Kenanga Research & Investment

Author: kiasutrader   |   Latest post: Fri, 23 Oct 2020, 9:20 AM


Daily technical highlights – (GDB, OCR)

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GDB Holdings Bhd (Trading Buy)

  • GDB’s share price saw a technical breakout from its consolidation pattern that stretches back to April this year when the stock reached a high of RM0.67.
  • The bullish trend is supported by a price crossover of its 200-day simple moving average line in recent days.
  • Given the positive backdrop, GDB shares – which closed at RM0.635 yesterday on heavy volume – could continue to climb towards our resistance thresholds of RM0.71 (R1) and RM0.76 (R2), respectively. This represents upside potentials of 12% and 20%, respectively.
  • We have pegged our stop loss level at RM0.57 (or 10% downside risk).
  • GDB – which was listed on the ACE Market on 27 March 2018 before transferring its listing status to the Main Market on 24 April 2020 – is involved in the provision of construction services (focusing on high rise residential, commercial and mixed development projects).
  • The Group’s net profit has been rising every year since FY16, growing at a CAGR of 41.9% from RM7.2m in FY15 to RM29.1m in FY19. Despite the Covid-19 related business disruptions, it was still profitable in 2QFY20 with net profit of RM3.9m (-43% YoY), taking 1HFY20’s earnings to RM9.7m (-31% YoY). Its forward earnings will be underpinned by an outstanding order book of RM1.02b as of end-June.
  • GDB is financially strong with a debt-free balance sheet that is backed by cash holdings & short-term investments of RM86.3m (translating to 13.8 sen per share or about one-fifth of its existing share price) as at 30 June this year.

OCR Group Bhd (Trading Buy)

  • OCR’s share price plotted a trend reversal following a convincing breakout from a negative sloping trend line in mid-May.
  • After pulling back from a peak of RM0.475 on 19 June to as low as RM0.24 in early August, the stock could have bottomed already. Since then, it has climbed out from an oversold territory, closing at RM0.29 amid high volume yesterday.
  • Looking technically interesting currently, the share price – which has recently crossed above the 200-day simple moving average line – could trend higher on the back of the positive momentum.
  • On the chart, we reckon the stock may rise further towards our resistance thresholds of RM0.34 (R1) and RM0.41 (R2), which translates to upside potentials of 17% and 41%, respectively.
  • Our stop loss level is set at RM0.25 (representing a 14% downside risk).
  • OCR is involved in the construction, property development, project management consultation and related businesses.
  • Hit by the Covid-19-triggered business disruptions, the Group posted net loss of RM1.7m in 2QFY20 (versus 2QFY19’s net profit of RM3.0m), which then led 1HFY20 into a net loss of RM0.5m (versus 1HFY19’s net profit of RM4.5m). • For the whole of last year, it made net profit of RM8.9m, a reversal from FY18’s net loss of RM7.0m.

Source: Kenanga Research - 8 Sept 2020

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Labels: GDB, OCR

Related Stocks

Chart Stock Name Last Change Volume 
GDB 0.695 +0.01 (1.46%) 3,777,000 
OCR 0.255 -0.005 (1.92%) 807,500 

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