Wednesday, April 20, 2011

Kencana Is Poised To Head Towards RM3.00 After A Brief Consolidation

Stock to watch – Kencana (Accumulate at RM2.70)

Kencana – A brief consolidation before heading higher

Kencana will continue to be one of the key beneficiaries of upcoming contract awards given its (i) proven track records with Petronas and other oil majors, and (ii) status as a Petronas-licensee to fabricate offshore O&G structures.

Recent pullback from 52-week high of RM2.96 (13 January) dragged prices to RM2.33 (26 January) but the bulls were quick to intercept as share price consolidated higher to close at RM2.70 yesterday.

Meanwhile, the close above RM2.65 (10-d SMA) suggests that a recovery is taking place slowly. A swing above RM2.75 (10-d SMA) would increase the odds for the bulls.

Further upside targets are RM2.83 (23.8% FR) and RM2.95. Thereafter, it should move towards the upper channel of RM3.00. Support levels are RM2.65 and RM2.60 (61.8% FR). Cut loss if price falls below uptrend line support of RM2.60.

For leveraging, investors can also consider Kencana-CD (expires on 14 September 11), which is trading at a discount of 2.2% with a decent gearing of 2.4x.

Kencana Is Poised To Head Towards RM3.00 After A Brief Consolidation.
Kencana 20-04-2011

Source: HLeBroking

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