Wednesday, September 7, 2011

Stock To Watch: Tenaga: Technical Rebound Amid Extremely Oversold Positions

Stock to watch –Tenaga (TRADING BUY)

Tenaga: Technical rebound amid extremely oversold positions

Tenaga’s near term prospects remain clouded by the possibility of potential gas supply constraints, which could impair FY12’s earnings visibility, despite the full-year benefit of the 2% base tariff hike. While the losses suffered by Tenaga may strengthen its case for tariff adjustment, we believe chances are slim after
receiving a tariff hike in Jun and ahead of the general election. However, the plunge in share price has more than offset the negatives given that it is trading at circa 1x FY11 P/B, which is a 30% discount to 5-year historical average

Looking at the charts, there is a high possibility that price may find near term support around RM5.00. A breach below RM5.00 will trigger more selldown towards RM4.60-4.80 zones. Since the tariff hike news on 30 May, share price has tumbled 29% from 1 June’s high of RM7.21 to as low as RM5.10 (6 September) before ending at RM5.12 yesterday (slightly above the 76.4% FR of RM5.01).

Daily charts are signaling potential bottoming up in share prices, reflected by the reversals in MACD and RSI whilst the slow Stochastics of circa 0.7% indicates limited downside. Potential technical rebound targets are RM5.55 (mid Bollinger band) to RM5.74 (30-d SMA).

Cut loss below RM4.97 (lower Bollinger band)

Weekly Tenaga Charts: Likely To Find Its Support Around RM5.00 Psychological Level
Tenaga 08-09-2011

Daily Tenaga Chart Shows Signs Of Bottoming Up Amid Potential Reversals In RSI And MACD
Tenaga 08-09-2011a

Source: HLeBroking

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