• Business profile. BENALEC is involved in the provision of marine construction services, mainly in the area of land reclamation, dredging and beach nourishment; coastal protection works, such as rock revetment works, shore protection works and breakwater construction; pre-bore and marine piling, and construction of marine structures, bridges, jetties, ports and other offshore and ancillary structures.
• Strong performance YTD. Share prices of BENALEC surged to a high of RM0.925 on 9 Feb, mainly boosted by the official approval received from the Department of Environment (DOE) with regards to the Detailed Environmental Impact Assessment (DEIA) report (received on 23 Jan), which enables the commencement of Tanjung Piai’s land reclamation. However, a weaker-thanexpected 1H15 results (released on 11 Feb) saw its prices sliding 12.4% to a low of RM0.81 before ending at RM0.82 yesterday.
• Management remains positive on its outlook and expects positive developments from the advanced stages of business negotiations. Despite the poor performance, Management remains confident in maintaining a very positive outlook for the Group over the next several years, premised on a stable stream of revenue of approximately RM597m (land sales in Melaka) which can be progressively recognized between FY15F and FY17F.
• On 12 Mar, BENALEC announced that it is in the midst of finalizing the terms and conditions of the Sale and Purchase Agreement with The State Secretary, Johor and 1MY Strategic Oil Terminal S/B to undertake the reclamation works and sale of approximately 1,000 acres of land off the coast of Tanjung Piai.
• Poised for an impending “flag” breakout to resume uptrend. Chart-wise, since hitting YTD high of RM0.925, BENALEC’s share price retreated and formed a continuation “Flag” pattern on daily chart. Hence, share price is expected to resume its previous uptrend as readings from hourly oscillators are on the mend, which bodes well for an impending Flag breakout.
• A decisive breakout above RM0.84 (30-d SMA or sloping line) will spur prices higher to retest RM0.88 (50% FR). Further upsides are situated at RM0.96 (61.8% FR) and RM1.08 (Flagpole measurement objective). Major supports are situated at RM0.80 and RM0.76 (50-d SMA). Cut loss below RM0.75.

Source: Hong Leong Investment Bank Research - 13 Mar 2015