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Dayang’s flight path is clear and what is my target price?

2 weeks end ago, I post my article “Dayang will fly on Monday”. It flew from 80 sen to Rm 1.02 with 150 million shares traded.

KWAP was selling so aggressively delayed Dayang from flying further up. When shareholders see KWAP selling, they would also follow to sell and potential buyers would delay in buying hoping to buy it cheaper.

On 21 st Feb, the company announced that KWAP sold

20.04 million shares.

 

On 22 nd Feb, the company announced that KWAP sold

29.2 million shares and remaining 51.2 million shares or 5.31%.

 

On Monday 25 th Feb, the company announced that KWAP sold 20 million shares

 

On Tuesday 26 th Feb, the company announced that KWAP ceased to be a substantial shareholder which means that KWAP has less than 5% of the total issued shares.

 

On Wednesday 27 th Feb, KWAP would have continued selling Dayang shares.

 

Last Friday 1st March Dayang’s share price went up from Rm 1 to close at Rm 1.18, an increase of 18% in one day. This sharp price increase indicated that KWAP has sold all its holdings and is no longer an obstacle to Dayang’s flight path.

 

What is my target price?

 

During my presentation at the I3investor Bloggers seminar yesterday, many attendees wanted to know what is my target price for Dayang.

 

 

Rapid profit growth rate acceleration

You can see from the above table that its EPS for the last 4 quarters were -2.21, 4.03, 5.05 and 10.13 sen.  Based of the rate of increase and no more delay by monsoon, it is most likely that its EPS for the coming quarter will be higher than 10.13 sen. 

Assuming that its next 4 quarters for financial year 2019 remain the same as 10.13 sen, its annual EPS will be 40 sen.

Based on P/E 5, it should be Rm 2.00

Based on P/E 10, it should be Rm 4.00

I know many investors will not buy it now because it has gone up too sharply. It has gone up from 60 sen to Rm 1.18 within 1month as you can see from the chart below. They want to wait for its price correction.

Due to its rapid profit growth rate acceleration, the last 2 price corrections were very mild. It dropped a few sen, then it resumed its price rise. Many investors expect the price to drop tomorrow, Monday. At the close, 1.21 million were queuing to buy at Rm 1.18 and 430 were queuing to sell at Rm 1.19.  Will the price drop tomorrow?    

I expect my critics to say that my purpose of writing this piece is to recommend readers to buy so that I can sell. If I want to sell, I do not need my critics to buy because the daily volume traded is tens of million shares. 

My target price is above Rm 3  

 

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