SP Setia, could be right time to invest?

Most investors would like to seek for stock tips, normally I seldom provide any. The reason is many people don't understand how to handle it, hence, many time Mr A is making money whereas Mr B is losing money though they bought the same stock, just because of the timing and experience make the different.

Recently there is a stock, SP Setia which fall about 18% in share price for the last few days to close at RM3.05 last Friday. You can treat this as stock tips on how to trade it. I think this one is a good example to study and at the same time, trade it to make pocket money. First, let study what could be the reason for it share price to fall?

According to some analysis, the main reason could be the foreign fund were selling due to the stock being removed from the MSCI Malaysia Index. Further add on to this is because of general election mood, many investors may stay sideline, wait and see first.

Investors may also want to find out if the company turn bad? Or if the profit in the decreasing mode? If the answer is no, then it's worth to take a look. It's similar to as if someone is selling their house at below market price in your area, do you need to feel panic or fear, it could be an opportunity to make money!

What's the prospect of the company, is the profit look good in next few years? The answer is sure, among the most recent projects, they have joint venture with Sime Darby Bhd and EPF to develop the 39 acres freehold Battersea power station in London with value about RM39.4 billion. Next on hand project is new integrated health and research institute (1NIH), measuring about 41 acres. This projects will give positive earning figure and keep the business going for few years.

Investors will get the dividend of about 4.8% at current share price of RM3.05. Base on the EPS of 20.8 cents, the PE is about 15x. Many stock brokers give target price of above RM4.00. However, for margin of safety purpose, I will give a discount of 15% from their target price, hence RM3.28 to RM3.40 is not a problem for short term investors.

For those Technical Analysis (TA) supporter, currently the share price is approaching Fibonacci level of 261.8%, hence we could see the technical support at the level of around RM3.00 (plus minus 5 cents). Once most of the TA supporter believe what they see in the chat, it will become strong support at current level, hence more traders will follow and forming buying support at current level. Though sometime I don't really like the TA, however, when you see the high volume appear at the bottom, it may hint, hey, it's time to buy!

Note: In addition to my disclaimer clause in my blog, I hereby confirm I have bought SP Setia recently at RM2.99 and RM3.00 level and had been trading for few rounds at this level. For the time being, RM3.00 is a good support, I feel that 5% or more profit for short term is not a problem. In cases if the stock price fall to RM2.80 or below, execute a cut lost plan.