• Our fundamental pick is our recently initiated oil junior, Reach Energy (refer to our report dated 4 Jan 2017) with a target price of RM0.83. Reach has graduated from SPAC and became a full-fledged oil and gas company after the completion of an acquisition into an O&G field in Kazakhstan on 26 th of November.

• Technically speaking, soon after the breakout of the RM0.64 level with high volumes, we opine that the recent correction phase has ended reinforced by a higher high formation. Also, the MACD Line has crossed above the zero level – indicating share price has potential to trend higher over the mid to long term.

• We called a technical buy on Reach Energy on 29 Dec and it has hit our LT objective target of RM0.71 (+13.8%). Following the continued bullish indicator on the stock and upside to our institutional TP of RM0.83, we revise our technical target to RM0.735-RM0.765 levels.

• On the cut loss strategy, we move our trailing stop level higher at RM0.68.

• Reach-WA is a cheaper entry which offers gearing of 5x. The implied warrant value is at 25 sen per warrant based on mother share target price of 83 sen.

Source: Hong Leong Investment Bank Research - 6 Jan 2017