FOCAL AIMS - IS IT OVERVALUED NOW?

My colleague and I spotted FOCAL in mid Aug at 75sens when we did a simple short term MA scan. Since then it has limit up 4 times on news that EcoWorld Dev Bhd ("the second SP Setia") will do a reverse takeover of Focal at RM1.40 per share. Since this news, Focal hit a new high of RM2.49 last Friday. Will Focal continue to limit up coming weeks or is this the end of the road?

I think this could be the end of the road. Technically speaking, if coming Monday closes lower, then we will have a Shooting Star reversal pattern.

Fundamentally, it is also overvalued at this price. The offer price of RM1.40 is 11% premium to Focal's NAV of RM1.29 per share. However, Focal has a piece of key asset in its 1,053.80 acre piece of land in Kota Masai, Pasir Gudang which is valued at RM7 psf or RM321.3 million since 1994. Using conservative market value of RM25 psf, the value now should be around RM1.1 billion. This works out to RNAV of RM3 per share. Using a 50% discount rate, the TENTATIVE FAIR VALUE should be around RM1.50 per share.