Midas – all time oversold

With the recent market weakness, as per my usual practice, I will screen out oversold stocks listed on our Singapore bourse.

Here is the list of the top ten most oversold stocks using CIMB’s stock filter as of yesterday, 7 Oct.
Company
Sector
RSI <=30
Yongmao Holdings
Limited
Construction /
Agricultural Machinery
6.7
VGO Corp Ltd
Retail – Apparel /
Accessories
8.7
Nam Lee Pressed Metal
Industries Ltd
Construction –
Supplies / Fixtures
10.4
Midas Holdings Ltd
Aluminum
11.9
Junma Tyre Cord
Company Limited
Chemicals –
Specialty
12.5
Full Apex
(Holdings) Ltd
Non-Paper
Containers / Packaging
13.4
Jacks International
Limited
Retail – Drugs
14.8
St. James Holdings
Limited
Leisure /
Recreation
15.8
JES International
Holdings Limited
Shipbuilding – NEC
15.9
Chew S Group Ltd
Fishing / Farming
16.7
Source: CIMB itrade 7 Oct 14
One of the stocks in the above list caught my attention. Midas is the 4th most oversold stock in the SGX by RSI level as of yesterday. It has a market capitalisation of S$402m and has dropped 25% from $0.440 on 30 Jul 14 to close $0.330 on 7 Oct 14. Part of the decline may be attributed to its weaker than expected 2QFY14 results announced on 14 Aug 14.
Against the backdrop of 25% drop in Midas’ share price, Midas is the most oversold since its IPO with a RSI of 11.9 as of last Fri. ADX closed at an unsustainable high level at 57.0, indicating that the recent sharp downtrend is likely to ease. It trades at 0.67x P / BV with NAV of $0.491. Average analyst target is $0.533.
Chart 1:  Midas dropped 25% since 30 Jul 14; all time oversold by RSI

Source: Shareinvestor chart (8 Oct 14)
Conclusion – likely to have a technical rebound
At the time of writing this, Midas is trading down half a cent to $0.325. Its RSI is even lower today at 10.7. If the general markets were to rebound, based on chart, to a certain extent, Midas is likely to participate in the technical rebound. Resistances are around $0.350 – 0.360 / $0.380. Supports are at $0.325 – 0.330 / $0.315.
P.S: Do note that the basis of this writeup is based mainly on technical analysis. It is entirely possible that there may be some fundamentally negative information on the company (which I am not aware of) that results in its persistent weakness.

Disclaimer

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