• Business profile – Comintel Corporation Berhad is engaged in three business segments: (i) communication and system integration (provision of turnkey engineering design and integration, program management, installation and commissioning); (ii) defense maintenance (provision of electronic systems testing, repair and provision of integrated logistics support), and (iii) manufacturing (manufacturing and assembling of electronic components).
• Share price performance – After a prolonged consolidation phase, share price surged circa 73% on 18 Dec 2015, driven by a strong set of earnings in the company’s 3rd quarter result. The company’s net profit surged 458% to RM4.86m in the 3rd quarter on the back of a 31% increase in revenue of RM109.85m. Thereafter, the stock has been in the downside consolidation mode as investors took profit after the strong rally.
• The company reported another quarterly record high earnings for its 4th quarter, causing a renewed surge in share price on 25 Mar 2016. At this juncture, we expect the trend of the stock to remain up and bullish on the back of strong buying momentum in daily MACD, RSI and Stochastics oscillators.
• On anticipation of further upside, we recommend a TRADING BUY on Comcorp, with technical upside resistances of RM0.84, RM0.895, and RM0.96 (long-term objective). Supports are at RM0.77 and RM0.75. Cut loss below RM0.73.
• Attractive risk to reward ratio with 23% upside against 6.4% downside. We see a good risk to reward ratio for investor with a theoretical entry price of RM0.78 given that the downside to the cut loss zone of RM0.73 is 5 sen (-6.4%) while the upside to the LT target of RM0.96 is 18 sen (+23%).

Source: Hong Leong Investment Bank Research - 14 Apr 2016