Although ZHULIAN is unable to operate and deliver orders during MCO, we believe they are capable to sail through this period of uncertainty supported by strong balance sheet (c.41.5 sen of net cash per share). Throughout the past 10 financial years, ZHULIAN has been paying more than 6 sen per share per annum. With the net cash in hand, it may continue to reward its shareholders with dividend in FY20. Technically, we are anticipating a sideways consolidation breakout above RM1.04, targeting RM1.09-1.13, followed by LT target of RM1.25. Support is located around RM0.96-0.97 and the cut loss is set at RM0.94.

Supported by solid net cash and dividend. The company currently is standing on a solid balance sheet with 41.5 sen net cash per share. Based on their track record over the years, ZHULIAN is very generous in rewarding shareholders (albeit flattish results over the past 5 years). Assuming they pay 9.5-10 sen dividend (should we discount 20% from FY19’s DPS amid Covid-19 episode), it will translate to c.10% DY.

Forming a base around RM1.00. Over the past 3 weeks, ZHULIAN has been trending sideways between RM0.94-1.05. Based on the recovering technical momentum oscillators (RSI and Stochastic), we believe it is pointing for a sideways consolidation breakout above RM1.04, ressitance is set around RM1.09-1.13, followed by a LT target around RM1.25, support is pegged around RM0.96-0.97, followed by a cut loss level anchored at RM0.94.

Source: Hong Leong Investment Bank Research - 13 Apr 2020