Stein­hoff, Rem­gro

Finweek English Edition - - Contents - Mox­ima Gama

rem­gro, which was es­tab­lished in the 1940s by An­ton Ru­pert as a tobacco man­u­fac­turer, is an in­vest­ment hold­ing com­pany with di­verse in­ter­ests, in­clud­ing stakes in Medi­clinic, FirstRand, Dis­tell and RCL Foods. On the chart:

Though Rem­gro pro­vides in­vestors ac­cess to a rel­a­tively de­fen­sive eq­uity port­fo­lio, it grad­u­ally re­tracted in Oc­to­ber 2015 af­ter reach­ing a ceil­ing at 27 925c/share, cor­rect­ing from an overex­tended po­si­tion on the monthly chart.

When valu­ing in­vest­ment hold­ing com­pa­nies, it is of­ten pru­dent to view the share price rel­a­tive to its in­trin­sic net as­set value (NAV) per share. In the year to end June, Rem­gro’s in­trin­sic NAV per share fell sharply by 17.9% to R251.48, mainly due to a de­cline in the share price of Medi­clinic, which was af­fected by the strength­en­ing of the rand against the Bri­tish pound. At the end of the fi­nan­cial year in June, Rem­gro held a 44.6% stake in Medi­clinic.

How to trade it:

Go short: Rem­gro has breached a ma­jor support trend­line dat­ing back to Fe­bru­ary 2013 and is strug­gling to re­bound. Cur­rently trad­ing in a sym­met­ri­cal tri­an­gle, and with the three-week RSI re­tain­ing its bear trend since 2014, Rem­gro could breach the lower slope of its tri­an­gle. A neg­a­tive break­out would be con­firmed be­low 19 950c/share, with the short-term down­side tar­get si­t­u­ated at 16 575c/share.

Go long: A pos­i­tive break­out would be con­firmed above 22 765c/share. Po­si­tions may have to be re­vised once Rem­gro tests the black dashed trend­line – as it may fail to breach that trend­line. If not, stay long on con­tin­ued buy­ing as the up­side tar­get of the tri­an­gle break­out would be at 26 140c/share. ■ ed­i­to­rial@fin­

has been rated as one of the top five tech­ni­cal an­a­lysts in South Africa. She has been a tech­ni­cal an­a­lyst for 10 years, work­ing for BJM, Noah Fi­nan­cial In­no­va­tion and for Stan­dard Bank as part of the re­search team in the Trea­sury di­vi­sion of CIB.

SOURCE: Me­taS­tock Pro (Reuters)

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