Kenanga Research & Investment

Author: kiasutrader   |   Latest post: Fri, 4 Dec 2020, 8:55 AM


Daily Technical Highlights – (SPRING, HSPLANT)

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SPRING ART Holdings Bhd (Trading Buy)

• SPRING is a ready to assemble “RTA” furniture manufacturer that designs, develops, manufactures and sells its own furniture products.

• The group is also seeing a shift in trend from bulk-buying to online shopping, in this current pandemic. This should favour the group’s “RTA” furniture which are (i) easy to assemble and (ii) compact enough to distribute.

• QoQ, the group experienced a significant decline in net profit to RM159k in 2QFY20 from a net profit of RM2m in 1QFY20. This was mainly due to the pandemic which has affected the group’s shipment into its exporting countries. The group expects this to be temporary and remains confident in the long run as it continues to see strong demand coming in from North America.

• Ichimoku wise, the stock has been on an uptrend since the “Kumo Twist” in mid-June this year. As the stock continues to find support near the “Bullish Kumo Clouds”, we thus believe the uptrend shall persist.

• Based on the Fibonacci projection our overhead resistance levels are positioned at RM0.280 (R1: +10% upside potential) and RM0.290 (R2: +14% upside potential).

• Meanwhile, our stop loss is pegged at RM0.230 (10% downside risk).

HAPSENG Plantation Sdn Bhd (Trading Buy)

• HSPLANT is a palm oil planation company which is involved in the plating and milling operations.

• The group is poised to benefit from the higher CPO prices that has risen to c.RM3,200/ tonnes (near to its 5 year high) as it tracks the soybean prices which are on the rise given the delayed planting in Brazil.

• QoQ, the group turned from a loss of RM6m in 1QFY20 to a core net profit of RM21.5m in 2QFY20. The core net profit is derived after stripping off the gain from the disposal of eight parcels of agricultural land. This earnings improvement was mainly due to higher FFB production and better yields in its production.

• Chart-wise the stock has been forming higher lows, while forming a bullish pennant pattern. Should the buying momentum persist as displayed in the uptick in its RSI, we foresee a potential breakout from its current level.

• With that, our overhead resistance is set at RM1.85 (R1: +11% upside potential) and RM1.95 (R2: +17% upside potential).

• Meanwhile, our stop loss is pegged at RM1.51 (or 10% downside risk).

• Fundamentally, consensus is currently projecting a net income of RM44.3m (41%, YoY) in FY20E and RM51.6m (+17%, YoY) in FY21E. This translates to a forward PER of 30x and 26x respectively

Source: Kenanga Research - 28 Oct 2020

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Related Stocks

Chart Stock Name Last Change Volume 
SPRING 0.385 0.00 (0.00%) 3,074,400 
HSPLANT 1.81 -0.03 (1.63%) 273,300 

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