• Aglobally competitive MRO service provider. Destini is currently one of the leading maintenance, repair, overhaul (MRO) service providers in the country focusing primarily on four sectors, namely aviation, marine, oil & gas and land transport sectors. As at 1H16, marine division contributed 69% to revenue, followed by aviation (22%), oil & gas (8%) and others (1%). Its geographical footprint now encompasses the Asian, Oceania, Middle East and European regions. Currently, Destini’s single largest shareholder is Dato’ Rozabil Abdul Rahman (MD), followed by Aroma Teraju (19.4%), a wholly-owned subsidiary of the Ministry of Finance.
• Orderbook set to grow strongly. Currently, Destini is trading at 14.2x FY17P/E, 25% below its average 10-year P/E of 19x, supported by a robust 2016-2018 EPS CAGR of 48% and healthy orderbook of ~RM732m (a cover ratio of 2.7x on FY15 revenue). The group could be on the verge of securing close to RM2bn worth of new jobs over the next 12 months to boost its earnings visibility, as management ramps up its MRO presence within Malaysia and on the regional front.

• Potential downtrend reversal. Destini’s share price appears to be at the tail end of its brief retracement following a bullish flag breakout recently. As long as share prices maintain its posture above RM0.80-0.825 (50-d SMA) levels, more upside could follow next, supported by the formation of Tweezers bottom and bottoming up hourly chart indicators. A decisive close above immediate resistance at RM0.86 (10-day SMA) will spur prices higher to RM0.895 (52-week high) before reaching our flag breakout objective at RM0.995. Cut loss at RM0.79.

Source: Hong Leong Investment Bank Research - 4 Nov 2016