Investing & Trading Analysis: Analysis of ADRO in detail

Saturday, 6 March 2010

Analysis of ADRO in detail

Wow, after consolidating for quite a long time, ADRO is now showing a sign of its revival. Let me share you some information of ADRO, that it's a good stock that might replace most old coal-mining stock as it's a good performing coal-mining company.

Here's the time for analysis, let's start from the fundamental analysis, then we'll step to the tehnical analysis.

Well, let me share you some information that ADRO is now the second largest coal-producer in Indonesia which operates the largest single coal-mine in Indonesia, and a significant supplier to the global seaborne thermal market. Yet, they are using or owning high-quality assets with abundant of coal-reserve which ensure the sufficient supply toward its customers & keep their satisfaction. One of the factor that can make them lead Indonesia market is that they are the lowest cost in production & they are keeping improvement of the efficiency.

For your information, especially investors, Adaro Energy ensure their transparency of statements that ensure their improvement in performance, which is needed for us nowadays, as there are a lot of closed statement of other coal-mining company, such as the government's & the million people's stock (you must know them^^, no offense). Well, Adaro also keep themselves with a balance & timely disclosure of information which is the same with the transparency to public. As their motto of Clean, Strong & Improving, they had proven their ability to improve from a net loss of Rp12 billion turning to profit to Rp1 trillion, what an amazing one.

The increment of profit is because of increment of sales & price of coal, as nowadays they are eye-ing for Asian market as European & American market isn't really potential anymore as they have gas price lower that coal's.

Overall, Adaro has good fundamentals comparing to other coal-mining company as it's complying to government & transparent in finance.

Now, let's talk about the Technical Analysis. We'll start from talking about the oscillator, then pattern.

It's is uptrend since the recession in 2008 till now, we can see from the trend-line channel drawn

It's almost broken the short-term down-trend-line channel

We can see that the DI+ is > DI- which confirm that it's still bullish yet, the candle is showing a doji star which is a reversal pattern.

Even though the Parabolic SAR is still becoming the resistance at 1890-1900

The MACD has crossed two days ago, which confirmed that it's moving upward. Where the ROC showed at the same time, moving upward at the same time, crossing the 0 line.

The William's%R has confirmed the buy signal since Feb 22, 2010, the low at 1790. The Stochastic had re-crossed upward which indicated the buy signal (Golden Cross). In addition, the RSI at 50% which is the same level as the previous shock.

Now, it's above the MA5, MA10, & MA20, which is a strong support of it. Well, the EMA5 & EMA15 did crossed, too. So, the averages lines do support the price. And the MA40 is becoming the next resistance at 1880-1890. See below.

Lastly, the chart pattern you can see that, every time after it get a shock & consolidate, it will narrowing its Bollinger & finally after the Bollinger is narrowed, it will get a shock again, see the 1st chart for detail of shock in Bollinger & Volume analysis.