It’s very preliminary, it could just be someone who found out about this company with some spare cash. However, it could also be the beginning of getting some more realistic valuations for this highly promising (and so far delivering) company.
Our thesis has always been:
- This company has so far shown very sound performance, business wise
- It is financially sound
- It operates in markets that have very significant growth potential (bussiness software and services in China, while their focus is on supply-chain management in the retail sector, it’s not limited to the latter)
- The present valuation does not even begin to reflect the fundamentals
- It has been a victim of the big bear market in China since last November
- We argue that the bear market is probably in it’s last stages
- We also argued that this stock is typically one in which nothing much happens for a long time, only to suddenly shoot up (even if there is no apparent reason).
Now, let us look at the Chinese market:
The downward trend is still in tact, but there could also be the beginning of a bottom formation here. It’s too early to tell.
It would be interesting to see where we close with EFUT today. The volume is also on the brisk side. And do we detect a double bottom in the graph… It would help if we could close above the 50 day moving average.