Batu Kawan is a cheaper proxy to Kuala Kepong

 

Between 15th October 2010 (Friday) and 18th October 2010 (Monday) Batu Kawan formed a  gap up from 15 to 15.30 with a relatively large volume which is shown in the chart above. This is partly because on 14th October 2010 CIMB Investment Bank published a very rosy picture of Batu Kawan as a potential privatisation candidate and attach a value of 18.02 to Batu Kawan.

There on, this counter has a fair bit of fluctuations and went on to form a bear divergence. with both MACD and RSI. This bear divergence push it to a mild correction (which suggest strength) on smaller volume. 

At the moment it is traded cum dividend. The 50 sen single tier dividend will only go ex on 22nd February 2011. So there is ample opportunity to accumulate Batu Kawan now. Not only the investor will enjoy a handsome dividend but also can ride on the strength of an up trend  journey.

Another important point is, Batu Kawan holds 45.65% of issued shares of Kuala Lumpur Kepong (KLK). KLK's closing price on 24th December 2010 is 21.78. On a very conservation estimate of just taking the worth of 45.65% of KLK at 21.78, Batu Kawan is worth more than 24. 

So if anyone is thinking of investing in KLK, Batu Kawan is much cheaper proxy to investing in KLK.. 

Batu Kawan 'compelling privatization target'

Batu Kawan Bhd, the biggest shareholder in Malaysian palm oil producer Kuala Lumpur Kepong Bhd, is a “compelling privatization target” and its shares could be worth RM18.02 each, according to CIMB Investment Bank Bhd.

Shares of Batu Kawan are trading at a “hefty” 40 per cent discount to the share price estimate at CIMB, analyst Ivy Ng Lee Fang said in a report today.

Batu Kawan’s stake in Kuala Lumpur Kepong is worth 56 per cent more than the company’s market value, Ng said.

The stock climbed 3.4 per cent to RM14 at 9:26 a.m. in Kuala Lumpur trading, set for a record close. -- Bloomberg