• Business profile. Kein Hing International Berhad is a Malaysia-based investment holding company. The Company operates through three segments: (i) manufacturing, which is engaged in sheet metal forming, precision machining, component assembly, and manufacture and sale of gas appliances in Malaysia and Vietnam; (ii) trading, which is engaged in trading of electrical and electronic products, home appliances and gas appliances, and (iii) investment holding, which is involved in investment holding activities.
• Trading BUY given the share price retracement. Since the spike up in trading volume in mid-Oct 2015, uptrend was established following a 10-year consolidation phase. We believe that recent share price retracement after hitting an all-time high of RM1.29 (12 Jan 2016) was just taking a breathier. Yes terday’s white candles tick on high volume has reignited buying momentum.
• Oscillators wise, MACD line crossed above Signal line while its histogram has also turned into positive zone, triggering buy signal. RSI increased from 45% (3 Feb 2016) to 62%, showing an improvement in buying momentum. Meanwhile, Slow Stochastics also surged from 6% (3 Feb 2016) to 70%, suggesting strong buying strength.
• Given the strong probability of resumption of uptrend, we are targeting RM1.29 (high on 12 Jan 2016) and RM1.37, with a long-term objective of RM1.47 (measurement objective of Flag pattern). Immediate supports at RM1.07 and RM1.04 (mid-point of yes terday’s candles tick). Cut loss below RM1.00.
• Attractive risk to reward ratio with 33.6% upside against 9% downside. We see a good risk to reward ratio for investor with a theoretical entry price of RM1.10 given that the downside to the cut loss zone of RM1.00 is 10 sen (-9%) while the upside to the LT target of RM1.47 is 37 sen (+33.6%).

Source: Hong Leong Investment Bank Research - 23 Feb 2016