• Profile: RCE Capital (RCE) is a 57% subsidiary company of Amcorp Group Berhad. It was listed on the Second Board on 20 Sept 1994 and subsequently transferred to the Main Board on 23 Aug 2006. RCE's core businesses are consumer financing services and commercial financing or factoring.
• Values emerge after recent carnage. RCE’s s hare prices tumbled from 52- week high of RM0.41 (15 Sep) to a low of RM0.245 (29 Sep) after the ex-date of 12 sen tax-exempt dividend (s pecial and final) on 22 Sep. At RM0.27, RCE’s 10x P/E is in line with peers 9.6x while its 0.6x P/B is significantly lower than peers 1.4x. Its dividend yield of 5.6% is also 49% higher than peers 4.7%, which would provide sufficient margin of safety and cushion further sharp share price decline.
• Upside bias amid bottoming up indicators. The stock has been steadily trending above RM0.245 low and closed above 10-d SMA yesterday, supported by strengthening indicators. A decisive breakout above RM0.285 (23.8% FR) will spur prices higher towards RM0.30 (38.2% FR) and our LT objective at RM0.33 (200-d SMA and 50% FR) levels. Key supports are RM0.25 (daily lower Bollinger band) and RM0.245. Cut loss at RM0.24

Source: Hong Leong Investment Bank Research - 28 Oct 2015