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Stock That Will Soar Higher On Rising Oil Prices
Corporate Digest | 26 March 2008
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578
By: Xavier Lim
Articles (51) Profile

Still remember in issue 315 when Shares Investment (Singapore) featured the Trio (KS Energy Services, Aqua-Terra Supply and SSH Corp)? We said that the Trio will be benefiting from rising oil prices and leveraging on the Trio’s chairman, Kris Taenar Wiluan’s extensive contacts in the oil and gas sectors in Latin America, the Middle East and Indonesia. Their recent FY07 results (1H08 for SSH Corp) that have continued to soar, without doubts speak louder than words.

This issue, we shall zoom in on one of the Trio, SSH Corporation (SSH). Although, many analysts have recently lowered SSH’s fair value price ranging from $0.43 to $0.54, due to increased volatility and poor market sentiment, we still believe that SSH will perform even better going forward. With oil price hitting above US$108 per barrel and potentially even higher, activities from offshore oil exploration and production will definitely keep on increasing. Goldman Sachs in its recent report, said that US$200 a barrel could be a reality in the not-too-distant future in the case of a “major disruption”. Moreover, SSH buys steel products in terms of US$ and sells them in Asian currencies, hence the exchange gain will be another source of income. As Singapore is aggressively aligning herself to stay young and attractive for foreign direct investments, infrastructure development will be an on going process, which spells opportunities for steel companies like SSH.

SO IS IT TIME TO BUY IN?
God knows! But Shares Investment (Singapore) would like to remind readers that it is very irrational to ignore the fundamental value in SSH and follow the crowd. Besides looking at the fundamentals, let us also take a look at the technical analysis. Looking at the chart, we can see that the share price continued to fall after a ‘Gravestone doji’ was formed on 19 Feb-08. There is no sign of reversal patterns formed at this moment. What we can see is a strong support line at $0.265, which would probably be moving sideways in the shortterm, as what we see in Box 1. But if there are any unexpected bad news coming up, then we may see SSH’s share price at the next support line of $0.25. I noticed a ‘margin of safety’ at $0.265. Previously, I quoted Warren Buffett saying, ‘It’s bad to go to bed at night thinking about the price of a stock. We think about the value and company results. The stock market is there to serve you, not instruct you.’ Therefore, if you are a long-term investor, you may want to consider buying some of SSH’s shares and wait for it to move up. But if you are a trader or short-term investor, you may want to wait till a reversal pattern is formed.

Armed with an arsenal of investment knowledge, Xavier is the Senior Research Editor at Shares Investment.

Please click here for more information about this author.

KS Energy  -- -- --   
Business: An integrated oilfield supply & services providers. [FY18 Turnover] Drilling (98.4%), engineering (1.6%).

Insight: May-19, 1Q19 revenue slid 58.7% due to decreased r... Read More


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