$Medtecs Int'l (SGX: 546) Target Price: $1.24-$1.30 (subject to upwards/downwards revision - we could be seeing as high as $1.5-$1.8 depending on sentiments)
Medtecs has broken out of the $1.07/$1.08 resistance region today at about 1 PM. Inner circle members were alerted to this and we watched Medtecs with watchful eyes. Members were earlier also alerted to start to accumulate Medtecs at the low $1.0x series and $0.9x series.
Some of us bought Medtecs at break-out ($1.08). Others bought at $1.02/$1.03 and added more to their position at $1.08 when it broke out. Others preferred to just accumulate low ($1.02/1.03) and ride all the way to $1.5.
Indeed, the insider transaction on 22 December, with Medtecs CEO William Yang buying as much as $0.5 million worth of Medtecs shares, foreshadowed this share price movement: see here for the SGX report.
Technical Positives:
1. Daily RSI is currently at 64 so there is some room to run.
2. OBV has been showing strong & continuous accumulation for many months.
3. The current break-out completes the cup and handle formation.
4. Volume and candles look good from a technical standpoint and 50 EMA begins to serve as support on the 4 hourly chart.
Upcoming Catalysts:
1. Supernormal results releasing soon. It is expected that Q4 PATMI and EPS will be even better than previous quarters.
2. Earnings sustainability plan moving forward, including further news on their US masks factory
3. Supernormal dividends (earlier dividend was a pittance - hence the upcoming special dividend is highly anticipated - this will possibly mean that Medtecs will be viewed more as a dividend stock or long-term investment, especially if viewed together with an earnings sustainability roadmap - see Point 2)
4. Possible inclusion into SG Mainboard (currently Medtecs is Catalist) after it had been inserted into MSCI small cap index recently in November 2020. Medtecs noted that a listing on the mainboard would enhance the image of the company and provide greater visibility and recognition in the market. Indeed, Medtecs said this is "particularly critical" amid the Covid-19 pandemic, where there could be pockets of opportunity for the company to tap in order to expand its business operations.
5. News of more COVID strains and COVID exacerbations in other countries and/or Singapore. Some highlight that new COVID super-strains may reduce vaccine effectiveness.
6. News of vaccine inefficacy or even adverse effects (Naturally produced antibody seems to last only ~ 3-8 months since COVID cases have started to report re-infection - more research is needed but preliminary data shows that at least one vaccine should be efficacious for at least 3 months. Read more here on getting COVID twice.
Vaccine administration details for maximum efficacy have not been ironed out yet.
7. Impediments to vaccination schedules (eg, in America- to date, less than 10% of population vaccinated) - see, for instance, winter delays in America. More delays to vaccine schedule means more strains in light of more mutations in human hosts.
8. Increased analyst coverage
Possible Surprises:
1. Accretive M&A
2. Announcement of recurring mega-contracts and partnerships with governments
Risks to Share Price:
1. Major risk will be sales of shares by substantial shareholders or insiders.
2. High RSI means possible corrections as the price rallies up further into the $1.3 - $1.5 region
3. In our view, vaccine and vaccine distribution news has already been factored and priced in.
Recent News:
1. Medtecs donating millions of face masks to France
2. Medtecs developing their own in-house brand masks (Medtecs and CoverU) rather than just providing OEM masks
3. Drastic ramping up of production via outsourcing of non-critical components, 24/7 production and investment in automation - more than 30% increase in output for new and existing customers
4. As a world leader of PPE, contracts secured for PPE throughout 2021
To read more, please click here.
ADVERTISEMENT
Trading and Investment Classes:
To join our trading and investment inner circle, $288.88 for 8 online and recorded lessons every Friday 8 to 10 PM (first lesson was held on 12 Feb, but recording will be sent to you via email), as well as 6 months of trading support (w.e.f. 5 Feb 2021), including members-only special stock picks, please message my business manager, Mr Wesley @ 9820 1686.
Join the team
We are looking for a Head Technical Analyst and Head Fundamental Analyst to contribute to the blog posts. Expansion plans are underway including company incorporation. Get in touch with business manager, Mr Wesley @ 9820 1686.
SgHuat Team wishes you a prosperous lunar new year.
No comments:
Post a Comment