• Stable recurring income from tin manufacturing to ride on strong, resilient demand for F&B products. JOHOTIN manufactures tin cans, other containers and printing of tinplates for local and some Singapore clients. It also manufactures milk, processes milk powder and other related dairy products (F&B) which are mainly exported to Africa, Middle East and ASEAN countries. The F&B business contributed about 78% to 1HFYl6 PBT while the rest was derived from its tin manufacturing division.

• Uptrend intact with key supports at RM0.785-0.815 levels. Following the ex-date of 1-to-2 share split and subsequently a 1-for-3 bonus share issue on 1 S ep, JOHOTIN’s share prices retreated from Y TD hi gh of RM0.90 (30 Aug high) to a low of RM0.815 (22 Sep) before closing at RM0.84 yesterday, tracking recent broader market consolidation.

• We maintain our short to medium term positive view on the stock as the support trendline near RM0.785 is still in force. Moreover, JOHOTIN’s FY16 P/E of 10x remains undemanding, which is 44% below peers’ average of 17.9x. If a decisive breakout above immediate downtrend line near RM0.85 takes place, a move towards RM0.89 (61.8% FR), RM0.96 (76.4% FR) and our LT objective at RM1.00 psychological barrier can be expected.

• On the flip side, a slip below RM0.815 will witness further weakness towards RM0.785. Cut loss at RM0.78.

Source: Hong Leong Investment Bank Research - 29 Sep 2016