Recent downtrend of Hyflux has me a little on the edge. Was worried back in 3rd quarter when it broke through the $1.20 major support level. Since then it has taken a nose dive to lows that hasnt been seen recently.
Below is the chart analysis:
If you havent already noticed. The lowest it went in 2008 was $0.732. This is for me the last support level which if crossed, panic will set in to hyflux shareholders. What is the company doing wrongly? Is its ability to win water projects in the region totally diminished? Are they getting too comfortable and used to low performance level of the company/stock/management, dare i say it, lack of expansion? Are they not able to cope with the cumulative preference shares which they issued @ 6% back in Apr 2011?? Their dividend pay-out has also taken a hit. These are questions that pop into any rational persons mind who has interest in this counter.
It is time to do fundamental analysis on Hyflux again to warrant further investment. Or it is time to accept your losses. We will just have to wait and see where it goes by end of this year, touching close to $0.732 region is "inevitable", just a matter of WHEN and not IF.
It seems like ages ago when i initially bought Hyflux. It was a rookie mistake; I was trying to catch a falling knife, cut myself and still not recovered fully. Having bought equal amounts at three intervals back in 2011, I have been sitting on my hands throughout 2012. Still hoping that it will turnaround one day.
After firing 3 shots, I am running out of bullets to spare for this counter. I only have 1 last shot left. This is a perfect example of how to break up your investments into 4 equal portions. Buy equal amounts at every 25% drop in value. However I could not do this blindly without technical analysis and/or without believing that the company have potential for future growth. Tech analysis will show me how to spend my last bullet, see below:
From the chart, you can see a beautiful supporting uptrend line since 2001 to now. The question is whether the price now ($1.17) is going to respect this trendline. Since it has bounced twice from hitting this trendline, I can conclude for myself that there is higher chance of bouncing from this trendline once again. My risk of exposure is greatly reduced. My last bullet will lower my buy price to $1.50 region. It has taken me 2.5 years to come to this point. One of my worst performing shares in my portfolio (always been in the red).
It does not take a rocket scientist to see that current price levels seems to be well supported.
ON the positive side: Dividends collected from this counter comes to 4.38% over the last 2 years.(2.1% annually)
Also things are looking good as they have finished the largest desalination plant in Singapore this year. Perhaps they will get more projects in the Middle East and China. There is one thing i know for sure, water is vital for life, we will face more shortages in water supply in the future. Therefor any company that is in this sector has potential for growth as long as they are well managed and reputable. To me, Hyflux fits the bill.
