Is it a good chance to buy Xiaomi in dip

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By :  ,  Financial Analyst
Xiaomi (1810), a giant Chinese electronics company, announced shares placement of approximately 4.1% of the existing issued share capital at 23.70 Hong Kong dollars per share, representing about 9.4% to its closing price on Monday, and issue of convertible bonds. The company said it intends to use the estimated net proceeds of 3.1 billion dollars for strengthening working capital for business expansion, investments to increase market share in key markets, strategic ecosystem investments and other general corporate purposes. The stock fell 7% after the announcement of share placement.

In November, the company announced that 3Q adjusted net profit rose 18.9% on year to 4.13 billion yuan on revenue of 72.16 billion yuan, up 34.5%. The 3Q result of the company shows the strong growth rate of the company.

From a technical point of view, although the stock posted a pullback from HK$28.4, it is still supported by a rising trend line and the 50-day moving average. The stock posted a potential candlestick pattern yesterday, then the stock broke above the high of yesterday. It would provide more evidence to the reversal signal.

Bullish readers could set the support level at HK$22.3, while resistance levels would be located at HK#28.4 and HK$31.00.

Source: GAIN Capital, TradingView
Related tags: Equities Stocks Tech Stocks

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