From my past articles, my regular readers will know that Alpha Trader is a big believer in price action and that price always precedes news and fundamentals. I found a stock that looks really interesting with a very nice chart structure and positive news flow to boot. The stock is Microlink  Solutions Bhd.

BACKGROUND

Microlink is a leading enterprise software developer and implementer as well as hardware distributor serving multiple industries. It has 4 segments, namely enterprise solutions, financial services, distribution services and solution delivery.

Profits have been consistently strong with the most recent quarter registering a profit of RM6.6 million translating into a Q-o-Q increase of 33%. Annualized PER stands at about 34 times which is in line with industry peers.

POINTS OF INTEREST

1) PRICE ACTION

The price has been on a very strong ascend since mid October 2022. It has been hovering near the RM0.60 for most of the last 2 years and has just started making a parabolic move up with little retracement. The current price of RM0.93 represents a huge move of over 50% in just 3 short weeks! Should investors be worried about the pace of the move or just participate before it moves any higher?

I always believe price action should always be respected and when price moves in a very positive and strong manner (especially at all time highs), news flow and the reasons will usually follow. Take a stock that Alpha Trader has always liked, Hextar Industries which was highlighted very early in this blog at RM0.17. It was a proxy to high fertilizer and the agrochemical space which has benefitted tremendously from the Russia/Ukraine war. Today, Hextar Industries is trading at RM0.63 up nearly 400% in 12 months!

2) NEWS FLOW HAS BEEN POSITIVE

Recent announcements have been positive with Microlink strengthening its presence in the Middle East with a project secured from Huawei in Bahrain. The project involves management of IT operations on behalf of a leading regional telecoms service provider.

Microlink also secured a five year contract worth RM48.55 million from Koperasi Co-opbank Pertama Malaysia Bhd (CBP) in September 2022 for the upgrade of its MiBS core banking platform. The project entails 2 years of implementation and 3 years of maintenance and support commencing in October 2022.

Microlink has also applied for a transfer in its listing status to the Main Board in September 2022. If successful this will increase the investability of the company in the eyes investing community.

3) INSIDER BUYING

From recent fillings we find that even as recent as 2 November, the company's Executive Director, Mr Monteiro Gerard Clair was still buying shares of Microlink at RM0.902. Further checks also shows that the Microlink's Chairman Tun Ariffin Zakaria (who is also Chairman of Permodalan Nasional Berhad) has also been increasing his stake in the company.

Last but not least, the latest Annual Report has also revealed that Dato Eddie Ong Choo Meng (of Hextar Group of companies) is also a big shareholder with a 4% stake in Microlink!

CONCLUSION

Buying stocks at all time high prices can be a scary thing. However, the probabilities of a stock going higher with the right catalyst and news flow justifies the buying of a stock that is in play rather than a stock that shows little interest or is ignored by investors!