When it comes to KPJ Healthcare, it is hard for me not to violates one of the most fundamental rule in stock investment. Do NOT make love with your stocks. No, not that kind of love making. But love as in attaching a sentimental value to the stock. Trade by charts. Invest by facts.
Since rising from the ashes in 2006, KPJ has not look back. Revenue increased from RM 222M in Q406 to RM 376M in Q110. EPS leaped from 5.65 sen in Q406 to 13.59 sen in Q409 (before 2:1 share split & 1:4 bonus issue), or 5.09 sen adjusted. Q110 EPS was 5.19. Dividends dished during the same period was nothing short of fantastic by my standard. 51 sen in cash, 30:100 alaqar shares, 1:4 free warrant. The alaqar shares is a dividend that keeps on giving.
Alas, my affair with KPJ Healthcare only started in Q110 after keeping it in radar for a good duration in 2009, after I am assured of the company's growth strategy, execution and dividend policy. My view is that healthcare industry in Malaysia is just exiting from it's infancy and KPJ Healthcare is positioned to ride this wave. KPJ's venture to Indonesia is also a plus point with proven execution.
Daily chart. KPJ retraced to FB23.6% after hitting a high of 3.85, hovered for a while before drifting down to FB38.2%. Floor 3.36 & Ceiling 3.48 found. The last candle closed above downtrend line. Indicators showing signs of hooking up. Looks good for a low risk re-entry.
Weekly chart. The long uptrend line suggests a potential retrace to 3.28. KPJ has been under sustained selling pressure for 6 weeks straight making a lower low. However, it failed to make a lower low on the 6th week. Is the bull winning? Week 7 opened with a white candle bucking the immediate downtrend line.
Trading note. Exited position when FB23.6% failed. Low risk re-entry on 3-Sep after establishing C&F and FB38.2% support.
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