GENM: Poised for Next Upleg?

Technical Outlook

GENM has broken above its downtrend line, RR at RM5.10 in late November. This was followed by a sideways movement with the upside capped by the horizontal line at RM5.30. Yesterday GENM went above the RM5.30 to reach an intra-day high of RM5.33 before it closed at RM5.29. Today it is again trading above RM5.30. Current prices are RM5.34-5.35.


Chart 1: GENM's daily chart as at Dec 12 2017_9.30 (Source: Malaysiastock.biz)

From the weekly chart below, we can see that GENM is in along-term uptrend line, RR with support at RM4.30-4.40. While still below the zero line, the MACD has hooked up and crossed above the MACD signal line. +DMI has also crossed above -DMI. These two signs point to a possible bottom for GENM.


Chart 2: GENM's weekly chart as at Dec 12 2017_9.30 (Source: Malaysiastock.biz)

Recent Financial Result

GENM's profits in the past 3 quarters have normalized after the exceptional profits from forex gains and disposal of investment & properties for the period from QE30/6/2016 to QE31/12/2016.


Table: GENM's last 8 quarterly results


Graph: GENM's last 46 quarterly results

Valuation

GENM (closed at RM5.29 yesterday) is now trading at a PER of 38 times (based on annualized EPS of 14 sen). At this PER, GENM is deemed fully valued.

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Conclusion

Based on poorer financial performance and demanding valuation, I rate GENM as a HOLD after the recent correction. The stock could be a trading BUY given the bullish technical outlook. If you choose to trade the stock, please exercise careful discretion.

Note:
I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.