APB Resources Bhd is poised to trend higher and test the psychological level of RM3. Over the past 5 days, the counter rose 4.6% to close at RM2.50 on Dec 14. More impressively, it jumped 73.6% in the past year, touching a high of RM3.29 after seeing a low of 96 sen in April.

Shares of APB Resources hit limit-up in June after Press Metal Aluminium Holdings Bhd’s co-founder and executive director Datuk Koon Poh Tat emerged as its new substantial shareholder. A filing with the stock exchange showed that Koon bought a 5.72% stake or 6.35 million shares on the open market. The transaction price was not disclosed. But based on APB Resources’ closing price of RM2.25 the previous day, the block of shares would have cost Koon RM14.29 million.

On October 27, its executive director and CEO Yap Swee Sang cease to be a substantial shareholder after he disposed of his indirect shareholding of five million shares, or 4.509% equity interest, in the company for RM11 million via direct business transaction by his private vehicle Ikram Pintas Sdn Bhd.

Swee Sang first emerged as a substantial shareholder in APB in October 2017, after his father Yap Kow @ Yap Kim Fah, who is the non-executive director and chairman of APB, transferred 14.35% equity interest, to him. At the time, Swee Sang also held an indirect stake of 32.47% equity interest, through Ikram Pintas.

What could have attracted Koon was the solid financial performance in FY24 by the fabricator of design engineering equipment.

APB maintained a solid revenue standing at RM18.9 million for the 3 months ended Sept 30. Although this reflects a 5.1% year-on-year from RM20 million, it underscores the group's ability to sustain its business operations amidst tough market conditions. This period saw a strategic shift in the Group's product mix, resulting in a gross profit margin of 33.9%, compared to 37.1% in 4QFY2022.

However, its net profit for the 3 months also fell to RM2.3 million compared with RM4.8 million a year ago. This was largely due to prudent financial adjustments, including the net reversal of impairment losses on trade receivable and liquidated and ascertained damages from the prior year.

Notably, APB showcased operational resilience on a quarter-on-quarter (QoQ) basis, posting a higher net profit of RM2.3 million from RM2 million. This improvement is attributed to an enhanced gross profit margin, bolstered by a more favourable product mix.

APB is optimistic about the future, especially in the fabrication sector with signs of revived capital spending.

The capex spending will be in areas where APB has established its expertise such as oleo-chemical, oil & gas, energy, and petrochemical sectors. It will be interesting to see if Koon will raise his stakes in APB and drive the company’s future direction, which could eventually see its share price moving up further.

Analyzing the daily chart, APB appears to be in the reaccumulation stage, marked by a strategic shakeout just below the support level. This signals a promising setup, poised for a retest of resistance after shedding weak-hand holders through the shakeout.

Currently, the price is trading closely with the 20-day moving average and eyeing a retest of the nearest resistance at RM2.50. A successful breakthrough at this level holds the potential to RM3.