Technical Analysis of BGIC on 15 Dec 2016

Technical Analysis of BGIC on 15 Dec 2016 (after trading hours)

This is no buy/sell recommendation – just a trial to see if Technical Analysis (works to an extent) in Dhaka Stock Exchange.

Fundamentally, it is a relatively good company in the General Insurance Sector – the last four years, it has been giving at least 11% Cash Dividend (but the Cash Dividend is decreasing as profit and EPS declined from 2012 onwards; however, payout ratio is being maintained around 95%). From 2013 to 2015, it has been reporting “losses” in the fourth quarter which has affected profit growth.

However, profit till Q3 ’16 has been good. With increasing imports and exports (more LC’s being opened) probably insurance companies earnings’ are increasing.

Another criteria could be “Dividend Yield” – assuming BGIC will give at least 10% Cash Dividend this year, at Tk 20 buying price, it would give a Yield of 5% - almost equal to keeping “cash” in banks.

This year’s fourth quarter result would probably guide the next “intermediate” movement.

Profit	2012	2013	2014	2015	2016
Q1	23.8	39.9	43.5	47.0	44.8
Q2	33.7	34.6	35.8	34.0	21.6
Q3	18.8	20.1	16.1	15.1	7.0
Q4	11.8	-20.6	-24.6	-35.1	0.0
Annual	88.0	74.0	70.7	61.0	73.4
Growth		-16%	-4%	-14%

EPS	1.63	1.37	1.31	1.13	1.36
Growth		-16%	-4%	-14%

Dividend	16% C	12% C	12% C	11%C
NOCFPS	3.8	1.2	2.0	1.4

Now, let us look at the Technicals.

Technically, daily chart is looking like a "flag".

* However, take this with a pinch of salt as the flag in Confidence Cement (earlier analysis on 25 Nov 2016: http://imti77az.blogspot.com/2016/11/technical-analysis-of-confidence-cement.html) seems not to have succeeded yet. 

Such formation gives an approximate measurement technique - if it moves up with volume from 18.5 level, then it could go up to 25-26.

It is calculated as such - BGIC moved up from 15 to 22 -> 7 points.
Next move from 18.5 (where it broke the flag; re-test also complete) would result in 25.5 (=18.5 + 7).

As the market is heated at the moment, I would suggest taking a wait and see approach. I would advice one to avoid taking new positions unless one is sure.

For the risk-takers, stop loss if it goes below 18.5.

Let us see what happens . . .