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SoundGlobal: Golden cross.

Thursday, March 29, 2012

Are we about to see the formation of a true golden cross which is the bullish crossing of the 200dMA by the 100dMA?

"A real, true golden cross — a very Japanese signal — occurs when a rising 100-day moving average crosses above a flat or rising 200-day moving average. It signals positive price action." Goola Warden, The EDGE.

The 200d MA in this case is still declining. So, the case for a true golden cross is weakened. Nonetheless, there seems to be longer term support with volume dwindling as price consolidation continues.

Although there seems to be longer term support, the 20dMA is declining and what looks like a declining triangle has formed.

Immediate support is at 58c which is where the golden cross is found. If that support should break, we could see the counter's share price declining to 52c which is where the 161.8% Fibo line approximates.

I was once upon a time a shareholder of SoundGlobal when it was still known as E-pure. Today, I am once again a shareholder as I initiated a long position at 59c.

SoundGlobal profit increased 43.1% (29 Feb 2011): Announcement here.


AK71 said...

Despite weaker technicals, I got in at 59c and I am paying the price now. Ouch...

Today, I added to my long position as technicals suggest that its share price could have found a floor, if not the bottom.

Fundamentally, I believe that China still needs to and will continue to invest heavily in solutions to its water issues. Sound Global (formerly E-pure) is a logical beneficiary.

Sound Global Ltd. announced the company won the bid for the Build-Operate-Transfer (“BOT”) project of the phase II of a wastewater plant in Chang’an District, Xi’an City, Shaanxi Province, in the PRC. The project will be invested, built and operated under the BOT mode with a total investment of approximately RMB58.6035 million.

AK71 said...

Sound Global continues to grow its

1) upgrade and improve old municipal and industrial sewage plants to meet higher discharge standards under the 12th Five Year Plan in China

2) BOT/O&M services demand arising from urbanization in China

3) rapid growth of rural development areas in China requiring clean water

4) overseas expansion in the Middle East and Southeast Asia region

See quarterly results (May 2012): here.

Gross profit margin: 30.4%
Nett profit margin: 17.26%

At the current share price of 46c, the PER is closer to 10x and it is about 1.3x of book value. Valuation is not demanding.

Any further weakness would probably bring in the bargain hunters.

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