2018 will be a very interesting year. Now we are already in the 2nd week of 2018, there is no better time than now to execute our goals for 2018 with the rest of the remaining 50 weeks. Start planning some simple goals if you had not done any yet.
As for the equity market, 2018 is a confusing year for the investor and trader. We heard people screaming about market crashing for the past 2 years, but it never came. Now we are coming to the 10th year since the last major financial crisis in 2008, could there be reset again? Back then in 2008, the crude oil crash to a lowly USD 32 a barrel from a peak of USD 147. But for 2018, global leading index had been hitting new high and breaking record almost every few weeks. The Dow30 index is sitting above 25000 level as raging bull hit forward with corporate tax reform from President Donald Trump.
10 years ago, we are speaking of crude oil crashing down. But now, we are seeing Crude oil seeping upwards gradually after hitting the bottom in February 2016, where WTI Crude traded below USD 27 a barrel. Today, it is pricing at USD 63.53 per barrel as of writing.
If you asked me why crude oil is regaining composure, I would credit this to the OPEC effort in continue to cut production in order to stabilize the commodity price, which is also crucial for the planned listing of Aramco IPO, which is slated to be done in 2018.
Hence, it is quite a good bet to put some investment into Oil and Gas sector to capture the potential rebound of this sector after a slump for 2 years.
Locally speaking, national oil company Petroliam Nasional Bhd (Petronas), has projected that there would be about 20 greenfield and 30 brownfield projects between 2018 to 2020 that has the potential for future oil projects. Out of this, 30 per cent of the greenfield projects will have 100 per cent new facilities development while 75 per cent of the brownfield projects has about 10 per cent for new facilities development.
These are very good news to the oil and gas segment, considering that most of the surviving oil and gas company are accustomed to working on the crude oil price of USD 50 per barrel.
Now, I would want to introduce to you this one company involve in oil and gas that should be able to do better in 2018.
This company, E.A Technique (M) Berhad (Eatech - 5259) had caught my attention and interest among the pack of other oil and stock company that is listed in KLSE. One of the reason is despite the strong rebound in a lot of oil companies, Eatech is technically still attractive at this level as it had not surged much compared to it's other peers
According to the long term technical outlook of Eatech, it can be seen that Eatech had yet to breakout from it's long term resistant line. However, it had just started to broke away from the middle term resistant line as per charted above.
Secondly, the major shareholder and director of the company is holding more than 75% of the company shares .
As of my knowledge, I do not really been able to find another oil and gas related company where is shareholding is held by more than 75% by the major shareholder, except for Eatech. If you would give it a thinker, why would a shareholder want to acquire much of the company share despite the volatile sentiment in the crude oil price. It takes a lot of courage to be buying back and holding on to the company shares, and logically thinking, the director should know that what they are doing are worthy.
For a layman retail investor, of course you and me will not be able to understand much because the Eatech had been displaying a series of losses due to extra incurred cost in the EPCIC (Engineering, procurement, construction, installation and commissioning).
But, what I am going to show you in the next few days should be able to open up your eyes on why Eatech is potential undervalue company. Not only undervalue, but could be packing a whole lot of powerful punches in the coming quarter. This catalyst will be strong to boost Eatech into breaking the long term resistant line, and also reinforce the idea of why major shareholder had been loading up on Eatech.