The limelight has been on the mining sector plus a couple of small cap stocks during the last last couple of weeks as they have bagging handsome gains. Chemrez Technologies, Inc. or COAT, though under the radar, has likewise been doing pretty well. However, unlike the small cap companies that raked in 20%, 30%, 50% or even more in a span of days or weeks, COAT’s stock appreciation appears to be backed by technical and fundamental supports.
Now, if you remember, my respected colleague placed COAT under positive surveillance back in June 9, 2011 (check his post here). You see for the longest time (since June 2008), COAT had been consolidating into a big cup and handle pattern. On June 28, 2011, COAT finally broke out from this formation. So if we get the height of the cup and project it upwards from the point of breakout, we would get an upside target of around PHP 3.60 to PHP 4.00. And given COAT’s long gestation or consolidation of more than 3 years, don’t be surprised if it races towards the mentioned target price.
On the fundamental front, Chemrez Technologies, Inc., Philippines’ biggest biodiesel, resins, and oleochemicals producer, netted a 28% jump in its income in the first quarter of 2011 to PHP 205 million from PHP 160 million last year. Now to make matters sweeter for its investors, COAT even declared a regular cash dividend pf PHP 0.06 and a special cash dividend of PHP 0.09 to holders as of June 27. But for those who were not a holder at that time, don’t worry as COAT seems to have more in its sleeve as it recently set aside about PHP 645 million to expand the capacity of its manufacturing plants in their effort to support their growing export business. This, at least, could reflect into capital appreciation moving forward.