• Sunzen Biotech Berhad (SUNZEN) is a leading animal health specialist focusing on developing, manufacturing and marketing animal health care products. The group develops and manufactures non-antibiotic animal health products that comply with international safety standards to ensure public safety, and markets a wide range of animal health products which include feed additives, nutritional feed supplements, veterinary pharmaceuticals, animal vaccines and other animal health care products for livestock such as poultry, swine, goats and cattle, as well as companion animals.
• New shares and warrants listed on 4 Mar. SUNZEN had completed its rights issues (3 for 5 at RM0.25 each) with warrants (1 warrant: 1 rights share) exercise following the listing of 179.4m rights shares together with 179.4m warrants (SUNZEN-WB) as well as 3.61m adjustment warrants (SUNZEN-WA) on 4 March 2016.
• Signs of bottoming up. The stock is steeply oversold after a 47.8% plunge from 52-wk high of RM0.46 (24 June 2015) to a low of RM0.24 (4 Mar) before closing at RM0.275 yesterday. We expect share price to resume its upward momentum in the near term given the formation of two bullish reversal patterns, ‘Tweezers bottom” and “Bullish Harami” patterns on daily and weekly chart, respectively, supported by uptick in technical indicators.
• As such, we are targeting immediate resistance at RM0.295-0.32 (gap down on 1 Mar levels. A decisive breakout above RM0.32 will spur prices higher towards our LT objective of RM0.35 (61.8% FR and 22 Feb high. Supports are pegged at RM0.26 (10-h SMA) and RM0.25 (7, 8 & 9 Mar lows), with cut loss at RM0.245.
• Attractive risk to reward ratio with 27.2% upside against 10.9% downside. We see a good risk to reward ratio for investor with a theoretical entry price of RM0.275 given that the downside to the cut loss zone of RM0.245 is 3 sen (-10.9%) while the upside to the LT target of RM0.35 is 7.5 sen (+27.2%).

Source: Hong Leong Investment Bank Research - 10 Mar 2016