Sitting Pretty: RCE CapitalThe market is moving up again.
As the blue chips rise and fall, penny stocks are quietly moving up; a clear indication that retailers are slowly moving in to form a broader market base at Bursa. The retailers are the ones that are pawing down the prices of stocks-we called it bargain hunting and it is always done on a soft market day.
Blue chips are currently overpriced by fund managers playing them up since November 2006. Most of them cannot breakout and thus are range-bound in terms of price movements.
If the market should fell, for whatever reason; be it the roguish Chinese markets or the sub-prime mortgage fall-out in USA, these blue chips will fell like ten-pins and drag down the 50 counter CI, which is not a very good representative index to rely upon for decision making these days.
With that as mukadimah, let us review RCE Capital. The counter was facing stiff resistance at the RM1.01 level for sometime. Right now, it has broken to the RM1.02 level convincingly. The highest intra-day high for RCE was RM1.07. Volume continues to be high daily signifying sustained interest. I think most counters have gone up since last week's retreat. RCE is a bit of a laggard if you compare it with JAKS which sprinted yesterday and today. RCE went down to as low as 96 sen during the 5 weak market days last week.
I believe this counter is ready on the starting block to move up higher. The Maybank- Aseambanker's 3Q 2007 Report released on 2nd July recommends this middling capital counter for what they term "consumption recovery play" especially when civil servants start receiving their new salary increments in their July pay packets. I think the play on the counter will start by mid-July.
RCE operates on a unique business model, providing consumer credit to government employees. There is almost no risk of default of installments as these are paid through monthly salary deductions. With a fairly cheap price earning multiple (PE), RCE also demonstrates a strong compounded annual earnings of 17.4% and ample trading liquidity. RCE will be an attractive retailer target play.
Let us review the movement of RCE. Chartwise I think it has moved into uncharted teritory of RM1.05. On a bullish trend, RCE should quickly spurt forward beyond RM1.10 and then try to ascend the RM1.20 level. Further projections are the RM1.40-RM1.50 band. Aseambankers, however, are of the opinion that the immediate price target would be RM1.33 at best.
If the trend should reverse, the first support level would be 95 sen followed by the next lower level of 90 sen.
Heartsong
As the blue chips rise and fall, penny stocks are quietly moving up; a clear indication that retailers are slowly moving in to form a broader market base at Bursa. The retailers are the ones that are pawing down the prices of stocks-we called it bargain hunting and it is always done on a soft market day.
Blue chips are currently overpriced by fund managers playing them up since November 2006. Most of them cannot breakout and thus are range-bound in terms of price movements.
If the market should fell, for whatever reason; be it the roguish Chinese markets or the sub-prime mortgage fall-out in USA, these blue chips will fell like ten-pins and drag down the 50 counter CI, which is not a very good representative index to rely upon for decision making these days.
With that as mukadimah, let us review RCE Capital. The counter was facing stiff resistance at the RM1.01 level for sometime. Right now, it has broken to the RM1.02 level convincingly. The highest intra-day high for RCE was RM1.07. Volume continues to be high daily signifying sustained interest. I think most counters have gone up since last week's retreat. RCE is a bit of a laggard if you compare it with JAKS which sprinted yesterday and today. RCE went down to as low as 96 sen during the 5 weak market days last week.
I believe this counter is ready on the starting block to move up higher. The Maybank- Aseambanker's 3Q 2007 Report released on 2nd July recommends this middling capital counter for what they term "consumption recovery play" especially when civil servants start receiving their new salary increments in their July pay packets. I think the play on the counter will start by mid-July.
RCE operates on a unique business model, providing consumer credit to government employees. There is almost no risk of default of installments as these are paid through monthly salary deductions. With a fairly cheap price earning multiple (PE), RCE also demonstrates a strong compounded annual earnings of 17.4% and ample trading liquidity. RCE will be an attractive retailer target play.
Let us review the movement of RCE. Chartwise I think it has moved into uncharted teritory of RM1.05. On a bullish trend, RCE should quickly spurt forward beyond RM1.10 and then try to ascend the RM1.20 level. Further projections are the RM1.40-RM1.50 band. Aseambankers, however, are of the opinion that the immediate price target would be RM1.33 at best.
If the trend should reverse, the first support level would be 95 sen followed by the next lower level of 90 sen.
Heartsong
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