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In the past 6 months alone, Penang-based property player Eastern & Oriental Bhd (E&O) has 95.2% to close at 60 sen on Dec 22. Based on technical readings, the counter is likely to stage a bullish breakout to above the immediate resistance of 61.5 sen.

In the event it breaks above the 61.5 threshold, this will improve market interests and should lift the stock towards the subsequent level of 66 sen, followed by 70 sen. These levels are attainable given that it has reached a 52-week high of 73 sen not too long ago while its low was at 28 sen. At the current price, E&O is valued at RM1.13 billion in terms of market cap.

Fundamentally, the company should be strong enough to warrant better valuations. Its latest Q2 EPS is solid from properties development progress billing and hotel, unlike Q1 EPS, which was mainly due to forex gain. It has no problems raising its hotel room rates without compromising occupancy.

Another catalyst is its upcoming high-end landed property project on reclaimed land on the island. In Q2 result ended Sept 30, 2023, its net profit surged to RM29.7 million from a meagre RM16,000 a year ago. Revenue in Q2FY24 saw its revenue jumped to RM123.9 million from RM95 million a year ago.

For the 6-month period, the property developer returned to the black with a net profit of RM62.7 million from a net loss of RM1.6 million a year ago. Revenue for the 6-months just ended rose to RM209.3 million from RM171.6 million a year earlier.

This was boosted by its properties segment which posted a 22.1% increase in revenue to RM157.4 million versus RM128.9 million in the previous 6 months. The higher revenue was mainly due to higher revenue recognition from the on-going project, Arica in the current financial period.

Its hospitality segment recorded revenue of RM49.4 million in the 6-month period just ended as compared to RM40.9 million a year ago. This marked an increase of RM8.5 million or 20.8%, mainly due to the higher average room rate and occupancy rate.

Moving forward, the revamped Malaysia My Second Home (MM2H) programme is expected to benefit property sector with increased domestic activities driven by a surge in infrastructure projects and investments. As such, counters such as E&O is likely to do well whereby its properties and hospitality segments will benefit from the relaxed MM2H programme.

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Here are the setup based on Daily Chart:

1. Deep pullback follow by reaccumulation

2. Price still moving along with long term uptrend line