KAREX (5247) - KAREX: Uptrend to Resume?
Karex broke above its intermediate downtrend line, RR at RM2.35 in June. Then the share price consolidated in a "flag formation" ('ABCD'). Today, Karex broke above the flag formation at RM2.47-2.48 (see Chart 1). This breakout could be the continuation of the prior uptrend which started in late 2013 (see Chart 2).
Chart 1: Karex's daily chart as at Aug 9, 2016 (Source: ShareInvestor.com)
Chart 2: Karex's weekly chart as at Aug 9, 2016 (Source: ShareInvestor.com)
In the preceding quarter (QE31/3/2016), Karex's profits dropped sharply due to lower sales, lower profit margin and foreign exchange losses. At the current price of RM2.53, Karex is trading at a trailing PER of 35x. Based on its prior year earning growth of 32%, Karex has an acceptable PEG ratio of about 1x. It is crucial that its earning growth remains elevated at about 30%, failing which the PER of 35x will not be acceptable. In the next 3 weeks, Karex will announce the results for QE30/6/2016. Anything less than a strong recovery will not be acceptable.
Based on the bullish technical breakout, Karex is expected to continue to go higher. For now, let's treat this as a trading BUY while we await the next quarterly result to confirm the return of earnings growth for this stock.
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.
KAREX (5247) - KAREX: Uptrend to Resume?
http://nexttrade.blogspot.my/2016/08/karex-uptrend-to-resume.html
