Henan Pinggao Electric Co.,Ltd. : The uptrend is stopped
Entry price | Target | Stop-loss | Potential |
---|
CN¥7.11 |
CN¥0 |
CN¥7.8 |
+100% |
---|
Henan Pinggao Electric is principally engaged in manufacture and distribution of electric power transmission and conversion equipment. The technical rebound of Henan Pinggao Electric should be stopped in the coming trading sessions.
From a fundamental viewpoint, the group has not sufficient quality to hope for a continuation of its bullish trend. Indeed, Surperformance rating largely punishes Henan Pinggao Electric Company Limited because of an excessive valuation with an EV/Sales ratio higher than its peers. The deterioration of the financial situation and the increasing leverage for the two next fiscal year emphasize risks. Net Debt/EBITDA ratio at 0.2 should become worst next year at 0.54.
Graphically, the security is trading in a bearish trend. In the short-term, the stock has rebounded on the CNY 6.1 support area toward its mid-term resistance. This rebound seems technical and is not likely to continue. Indeed, moving averages in the long-term are still in a downtrend and that argue for a continuation of the decrease in prices.
Thanks to financial information above-mentioned, investors can take a short position in Henan Pinggao Electric. The target price is CNY 6.1 (mid-term support). This strategy would be invalidated if the security crosses the CNY 7.8 resistance.
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