• Trading & services division. Fiamma is mainly involved in the distribution of electrical home appliances, sanitary ware and bathroom accessories, home furniture and fittings and medical and healthcare products.

• Property development. Fiamma also ventured into property development with its maiden project in the development of office suites in Jalan Tuanku Abdul Rahman (started in 2013 and completed in 2015). Current on-going and future projects are: (1) Development of double-storey terrace houses in Kota Tinggi, Johor as well as the service apartments and retail space (Vida Heights) in JB, which will contribute to the Group’s revenue and profit for the FY16/17; (2) Proposed redevelopment of the existing warehouse land in Bandar Menjalara, Kuala Lumpur into service apartments (East Parc @ Menjalara) which has commenced construction in July 2016 and to be completed before 2020, and (3) The proposed new commercial development in Jalan Yap Kwan Seng and the proposed new mixed development in Jalan Sungai Besi, both in Kuala Lumpur are expected to contribute to the Group’s future income s tream.

• Poised for further upside amid bullish downtrend line breakout. At RM0.575, FIAMMA’s P/B is inexpens ive as it is trading at 13% discount against its peers. We expect FIAMMA to play catch-up as share prices had underperformed with only 1.3% gain YTD.

• The downtrend resistance breakout in daily and weekly chart could signal more upside ahead, supported by bottoming up indicators. A decisive close above RM0.59 (100-d SMA) will spur prices higher to RM0.615 (23.6% FR) before reaching our LT target at RM0.66 (38.2% FR). Major supports are near RM0.55 (52-week low) and RM0.545 (weekly lower Bollinger band). Cut loss at RM0.54

Source: Hong Leong Investment Bank Research - 22 Sep 2016