a sum-of-parts valuation method. For more, go here.

Chartwise, Fitters has just broken above its downtrend line at RM0.80. This is also the resistance from the horizontal line of RM0.80. Its next resistance will be at RM0.90-0.95. The stock has potential to revisit its recent high of RM1.15. See the two charts below.


Chart 1: Fitters' daily chart as at July 19, 2012_11.45am (Source: Quickcharts)


Chart 2: Fitters' monthly chart as at July 18, 2012 (Source: Tradesignum)

Based on technical consideration, Fitters could be a good stock for a trading BUY.