HEXZA

Periodically,  TCB will pick a stock we may like to trade short term.  So, this week, TCB have selected the stock, HEXZA 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

The Group's principal activities are the manufacture and sale of ethyl alcohol, liquefied carbon dioxide, kaoliang wine, adhesive resins, formaldehyde based resin and glues. Other activities include property development, general trading and marketing and distribution of consumer products and investment holding. Operations are predominantly carried out in Malaysia. Its subsidiaries include Bio-Acetic Products Sdn. Bhd., Chemical Industries (Malaya) Sdn. Bhd., Hexza-Mather Sdn. Bhd., Hexzachem Sarawak Sdn. Bhd. and Norsechem Marketing Sdn. Bhd.

Technical Analysis

Weekly Chart

On the weekly chart, it is in stage 2 of the market cycle which is very bullish. The long term up trend line is still intact since it started its uptrend in August 2013. After hitting a high at $0.83, it is under consolidation between $0.625 and $0.83. The current selling pressure is minimal. It is expected to test the immediate resistance at $0.83 and strong resistance at $0.845. A break above $0.845 will take it into uncharted territory that comes with an estimated target of $1.13. 

Daily Chart

On the daily chart, it is in stage 2 of market cycle which is very bullish. It broke out from the Inverted Head and Shoulders formation which has bullish implications. The immediate targets are $0.90 and $1.00, where $1.00 is the psychological resistance price and the final target for this breakout is estimated to be $1.13. It is expected to test the immediate resistance at $0.83 and $0.845. Any weakness may find $0.815 as its immediate support with strong support at $0.795/$0.80. The formation of a gravestone doji on 1/4 hints at a possible consolidation towards its immediate support but it remains in its overall bullish pattern.  For short term traders, you may want to cut loss if $0.77 is violated. For a medium term trader, you may want to cut loss if $0.70 is violated. 

Note: Analysis was performed on a price adjusted chart.

Key Notes

1.  On 30th January 2015, Hexza entered into a Sale & Purchase and Lease Agreement with Tembusu Industries Pte. Ltd. (“Tembusu”), a company incorporated in Singapore, pursuant to which Hexza shall purchase part of the equipment for a 8MW Heavy Fuel Oil Power Generation System (“Equipment”) in Kauthaung, Myanmar from Tembusu, and Tembusu shall lease back the Equipment from Hexza for a period of 10 years. The purchase consideration of US$ 6.0 mil versus the leaseback rental of US$130,205 represent a payback period of 4.5 years.

2.  On 11th February 2015, Hexza announced its 2nd quarter results ended 31st December 2014 that reflect improved revenue and profits when compared to the preceding period.

SUMMARY OF KEY FINANCIAL INFORMATION 31/12/2014

		INDIVIDUAL PERIOD		CUMULATIVE PERIOD
		CURRENT YEAR QUARTER	PRECEDING YEAR CORRESPONDING QUARTER	CURRENT YEAR TO DATE	PRECEDING YEAR CORRESPONDING PERIOD
		31/12/2014	31/12/2013	31/12/2014	31/12/2013
		$$'000	$$'000	$$'000	$$'000
1	Revenue	37,897	36,285	77,158	67,725
2	Profit/(loss) before tax	5,785	3,408	11,958	4,601
3	Profit/(loss) for the period	4,730	2,731	9,507	3,758
4	Profit/(loss) attributable to ordinary equity holders of the parent	4,266	2,609	8,423	3,629
5	Basic earnings/(loss) per share (Subunit)	2.10	1.30	4.20	1.80
6	Proposed/Declared dividend per share (Subunit)	0.00	0.00	0.00
		AS AT END OF CURRENT QUARTER		AS AT PRECEDING FINANCIAL YEAR END
7	Net assets per share attributable to ordinary equity holders of the parent ($$)	1.0600		1.0800

source : http://www.bursamalaysia.com/market/listed-companies/company-announcements/1874565