Tortie Portfolio: Public Bank Berhad - Part 2
Tuesday, June 20, 2006
Judging from the chart, the share price of PBB appeared to be trapped within a series of Bull-Bear cycles. The Bull phases lasted 1.5 to 2 years plus; while the the Bear lasted slightly longer, about 2 to 2.5 years. The pattern during the 1996-1998 was disrupted by the infamous economical crisis, and shown atypical picture.Let's look at the first Bull-Bear cycle on the left on the chart. PBB rise from the low of RM0.70 and slowly doubled, and then gained momentum on the 1993 Superbull and propelled to the new high of about RM3.50 at that time. That's about five-fold gain in less than 1.5 years! Subsequently the price underwent a Bear phase of two years and retraced to about RM2.00, representing 50% retracement.
The second Bull-Bear cycle commenced at the low of RM0.80 in 1998, and went up steadily to RM4.50 around early 2000. Again, another more than five-fold gain in about two years time! Again, ensuring Bear phase eroded about 50% of the gain to the low of RM2.60.
The third Bull-Bear cycle started in 2003 and ended in 2005. The price went from RM3.40 to RM7.80. Another impressive gain of 130% within two years. Please bear in mind that that was the post-crisis period when KLSE was shied away by the foreign funds due to the infamous capital control. KLSE became the famous "low beta" market at which nothing happened no matter how the outside world performed. KLCI was trading between 600-950 for that period and had never achieved the pre-crisis level. The ensuring Bear had been running from 2Q2005 until now. Current level of RM6.30 represent a third correction from the height of RM7.80, which we believed is the bottom for this phase.
Technical analysis exists for the presumption that history repeats itself. If we were right, PBB is all set for another impressive bull run soon. What if we were wrong? At RM6.30, the expected dividend for financial year 2006 is at least RM0.40, which is 6.3% gross dividend yield. Still better than FD and EPF and most trust funds.
So, head we win, tail we don't lose!
We are going to buy 1000 shares of PBB for our Tortie Portfolio.
posted by winpulse @ 11:55 AM,
