Sheng Siong: DBSV says, technically, it sees little or even no upside to the current rally in the short-term. Advises that for short-term traders who wish to buy, don’t chase at current level; for traders who are already in the stock, consider locking in some gains and wait to buy at lower level.
Notes Sheng Siong has attracted much attention after its strong performance since debut but there is increasing likelihood that the trend could turn from current up to sideways. Says one reason why this stock is able to attract interest recently is because it plans to give 90% of net profit as dividend which sounds good under the current uncertain macro environment.
While the house does not cover the stock, it notes that the co had highlighted higher operating expenses, a possible drop in profit margin and a drop in other income in their prospectus under the section “Prospects Business and Future plans - Trend information”. Using FY10 historic numbers (profit $42.6m) the current price level at $0.49 would yield 5.8%, while historic PE is expensive at ~15.4x. Says, at 5.8% yield, there are alternate choices for investors to choose from within REITs and telcos.
Technically, from here in the short-term, a 38.2% downward retracement to $0.435 or a 50% downward retracement to $0.415 provides better entry opportunity but not now.
Stock is flat at $0.475, pulling back from its earlier intraday high of $0.495.