Thursday, June 18, 2015

Gasmsia: IBR coming

Gasmsia has revealed that incentive-based regulation (IBR) for the gas sector is well under way. It is expected to be implemented by as soon as Jan 2016. This has prompted CIMB to lower our target price to RM2.25 as we change our valuation method to SOP from 22x CY16 P/E to better reflect its earnings composition. We also downgrade to Reduce from Hold as IBR could lead to a sharp earnings erosion.For more, check out the report in the Star newspaper.

Chartwise, we can see that Gasmsia has broken below its strong horizontal support at RM2.60. While it may find support at RM2.50 or even RM2.40, these support levels are relatively weak. In line with the negative development on both the fundamental & technical fronts, I would recommend a SELL on Gasmsia.


Chart: Gasmsia's weekly chart as at Jun 17, 2015 (Source: ShareInvestor.com)

Note: 
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, Gasmsia.

5 comments:

Unknown said...

Hi Alex,
Wondering what you think of Hohup?

Chun Mun said...

Hi Alex,
Can you comment on CMMT and TDM please?
Thank you,
Tan Chun Mun

Alex Lu said...

Hi Ming Hoong Law

Hohup has a pretty interesting story which could one day set the stock on fire. However the technical outlook has dimmed somewhat, probably due to poor sentiment for property stocks in general. The stock may drift lower to RM1.00-1.10. At this price level, I think it is a worthwhile investment.

Alex Lu said...

Hi Chun Mun

CMMT has been range-bound for the past 18 months between RM1.35 & RM1.55. It is heading towards the RM1.35 level, which could be a trading BUY.

TDM has shown a bit of weakness in the past 1 year. It is likely to continue to drift lower until it has found its support at its long-term uptrend line at RM0.60. That will be a good entry level to the stock.

Please look up the financial data on your own.

Unknown said...

Thanks for your comment :-)