Chart: Guanchg daily chart (Source: tradeSignum) 
Fundamental Outlook
Guan Chong is currently one of the top 10 Cocoa-derived food ingredient maker in the world. The production plant in Johor has reached the maximum production capacity 80,000 tonnes yearly. It is investing RM80mil to setup a plant in Indonesia with a starting production at around 60,000 tonnes yearly in the 1st quarter 2011, with the potential annual capacity to reach 180,000 tonnes within the next 2 years. For the 9 months ended Sept 2010, the company revenue soared to RM836mil from RM425mil in the same period earlier while net profit jumped 6-fold to RM57mil against RM8mil previously. The company's 1-for-3 bonus issue and 5-year warrants 1-for-4 proposal has been approved during the EGM last week. The bonus issue plan is anticipated to be completed in the 1st quarter 2011.
Technical Outlook
After 2 months consolidation, GuanChg tried to test the previous high RM2.00 last week accompanied by huge volume transacted. However, stock price retreated as volume decreasing with less buying activity support. Price will only able to move up and break the main resistance RM2.00 with more volume support, otherwise it may stay in consolidation mode longer.
Technical Indicators
Volume: stock price needs further buying support to breakthough RM2.00 main resistance.
MACD: Bullish signal after golden cross being constructed last week.
RSI: Bullish signal.
Support level
RM1.80.
Resistance level
RM2.00
Risk
1. High-debt position after aggressive business acquisition and expansion plan implemented. However, it is informed that it is still under managable level as still level of debt ratio is normal in the industry.
2. Global consumer spending uncertainty.
3. Commodities prices like Cocoa increase may dilute profit margin.
Near term outlook
Consolidation mode
Long term outlook Bullish
Long term uptrend, buy on weakness
Trading opportunity
Due to strong gain during the last few trading sessions, stock falls into consolidation mode, it is good bargain hunting opportunity during profit taking.
Guan Chong is currently one of the top 10 Cocoa-derived food ingredient maker in the world. The production plant in Johor has reached the maximum production capacity 80,000 tonnes yearly. It is investing RM80mil to setup a plant in Indonesia with a starting production at around 60,000 tonnes yearly in the 1st quarter 2011, with the potential annual capacity to reach 180,000 tonnes within the next 2 years. For the 9 months ended Sept 2010, the company revenue soared to RM836mil from RM425mil in the same period earlier while net profit jumped 6-fold to RM57mil against RM8mil previously. The company's 1-for-3 bonus issue and 5-year warrants 1-for-4 proposal has been approved during the EGM last week. The bonus issue plan is anticipated to be completed in the 1st quarter 2011.
Technical Outlook
After 2 months consolidation, GuanChg tried to test the previous high RM2.00 last week accompanied by huge volume transacted. However, stock price retreated as volume decreasing with less buying activity support. Price will only able to move up and break the main resistance RM2.00 with more volume support, otherwise it may stay in consolidation mode longer.
Technical Indicators
Volume: stock price needs further buying support to breakthough RM2.00 main resistance.
MACD: Bullish signal after golden cross being constructed last week.
RSI: Bullish signal.
Support level
RM1.80.
Resistance level
RM2.00
Risk
1. High-debt position after aggressive business acquisition and expansion plan implemented. However, it is informed that it is still under managable level as still level of debt ratio is normal in the industry.
2. Global consumer spending uncertainty.
3. Commodities prices like Cocoa increase may dilute profit margin.
Near term outlook
Consolidation mode
Long term outlook Bullish
Long term uptrend, buy on weakness
Trading opportunity
Due to strong gain during the last few trading sessions, stock falls into consolidation mode, it is good bargain hunting opportunity during profit taking.
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