M+ Online Research Articles

Author: MalaccaSecurities   |   Latest post: Tue, 24 Nov 2020, 10:33 AM


Technical Focus - Gold Proxy

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Safe haven bets amid renewed volatility

  • Global equities have delivered strong gains in recent months, exceeding expectations as investors pinned hopes on the re-opening of economic activities. After a meteoric rise with valuations are now toppish and prospects of earnings recovery are still uncertain, renewed volatility kicks in over the past couple of days.
  • We see the safe haven stocks (gold and silver-related) outperforming the negative market amid the higher gold prices that stood above the US$1,700 per ounce. The strides was also reacting to the US Federal Reserve gloomy economic outlook as benchmark interest rates are likely to be maintained at record low levels till 2022.

Trading Catalyst

  • Poh Kong Holdings Bhd is one of the largest distributor and supplier of jewelry, precious stones, semi-precious stones and gold ornament in Malaysia. Moving forward, Poh Kong aims to focus on expanding their online shopping services which currently has yet to see significant contribution against physical stores. After delivering 88.8% YoY jump in net profit to RM18.7m in 1HFY20, Poh Kong is trading at 6.4x PE, which is significantly lower than 2Y and 10Y average PE of 7.8x and 10.7x, respectively, implying potential upside in our view.

Technical Outlook

  • Following a two-months long of consolidation, price has experienced a consolidation breakout above RM0.515 on high volumes. We expect extended gains as price looks to see further upside, targeting the next resistance of RM0.57-RM0.60 with long term target at RM0.705. Support is set at around RM0.46, while cut loss point at RM0.45.

Trading Catalyst

  • Tomei Consolidated Bhd currently has 53 retail outlets; all located in major shopping malls in Malaysia. Shopping malls garners higher number of traffic for the group’s retail business segment. Financial wise, recall in 1QFY20 whereby net profit rose 34.4% YoY to RM4.0m amid the higher gold prices which we expect the growth momentum to take charge in 2HFY20.

Technical Outlook

  • After a strong recovery since mid-March 2020, price has staged a pullback accompanied by low trading volumes. Price has found some support along the EMA60 level before forming a channel formation breakout above RM0.47. Price may head higher towards the next resistance of RM0.545-RM0.57, levels with long term target at RM0.60. Support is located at around RM0.425 level, while cut loss point at RM0.42.

Source: Mplus Research - 12 Jun 2020

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Related Stocks

Chart Stock Name Last Change Volume 
POHKONG 0.79 -0.015 (1.86%) 1,321,300 
TOMEI 0.84 -0.035 (4.00%) 1,137,900 

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