• Homeritz is one of the leading upholstered home furniture manufacturers in Malaysia. It designs, manufactures and exports three major products (upholstered sofas, dining chairs and bed frames) to more than 50 countries across all continents.
• Since we recommended “Technical BUY” on HOMERITZ (on 30 April 2015), share price surged 34% to hit all-time high of RM1.43 on 21 May 2015 (near our technical long-term objective of RM1.45). The stock is now grossly overbought, triggering technical retracement. In addition, reading from MACD, RSI and Slow Stochastics showed that selling pressure is picking up pace. Although our fundamental research has a target price of RM1.54, the grossly overbought position suggests temporary pullback.
• Hence, investors are advised to take profit in the short-term and wait for next opportune re-entry time and level. Breaking below RM1.25 (23.6%FR) will see next support at RM1.14 (38.2% FR) and RM1.05 (50% FR).

Source: Hong Leong Investment Bank Research - 26 May 2015