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NRA Capital Pte Ltd

Written by: Jacky Lee

Friday 30 Jan 2015

Riverstone Holdings – Stock alert

Share price surged 17% YTD

Short for short-term and Buy for long-term

Riverstone’s share price has outperformed YTD so far rising 17% and average trading volume has increased significantly over the last 5 days. After confirming with management that the group has no major corporate change, we believe the reason could be due to two broking houses initiating coverage recently, RHB initiated at target price at $1.15 on 2 Jan follow by Maybank KimEng two days ago with a $1.21 target price.  

At $1.14, Rivestone is trading at 18x of our FY14 PER estimate and exceeds our fair value of $1.08, which is based on 15x FY15 PER. We view the current price to be fully valued and its RSI index has short up to 80.3 points, also seeing a strong resistance level. However, we believe the recently weakening of MYR as well oil price will both benefit Riverstone in the short and mid-term. For long-term investors, we continue to recommend a Buy as for its good track record and given the good prospects from the expansion plans until 2018. Riverstone will announce its final results on 25 February


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