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Loyz Energy, is it at long term bottom?

Loyz Energy, is it at long term bottom?

Since late Jan, STI has been consolidating in the range of 3390 to 3460. This trading range is only 70 points or 2% of STI and considered quite narrow. It is difficult to trade in this kind of market with low volatility. In addition, the current US market is at the high end. Let’s take S&P500 as an example, it can be seen that both Stochastic and MACD formed death cross already and indicates a potential sell down thereafter. The risk for US market may also have negative influence on STI and make it even more difficult to find good opportunities in local market especial for those index-related bluechip stocks. At this moment, it will be safer to look for opportunities from non-bluechips stocks as they are less sensitive to the potential weakness of STI.

Loyz Energy is a potential candidate investors may look into. It had dropped from 0.35 to 0.07-0.08 since June 2014, a 75%-80% drop. From fundamental perspective, the price is less than 40% of its net asset value and indicates the current price is considered not expensive, if not “cheap”. According to the report released on 10 Feb, half year revenue increased 69% and profit turn to positive from negative the previous year. In addition, the previous year report has a one-off other income of US$4.7M, without which, the newly released statement could shown much better figure than the previous year in terms of net profit, indicating that the company is having healthy growth in 2014. From technical perspective, weekly chart shows that the trading volume increased for the past a few weeks but the price did not drop any more, indicates a potential step in of the buyers. Besides, the MACD histogram on weekly chart also started to show bullish signal. From daily chart, it can be seen that both MACD histogram and Moving averages crossed up to give bullish signal, suggests a potential turn of the trend as well. In conclusion, both fundamental data and technical charts shows that the current price of Loyz Energy is considered low and may start to go up soon. Investors may start to accumulate when the price is still at the low end, while traders who focus on timing may consider trade this stock after it breaks above the resistance at around 0.09 and get out of the bottom consolidation zone.

STI

STI Chart

S&P500

S and P500 Chart

Weekly chart:

Weekly chart

Daily chart:

Daily chart

Robin Han
Robin Han

Dr. Robin Han, a graduated from NUS with a Ph.D in Department of Chemical and Biomolecular Engineering, has been actively trading in Singapore stock market since 2007. His passion has let Dr. Robin to become a full time trader since 2010. He has extensively share his experience with his fellow investors on trading Singapore stock market using both technical analysis and fundamental analysis.

Dr. Robin is a regular guest speaker for radio 95.8 on financial program. He also has been invited by different companies and societies to conduct educational seminars on stock investments, including Shares Investment, Wealth Directions (Founder: Dennis Ng), Traders Round Table, SIM, Raffles Business International, Online trader's club and Alpha Alliance. He is also contracted by N2N (a listed trading software provider in Malaysia) as their overseas educational speaker in stocks.