Federal Int'l now on research houses' radar screen
(2002-09-19)

Federal Int'l now on research houses' radar screen

OIL and gas exploration equipment specialist Federal International has revved up its investor relations activity in recent weeks.

The company has been busy holding roadshows and meeting investment houses. And this appears to be paying off.

Many analysts and brokers are impressed with Federal's prospects. And its stock has seen a trading surge.

It closed a cent lower yesterday at 25 cents - still below the initial public offer price of 30 cents some two years ago.

But it has outperformed the Straits Times Index by 18 per cent in the past month and 51 per cent over a three-month period.

Federal will report its half-year results tomorrow.

Technically, the stock is now trading close to its historic highs. A break above 26 cents would be a very bullish sign, though the MACD and stochastics have weakened slightly in recent sessions.

The Relative Strength Index is neutral.

In terms of fundamentals, Federal could be poised to ride the wave of increasing oil and gas exploration. It has recently moved upstream to become an integrated service provider and procurement specialist for the energy industry.

The stock is now trading around 14 times FY2002 earnings and 12 times FY2003 earnings.

Several research houses have initiated coverage, signalling that the market is starting to take notice of the company.

OCBC Investment Research has an 'outperform' call on the counter, with a price target of 36 cents based on 1.5 times price-book and 18 times FY2003 earnings.

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