We believe the worst is over for DESTINI as the share price is hovering above SMA200, coupled with the recovering sentiment following a series of projects reviving after the review by PH government, we opine that the downside risk would be limited, at least over the near term. Moreover, the timely expansion into the rail services could be a prelude in bidding of rail and track projects in the future. DESTINI has formed a flag breakout, next target will be at RM0.35- 0.40, followed by RM0.47. Support will be at RM0.27-0.28, with a cut loss set below RM0.265.

An established MRO service provider with global presence. DESTINI started off as an aviation tool and spare parts trading company supplying for the defence industry. Two decades later, DESTINI has evolved to provide a diversified range of products and services for the aviation, marine and land system industries for both defence and commercial sectors. With a wider portfolio and coupled with DESTINI’s foray into oil and gas, it has expanded its geographical footprint over the Asian, Australian, Middle East and European regions.

Timely expansion into rail services. Following the revival of mega projects such as ECRL and Bandar Malaysia, construction sentiment has turned positive and DESTINI has incorporated a new wholly-owned subsidiary DLP Rail Sdn Bhd on April 19 for the expansion of its future service offerings to include the provision of total engineering solutions and services, civil works, rolling stock, project and asset management and maintenance services for rail and track transportation projects in Malaysia. Hence, we may anticipate this as a prelude for bidding of rail and track in the future.

Hovering above SMA200. After a severe decline post-GE14, the share price has finally surfaced above the SMA200 in Mar-19, accompanied by high volumes. Meanwhile, DESTINI has formed a flag breakout with a positive ADX signal (+DMI>ADX) and it may retest the RM0.35-0.40 level. Support will be set around RM0.27-0.28, with a cut loss below RM0.265.

Source: Hong Leong Investment Bank Research - 23 Apr 2019