Thai Beverage Public Company (ThaiBev) has dropped 12 percent from an intraday high of $0.920 on 14 February 2018 (before the results) to $0.810 on 23 February 2018.

At $0.810, this was the lowest last seen on 13 May 2016. Will it go lower?

Chart Analysis

Based on Chart 1 below, ThaiBev is entrenched in a strong downtrend with all the exponential moving averages (EMAs) moving lower, coupled with death cross formations. The breakdown at $0.895 points to an eventual measured technical target of $0.805 which was attained on 23 February. Since its result release on 14 February aftermarket, the volume of shares transacted post its results reached more than 40 million shares each for the past five out of six trading days. On 15 February, the volume of shares transacted hit a one year high of 102 million shares. 23 February marks the sixth trading day after the results, thus my guess is that those who want to sell on its disappointing results may have mostly sold. This is corroborated by the extremely low RSI on a relative basis. RSI has dipped to an extremely oversold reading of 18.7 today. Since 2006, there is only one other session where RSI is lower than 18.7. (The lowest reading for ThaiBev RSI is 17.8). Thus, there may be limited near-term downside, as extreme oversold pressures escalate. However, it is noteworthy that only a sustained breach above $0.935 negates the bearish chart.

Near term supports: $0.805 – 0.810 / 0.800 / 0.775

Near term resistances: $0.840 / 0.860 / 0.880

Chart 1: ThaiBev Reaches Almost A Two-Year Low With Extremely Oversold RSI

chart 1Source: Chartnexus 23 Feb 2018

Analysts’ Target Prices

Based on Figure 1 below, post results, analysts’ target prices range from $0.840 – $1.13 with the average analyst target of $1.01. Estimated div yield is around 3.4 percent. Nomura mentioned in a Bloomberg post yesterday that ThaiBev is one of the 14 Asean stocks which investors should hold.

Figure 1: Bloomberg Analyst Compilation Of Target Prices

table 1Source: Bloomberg 23 February 2018

Some Possible Risks 

  1. Over the medium to long-term, ThaiBev’s chart is entrenched in a downtrend. Only a sustained breach above $0.935 negates the bearish chart. For myself, I am vested and am punting for a few bids if any.
  1. Thai Bev has dropped 18 percent from its recent high of $0.985 on 28 November 2017 to close $0.810 on 23 February 2018. Besides the weak set of results announced last week, there may arguably be some negative information which the market knows (resulting in the share price slipping to close to a two-year low), but I am not privy to. Thus, it is important to do your due diligence before making any trading or investment decision.
  1. I do not have access to management and am not familiar with the company’s fundamentals. This write-up is based solely on chart with a short term time frame and analyst reports.
  1. Oversold reading can remain oversold for an extended period. However, extreme readings (on a relative basis) typically do not sustain for too long.
  1. Chart reading is subjective.

In A Nutshell

Thai Bev has dropped 12 percent from its intraday high of $0.920 on 14 February 2018 (before the results) to close $0.810 on 23 February 2018. Such drop in a short span of time has caused oversold pressure to build which may arguably limit any large downside risk in the near term.

In view of the aforementioned risks, it is noteworthy that besides the weak set of results announced last week, there may arguably be some negative information which the market knows (resulting in the share price slipping to close to a two-year low), but I am not privy to. Thus, it is important to do your due diligence before making any trading or investment decision. The above write-up hinges solely on its short-term technical outlook.

 P.S: Do note that as I am a full-time remisier, I can change my position fast to capitalize on the markets’ movements.

Disclaimer

Please refer to the disclaimer HERE

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