GENM (4715) - GENM: A Failed Upside Breakout (AMENDED)
Yesterday, we saw GENM rose 19 sen to close at RM4.70. In the process, GENM broke above the strong resistance from the horizontal line at RM4.60. This resistance has capped its upside for a period of 15 months. This morning, it started off with a mild correction which saw the prices pulling back to RM4.65-4.67. Unfortunately at 11:30am, the share prices dropped sharply to just below the breakout level at RM4.60. The selling intensified in the afternoon. At 2:55pm, it hit the low at RM4.47 before mild recovery set in. At 3:40pm, it was trading at RM4.51-4.52.
Chart 1: GENM's weekly chart as at Sep 22, 2014 (Source: Chartnexus)
Had the upside breakout sustained, GENM could continue to rise within its larger upward channels (see the green lines). This would see GENM slowly rising to the upper channel line at RM5.50-5.80.
Chart 2; GENM's monthly chart as at Sep 22, 2014 (Source: Chartnexus)
These are the potential reasons for the start of the next upleg for GENM:
1) Good financial performance
In last quarter (QE30/6/2016), GENM's net profit rose 195% q-o-q or 106% y-oy- to RM476 million while revenue rose 1% q-o-q or 13% y-o-y to RM2.234 billion. The q-o-q increase in net profit was due to foreign exchange gains of RM46.1 million; higher adjusted EBITDA by RM28.6 million from the leisure and hospitality business in US and Bahamas mainly contributed by lower operating loss from Bimini operations in 2Q 2016 and lower operating cost for RWNYC operations; and, higher adjusted EBITDA by RM20.6 million from leisure and hospitality business in Malaysia mainly contributed by higher revenue.
Table: GENM's last 8 quarterly results
Chart 3: GENM's last 41 quarterly results
2) Opening of a new theme park in Genting Highland
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