Carabao Group PCLShare has been falling because it was over-hyped and over-valued.
I am expecting more of a pullback and a retest critical support zones between (90-87 baht) (87 -80 baht). We should see a bounce at these levels, bouncing off an existing trend line . However, if that doesn't hold then we could see another meaningful correction to lower levels to bring the multiples back down to earth.
The earnings report should lead the way for direction.
If their earnings report isn't to the markets liking, then we can expect that 87 baht area to fail and gradually make its way back down to the 40 baht region.
If the Earnings report is decent and shows growing revenues and increasing margins, well, then we could see that white trend line holding and could be the catalyst for a continued uptrend.
With a P/E multiple of 32 - the market is pricing in expected earnings for the future already and is expecting big things from this company, so I would tread lightly here. Any missed guidance or revenue contractions will send the share tumbling.
Nonetheless, I will be taking my first position between 80-90 baht baht and leaving it there for the long term, and will be looking to add again in the 40 -55 baht region.
