• Business profile. Heng Huat Resources Group (HHGROUP), which was listed on the ACE market of Bursa Malaysia on 25 July 2014, is engaged in the manufacturing and trading of biomass material and value-added products focusing on oil palm EFB fibre, coconut fibre and value-added products. The Group is also a manufacturer and distributor of its own brands of mattresses and related products.
• Prospect remains buoyant. According to IMR report by Protégé Associates, the biomass material market for coconut fibre and oil palm EFB in Malaysia is estimated to grow at a CAGR of 14.3% from 2013 to 2018 to reach RM180.4m in 2018. Management expects this growth to be driven by (1) rising demand in China; (2) population growth and greater affluence spurring demand for end-products; and (3) growing applications of natural fibre.
• Uptrend in the progress. Since its listing, share price tumbled 40% from all-time high of RM0.62 to the low of RM0.37 on 12 Dec 2014. This brought price into an oversold position which usually triggers a technical rebound. Moreover, a long white candlestick on 23 Jan 2015 has initiated uptrend line.
• Further upside is expected in near future. We are targeting at RM0.515 and RM0.53, with long term target price of RM0.57. Immediate support is RM0.49 (Upper-Bollinger band) and RM0.48. Cut loss at RM0.47 (10-d SMA).

Source: Hong Leong Investment Bank Research - 26 Feb 2015