• SCABLE is one of the HLIB top construction picks with an institutional target price of RM2.49 (based on SOP), or 52.7% upside. SCABLE has strong growth potential driven by acquisitions, superior orderbook cover and a new earnings stream from its hydro plant. The impending Sarawak Election, touted to be in April, is an added booster as investors scavenge for such plays. SCable is als o a cheaper proxy to Sarawak’s growth theme with P/E valuations at a 50% discount to CMSB.
• Poised to retest RM1.77-1.87 zones amid a bullish short term trend line breakout. Yesterday, SCABLE surpassed its short term downtrend line as share prices gained 2.5% to close at RM1.64 (above key SMAs), supported by upticks in indicators .
• We expect prices to break the immediate resistance of RM1.71 (61.8% FR) soon. A decisive breakout above RM1.71 will spur prices higher to retest RM1.77 (76.4% FR) and 52-week high of RM1.87. Our long term price target is RM1.90 (18 Aug 2015). Key supports are RM1.59 (10-d SMA) and RM1.55 (23.6% FR). Cut loss at RM1.54.
• Attractive risk to reward ratio with 15.9% upside against 6.1% downside. We see a good risk to reward ratio for investor with a theoretical entry price of RM1.64 given that the downside to the cut loss zone of RM1.54 is 10.0sen (-6.1%) while the upside to the LT target of RM1.90 is 26 sen (+15.9%).

Source: Hong Leong Investment Bank Research - 17 Mar 2016