Monday, May 12, 2014

Maybulk: Uptrend line violated

Ever since POSH (or, PACC Offshore Services Holdings Ltd) an offshore support vessels ('OSV') operator owned by Robert Kuok announced its planned listing on SGX, the share price of Maybulk has been heading South. RHB & CIMB feel positive about the listing of POSH as they valued Maybulk's stake in POSH at RM1.02 billion and RM1.1 billion respectively (go here).

On the other hand, Kenanga in a March report entitled "Riding the Wave" opined that POSH might command a PE of only 11x. If so, Maybulk's 21.23%-stake in POSH will be worth about RM554 million. Thus the listing of POSH would lead to a paper loss of RM238 million since the stake was acquired for USD221 million (or, RM792 million). Who is right?

Table: The Possible Return on POSH (Source: Kenanga)

Last Thursday, Maybulk broke below its uptrend line at RM1.90 and closed at a low of RM1.80. Right now, Maybulk is staging a small rebound to RM1.85. Unless it managed to climb back above the RM1.90 level, the stock's uptrend has ended and it will either trade sideways or enter into a downtrend. It looks like the investors in Maybulk are taking a negative view on the listing of POSH.

Chart: Maybulk's weekly chart as at may 9, 2014 (Source: Tradesignum)

Given the technical breakdown, you are advised to reduce your position in Maybulk as the share price rebounds up to the RM1.90.  

In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Maybulk.


富升 said...

Dear Sir,

How about MMC ?

Recently MMC get a project but the share price drop so much and broke 250MA with small volume.

Alex Lu said...

Hi 富升

MMC has formed an irregular U-shape channel. It is now at the lower boundary of that channel, with support at RM2.60. I believe it should find support at that level and then rebound back up to the upper boundary at RM3.20.

This will likely happen with positive newsflow, such as the listing of Malakoff, etc.