Weekly Trading idea - karyon

KARYON – MYR0.385    SHORT-TERM BUY (TECHNICAL)

Karyon Weekly Chart (click to enlarge):KARYON made a major weekly Wave 2 low of MYR0.15 (Oct 2012) with grossly oversold and bullish signals. All its positive chart signals above suggest a weekly Wave 3 uptrend. It is likely to break into higher territory,as it breached its key resistance areas in a clear upward Wave 3 and 5-move. Short-term  BUY  on dips for KARYON, with firmer support and clear upward target areas of MYR0.405, MYR0.50, MYR0.68 and MYR0.83. Stop-loss is at MYR0.25.

For the quarter ended 31 Mar  2013, the group recorded revenue of MYR34.2m, a rise of 19.4% compared to the corresponding quarter last year. The higher revenue was attributed to the growth in sales volume coupled with higher selling prices for polymeric products. KARYON’s polymetric division saw higher sales volumes and
profit margins  while its oleochemical division was weaker due to a slight decrease in selling prices despite the higher sales volume.  KARYON  was  recently promoted to the Main Board of the KLSE from the Ace Market that it used to be trading in.

Moving forward, KARYON will continue to focus on improving its  operating  efficiencies. Maybank-IB has no fundamental  coverage  on  KARYON.  A  check  of  Bloomberg  consensus  reveals  that  there  are  no  other research houses that have coverage on the stock. KARYON is currently trading at a historical PER of 13.3x with a high indicative dividend yield of 4.06%.

Karyon  Industries  Berhad  (KARYON),  through  its  subsidiaries,  manufactures  and  trades  PVC, chemical, lastic and industrial products as well as manufactures foam boosters, concentrated detergent paste, washing detergent, and shampoos

by Maybank IB