Trading Room – Wed 31 Oct 2018
It was reported in the media recently that the major shareholder of Prestariang Bhd, Dr Abu Hasan Ismail, saw forced selling of a block of his shares, as speculation persists on the company’s multi-billion contract with the Home Ministry.
In an announcement, it was said that Abu Hasan’s shares amounting to 3.13% of the company was forced sold to rectify a personal margin position. Abu Hasan is the president and group managing director of Prestariang and still has another 24% in the company.
Prestariang’s share price has fallen by more than 50% in the last month after selling by institutional shareholders, led primarily by Retirement Fund Inc (KWAP). The pension fund had a 13.02% stake in Prestariang in May prior to the 14th general election and has steadily reduced it to 7.82%.
A recent report by one analyst said he remained positive on the stock but has reduced Prestariang’s fair value target price to RM1.89 from RM2.05.
The report adds that “we believe SKIN is a national security project as the existing Immigration Department’s MyIMMs IT infrastructure network, built in the 1990s, is already outdated and there is an urgent need to replace MyIMMs with a new IT infrastructure with the latest technology. We estimate SKIN to be worth RM1.08 a share.”
Against this background, how should one trade the stock, which is heavily transacted daily?
What could be a good trading plan towards the stock?
Prestariang’s prospect is now likely to depend on the soon outcome of review of its SKIN (immigration system) contract by the present new government, which could send the stock price either way violently.
Hence, conservative traders should avoid trading the stock.
However, aggressive could formulate a rewarding trading plan on the stock by focusing on two critical criteria, which should easily provide tell-tale signs of where the share price is likely to head to.
Take actions as soon as the two triggers mentioned above materialise (on an intra-day basis) as the stock has good target levels in our view and is thus attractive given the projected reward to risk ratio, which has to be adhered to strictly.
Watch carefully these two trigger criteria as highlighted by us in the mPower Algorithm report today.