Please be reminded that this is NOT a ”pump and dump” motivated article nor a recommendation. It is just my comprehensive studies on this interesting company. Please seek advice from licensed investment representative for the recommendation!
Please refer to the previous articles for a better understanding on the flow of my comprehensive studies:
https://klse.i3investor.com/m/blog/fatprofitstock/2020-04-03-story-h1485789474-I_TOLD_YOU_ALREADY_THIS_STOCK_WOULD_RALLY_ALL_THE_WAY_UP.jsp
Part 1: Fundamental Analysis
• There are few reasons of why buyers pay high price with no dividend to buy the stock? In this case, Minetech.
• Dato' Awang Daud, a co-founder of Serba Dinamik and the new Chairman of Minetech has so far acquired 18% shares of Minetech at high PE of more than 100x and the market has seen following him too. This is because the market is expecting high earnings growth potential in the Company!
• What could be the earnings story of this Company? Assuming case 1 study of new contracts. As explained in the previous articles, Minetech could potentially win MORE projects following the changes in board with Dato' Awang Daud as a new Chairman and new faces with strong profile on the board of Minetech!
• Now back to my earlier shout of why Minetech could be the next Kpower and SCIB?
• Like Minetech, Kpower and SCIB also just have new Chairman, Dato' Dr. Ir Mohd Abdul Karim, a founder and MD of Serba Dinamik. He has acquired the stake in both companies in late last year before becoming a new Chairman for both companies. The interesting part is Dato' Mohd Abdul Karim has turned around both company's earnings prospects in a short period of time from RM20 million and RM80 million revenue level as of FY19 to potentially to be more than RM500 million revenue level this year (assuming work progress of 50-60% of orderbook) with their orderbook targets of RM1 billion and RM1.5 billion respectively! And have so far on track to meet their orderbook target with recent new contracts secured! As a result, both share prices had rallied from 50sen-level to RM3-level from mid-last year to early this year!
• Similar to Dato' Mohd Abdul Karim's modus operandi, Dato' Awang Daud has also acquired stake in the company, which is Minetech. Judging from the case of Kpower and SCIB, there is a potential turnaround in Minetech's earnings outlook from RM100 million revenue level and loss making as of FY19 (ended in March 2019).
• Should Minetech secure MANY MORE contracts, from Dato' Awang Daud's network and other projects (as highlighted many times in previous articles), let say with RM1 billion orderbook target in this FY2021 (from April 2020 - March 2021) and with engineering expertise of Dato' Awang Daud and new members of Minetech's board, which could help save some costs and expand profit margin to around 8 - 10%, Minetech could generate RM80 million - RM100 million.
• Assuming FY21 work progress of 50-60% of its orderbook target of RM1 billion, Minetech's earnings potential to be around RM40 million - RM50 million, which translates to 4.34sen or 5.43sen EPS. At current price of 17sen, forward P/E ratio would be only at 3.1x - 3.9x!
• Assuming the stock should be traded at conservative forward P/E ratio of 10x, it implies fair value of 43sen - 54sen! Now, this could explain why Dato' Awang Daud has been so aggressively since February this year accumulating this stock and the last 3-days ultra high volume traded!
• Now, this should justify technical analysis view of the share price of Minetech could double to 33sen in the near term!
•ANYHOW, this is just my own comprehensive studies on this company and on this stock's share price behaviour?! This is not a recommendation!
Part 2: Technical Analysis View
• The share price has broken three resistance levels of 13sen, 15sen and 16.5sen in 3 days straight with another breakout closed today at 17sen, accompanied by another stronger-than-average volume for 3 days straight!
• In fact, the stock has broken weekly double bottom resistance of 16.5sen too! A breakout of this double bottom is significant imminent bullish rally!
• This indicates the stock is poised for another further upside next week!
• A ”Sharp/Spike Rally” will continue in the coming days given the aggressive 3-day straight accumulation. Based on technical analysis projection, the stock is on the track to rally to its historical high of 33sen in the near-term!
• Of course, there would be minor hiccups/small corrections along the way but would stay in a sharp/spike uptrend, with the next resistance stands at 22sen / 26sen now.
• Both short-term and long-term bullish outlook remains intact as the share price has maintained above all 5,20,50 and 200-day E/SMA lines.
https://klse.i3investor.com/blogs/fatprofitstock/2020-04-04-story-h1485792329-WHY_BUYERS_PAY_HIGH_PRICE_TO_BUY_THIS_STOCK.jsp
