is SAMCHEM providing the GOLDEN opportunity for investors?Introduction to SAMCHEM
SAMCHEM's core business is the distribution of chemicals to over 7000 clients in various industries that would benefit from the global economic recovery.
SAMCHEM’s distributed product mix are:
Polyurethane(PU): mattresses, car seats
intermediate chemicals used in manufacturing, construction, agricultural, adhesives, industrial cleaning, oil and gas
specialty chemicals used in paints and coatings, printing ink, cosmetics, personal care products
The Group distributes about 500 products of which they hold formal distribution rights acquired from world-renowned chemical manufacturers such as ExxonMobil, Shell EP, BASF PETRONAS, OPTIMAL Chemicals, etc. Within its distribution value chain, SAMCHEM also offers integrated logistics including warehousing, bulk breaking and blending of chemicals.
In FY2020, 54.3% of its revenue were generated domestically, whilst 30% were generated from its Vietnam operations and 15.7% from its Indonesia operations.
The forecasted GDP growth in 2021 of said countries are as below:
1) Malaysia: +7.8%
2) Vietnam: +6.7%
3) Indonesia: +6.1%
Source:
i)SAMCHEM Annual Report (2020)
ii)Statista Research Department (2021)
Tehcnical Outlook :
The Bullish take
1)Price has corrected significantly (32%) from its highs. As no stock goes up or down continuously in a straight line, a short term rebound should occur soon.
2)The latest candle formed is a hammer which suggests a reversal to the upside (to be confirmed by tomorrow's candle closing at or above the hammer closing)
3)The price is hovering close above to its MA200 trend line, a level well respected by long term investors in making investment decisions.
4)RSI has hit oversold, suggesting a short term rebound to occur. Note that there are also cases where the RSI of a stock remains oversold for a long period of time.
5)Hidden Bullish divergence of the RSI in the 1-hour and 2-hour time frame. (Not seen on published chart)
6)Rate of fall of the MACD is decreasing, a timely golden cross paired with the rebound of the RSI and a breakout of resistance would be a significant impetus for SAMCHEM's share price.
7)Price is currently supported above EMA42 on the weekly timeframe (not seen on published chart)
All the above suggests that the current price may be a good entry point for investors of SAMCHEM and a short term rebound may be around the corner.
Whether a bullish continuation of the current mid term uptrend would continue or not cannot be certain at the moment but would be clearer as time goes on.
The bearish take
1) EMA18 has crossed below EMA42
2) Current MACD DC below 0
The above suggests that the stock price of SAMCHEM may see further downside.
These are my takes on SAMCHEM. I welcome any constructive criticism in the comments below. Please note that the final decision to buy/sell is yours.
Thank you.
-FairTrades
