Thursday, 7 March 2013
Highlights / Stock Picks of the Day - Chemical Company of Malaysia ("CCM") – Buy
Last week, CCM announced a FY12 net profit of RM36m, almost double from FY11's RM22.3m. The market was slow to catch on with the positive news, and the share price was up by a meager 2.8% to 92 sen in the very next day. It was the calm before the storm and in the subsequent days, the share price surged a further 17.4% to yesterday's closing price of RM1.08. Even so, we believe that the share price has further distance to go. CCM has now broken above the trigger-line to confirm a "Double Bottom" bullish reversal pattern. The bullish move effectively marks a bottom at 82 sen, and implies a further upside towards RM1.24. We are positive on the stock from a technical standpoint, and suggest that traders buy in with the RM1.22 target in mind (2 bids below the RM1.24 measurement objective). A stop-loss should also be placed just below the trigger-line at 99 sen.