ASTI: A doubling of share price in time?

I recently bought some shares of ASTI Holdings Limited.  This company is engaged in the provision of solutions and technologies in the backend (ie assembly, test and finishing) arena of the semiconductor industry as well as the distribution of electronic components and products plus the provision of semiconductor application in consumer electronics, computer peripheral and communication solutions. The description of  ASTI's business is taken from its homepage.

Anyone who knows me well would be somewhat surprised at this move of mine since I am not in tune with high technology at all and IT is as Greek to me as, well, Greek. However, I am not a hermit and I do keep in touch with the real world.  There is much news of how the cyclical demand for semiconductors has been ramping up and that this momentum has yet to run its course.

I read an article in The Straits Times (22 Aug 10) by Tan Ai Teng on why tech stocks are a good buy then:

1. Tech stocks are in a period of strong earnings recovery.

2. The second half of this year would have been stronger if not for a shortage of components.

"I am bullish on the semiconductor equipment related business. According to Semiconductor Association's (SEMI) forecast, global semiconductor equipment sales are expected to climb 104% this year... and rise a further 9% next year."

Since I am so unfamiliar with tech stocks, I was wondering which company's shares offer good value.  As luck would have it, I read an article in Next Insight where NRA reported on Innotek and ASTI.  Both companies seem promising. However, Innotek's share price has appreciated enormously while ASTI seems like a laggard. 

The following factors drew me to ASTI:

1. A share price of 10.5c then with a PER of 3.8x and NTA/share of 16.9c.

2. Improving balance sheet with its gearing level falling from 22% to 8%.

3. Gross margin (GP) expanded from 7.1% to 22% year on year.

Read article here.

As per my usual style, I looked at the chart to find a fair entry price.  ASTI bottomed in late November 08 with price touching a low of 4.5c.  It made a higher low of 6.5c on 16 March 2010. It broke above the 200dMA in April 2010 and has been trading above this MA since. Using candlesticks and the 200dMA as references, strong support at 9c is spotted.  Seeing how the 20d, 50d and 100d MAs are bunching together at around 10.5c, however, I decided to buy some at 10.5c as a hedge.  Price might or might not retest  support at 9c.  If it does not, I'm already in.  If it does, I would buy more as the uptrend is intact.  Looking at the OBV, it is obvious that there is longer term accumulation going on and once all the sellers are done selling, the share price could rise.

NRA has a target price of 21c for ASTI.  That is a 100% upside from my entry price of 10.5c.  Nice but I see resistance at 12c which was tested several times in recent months.  It is, however, also interesting to note that we might be seeing the formation of an ascending triangle here with 12c being the top of the formation.  If  the resistance at 12c is taken out, I see immediate resistance at 13.5c with a near term target of 15c. Over a longer term, we could even see 17.5c, a support level which broke in early 2008, tested.  Of course, in extremely bullish circumstances, prices could go parabolic in which case all resistance levels identified could be destroyed like butter cut by a hot knife. Then, it would be time for me to let go and run for the hills.

Overall, ASTI looks rather promising.  Wish me luck. :)

This video describes how the semiconductor industry may experience shortages due to capacity constraints, increased demand, and low inventory levels (June 14, 2010):

P.S. I am having trouble saving charts from ChartNexus in Lim&Tan. So, I am unable to put up the chart for ASTI here.