Despite Covid-19 situation, SCICOM has maintained its business activities, providing support to its clients as the team in Malaysia and Sri Lanka could work from home to serve its customers throughout this crisis. Also, we believe the selling is overdone and may warrant a decent recovery, supported by its dividend yield of more than 5%. It has experienced a sideways breakout above RM0.72. Next resistance will be at 0.78-0.815, followed by a LT target of RM1.00. Support is located around RM0.69-0.72 and the cut loss is set at RM0.68.

Business as usual for SCICOM despite Covid-19. Despite the challenges faced by corporates under the Covid-19 pandemic, SCICOM is able to continue serving its clients during this unprecedented period of uncertainty. Most of their teams are working from home, ensuring continuity of business activities and providing support to its clients and customers throughout this crisis.

Supported by decent dividend yield. Hence, we believe the selling is overdone and we believe it may warrant for a healthy recovery, supported by its strong dividend yield more than 7% over the years (FY15-19). At this juncture SCICOM has paid 3 sen in 1H20 and likely to be paying another two rounds in 2H20 (based on previous records), which may translate to dividend yield of more than 5%.

Recovering technicals could warrant further breakout. SCICOM has declined more than 60% towards the recent low (RM0.48) and rebounded more than 50% over the past 3 weeks. We believe technical readings are recovering at this juncture and may retest several resistance (RM0.78-0.815) over the near term, with a LT target located around RM1.00. Support is set around RM0.69-0.72, with a cut loss set around RM0.68.

Source: Hong Leong Investment Bank Research - 9 Apr 2020