Stock In Focus: Emperador Inc. ($EMP)

Emperador Inc ($EMP)

Based on pse disclosure:

  1. Grupo Emperador Spain S.A., a company owned by Emperador, Inc., said  it has reached an agreement with Beam Suntory to acquire the company’s Spanish brandy and sherry business with an all-cash offer of 275 million euros or P13.8 billion.
  2. The acquisition further strengthens Emperador’s dominant position as the number one brandy company in the Philippines and in the world.
  3. Emperador acquisition includes the iconic brands of Fundador Pedro Domecq, the Philippines’ largest selling premium imported brandy brand; Terry Centenario, Spain’s no. 1 selling brandy; Tres Cepas, Equatorial Guinea’s no. 1 brandy; and Harveys, United Kingdom’s no. 1 selling sherry wine.  These brands carry a unique heritage and market leadership position in their respective categories.
  4. With the combined global reach of Whyte & Mackay and Fundador, expanded product portfolio of EMP will have access to more than 100 countries around the world.

Here’s the technical analysis:

EMP1

  1. If you look at the last candle, one may say that the candle forms a shooting star.  If that is a shooting star, it is a sign of the reversal.  However, let’s check the definition of the shooting star as defined by Investopedia:

a.) In a shooting star, the formation must be an upward or bullish trend which is present in this case.

b.) The distance between the highest price for the day and the opening price must be more than twice as large as                    the shooting star’s body which is present here.

c.) The distance between the lowest price for the day and the closing price must be very small or nonexistent.

d.) A type of candlestick formation that results when a security’s price, at some point during the day, advances well                 above the opening price but closes lower than the opening price.

In this case, the price action closed higher than the opening price.  This may not be valid shooting star.

2.  If you look at the upper trendline, that line is a major resistance.  A breakout of the resistance level around 9.80,               9.85 and 9.9 could be a good move towards an escape of the bearish zone especially in a weekly chart and a                   potential start of the reversal from bearish to bullish in a daily chart as per ichimoku elements.

EMP2

3.  On the other hand, traders may be hesitant and observe the price action due to the following:

a.) strength of the trend looks like moving sideways

b.) MACD in daily chart and ultimate indicators are not convincing which is in a tug of war between bear and bull.

4.  Fundamentaly, If we see it in a long term, based on its pse disclosure that EMP has acquired Fundador and the                combined global reach of Whyte & Mackay & Fundador has something to do with the optimistic future growth of the          company.  With the future growth due to EMP acquisition of Fundador, at the current price, price-to-earning ratio              forecast is expected to reduce from 25 to 16. My initial target is P14 per share.

5.  In a weekly chart, the price action is moving towards the bullish trend as per ichimoku elements.  The future price               action may be moving sideways in the next few days as indicated by ADX. But MACD line and other indicators have         positive signal in a midterm.

My initial technical target is based on midterm resistance at 10.28, 11.74 and 11.90

Disclaimer: This article is for information purposes only. There are risks involved with investing including loss of capital. The information provided in the website is only an opinion of the author and  does not constitute as legal advice, research or recommendation to buy or sell any securities

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