Singapore Stock Analysis - Yanlord Land

China's property markets rebound especially in Shanghai may benefit companies like Yanlord Land. Yanlord's 5 month revenue for year 2009 of $5.3 billion yuan is more than the $5 billion yuan registered for the whole of year 2008. Two months ago, the company said that it plans to raise SG$604 million through issue of new shares and convertible bonds to fund acquisition of new development sites, strategic investments and working capital needs.

Yanlord’s share price has increased four-fold from $0.70 in March this year to a high of $2.84 before falling sharply for three consecutive days to close at $2.43 at the end of the first week of August. Yanlord is one of the leading performers in SGX. The price is currently at the 50% retracement level of the bearish trend from October 2007 to October 2008. The high of $2.84 was a Fibonacci retracement level of 61.8%, which is considered as a resistance level.

The uptrend is still intact as the 30, 60 and 90-day moving averages are still increasing. However, the price has started to below the 30-day average. The uptrend is currently in a correction with support level at the 90-day average which is currently at $2.04. There is a strong pivotal support level at $2.15.

Although price of Yanlord is in an uptrend, the momentum indicators are showing signs of weakness in the current up trend. The RSI, MACD and ADX indicators which indicate the strength of a trend is declining from high to high and this means that the uptrend has become weak. With price being overbought at $2.84, the sharp correction to the current price is no surprise. Now that the momentum is weak, $2.84 may be the high for this year, unless the price is strongly supported. At this point of time, this counter may be difficult to get support because investors and traders may shift focus on other under-valued stocks.

The correction is expected to continue and if the price is able to be supported at $2.15, then the uptrend may still be valid but may continue to face strong resistances. A lot of profit can be made at current price even if the shares are bought at $2.00. Therefore, it is best to wait for the price to come around $2.15 and re-look at the indicators before considering buying this counter. Risk is high to buy at current price.


Daily Yanlord chart with volume as at 7 August 2009 using NextVIEW Advisor Professional


The 3-day Average true Range (ATR) indicator has increased to high of $0.16 and this was because of the three consecutive days of sharp fall. Therefore, a stop loss should not be placed higher than $0.16 from the entry price if a trader decides to trade and longer term position trading should be 1.5 times the ATR which is $0.24.

Resistance is obviously at $2.84 and if this can be broken, then we may see price rally to $3.50, but like I have mentioned earlier, the chances of this happening is this year itself is low.

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Article contributed by Private Trader, Market Expert, Trading Coach and Chief Market Strategist of Nextview, Mr. Benny Lee. For more articles and commentaries from Benny, click HERE.