• A globally competitive MRO service provider. Destini is currently one of the leading maintenance, repair, overhaul (MRO) service providers in the country focusing primarily on four segments i.e. aviation, marine, land transport (for both the defense and commercial sectors) and the O&G sectors.

• Overall, marine division contributes about 70% to revenue, followed by aviation (20%), oil & gas (8%) and others (1%). Its geographical footprint 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. At RM0.69, Destini is trading at 12.3x FY17 P/E (32% below its average 10-year P/E of 18x), supported by a robust 2016-2018 EPS CAGR of 48% and healthy orderbook over RM600m. According to consensus, the group could be on the verge of securing over RM1bn worth of new jobs over the next 12 months, as management ramps up its MRO presence within Malaysia and on the regional front.

• Poised for a potential downtrend resistance breakout. After tumbling 33% from 52-week high of RM0.895 (14 Sep 16) to a low of RM0.60 (30 Dec 16), Destini’s share prices staged a relief rally to RM0.735 (11 Jan) before ending at RM0.69 yesterday in high volume (+122% against 5-d average). We believe the stock is ripe for a downtrend resistance breakout soon after a brief sideways consolidation, as indicators are on the mend.

• A decisive breakout above downtrend line near RM0.70 will likely to lift share prices higher towards RM0.745 (50% FR) and RM0.78 (61.8%FR) before testing our LT objective at RM0.825 (76.4% FR). On the flip side, key supports are situated at RM0.67 (lower Bollinger band) and RM0.65 (70-w SMA). Cut loss at RM0.63

Source: Hong Leong Investment Bank Research - 3 Feb 2017