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Friday, September 19, 2014

A chart “sell” on TAS Offshore (Edge)

Due to the KLCI’s softer tone, we are recommending a chart “sell” on TAS Offshore Bhd. TAS has fallen off its all-time peak of RM1.65 since July 2014 to its current level of 94.5 sen, erasing approximately RM123.9 million from its market capitalisation.

In line with our weaker chart outlook for crude oil prices, we are bearish on the oil and gas segment, which will also adversely impact investor sentiment towards TAS. The company’s share price weakness is in line with the softer European Brent crude prices which stalled at US$115.77 in mid-June 2014 with negative chart signals. We have a “sell on rallies” stance on Brent and its downside target levels are US$93.75, US$83.75 and US$78.70 in the medium term.

A check of Bloomberg consensus reveals that only one research house has coverage on TAS. The stock is currently trading at an inexpensive price-earnings ratio of 5.77 times and at a discounted price-to-book value ratio of 0.95 times. The reported shareholding changes on Bloomberg did not reveal any major transactions over the past month.

TAS’ chart trend on the daily and weekly time frames is very weak and is firmly down. Its share price made a large plunge since its weekly Wave-5 high of RM1.65 in July 2014. Since that high, TAS plunged to its recent September low of 94.5 sen.

As prices broke above their recent key critical support levels of RM1.28 and RM1.13, look to “sell” TAS on any rebounds to its resistance areas as the moving averages depict very firm short- to medium-term downtrends for this stock.

The daily and weekly indicators (like the CCI, DMI, MACD and Oscillator) have issued “sell” signals and now depict very firm indications of TAS’ eventual move towards much lower levels.

It would attract very weak buying interest at the support levels of 75 sen, 80 sen and 89 sen. We expect TAS to attract major liquidation towards its resistance levels of 94.5 sen, RM1.13 and RM1.28. Its downside targets are located at 89 sen, 54 sen and 24 sen.

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