SENDAI (EVERSENDAI CORPORATION BHD)

Periodically,  TCB will pick a stock we may like to trade short term.  So, this week, TCB have selected the stock, SENDAI as our *Stock In Focus (SIF)*.  Please do not take this as a buy signal as our TA reading for these stocks are for sharing purpose only.  Do calculate your own risk/reward ratio if you decided to trade this counter. 

Background Information

Eversendai Corporation Berhad, an investment holding company, provides steel fabrication, structural design, shop drawing, and steel erection services. The company is involved in the structural steel design, engineering, supply, and fabrication; structural steel erection services for high rise buildings, shopping malls/ retail centres, stadiums, airports, long span roof structures, industrial, power, and petrochemical plants, as well as factories, warehouses, and bridges; and installation of mechanical equipment, pressure parts, pipes ducts, clads, and control systems for power plants. It also provides procurement, fabrication, and installation of process modules and equipment for oil and gas production; planning, procurement, HSC and execution, and installation of various mechanical works, such as pressure parts, non-pressure parts, piping, heat treatment, equipment, ducting, insulation, electrical, painting, and pre-commissioning works; and undertakes contract specialising in fabrication projects consisting of medium sized turnkey and large EPC projects. In addition, the company is engaged in the provision of management services; civil engineering and general contracting services; and steel fabrication and painting services. It operates in Malaysia, Singapore, Thailand, the Philippines, Indonesia, Hong Kong, Oman, Saudi Arabia, Bahrain, Qatar, India, and the United Arab Emirates. The company was founded in 1982 and is based in Rawang, Malaysia.

Technical Analysis

A potential awakening of a beaten down stock could be an apt description of Sendai's technical chart. It's stock price peaked at 1.74 on 17/7/2003 and then took an ensuing downward journey that took it all the way down to 0.485, a journey that lasted about 20 months. 

Currently, it has all the trappings of a potential classic Double Bottom Reversal, a bullish reversal pattern, as it fulfills the critical criteria associated with it.  For starters, there was a significant downtrend for it to reverse.  Crucially, there were evidence of an accelerating buying pressure and volume off its 2nd trough. To add to it, the peak after the 1st trough was significant which carries the implication of a large potential advance upon successful completion of the Reversal.  Hence, a break above the critical resistance of 0.78 will complete the Double Bottom Reversal and could signal a potential strong bullish run.

Weekly Chart

On the weekly chart, it broke out from its downtrend line during the week of 9/3/2015 with good volume giving ammunition to the validity of its price reversal.  In the mid-term, it has an immediate support at 0.705 with the cushion of a strong support at 0.66.  The resistance at 0.78 is a key resistance that must be taken out convincingly in order to complete the Double Bottom Reversal.  A successful completion of the reversal would yield a target price of 1.07.  A stop loss is recommended upon violation of 0.66 for mid-term traders.

Daily Chart

Based on the daily chart, it hit a high of 0.835 on 17/3/2015 but failed to clear it.  Instead, it closed the session with a dark cloud, a precursor to an ensuing period of consolidation. It is currently consolidating sideways and thus far, is on the verge of overcoming the 0.78 resistance convincingly.  Successfully clearing the dark cloud top of 0.835 will pave the way for it to scale towards its target prices.  It has an immediate support at 0.76 and further support levels can be found at 0.735 and 0.715 respectively.  A successful completion of the Double Bottom Reversal would carry Sendai to its target prices of TP1 = 0.85, TP2 = 0.90, TP3 = 0.99, and TP4 = 1.07. For short term traders, a stop loss is recommended should 0.715 be violated depending on your risk profile.

Key Notes

1.  On 26th Feb 2015, the company announced its unaudited 4th Quarter results of 2014. The Group reported a revenue and profit after tax of RM308.5 million and RM16.4 million respectively for the quarter ended 31 Dec 2014, as compared to the corresponding quarter last year of RM238.3 million and a loss of RM9.3 million. The improved performance of the group is due to the positive contribution from its new Oil & Gas division.

The Group’s revenue continued to be dominated by its operations in the Middle East, which has accounted for 67% of the Group’s revenue during the current financial period. 

(Ref:  http://www.bursamalaysia.com/market/listed-companies/company-announcements/1886933)


2.  Some of the Group's recent announcements include a RM44 mil contract secured in Dubai on 5th Jan 2015, a RM184 mil project in India on 26th Jan 2015, a RM120 mil contract in Malaysia on 9th Feb 2015, a RM269.2 mil project in Qatar on 2 Mar 2015 and two contracts worth RM246 mil in Saudi Arabia on 16 Mar 2015.