Fwd: SG:Technicals

[Speculatist]

K Ajith, I think he is not bad. :)



Singapore bourse

While the ST Index continues to form higher highs, it is quite important to
note that that none of the banking stocks have followed suit. Similarly
most of the property stocks have lagged behind. Much of the recent action
has centered around oil and gas stocks such as Cosco and Sembcorp Marine.
This is certainly not a broad based rally. Downside support for the ST
index for the week is estimated at the 3600 level.
Bearing that in mind, investors/ traders should consider buying stocks with
high relative strength as and when the market dips. In this report, we
feature one such stock.


Stock recommendation

1.  Sihuan Pharmaceutical- The stock which was listed in March this year
had rallied to a high of $0.945 but has eased back towards $0.88 as at
Friday. The pharmaceutical company markets 31 product among which Kelinao,
a cardiocerebral vascular drug has a 10% market share in China. At Friday's
closing price of $0.88, the stock trades at 18x historical earnings. 1Q07
net profit however rose 72% on net profit margin of 63.5% , suggesting that
forward PE rating could be lower.

From a technical standpoint the stock is attractive for 3 reasons.
1.One, the stock has maintained a clear uptrend since listing.
2.Secondly, pullbacks have been shallow suggesting that the stock is still
in accumulation phase.
3.Thirdly, downside risk will very likely be contained at trendline support
at $0.84. Given its strong uptrend, we think the stock should at the very
least retest its previous high of $0.945 and potentially even towards
$1.05-1.09. Recommend accumulating the stock at $0.87-0.88.



Best Regards

K Ajith

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