PRESBHD (5204) - Presbhd: Game Changer Can Wait


In August last year, I posted a trading BUY call for Presbhd. At that point of time, Presbhd has tendered for a contract to upgrade our immigration system. Last week, Presbhd has announced that its 70%-owned subsidiary, Prestariang Services Sdn Bhd has finally secured the contract (here). The cost of developing the system is about RM1 billion and the work will take about 3 years. After that, it's entitled to collect RM294.7 million per annum for the next 12 years.

Market reaction to this game-changer for Presbhd was a big disappointment. Instead of a sharp price rally, we have a price drop! This obviously shows that investors are lukewarm about any project that involves large sum of investment and long gestation period. Then again, one should not be too surprised by the price drop if you look at the occasional bouts of selling over the past 2 years. However, if you draw a line connecting the recent bottoms, the stock should have support at RM1.85-1.90. If Presbhd can rebound back and stay above its long-term uptrend line at RM2.00, the technical outlook would still be positive. (As at 2.45pm, Presbhd was trading at RM1.95.)

Based on the project secured, I believe Presbhd is a good stock to consider for long-term investment.


Chart 1: Presbhd's weekly chart as at July 24, 2017 (Source: ShareInvestor.com)


Chart 2: Presbhd's monthly chart as at July 24, 2017 (Source: ShareInvestor.com)

Note:


I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.

http://nexttrade.blogspot.my/2017/07/presbhd-game-changer-can-wait.html