SALCON BERHAD

NetResearch Asia, through Bursa Malaysia e-research website which is available to public for FREE on the 15th published a buy recommendation on this counter Salcon Berhad.

Salcon Berhad is a company listed on the Main Board, Kuala Lumpur Stock Exchange. Its wholly-owned subsidiary, Salcon Engineering Berhad, offers value-added services in the design, construction, commissioning, operation and maintenance of municipal potable water and wastewater (sewage) treatment facilities.

The share price has been in a down trend since early 2008 from an average price at about RM1.15 fell 61% to the current price of RM0.44 (as at 15 July 2008). The longer term average (using a 60 to 90 day average calculation) is at about RM0.60.

For the past few weeks, the price action of Salcon has eased and found support at around RM0.425. The support level is well established (in the short term) because momentum indicators like RSI and Momentum has shown a bullish divergence pattern. The bullish divergence pattern shows an increasing upward momentum in a down trend. Therefore, price may start to rebound. Furthermore, the price is relatively oversold.

Technically, price may rebound to the resistance level of RM0.60. This gives a RM0.16 or 36% potential room to move upwards. Using the RM0.425 support level as a stop loss level, the risk is RM0.015 or 3.4%. NetResearch NTA is RM0.56.


Daily Salcon chart as at 16 July 2008 using NextVIEW Advisor

Article by Benny Lee