HENGYUAN (4324) - What's next for HengYuan Share Price


Someone asked the following questions, I decided to answer them from another perspective.

1) Is the trend reverse?

I don't think this is a trend reversal. the high volume on Friday show that 16.30 is a strong support. whoever wanted out had already done so on Friday. Refer 28 Aug ( a day after lower Qr announced), there was a drop of RM1 with high volume, then the price slowly trend up. It simply means that all the sellers are exhausted and price is ready to go higher.

2) Can I buy when the price go lower?

If you think that Hengyuan deserves a PE10 and that Q4 qr will be excellent, then keep buying. The price did not go up 5-8% a day without good reason. I dont think those who buy higher and higher for the past few weeks are without good foresight. Also do you think that so-called sharks would buy higher and higher each day then suddenly trigger a big drop by throwing tens of millions worth of shares out in a few minutes. Price shouldn't drop anymore, If it drops it means that we need more time to exhaust the sellers and you can start buying more and more

3) Can I buy if the price rebound? When this rebound, it would be strong and price would quickly move towards 25.

4) Or should I wait for the price to break new high before buying? if it breaks, price would move up very quickly I don't think you can get any tickets without full-time monitoring. I don't advocate this method of playing.

Understand that price can be manipulated to some degrees. on 28Aug operators who see the HY potential could be throwing out big blocks cheaply to cause others to think that it is a bad Qr when they are actually accumulating. or possibly those without great foresight sold their holdings. sellers exhausted, more buyers who see the potential join in, so price continue upwards

Last Friday with the help of the TA comment, operators saw an opportunity to collect more tickets by throwing out millions of worth of shares within a few minutes to trigger a sell-down.

Or possibly some funds (sharks) who have plans to exit soon was frightened that the TA securities comment might trigger a sell-off. so they quickly threw out all their holdings first. If this is the case, then other funds which see the potential in HY had collected all of the tickets and are ready to push HY to higher price.

Or possibly investment banks who have been accumulating for sometime at lower prices, they throw out all their holdings in attempt to reverse the uptrend to minimize their losses from warrants. but note that other funds which see the potential in HY had collected all of their tickets and are ready to push HY to higher price.

Worst case scenario, investment banks were the one who triggered the sell-down and also at the same time collected the tickets. they can now sell bit by bit to press the price down. But if they do this, will they be in a better position than to settle the warrants at higher price. So I think this scenario is not sensible. But never know someone made some wrong calculations and came out with this idea.

Therefore to truly predict if price will go up or down next, we need to know who is holding the tickets, who has been buying and who has been selling and who throw out the millions last Friday and who has the intention to buy/sell more. without knowing all these, it is difficult to predict the (short-term) price movement just by looking at some charts (so called TA).

Fundamentally HY is unchanged. its value will be unlocked sooner or later no matter who the operators are and what their intentions are. You can see that my answers all point to Buy because I know fundamental analysis works and HY has good fundamentals, and (long-term) price movement will be up.

I can tell you many bursa counters with 1-2 QR turnaround can easily goreng till PE20 based on that 1 profiting Qr annualized. If you annualized this HY 120 EPS (=480), at a mere PE10 you are already looking at RM48. Is not that much to ask for RM25 by next Q4 qr release. The main concern of many people is that HY cant sustain a high EPS. But do you think HY cant even achieve a 60 eps per quarter on average for the next year?

Short-term price movement depends on the strength of the numerous sharks at play now. what retailers can do is to buy for the good fundamentals as I believe more sharks want HY to up than down, as sharks also look for good fundamentals counter to goreng. some sharks are not so ethical, they help to push up, earn peanuts and run away. But we definitely need them to help propel the share price to HY deserved PE of 10. Let's see who can win this battle as there are not much tickets left.

Also It will be oil play in 2018. PE of msian oil/refinery counters can go towards 30 like all the semicon counters last year.