Laggard but attractive oil & gas plays

KS Energy

KS Energy - the company supplies parts and equipment to various oil major and rig operators. The company reported a 107% rise in net profit for 1Q08. Price chart shows strong accumulation and superior relative strength to the STI, both of which are reasons to go long on the stock. Two days ago, there was a surge in volume to 7 million shares. Pullback since then has been shallow. The 20-day Moving Average (MA) has also just crossed above the 50-day (MA). Six months ago, the 20-day MA cut below the 50-day MA at $1.35 and the stock fell to a low of $1.35. This time, we reckon that the moving average crossover will signal an upside reversal. Based on the chart formations, we project an upside of $2.60 over the next 1 month.

AUSGROUP

Ausgroup - We like this stock, because it shows strong relative strength to the ST Index over the past 3-5 days. While the index corrected, Ausgroup emerged out of a 6-day consolidation in early May. Note how volume declined during the consolidation period and the recent pick up. This is a clear sign of accumulation. Confidence is slowly building for the stock and a break above $0.90 could easily bring the stock back up to at least $1.10.

DISCLAIMER:
We have based this document on information obtained from sources we believe to be reliable, but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Expressions of opinion contained herein are those of UOB Kay Hian Research Pte Ltd only and are subject to change without notice. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of the addressee only and is not to be taken as substitution for the exercise of judgement by the addressee. This document is not and should not be construed as an offer or a solicitation of an offer to purchase or subscribe or sell any securities. UOB Kay Hian and its affiliates, their Directors, officers and/or employees may own or have positions in any securities mentioned herein or any securities related thereto and may from time to time add to or dispose of any such securities. UOB Kay Hian and its affiliates may act as market maker or have assumed an underwriting position in the securities of companies discussed herein (or investments related thereto) and may sell them to or buy them from customers on a principal basis and may also perform or seek to perform investment banking or underwriting services for or relating to those companies.

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