• Company profile. Ranhill Holdings Berhad involves in power business (power generation in Sabah) and environment business (water treatment and supply services and wastewater treatment plants).

• Trading Catalyst . Recently, Ranhill highlighted its plan to expand its power business to the SEA region to increase its revenue contribution to the group to 50% from the current 30%. Also, Ranhill intends to increase the power plant capacity to 1,000MW in the next 3 years vs. current capacity of 380MW.

• Steady financial results . Ranhill has been profitable for the past four quarters, with FY16 EPS of 9.22 sen. Meanwhile, it has paid 3.8 sen dividend since listing, while declaring 2.0 sen this quarter (ex-date 13th Mar 2017). Ranhill has also proposed a final dividend of 2.0 sen, subject to the shareholders' approval in the AGM. The cumulative dividend payments make Ranhill an attractive yield play with 9.3% dividend yield (based on total dividend of 7.8 sen at current market price of RM0.84).
• Technical outlook. Daily chart experienced a breakout above RM0.84, accompanied by strong volumes. Also, the MACD Line is approaching zero, with the MACD Histogram turning green. The RSI indicator has hooked up above 50 – indicating that short term momentum is turning bullish. We expect buying interest could pick up over the near term towards the target of RM0.875, RM0.92 and RM0.975 levels. Meanwhile, support will be anchored around the RM0.825, followed by RM0.815. Stop loss will be set around RM0.80.

Source: Hong Leong Investment Bank Research - 2 Mar 2017