Coraza Integrated Technology Bhd (Technical Buy)

• Following a retracement of 35% from the peak of RM1.16 in February this year to as low as RM0.755 last week, CORAZA shares have since recovered to close at RM0.815 yesterday. With the share price likely to have found its key support atRM0.755, a technical rebound could be anticipated.

• Chart-wise, we believe the share price will plot an upward trajectory in view of the strengthening Stochastic and RSI indicators coupled with the 12-day moving average hovering above the 26-day moving average following the MACD golden cross yesterday.

• Hence, we expect the stock to rise and test our resistance thresholds of RM0.90 (R1; 10% upside potential) and RM0.95(R2; 17% upside potential).

• Conversely, our stop loss price has been identified at RM0.73 (representing a 10% downside risk).

• An engineering support services provider, CORAZA is mainly involved in the business of manufacturing metal sheet parts and precision machine components, servicing clients from various sectors including semiconductor, instrumentation, life science etc.

• Earnings-wise, the group reported a net profit of RM4.3m in 4QFY22 compared with a net profit of RM3.9m in 4QFY21. This took FY22 bottomline to RM14.7m (versus net profit of RM12.8m previously).

• Based on consensus forecasts, CORAZA’s net earnings are projected to come in at RM16.4m in FY December 2023 and RM20.5m in FY December 2024, which translate to forward PERs of 21.3x this year and 17.1x next year, respectively.

Kim Teck Cheong Consolidated Bhd (Technical Buy)

• The share price of KTC has risen to a 52-week high of RM0.295 in March this year after breaking out from its sideways pattern in August 2022.

• On the chart, the share price – which closed at RM0.24 yesterday - is expected to shift upward backed by the strengthening Stochastic indicator as the stock price has crossed back above the lower Bollinger Band.

• Thus, we believe KTC’s share price could advance towards our resistance levels of RM0.27 (R1; 13% upside potential) and RM0.30 (R2; 25% upside potential).

• Our stop loss level is pegged at RM0.21 (representing a 13% downside risk).

• Fundamentally speaking, KTC is engaged in the provision of distribution and warehousing services of third-party consumer packaging goods in East Malaysia. It also manufactures bakery products which are sold in Sabah.

• Earnings-wise, the group reported a net profit of RM4.5m in 2QFY23 compared with a net profit of RM3.8m in 2QFY22,driven mainly by increased sales of personal care and cosmetics products as well as food products. This took 1HFY23bottomline to RM8.9m (versus net profit of RM7.9m previously).

• Based on consensus forecasts, KTC’s net earnings are projected to come in at RM23.0m in FY June 2023 and RM25.0m in FY June 2024, which translate to forward PERs of 7.1x this year and 6.5x next year, respectively.

Source: Kenanga Research - 18 May 2023