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Bottomed out?

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Occasional Contributor
Does anyone else think that Ellies has bottomed out at 755?
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11 REPLIES 11
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Super Contributor
Support is at R7.52.
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Occasional Contributor
Do you see an upturn in the short-term?
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Super Contributor
Based on candlestick pattern, there was a bullish engulfing pattern at support level, which is positive but other technical indicators remains negative.Short term bounce is possible but i will not be trading derivative instrument on this share.
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Contributor
I think we could have another period where we have a few days of successive selling on overall market. This normally drives prices down accross the board, so based on this I think more downside than upside at moment. Below 7 I would buy again as higher margin of safety.
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Regular Contributor
Mark, are you smiling?
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Occasional Contributor
Much happier. Hopefully it runs up to R9 or thereabouts.
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Contributor
My 10c - and this is apurely personal view so take with a pinch of salt please!!!! The October update was extremely positive and the growth was there to back it up. However the fundamentals were already under pressure on the debt and working capital front. This business is tying up too much working capital at the moment which could be the result of the diversification strategy and the pursuit of so many different market angles. Its dividend policy also seems a bit haphazard and given the growth levels, one wonders whether they moved prematurely in returning monies to shareholders. Over the past couple of years they have returned some R70m and this could have perhaps been better utilised to fund the aggressive growth path. Assuming management come to the same realisation, I would not be surprised by a dividend cut coming through in the final year-end results – perhaps even the announcement of no final dividend. If this is the case, we may see the market pushing the share price even further down from its current level. Growth opportunities still present massive upside but there are 2 chief concerns. Firstly the ability of the company to service projects in the absence of a capital injection and secondly the timing of the rollout of some of these projects. The DTT rollout is on a slow-cooker at the moment and if Ellies have committed resources into scaling up to deliver in this space we could see problems in terms of both overcapacity and perhaps more worryingly technological obsolescence concerns – in the event of them stocking in anticipation of project delivery. The IPP preferred supplier listing similarly has seen Megatron win a number of small tenders but nothing to shoot the light out – especially of late. Again this seems to be a process which is rolling out very slowly. Although it’s unclear what kind of investment has been made in Skyvine, this does seem to be a bit of a wet blanket in the product mix so we may even see a shift out of this space – which may not necessarily be a bad move. On balance, I’d have to say that while there is the potential for big upside, there’s a lot of risk floating around this business at the moment. Greater clarity is needed on the timing of new projects. There needs to be a plan put on the table in respect of funding requirements and how the company intends to approach this. I’d be very sceptical if a debt injection is put on the table because I think they are becoming over-exposed on this front. I think this company may be a ripe target for a larger diversified industrial which is able to weather the short-term business dips and finance the longer term growth aspirations. In either event, there is very little short-term sustainable upside in this one is my view. And now lets watch how the share price spikes:)
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Super Contributor
for a good run to 960(trading), this share must first get to 825. Right now the trend is still down. if it sells off any more, the entry will be lowered accordingly but will always be higher than the "bottom"
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Valued Contributor
nice thoughts whether one agrees or not shows thinking which is not so common ..
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Frequent Contributor
A valuable 10c.
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Occasional Contributor
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