HLBank Research Highlights

Author: HLInvest   |   Latest post: Fri, 6 Dec 2019, 9:55 AM


AWC - Solid Order Book and Balance Sheet to Cushion Adversity

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We like AWC’s asset management business model for its: (i) substantial order book c.RM1.1bn (providing about four years earnings visibility), (ii) healthy balance sheet (net cash of 13.8sen), (iii) positive growth in the Total Building Solutions industry, (iv) reputable clientele (mainly from Malaysia, Singapore and Middle East) with a high chance of securing future tenders. Valuations are undemanding at 6.7x FY20 P/E (46% below its peers and 35% below its 10Y mean of 10.3x), supported by strong earning CAGR of 17% from FY18-21. Ex cash, valuation is even more compelling at 5.4x. Although share prices could see mild pullback following yesterday’s 9.2% rally, a decisive LT downtrend line breakout above RM0.72 could see a potential downtrend reversal, targeting higher upsides at RM0.74-0.85 zones.

Poised for a LT downtrend line breakout. Prior to the 3-year RM113m (total order book now stood at RM1.1bn) hospital service job announcement for the National Cancer Institute, AWC’s share price jumped 9.2% to RM0.71 yesterday with 2.84m shares transacted (4.6x higher than the 90 days moving average of 0.51m). Although the stock could see a mild pullback today to neutralise overbought positions, the next up leg is underway following the Marubozu candlestick formation. Currently, AWC is downward trending after hitting a 52W high of RM0.93 (Sep 2018) but a decisive LT downtrend line breakout above RM0.72 could see a turnaround soon with share prices targeting RM0.74 (38.2% FR) and RM0.775 (50% FR) zones next before reaching our LT objective at RM0.85 (76.4% FR). Key supports are RM0.685 (20D SMA) and RM0.67 (10D SMA). Cut loss at RM0.64.


Source: Hong Leong Investment Bank Research - 21 Aug 2019

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