Technical Analysis of Renata on 2 Dec 2016

Technical Analysis of Renata on 2 Dec 2016

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

At last, I could write about a Fundamentally good company!

Fundamentally, it is a growth company – having around 20% growth annually in the last three years and hopefully this year too (as can be seen from the Table below). It has PE of 25 but I think it is justified considering the Fundamentals along with healthy annual (consistent) dividends.

The only major risk with a growth story is that once the company cannot increase profit, it becomes a cash cow . . . and markets generally do not pay premium for the stock henceforth.

Profit	2012	2013	2014	2015	2016
Q1	317	356	403	477	625
Q2	274	330	413	552	783
Q3	325	410	435	524	651
Q4	269	301	464	528
Year	1,185	1,397	1,715	2,081	2,060
Growth		18%	23%	21%	-1%
EPS	42.3	39.9	39.0	39.2	33.9
Dividends	60% C + 25% B	75% C + 25% B	80%C + 20%B	85%C + 15%B
NOCFPS	39	26	39	37.5

Now to the Technicals:

It had an initial run from 1085 (one year low) to 1186 – which then failed. It then retraced 100% to Low of 1085 and has just moved up. It might be too early to tell – but it may rise slowly.

I think it will move to around 1185 – then retrace to around 1150 before going into Major Resistance at 1250.

Up-side potential around 150 points vs downside potential of 20 points – I would take the odds on most counts.

Note: MUST Stop loss if it goes below 1085.

Let us see what happens . . . don't expect it to rise so steeply as shown (this is just for illustration purpose) . . .