Broker's Call - Tue, 27 Oct 2009

Broker's Call - Tue, 27 Oct 2009: ".
– Axiata Group (AXIATA MK; RM2.92, SELL) – Uptrend channel formed since March was violated.
– Eti Tech Corporation (ETIT MK; RM0.72, SELL) – Possibly a Triple Top formation.
– Gamuda (GAM MK; RM3.29, BUY) – Keep stop tight at the 50-day SMA.
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Axiata Group (AXIATA MK; RM2.92) – SELL
FY10P/E: 15.6x, P/BV: 1.5x

• The uptrend channel formed since March was violated. This may trigger more downward pressure on the stock over the near term, likely towards the next support at RM2.75 and RM2.60.
• Indicators are showing bearish signs. MACD has turned negative while its RSI dipped closer to the oversold territory.
• We remain bearish until the day when the candles inch above the supportturned- resistance trend line. Any rebound towards RM3.04 resistance is therefore an opportunity to take profit. To negate this bearish tone, it must first cut above its key SMAs.

Axiata Group Berhad is a telecommunication company. The company's main activities are the establishment, maintenance, and provision of telecommunications and related services.
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Eti Tech Corporation (ETIT MK; RM0.72) – SELL
FY10P/E: 18.0x, P/BV: 5.7x

• Eti Tech seems like forming a Triple Top formation and this pattern is usually viewed as a reversal signal. However, we need another black candle to confirm this bearish tone.
• Both MACD and RSI show bearish divergences, suggesting that buying momentum has faded. The still dropping RSI indicator also points to more downside ahead.
• If the candle fails to move above RM0.73, we think the next downside target is at RM0.70 and RM0.65. Even if there is a rebound, gains would likely be capped by the SMAs at RM0.78-RM0.79.

ETI Tech Corporation Bhd researches, designs, and markets batteries.
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Gamuda (GAM MK; RM3.29) – BUY
FY10P/E: 19.8x, P/BV: 2.1x

• Despite our earlier sell-on-weakness call on 1st Oct, Gamuda continues to hold firm within its uptrend channel formed.
• So long as the candles stay above its 50-day SMA at RM3.20, there is still a chance for it to swing higher. However, traders must keep stop tight as a break down would change our positive stance on the stock. Breaking below its key SMAs would be bearish and traders should go short instead.
• We believe Gamuda may gyrate sideways over the next few days for consolidation. MACD is turning flat while its RSI has also retraced from its earlier peak.

Gamuda Berhad is an investment holding and civil engineering construction company. Through its subsidiaries, the company provides earthwork construction, manufactures and supplies road surfacing materials, and operates quarry and road laying projects. Gamuda also has operation in hiring and rental of plant and machinery, develops properties, and manufactures and sells paper.

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