Wednesday, March 28, 2007

Update - The fact that daily volume for Tebrau has surged past 100m or 30% of free float means it will move to the next range very soon. (Thursday 29/3 12.30pm)

Tebrau Trends

There are certain things that you should know when playing stocks like Tebrau. Its not just any other stock. Its a market theme stock, its even a market leader, it moves and sways to build up of buyers and sellers waves. It will be volatile. You would still have to know the demand and supply, the resistance levels, and the surrounding fundamentals to get a grasp of where it is going, where it can go, where to take profits. Its part concept turning into reality fast, so things can change very fast indeed. What seems inflated valuations now can look decently priced later.

Shares: 669.7mn
Kump Prasarana Johor holds 42.4%, leaving free float at 386m. Average daily volume 3m-5m or 10% free float change hands every week or so. RNAV @ RM30 psf = RM1.70 per share. Land values will command a higher premium as it has 26km waterfrontage. Commercial land in JB City has been transacting at RM100 psf at least. Hence the Kota Selat vehicle can gradually release projects which will garner higher prices as they go along. Its not a limit up counter, it will be moved whenever new catalysts are announced, where reality becomes closer to hand. hence it will go and test new boundaries and will be range bound for a while before moving ahead.

Its obvious that RM2.00 will be the first target. Traders should lock in profits and trade within the RM1.50-RM2.00 unti the next catalyst is announced. Of course this is provided global equity market conditions stay relatively stable. The quantum of the next range is an rule of thumb 50%. You had 70 sen before as the high in 2Q2006 before it moved to the RM1.00-RM1.10 level, now its going for the RM1.60-RM1.80 range. The next range will be RM2.60-RM2.90. Simple isn't it. Charting is not rocket science.. lol. It can be as simple or as complicated you want it to be.

First bunch of catalysts have been made known (tax incentives, removal of RPGT, etc.) Look for second batch of catalysts, things like the Mass Rapid Transit system announcement, and/or land sales to big foreign companies.

Would you be better off trading the stock of buy and hold? I would say to trade the stock because it will be volatile and offer a lot of trading opportunities, plus you will be able to lock in bits of gains as buffer for the longer ride.

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