How Would One Trade QAF?

QAF Ltd, formerly known as Ben and Company Limited, was incorporated in Singapore on 3 March 1958 as a private company. The Company was converted into a public company on 30 June 1967 and its stock units were quoted on the SGX on 25 August 1967.

The principal activities of the Company are those of an investment holding and management company. The principal activities of the Group consist of the manufacture and distribution of bread, bakery and confectionery products; operations of supermarkets; cold storage warehousing; trading and distribution in food, beverages, food related ingredients and commodities; production, processing and marketing of pork and feedmill production; and investment holding.  Currently, QAF is conducting a strategic review of its primary production business in Australia to enhance shareholder value. QAF said that the review is in its preliminary stages, and may result in a listing of the business segment in Australia or a complete sale of that business.

So, how would one trade this counter?

Looking at a lower time frame (i.e daily chart of QAF), one may infer that it is consolidating with downside bias after achieving a significant rally that started since last year.

QAF_weekly_may17

On a higher time frame (e.g weekly), the downside bias is more subtle. Nevertheless, one would consider a trade entry into QAF if there is a ‘failure test’ of which its share price is not able to breach a certain support level. In addition, in the following chart, I have set $1.55 as potential profit target as well as a possible stop loss at $0.96.

QAF_daily_may17.jpeg

So, seriously what is the possible entry point?

One may consider a possible range of between $1.25 (i.e lower band of Keltner channel)  and $1.28 (i.e based on earnings capitalisation method at 1% perpetual growth rate) to be reasonable (but not guaranteed profitable) entry points. Alternatively, another possible entry is when a failure test has been clearly established. More importantly, it is to acknowledge that in non-trending and consolidating positions, traders are subject to significant level of randomness. As such, stop loss and profit targets should be strictly enforced.

Fundamental_QAF

Further, there could be support for a higher price movement based on recent target price by analyst:

Analysts Target.png

DISCLAIMER: THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED IN THE ARTICLES.

Author: Ken Utau

Markets Observer + Food Lover

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