• Business profile. Tadmax Resources Berhad is engaged in timber, construction, developments, drainage construction, reclamation, property development, turnkey contracting and financing project developments. Healthcare, financial services and food manufacturing are the latest additions to the business.
• Since the emergence of an upward trend in share prices in Aug 2015 which subsequently hit a recent high of RM0.44 on 7 Apr 2016, share price retraced to near 38.2% Fibonacci Retracement level of RM0.36. Resumption of uptrend following recent share price retracement is expected, driven by (1) Flag pattern breakout on daily chart; (2) ‘Pos itive Divergence’ pattern on hourly chart; (3) and bullish reading from MACD, RSI and Stochastics which showed that buying momentum is likely to pick up pace at accelerating velocity.
• Given the strong buying interests in the stock, we are of the view that share price is expected to gain further buying momentum towards RM0.41, RM0.44 and RM0.47. Support at RM0.365 and RM0.36 with cut loss below RM0.355.
• Attractive risk to reward ratio with 22% upside against 7.8% downside. All in, we see an attractive risk to reward ratio for investor with a theoretical entry price of RM0.385 given that the downside to the cut loss zone of RM0.355 is 3 sen (-7.8%) while the upside to the LT price objective of RM0.47 is 8.5 sen (+22%).

Source: Hong Leong Investment Bank Research - 12 May 2016