Tuesday, August 23, 2011

CIMB Research: Sell Petronas Chemicals into strength

KUALA LUMPUR: CIMB Equities Research has a Technical Sell on Petronas Chemicals Group Bhd at RM6.24 at which it is trading at a FY12 price-to-earnings of 9.8 times and price-to-book value of 2.5 times.

It said on Tuesday, Aug 23 Petronas Chemicals Group broke below its triangle support as well as its key moving averages recently.

'Therefore, we think there is still risk to the downside. Although intermittent rebound could take place, sustainability remains a key concern here. Looking at the chart, we think near term gains are likely capped at RM6.47-RM6.69,' it said.

CIMB Research said the MACD signal line continues to linger in the negative territory. RSI too has hooked downward. The deteriorating technical landscape reinforced its short term bearish view on the stock.

'Sell into strength looks like a good option here, especially near the stipulated resistance zone. Traders should wait for a break below RM6.03 before going short. Next support levels are RM5.80 and RM5.50,' it said.

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