L V L ENERGY FUND PLC - LVEF.N0000 (CSE/Colombo Stock Exchange)Strategy
Recovery from Earnings Recession.
- Strong recovery in earnings during Q4
- Q4 EPS LKR 0.54
- Forward 12M PE 2.17
- NAV LKR 9.60 (After adjusting close to LKR 1/share as currency loss (LKR appreciation/USD)
- 52 W high/low LKR 6.90/LKR 4.00
- 1/5 Rights Issue concluded last week (Issue Price LKR 4)
Technical Analysis (Chart Patterns)
* Currently LVEF is trading in Descending Wedge pattern, which is yet to break out.
* During 2020 upward cycle descending wedge break out happened after MA 9/20 cross on weekly basis. Currently WMA 9 is curving towards WMA 20, indicating potential upward break out.
Potential Pattern Targets
* Multi week descending wedge target LKR 7.30
* On previous cycle (started on June 2020) descending wedge break and WMA 9/20 cross produced a 90% upward move that lasted 525 days.
* During 2020 cycle Q4 EPS was LKR 0.17 cts & NAV LKR 7.58 vs current Q4 EPS of LKR 0.54 cts & NAV of LKR 9.60
Fundamentals & business outlook
* As company is an energy producer operating in Sri Lanka & Bangladesh, we can safely assume earnings will continue similar to Q4
* If LKR started to depreciate towards Q4 2024/25 FY (After permitting vehicle imports), LVEF will benefit from currency gains
