I-Stone Group Bhd

Capitalising on IR 4.0

• I-Stone is one of the key players in the design, manufacturing and modification of specialised automation machines. Proxy to the rising adoption of automation amongst companies in order to improve production efficiencies & capabilities and to maintain a leaner operational cost structure.

• Capitalising on the adoption of fourth industrial revolution (Industry 4.0) with opportunities under the field of artificial intelligence, big data, robotics and the leasing of automated lines and equipment.

• Technically, the breakout above RM0.25 suggests price may charge towards the next resistances at RM0.29-RM0.325 with long term target at RM0.36.

Trading Catalyst

• I-Stone Group Bhd (I-Stone) involved in the design, manufacturing and modification of specialised automation machines which are used to automate manufacturing processes. Some of the I-Stone’s key clients include EMS players like Dyson, V.S. Industry Bhd and ATA IMS Bhd. We favour I-Stone as a proxy to the rising adoption of automation amongst companies in order to improve production efficiencies & capabilities and maintain a leaner operational cost structure.

• Even with the implementation of Movement Control Order (MCO), I-Stone remained in the black recording a net profit of RM1.5m on top of revenue at RM13.9m in 2QFY20, underlying the resilience of the demand for their products. Moving forward, I-Stone intends to leverage on the network of its newly appointed chairman; Datuk Awang Daud Awang Putera, co-founder of Serba Dinamik Holdings Bhd for automation developments under the oil & gas industry.

• At the same time, I-Stone is also capitalising on the adoption of fourth industrial revolution (Industry 4.0) with opportunities under the field of artificial intelligence, big data, robotics and the leasing of automated lines and equipment.

Technical Outlook

• Technically the uptrend intact formation was established since end-July 2020. Price has formed a bearish engulfing candle after hitting RM0.325 before staging a healthy pullback. While price appears to have found its footing, the recent recovery beyond the daily EMA9 and the breakout above RM0.25 suggests price may charge towards the next resistances at RM0.29-RM0.325 with long term target at RM0.36. Support is pegged at RM0.22 and cut loss is located at RM0.215.

Source: Mplus Research - 24 Aug 2020