• Company profile. M-Mode Berhad (MMODE) is involved in development and distribution of mobile value-added contents and its related services which include digital applications, mobile games, video contents, SMS/MMS and mobile payment platforms. In 2017, the Group has diversified into the property construction sector through its incorporation of E&J Builders Sdn. Bhd (EJ).

• Business diversification with new entrance of shareholders. In April 2017, MMODE has incorporated a property construction company EJ, whereby MMODE is capable of taking up construction works in the future. Also, in May 2017, we saw a huge off-market transaction of 61.1m shares (37.5%) transacted at a price of 30 sen, suggesting there is a potential new shareholder to this mobile content and construction company.

• RM180m mixed development . Later in May 2017, via its wholly-owned subsidiary EJ, MMODE has inked an agreement on 26 May with Rexallent Construction Sdn Bhd to undertake the remaining construction of the H2O mixed development in Ara Damansara, Petaling Jaya, for RM180m. We believe this could be a start of MMODE to undertake projects related to the construction segment.

• Technical outlook. Following with the strong surge in the month of Oct 2017, accompanied by higher-than-average volumes, MMODE has been on a gradual uptrend, we anticipate it could poise for a breakout above RM0.41. Next resistance will be envisaged around RM0.445-0.47, followed by a LT target of RM0.52. Support will be set around RM0.385- 0.395. Cut loss level will be anchored around RM0.38.

Source: Hong Leong Investment Bank Research - 9 Jan 2018