Since the recent mini rally, most of the penny stocks have risen but Mapletreelog still lagging in its price movement. With the rights issue several months ago, Mapletreelog has managed to lower its gearing ratio to around 37% from a previous value of more than 50%. At Friday close price of $0.355, it is enjoying a dividend yield of around 15.68% with reference to FY08 distribution. It also has a NAV of $0.84 and price now is at a discount of 42% to its FY08 NAV.
Technically, the bollinger band is narrowing and price movement has been in a very tight range for past days already. Normally, the narrowing of bollinger band will be followed by a outburst of the price movement. The question is whether it will breakout or breakdown. Base on the several indicators, it is bias towards a breakout than a breakdown. Breakout level will be at $0.365 and current support level is at the $0.335. MACD, RSI and Stochastic are showing short-term upside. The DI+ is looking to cut up to DI- soon hence suggesting bias towards the upside. One cautious is the ADX signal is falling towards the 20 level and any upside might lack the strong momentum. A breakout from $0.365 might see it testing the target price of $0.45 level. Breakdown level would be at $0.305.
Looking at the reward/risk ratio, at current price of $0.355, downside at $0.305 and upside at $0.45, the reward/risk ratio would be
($0.45 - $0.355) / ( $0.355 - $0.305)
= 1.9
Note also Mapletreelog should be releasing its 4Q08 earnings and hence declaring its DPU probably around end of Jan or early Feb.
At current price of $0.355, it is relatively cheap to hold till the earning announcement period.
