• HLIB has a BUY rating on MITRA with an institutional target price of RM1.95 (based on SOP), or 61.2% upside. We like MITRA mainly due to its robust orderbook of RM1.6bn (4.3x FY14 construction revenue) to sustain 3- year 24% EPS CAGR trajectory, with over RM2bn worth of tenders in the pipeline.
• After tumbling from the peak of RM1.39 (21 May) to a recent low of RM0.80 (25 Aug), MITRA’s s hare prices s teadily recovered to a high of RM1.32 (24 Nov) before settling at RM1.21 yesterday. At RM1.21, MITRA is trading at undemanding valuations of 8.1x FY16 P/E (19% below peers ’ 10x).
• More upside as indicators are bottoming up. We expect further upside in the short to medium term as share prices have been trading above 200-d SMA (now at RM1.17) since 9 Oct, supported by bottoming-up RSI and slow stochastic indicators with MACD about to confirm its golden crossover coupled with the hammer candlestick formation on 14 Dec.
• A decisive breakout above immediate resistance of RM1.26 (upper Bollinger band) will spur prices higher to RM1.32 and RM1.39 levels, with a long-term target price of RM1.50, a key psychological barrier. Key supports are pegged at RM1.17 (200-d SMA and 61.8% FR) and RM1.16 (14 Dec low). Cut loss at RM1.13.
• Attractive risk to reward ratio with 24% upside against 6.6% downside. All in, we see a good risk to reward ratio for investor with a theoretical entry price of RM1.21 given that the downside to the cut loss zone of RM1.13 is 8 sen (-6.6%) while the upside to the LT target of RM1.50 is 29 sen (+24%).

Source: Hong Leong Investment Bank Research - 18 Dec 2015