• TAS Offshore has been trending below the 200-d SMA over the past year and buying interest has emerged recently over the past three months where share price has traded firmer from RM0.24 to RM0.33.

• We opine that the recent positive quarterly result, which was announced in January 2017, gave a confidence boost to traders that TAS might be on a lookout for a turnaround story after suffering three quarters of losses consecutively.

• To recap, in August 2016 TAS secured two contracts worth a combined RM31.6m for the sale of two harbour tugs. In January 2017, it further secured a contract to sell a landing craft worth RM17.29m, which will be delivered in 2Q17. We believe that the contracts are likely to contribute to their earnings in the FYE17 results.

• On the technical grounds, the weekly chart has formed a bullish divergence and share price has rebounded above the RM0.305 last week, accompanied by higher-than-average volumes.

• Meanwhile, on the daily chart, we may expect a breakout above the RM0.335 (200-d SMA), targeting RM0.35 and RM0.375, followed by a LT objective target of RM0.40. Support will be located around RM0.32 and RM0.315, while cut loss will be set around RM0.31.

Source: Hong Leong Investment Bank Research - 13 Feb 2017