Stock in Focus: MEGAWORLD CORPORATION (October 30, 2009)

(This analysis is for November 3-6, 2009)

BUSINESS PROFILE

Megaworld Corporation was founded by Andrew Tan and incorporated under Philippine law on August 24, 1989 under the name of Megaworld Properties & Holdings, Inc. The company was primarily organized to engage in real estate development, leasing and marketing. In 1994, it spun off Empire East Land Holdings, Inc. which focused on the middle income market. On August 19, 1999, the company changed its name to Megaworld Corporation to coincide with its conversion from a purely real estate company into a holding company, although MEG continues to focus on its core competence in real estate development.

The company is primarily engaged in the development in Metro Manila of large-scale mixed-use planned communities, or community townships, that integrate residential, commercial, educational, leisure and entertainment components. In addition, MEG engages in other property-related activities such as project design, construction oversight and property management. MEG's real estate portfolio includes residential condominium units, subdivision lots and townhouses, as well as office projects and retail space. The company's property development projects include Eastwood City, Forbes Town Center, McKinley Hill, Newport City, Manhattan Garden City, and Cityplace.

MEG's subsidiaries include Megaworld Land, Inc., Richmonde Hotel Group International Limited, Prestige Hotels and Resorts, Inc., Eastwood Cyber One Corporation and Forbes Town Properties and Holdings, Inc., among others.

Source: SEC Form 17-A (2008)

Reference:  www.pse.com.ph

Analysis:

Figure 1. MEG Chart

(Note: double click image to enlarge)

MEG has closed below its short time moving average.

Short time moving average is currently above mid-time, and above long time moving averages.
The relationship between price and moving averages is: neutral in short-term, and bullish in mid-long term.

MEG has closed above bottom band by 7.2%.

Bollinger Bands are 31.6% narrower than normal.
The current width of the bands (alone) does not suggest anything conclusive about the future volatility or movement of prices.

MEG is currently on a minor correction. It is currently trending upward with trend strength of about 20.60.

Volume is slightly below the average of  MEG for the past two weeks.

50 Day Historical Volatility (preferably greater than 40%): 51%

6/100 Historical Volatility (preferably less than 50%): 64%

Support / Resistance:

Figure 2. Fibonacci Lines

(Note: double click image to enlarge)

Figure 3. S/R Lines

(Note: double click image to enlarge)

MEG current correction is 38% of the Fibonnaci Lines. It is now standing on the Fibonacci support line at 1.54. It nearest resistance is at 1.74.

For the S/R its nearest support line is at 1.48, while its nearest resistance line is at 1.58.

Base from the weekly pivot point analysis of MEG:

Main pivot point for the week is 1.66.

This are the primary support lines of MEG this week: 1.62, 1.58, and 1.54
While its primary resistance lines for this week are: 1.70, 1.74, and 1.78

Buy/Sell:

Figure 4. Momentum, RSI, Williams %R, and MACD readings

(Note: double click image to enlarge)

Momentum is bearish at reading of -0.07.

RSI reading is also bearish at 43.37.

Williams %R is already oversold at -83.33.

MACD is currently at neutral.

Recommendation: BUY

For me, MEG is a buy because it already consolidated enough and is currently standing at the major fibonacci support line at 1.54. It is also at the oversold area of our leading indicator. Lastly MEG is fundamentally good.

If your looking for a much safer entry then wait for %R to trigger the buy signal and for MACD signal line cross over for the confirmation of a buy signal.