My last chart post was in mid-January when the downtrend was first broken...here's an update on the situation.
At the time I was hopeful a solid quarterly would confirm 2019 revenue of $27-$30m and provide an encouraging update on the outlook for 2020. As we now know the revenue target was missed by $2m and the outlook for 2020 unchanged and recently a new contract in Brazil was announced.
From the chart we can see a clear pullback in January to the mid 60s that coincided with the news the 2019 revenue target was missed cutting a big chunk out of NPAT and then another recovery possibly because the market accepted the revenue wasn't lost just moved one quarter to the right into 2020. The Corona virus was probably also a factor. Clearly though there's a lesson here for management, don't over promise and under-deliver, you will get belted. Perhaps that is why this year's forecast has not been adjusted up to take account of the revenue rollover...it provides management with a bit of wriggle room.
News of the new contract, confirmation the Corona virus does not represent an ongoing threat to business and that the factory is back to work has gone down extremely well pushing the share price up around 10%. All very re-assuring for investors.
From a charting perspective we now have an ascending pennant base formation and a breakout confirming the downtrend is broken. Based on that we could see a move into the mid 90s, enough to re-establish the uptrend (need 90 or more), whether that happens off the back of this week's news or news yet to come remains to be seen nonetheless we now have evidence of a turnaround.
As the year unfolds we can expect management to announce the conversion of projects in the pipeline to new contracts and that should underpin a steady improvement in the share price.
By year's end PET's production capacity will be 40k tonnes worth about $150m so I'm tipping next year's revenue forecast covering global sales and engineering works will be ahead of the numbers in Graeme Newing's report.
Fingers crossed.
(20min delay)