Hi to all fellow investors and traders !
Today I would like to highlight the following counter:
MELEWAR INDUSTRIAL GROUP BERHAD or MELEWAR (Main Market, Industrial Products & Services)
MELEWAR - Breakaway Gap - Turning Point for This Company ???
Here are my thoughts :
1. Recently Posted Superb QR - Huge Earnings of RM 46.2 million or EPS 12.85 cts !!!
Refer below summary of last 3 years MELEWAR QR.
The company had posted 4 quarters of losses in a row prior to August 2019 QR. Recently, it had posted a whopping PBT of RM 47.7m and Net Profit of 46.2m. This implies an EPS of 12.85 cts. The NTA of the company also increased to 91 cts.
I believe this company is too undervalued at this price, with the release of this latest report. Even with the previous 3 quarter losses, the full year EPS is still high at 8.31 cts. Taking a minimum PE ratio of 4-5, this gives a fair value of the company at between 33 - 42 cts range.
Therefore, the current price of 14.5 cts is far undervalued in my opinion.
2. Technicals - Breakaway Gap - Indication of Strong Turn in the Trend
Refer below daily chart of MELEWAR.
A few observations below:
i. A breakaway gap formed last Friday after the results were announced. This gap indicates a strong turn of trend from downtrend to uptrend, should the support be held.
ii. MACD and Stochastics crossing upwards indicating bullish momentum
iii. Longer term resistance seen at 19 cts
iv. Breakaway Gap is supported by significant increase in volume
CONCLUSION
Based on my opinion, I believe MELEWAR trend has changed from downtrend to uptrend. based on below:
i. Improved Financial Report with Full Year EPS 8.31 cts implying a price target of between 33 - 42 cts in longer term
ii. Breakaway Gap formed, with increasing volume indicating a change of tide from downtrend to uptrend
Thanks for reading and see you in the next post.
THE ABOVE IS NOT A BUYCALL AND ONLY A PERSONAL OPINION ARTICLE AS A SHARING TO BSKL COMMUNITY MEMBERS.
Yours Truly,
INVESTHOR
https://klse.i3investor.com/blogs/InvesthorsHammer/2019-09-01-story222738-Breakaway_Gap_Turning_Point_for_This_Company.jsp
