Friday, December 30, 2011

RHB Research expects Mulpha Intl to end 6-wk consolidation

KUALA LUMPUR (Dec 30): RHB Research Institute says technically, it expects Mulpha International to end its 6-week long consolidation and resume its uptrend in the immediate term on expectations of strengthening buying momentum.

In its technical outlook for the share price on Friday, it said given the stock's positive short-term outlook, it expects the stock to retest the 76.4% FR level of 42 sen in the short term.

'Any breakout above the 42 sen barrier, would then turn the medium-term outlook positive and drive the stock's price towards the next resistances of 47 sen (61.8% FR level) and 51 sen (50% FR level) over the medium term,' it said.

RHB Research said while it does acknowledge that the stock's medium-term outlook is still negative, it thinks its proximity to its immediate support of 37 sen (which held well over the last two months) offers investors a compelling risk to reward ratio for a short and medium-term play.

'Hence, we advise short and medium-term investors to buy at yesterday's close of 38.5 sen in anticipation of the stock's price resuming its uptrend in the immediate term. Long-term investors are, however, strongly advised to stay aside for now,' it said.

RHB Research said on the downside, it noted that the breaching of the support of 37 sen would turn the immediate outlook negative and the stock's price could lose its chance of redeeming its uptrend in the short term. Hence, investors should strictly cut loss at below 37 sen.

Overall, investors with a theoretical entry price of 38.5 sen would see a limited downside risk of 1.5 sen from the cut loss level of 37 sen compared to an upside of 3.5 sen and 8.5 sen to the resistance of 42 sen and 47 sen respectively.

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