Appears to have good upside potential over the near term. Share price has corrected by ~45% since peaking in mid-April, but appears to be building a strong base near the 200MA. RSI and stochastics are coming nicely out of oversold levels, while OBV (an indicator of accumulation) has been rising steadily since bottoming out in late May. Support at $3.00 vs next major resistance at $4.00. This compares with targets by 4 other brokers, at between $4.54 to $5.48.
HL Asia, Concerns due to accounting irregularities at its US-listed subsidiary, China Yuchai should be dispelled now that the company has been effectively let off by the SEC. Bill Singer, a well-known advocate for regulatory reform, notes that Yuchai has since learnt from its mistakes and seems to have moved on.
HL Asia, Fundamentally, there seems a lot going for this stock. 1Q10 saw NPAT to shareholders rise by 54% yoy, driven by growth at its China businesses. This looks set to continue, as the PRC govt extends stimulus programs for purchases of electric appliances and trucks, ultimately benefiting subsidiaries like Xinfei (third largest maker of fridges and freezers) and Yuchai (leading manufacturer of diesel engines.
HL Asia, Stock now trading at undemanding 8.8x PE, with possible rerating if Merrill Lynch’s strategic review of Xinfei results in the company being able to unlock value in this investment.
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