THIS STOCK RALLIED STRONGLY RECENTLY !!! SEEMS THE LATEST CORRECTION WAS OVERDONE !!!

Hello to all readers out there. Recently, a lot of oil & gas counters have pulled back as the crude oil price made  slight retreat. However, recently, BRENT OIL has climed back above USD 40 and o&g counters have kick-started momentum for another rally.

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/

I had recently written about SEALINK on 9th June 2020, please refer the article below:

https://klse.i3investor.com/blogs/Bursa_Master/2020-06-09-story-h1508700516-MOST_O_G_LINK_STOCKS_HAVE_RALLIED_YET_THIS_STOCK_IS_OVERLOOKED.jsp

1. AN UPDATE ON CRUDE OIL - MADE A DOUBLE BOTTOM W SHAPE BREAKOUT - BULLISH AHEAD FOR O&G SECTOR

Let's see the daily chart of BRENT CRUDE OIL below. If we look at Circle 1, we see that it had made a W shape pattern and tested the support price 2 times.

Recently, the price had broken out above resistance line to confirm a W shaped breakout and now is trending upwards to close the gap towards USD 45 as many of the world economies are reopening after facing COVID10 pandemic. Today we saw that o&g counters started to rally from their recent pullback prices, like HIBISCUS, DAYANG and many more. Hence I see that SEALINK as an o&g service provider should be riding this rally as well.

2. COUNTERS RELATED TO SEALINK MAJOR SHAREHOLDER (DATO AWANG DAUD AWANG PUTRA) ARE ALSO STABILIZING AND MAKING A V-SHAPE RECOVERY

Refer to below counters related to SEALINK as they all have a common major shareholder DATO AWANG DAUD AWANG PUTRA.

Most of them have made a strong V-shape recovery since the March 2020 lows:

i. SERBADK - low of RM 1.02 in March 2020, latest closing RM 1.65 (62% gain)

ii. KPOWER - low of 85c in March 2020, latest closing of RM 2.18 (156% gain)

iii. SCIB - low of 90c in March 2020, latest closing of RM 2.02 (124% gain)

iv. MINETEC - low of 6.5c in March 2020, latest closing of 30.5c (369% gain)

Looking at the gains in all the above related counters, SEALINK should be able to also generate momentum on the way to its recent high of 70c in FEB 2020.

3. 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 28.5c, indicates a whopping discount of 37.5c from its NTA value of 66c which is about 52.5% discount. Investors getting a bargain on buying this counter as such level.

4. TECHNICAL ANALYSIS - TOO OVERSOLD BELOW 0.27 FIBO - REBOUND IS IMMINENT

Refer below the basic price and volume chart with key EMAs for SEALINK daily chart :

A few observations on the daily chart chart:

i. Recently, the price had rallied from 24c to a peak of 40.5c, showing about 75% returns during the period

ii. There was some heavy profit taking and price had retraced downwards 

iii. We see that the price had RETREATED TOO MUCH and way below the normal 38.2 FIBO level

iv. Price retracement below the 0.27 FIBO level, had been meet with STRONG BUYERS who are buying this stock as a sign of TOO OVERSOLD in current market

v. On 16th and 17th June 2020, big volume of buying entered the stock, rejecting the fall in priced, forming  a hammer on 17th June 2020, signalling that a reversal trend upwards is highly possible from tomorrow

CONCLUSION

Considering all the above, I opine that current price for SEALINK is attractive due to below:

i) Oil price made a W shape double bottom breakout and o&g stocks are picking up momentum

ii) Trading well below its NTA of 66c

iii) Related companies with similar major shareholder to SEALINK e.g. SERBADK, KPOWER, SCIB & MINETEC are making strong V shape recoveries

v) Buyers rejecting prices below FIBO 0.27, and hammer pattern formed on 17th June 2020 indicating possible reversal upwards

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.

BURSAMASTER