retrace trading opportunity, page-4

yes guys i was hoping that 10.50 wouldnt break, but in the last few sessions it seems to have found a bit of support at 10.40.

Look, i think the retracement in share price has to do with what you mentioned PLUS the fact that INTEREST RATES have apparantly 'bottomed' and will increase from here on in according the the reserve bank in 2010 onwards. RHC has a great amount of DEBT, and the major reason why theyre going to outperform their forecasts by quite abit in the upcoming 2009 yearly report is due to the lower interest rates they had to pay to service their debt in the last half year.

Add to this that they have quite a few foreign hospital earnings, i.e they are exposed to the higher AUD currency from here on out

And you can see why it retraced back based on these fundamental factors

remember - the faxt that theyre going to make 20% growth instd of 10% growth is largely due to the lower interest rates theyve had to pay on the massive debt they have, plus the lower AUD in the last 6months helped them too

So for 2010 we have potentially built into fundamental analysis modelling for this stock

a) expectation for higher interest rates and hence cost of funding their debt

b) expectation of a higher AUD

**** These 2 factors can be somewhat cancelled though if therell be an 'expectation' of higher EPS due to a global recovery and hence higher demand. I.e higher revenues translating to higher earnings due to global demand recovery

their investments in new hospitals will come through next year, so the fundamentals/financials regarding ROE (return on equity) and more importantly ROA (return on assets or Return on capital) should start looking better.

Right now theyve got high debt, but its in the process of being invested and one would hope that the return on investment of these borrowed funds will good.

It seems a decent buy to me at these levels , but if you want to be sure, we need the chart to turn back into an uptrending channel, or at least confirm a sideways channel.
Right now its too early to tell. If you want to take a punt at picking the bottom for the recent pullback, then thats what youre doing.

Good stock though and once a side-ways trend occurs, you can trade the swings from support to resistence on the side movement. Or up movement if it breaks 11.00 for example again.