Sunday, 11 February 2018

Wilmar's Technical Analysis

It's Sunday again. Time truly flies. And on this boring Sunday today, I've decided to do another Technical Analysis post on another company that I own - Wilmar. Once again, please pardon me for the poorly done TA.

Pretty much similar to Singtel, Wilmar's share took a beating and fell from the 3.4 range in November to the recent days where it broke it's 3.00 mark.

Wilmar's chart today display a relatively bearish trend.
You can plot your own graph on InvestingNote

The price for Wilmar gapped down on Friday when the market open and Wilmar started trading at 2.97. Shortly after this level of support is tested, the price rebounded back to the 2.99-3.00 range, before finally closing at 3.00.

We can see a small pinch in Bollinger Band somewhere around late Jan. This action suggest that the moving average is constricted and pretty much. volatility increased after the pinch. The price on Friday has breached the lower band slightly which is indicating that Wilmar is entering the over-sold region.

Taking a look at the next indicators of RSI, we obtain a value of 28.80 which suggest that Wilmar is oversold. The price today has fell below it's EMA, 20D MA and 50D MA which signals that Wilmar is currently in a downtrend.

The negative MACD value we can see also tells us that the short term moving average is below the long term moving average. As per pointed above, this signals a downward momentum and our dear Bear is in action.

While looking at the MACD graph below (most bottom), we can also see that the MACD line (Blue) is away and below from the Signal Line (Red), signalling a Bearish market. At this point, there is no divergence seen as both MACD and Wilmar's share price is moving downwards, this will also tell us that this bear attack might continue.

While MFI does not suggest that Wilmar today is over-sold, but it is much closer to that region than it is to the over-bought region at 36.73. If we get the formula in, we will be able to obtain the MFR base on MSI = 100 - 100/(1 + MFR). Work it backwards, we will obtain a value lesser than zero.

This will suggest to me that the money flowing out is greater than the money that is coming into it. The situation here is much better than Singtel's situation where greater amount of money is flowing out of it.

Using the Fibonacci Retracement certain potential areas of support could be seen at 2.86, 2.79, 2.74 should it once again break the support at 2.97. Likewise, the next area of resistance can be identified at 3.06, 3.14, 3.19 and 3.24. 

At today's price, I can see an attractive value and opportunity presenting for myself to buy more shares from Wilmar. However, as I've promised to strap my fingers to myself, I should now learn to resist onto the temptations!

Also, at this current point where the downtrend might continues, it is better to stay at the side while monitoring the situation.

Wilmar's 1 year chart from Google

Do remember that, TA is all about the probability and not certainty.
Most importantly, the high can get higher and the low can get lower. Once again, please only take this poorly done TA as a pinch of salt.

Oh yes.

Technical indicators and charts aside, the price we see today is below it's NAV and it's priced below 11x their earnings. Concerns about the major market for palm oil, Europe to phase out palm oil in biofuels also posted a threat to Wilmar recently. Aside the European, the 2 other biggest market for palm oil are China, India and not forgetting the other markets like Africa and Middle-East market.

However, Wilmar's investor should also remember that their operation does not only consist of this segment and it compasses a wide breath of operations.

Factoring the uncertainty and pessimism in, the price looks rather appetizing. On a side note, the price we're paying today for the wonderful management in Wilmar does provides some comfort.

We should also remember that Wilmar had conducted share-buy back in 2015 at 3.03 when they felt that the share is currently undervalued. Considering that it had fallen below the price they paid during the last buy back, history might repeats itself and should that happen again, we will get to see some tale from this action.

Once again, I must remind you that, this counter we see here, is a not an ordinary counter. We must also be reminded that by investing in Wilmar, we must be able to see the value and upcoming growth prospect.

Another catalyst in the upcoming days that we can look upon aside the delicious growth prospects of Wilmar will be the listing of it's China unit and list on the Shanghai Stock Exchange in the second half of 2019.

I continue to love the confidence and optimism Mr Kuok has on Wilmar and this brings in another layer of confidence for myself as a pico investor of Wilmar.

Read: Analysis on Wilmar

ST news on Wilmar's share buy-back in 2015 can be found here.
CNA article on EU's Palm Oil Ban can be found here.
Nikkei Asian Review article on Wilmar's listing of China unit can be found here.

Please don't forget about the disclaimer!
All information published on this site is only meant for general information purpose. No warranties should be carried out on the action that is taken based on information found in this blog and no liabilities will be undertaken by the owner for any losses/damages incurred from the use of this information.

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