Technical Analysis of SIMTEX on 14 Jan 2017

Technical Analysis of SIMTEX on 14 Jan 2017

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

SIMTEX has been in the market for over a year – not much data but probably enough. What I have read of their business, I liked as they make threads which they supply to other textile firms.

It is similar to the “midstream” in the petroleum industry – their risks are sort of lower as they do not sell to end user consumers – rather to other firms which use their "raw material" and then have to distribute and sell the finished products to customers.

Fundamental Analysis: Profit seems to be growing and I liked the fact that it gave 20% Cash Dividend recently – very good yield during time of declaration.

From DSE	2013	2014	2015	2016
Profit	80	96	97	129
EPS			3.36	2.54
Dividend				20%C + 2%B
NOCFPS			4.57	1.25

Current PE is quite high at 30.

So now let us look at the Technicals: I am a bit late with the analysis!

Weekly chart seems to be a triple bottom formation (at 18.5) – with bullish implications. Its historical low is 17.7 but I would say it is a definite buy around 18.5 – when will it next come to 18.5? It has support at 20 too.

Now, if we expect a bullish movement, then the opportunity might be in the retracement. I am assuming that its initial run was over at 27.9. Now, if it retraces (on low volume) to around 24 or 22.8 and then makes an up move, we could see another bullish move.

*(Note: TA is not a Science; it works 60-70% of the time so don’t be hooked on to the exact numbers – please allow some flexibility).

As there might be significant up potential, I would allow loose stop loss of around Taka 2 below the entry price.

Let us see what unfolds . . .