Technical Analysis of GPH Ispat on 9 Dec 2016
This is no buy/sell recommendation - just
a trial to see if Technical Analysis (works to an extent) in Dhaka Stock
Exchange.
I am facing difficulty finding stocks at
low prices. But I couldn’t resist GPH as its technical formation is beautiful
(how does a human being define beauty in numbers and charts?) Madness! It is
becoming a boring world!
It is a Fundamentally good
company. Profit and EPS quite stable around 2.3 and it gives Cash Dividends.
Moreover, there is a growth
story. Please check out the following news on 29 May 2016:
“GPH Ispat will use the funds to expand
its production: its annual production capacity of MS billets will rise to 10.08
lakh tonnes from 1.68 lakh tonnes now, which will put the company on par with
top market players like BSRM and AKS”.
A 6 (six) times increase in capacity!!!!!!
Following is a summary of
Annual profits and dividends (2016 is a bit of a problem due to 14 months
report). Also data from DSE website and GPH Ispat’s 2016 annual reports do not
match exactly!
GPH Ispat
|
2012
|
2013
|
2014
|
2015
|
2016 ?
|
Profit (DSE)
|
257
|
250
|
280
|
292
|
325
|
Profit (GPH)
|
201
|
207
|
270
|
292
|
366
|
EPS (DSE)
|
2.85
|
2.31
|
2.35
|
2.34
|
2.60
|
NOCFPS
|
10.4
|
2.8
|
5
|
0.4
|
|
Dividends
|
10%C + 20%B
|
15%C + 10%B
|
15%C + 5%B
|
17%C
|
12%C
|
But forget the Fundamentals.
Now to the Technicals:
It has been consolidating from 9 March
2016 till date between 27 and 32.5.
A 9-month trading range. Too long . . .
In technical terms, it is also called a
coil (also for triangle formation). It is defined in some books as follows:
“… it gives the suggestion of a spring
being would up tighter until it is finally released and breaks out of the
formation with a pent-up, or wound-up, force”.
“Psychological energy coils up like
a spring inside the pattern. And so the thinking here is that no matter what
happens next in the stock market, it'll be a big, violent move”.
This is a risky trade – mainly for break-out
traders as Contrarians
probably had a “perfect” entry around 27 (and would close the trade at signs of weakness).
I am expecting a big break-out – it might
be direct. But I would be happier if it retraces to 32 and then flies up and away.
There are some minor Resistances around 36,
40 . . . till major supply zones at 50-55.
Note: MUST Stop loss if it goes below 31.
Let us see what happens . . .
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