MOST O&G LINK STOCKS HAVE RALLIED, YET THIS STOCK IS OVERLOOKED !!!
Hello to all readers out there. Recently, a lot of oil & gas counters have rallied well above their recent lows in March 2020. However I do see a counter which is overlooked and yet to gain attention.
Having said the above, the stock which I'd like to talk about today is SEALINK INTERNATIONAL BERHAD (SEALINK - Stock Code 5145, Main Market, Transportation & Logistics)
BASIC INFORMATION ABOUT SEALINK
SEALINK core business:
i) Ship Chartering
ii) Ship Building
iii) Ship Repair
Both the above services are catering mainly to oil & gas sector.
Market Capitalization : RM 127.5 million
Shares Float : 500 million
Website : http://www.asiasealink.com/
1. WITH OIL PRICE STABILIZING, RELATED SERVICES LIKE SHIP CHARTERING ACTIVITIES SHOULD BE PICKING UP
As at writing, Brent Oil was hovering around USD 40. The March 2020 low was USD 16 for Brent.
Therefore, we can see that oil price is up about USD 24 from the low which is about 150% gain.
We had seen recently that o&g stocks, had made a big rally, with HIBISCUS amongst the leaders, rallying from a low of 24.5c in March 2020 to close at 68c which is about 170% gain from the rock bottom price.
With this, we should expect that chartering services also would be picking up moving forward.
2. TRADING WELL BELOW ITS NTA OF 66 CENTS
Refer to latest report of Assets VS Liabilities, we can see that total Assets RM 507 mil (66c) versus low liability of RM 177 mil.
The latest closing price of 26c, indicates a whopping discount of 40c from its NTA value of 66c which is about 60% discount. Investors getting a bargain on buying this counter as such level.
3. MAJOR SHAREHOLDER DATO' AWANG DAUD B AWANG PUTERA ACQUIRED 150 MILLION SHARES IN OCT 2019 - HE IS A CO-FOUNDER OF SERBA DINAMIK
Refer below news article by The Edge entry of Dato' Awang Daud B Awang Putera where he bought 150 million shares in October 2019.
Dato' Awang Daud is co-founder of SERBA DINAMIK who also currently sits on the Board of SERBA DINAMIK, and also holds about 234.6 million shares in SERBADK.
At the latest closing of SERBADK of RM 1.84, his stake is worth roughly RM 431.6 million.
We saw that in FEB 2020, he had made some disposals in SEALINK, however that was only because the price had spiked up to above 60c and went as high as 74c.
But at the current price, the stock is below his entry (in Oct 2019 SEALINK was hovering around 40-47c), therefore he might be looking to average down his positions.
Also, as he is a co-founder of SERBADK, it would be possible that he will be channeling some of SERBADK business to SEALINK for the longer term business prospects growth.
4. TECHNICAL ANALYSIS - HIGH UPSIDE , LOW DOWNSIDE, LOW RISK ENTRY
Refer below the basic price and volume chart with key EMAs for SEALINK daily chart :
A few observations on the daily chart chart:
i. Refer Circle 1, the entry of SERBADK Dato' Awang Daud, the price range was 40-47c
ii. Refer Circle 2 & 3, price hit a peak of 74c on heavy volume trading, and profit taking started to take place in FEB 2020
iii. Refer Circle 4, SEALINK hit a low of 12.5c in March 2020 on the back of small volume trading, indicating that no major shareholders sold at the bottom of the market
iv. Refer Circle 5 & 6, recently SEALINK made a retracement towards 25c support, and momentum seems to be kicking back in indicating buyers rejecting lower prices
v. Key EMA14 at 26.5c and EMA43 at 27.5c to be broken before confirming uptrend
vi. Low downside is seen, and very high potential upside towards its recent high
Considering all the above, I opine that current price for SEALINK is attractive due to below:
i) Stabilization of oil price, will cause surge in demand for ship chartering
ii) Trading well below its NTA of 66c
iii) Dato' Awang Daud (SERBADK Co-Founder & Major Shareholder) as a long term strategic investor
v) Low downside and high upside potential on daily chart, low risk entry
LET’S SEE HOW THE SHARE PRICE MOVEMENT IN THE NEAR FUTURE FORBEARING ANY GOOD CORPORATE NEWS.
Disclaimer : The above opinion is never intended to be a BUY CALL whatsoever. I am sharing my observations ONLY based on fundamental; past history; current trading pattern; charts etc. Please make your own informed decision before buying this share or whatever share for that matter.
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