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Ernest Lim: 3 Stock Charts That Caught My Price Alert Radar
Perspective | 26 October 2015
Related stocks:
H17
By: Ernest Lim
Articles (134) Profile

Dear all,

It has been a hectic week. Three stock charts caught my attention, together with their price action on 22 Oct.

1. Innovalues – Potential Chart Breakout

It closed +0.065, or 10 percent to 0.720 on 22 Oct. Day range $0.670 – $0.730. Ave analyst TP: $0.980. Estimated dividend yield is around 4.5 percent.

Noteworthy points

1. 3Q results – If I based it on their historical performance, it is likely to be good. This is because the company has typically met and usually exceeded estimates;

2. Chart seems to have broken out from the recent tight trading range of $0.630 – 0.675 on a six month high volume. If it can break $0.725 – $0.735 with volume, an eventual measured technical target is around $0.840. This also coincides with point 3 below and the 76.4 percent Fibonacci retracement. Indicators such as MACD and RSI are strengthening. OBV is approaching all-time highs which is another bullish indicator. (See Chart 1 below)

Near term supports: $0.710 / 0.685 / 0.675

Near term resistances: $0.735 / 0.750 / 0.775

Chart 1: Innovalues reached near the resistance $0.725 – 0.735

Source: CIMB chart as of 22 Oct 15

3. Innovalues has a track record of moving upwards in anticipation of its release of financial results. Based on my compilation below, if I buy 4 weeks before results, I typically have a positive return between 10 – 32 percent with an average return of around 21 percent.

Taking the high and low percentage returns, this translates to around $0.704 – $0.845. However, do note that past performance does not guarantee future performance.

Table 1: Past Innovalues’ share price performance

4. For those readers who are on my readers’ mailing list, I will send you the attached analyst reports released this month in my email.

P.S: I have informed some of my clients on Innovalues on Wednesday and Thursday due to Innovalues’ price action.

2. Hi-P – Breached The Downtrend Line Established Since Start Of The Year

Hi-P closed +0.04 or 10 percent to $0.450 on 22 Oct. Day range $0.420 – $0.450. Average analysts’ Target Price: $0.593. Estimated dividend yield is around 1.2 percent.

Noteworthy points

1. Yota phone’s majority shareholder changed hands

According to this article, Rex Global Entertainment (“Rex”) bought 64.9 percent stake in Yota phone, worth about US$100 million.

For those who are not familiar in Rex, it is an investment holding firm, listed on the Hong Kong stock exchange. It is engaged in investments in real estate, entertainment, gaming, etc.

Based on my personal guess, with this change in share ownership to a financially stronger shareholder, there may be progress in the legal suit between Yota phone and Hi-P. (Pure guess only)

2. Chart seems to have breached a downtrend line since Jan 2015

With reference to Chart 2 below, Hi-P breached the downtrend line established since Jan 2015, accompanied by a two month high volume.

In addition, Hi-P saw more volume in days where it closed higher which was a positive sign. Indicators such as MACD and RSI are strengthening.

Notwithstanding the positive tinge in the chart, it is noteworthy that Hi-P is a pretty illiquid stock and this lack of liquidity may skew the chart to a certain extent.

Near term supports: $0.425 / 0.415 / 0.395

Near term resistances: $0.460 / 0.475 / 0.490

Chart 2: Hi-P breached the downtrend line since start of the year

Source: CIMB chart as of 22 Oct 15

3. Yamada Chart – Potential Chart Breakout In The Making?

Yamada closed +$0.002, or two percent to $0.085 on 22 Oct. Day range of the stock is $0.083-$0.085. As there is no analyst coverage on Yamada, there is neither an analyst estimate nor an estimated dividend yield. Historical dividend yield is around 1.4 percent.

Noteworthy points

1. Yamada seems to be in the process of breaking out from its downtrend line around $0.086. Indicators such as MACD and RSI are strenghtening. OBV is near a record high. However, it needs to break out of $0.086 with volume expansion and on a sustained basis in order for the breakout to be valid.

Near term supports: $0.081 / 0.077 / 0.075

Near term resistances: $0.086 / 0.088 / 0.095

Chart 3: Yamada – potential chart breakout in the making?

Source: CIMB chart as of 22 Oct 15

2. Valuations seem undemanding. Yamada’s NAV / share is around $0.257. It is trading at around 0.33x Price to Book and around 3x PE. According to Bloomberg, average price to book since IPO was around 0.8x.

3. Major shareholders raised stake

Since 7 Sep 2015, Mr Chen Qiuhai, CEO of Yamada bought 7.15 million shares at an average price of $0.0838 / share on the open market. He also subscribed for approximately 98 million Yamada rights shares which boosted his stake to 37.1 percent.

Mr Gilbert Ee, CEO of GSH Corp also raised his stake from 1.1 percent to 8.2 percent.

Besides the above changes, it is noteworthy that Mr Sam Goi still has around 7.8 percent deemed interest.

Conclusion

The above is written based more on the charts’ developments. I have included some noteworthy points on Innovalues, Hi-P and Yamada for your general reference.

As mentioned previously, readers who wish to be notified of my write-ups, selected analyst reports and / or informative emails, they can consider to sign up at http://ernest15percent.com so as to be included in my mailing list.

However, this reader’s mailing list has a one or two day lag time as I will (naturally) send information (more information and more details) to my clients first.

Ernest Lim is a CFA, CA and has worked at GIC Special Investment. He has a solid feel of the markets and financial world and is now a remisier.

Please click here for more information about this author.

Hi-P Int'l  1.940 -0.020 -1.02%   
Business: Co is an integrated contract manufacturer catering to various industries. [FY16 Turnover] Precision plastic injection molding (PPIM) (60.4%), assembly (32.7%), mould design & fabrication (MDF) (6.9%).

Insight: Nov-17, 9M17 revenue dipped 1.4% to $935m. Neverth... Read More


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