Value buy
IT
will not be surprising to see some value buys among the construction
counters considering the sector's dismal performance on the stock
exchange. One of them may just be construction stalwart IJM Corp Bhd.
There
has been some accumulation of shares; The Capital Group Companies Inc
has been buying since March and as of April 9 has an 8.57% stake in the
company. Similarly, Amanah Raya Nominees, as of April 9, has a 6.35%
stake in IJM Corp.
IJM's
sustainability is supported by an order book in excess of RM5bil.
A
foreign research house recently speculated that IJM may declare a
capital repayment of 50 sen a share and a recurring dividend of 15 sen a
share.
“IJM's property rationalisation exercise should be completed in April.
Ideally, they will announce the capital repayment soon after,” says an
analyst from a local house. – By Tee Lin Say
Technical analysis
IJM
Corp Bhd shares rebounded strongly from a two-year low of RM4.90 on
March 19 to a high of RM6.35 on April 4 before consolidating sideways in
the wake of mild profit-taking activity.
Yesterday, this blue-chip construction company ended 20 sen steadier at
RM6.25 on renewed bargain hunting interest and it looked like prices
could be making a fresh attempt to resume their recovery process.
As
for the indicators, the oscillator per cent K and the oscillator per
cent D of the daily slow-stochastic momentum index were strengthening
after flashing a short-term buy at the oversold position on Thursday.
Likewise, the 14-day relative strength index was curving up from the
mid-range following recent weakness.
Apart
from that, the daily moving average convergence/divergence histogram and
the daily signal line sustained their steady upward trend to stay
bullish.
Given
the positive technical development, prices may scale higher in the
intermediate term.
In
the event that the moderate “downside gap” of RM6.50-RM6.85, created on
March 10, is successfully filled, greater volatility to the upside can
be expected, targeting a re-test of the 100-day SMA of RM7.50.
Initial support is pegged at the RM5.95 level. The next downside floor
of RM5.75 will act as the last defence line. – By K.M. Lee
The comments above do not represent a recommendation to buy or sell.
