Due to COVID-19, ROHAS project execution has been delayed in various countries but management remains optimistic for a restart despite the lockdown due to its involvement in critical power utility infrastructure, supported by a healthy fabrication order book at ~RM170m and EPCC order book ~ RM530m. The risk-reward profile is attractive the stock is only trading at 7x FY21 P/E (61% discount to 2Y mean and in line with PESTECH) and 0.6x P/B (50% lower to peers and -44% to 2Y mean). In the wake of positive crossovers of 20D SMA above 30D/50D SMAs, ROHAS is poised for an impending downtrend line breakout (near RM0.45) soon, to challenge higher resistances at RM0.49- 0.535 levels.

Look beyond FY20; patience will be rewarded. HLIB has a BUY rating on ROHAS with RM0.50 TP or 8.2x FY21 EPS (+20% return including FY21 DY of 2.4%). We reckon due to the nature of its business, earnings recovery trajectory post-MCO is likely to be relatively steeper. Overall, the fabrication order book currently stands at c.RM170m, translating into 1.3x cover. EPCC order book stands at RM530m, translating into 1.5x cover. Due to COVID-19, ROHAS project execution has been delayed in various countries but management remains optimistic for a restart despite the lockdown due to its involvement in critical power utility infrastructure.

Poised for a downtrend resistance breakout. After plunging 78.5% from the 52- week high of RM0.79 (22 Nov 19) to a low of RM0.17 (19 Mar), ROHAS has been trending higher to form positive crossovers of 20D SMA above 30D/50D SMAs. The successful crossovers are seen as a precursor to an impending downtrend line breakout (near RM0.45) soon. Trading volume was strong with 8.66m changed hands (1.8x higher than 90D avg), implying that the bulls have the upper hand in the near term to take the next leg up towards RM0.49 (100D SMA) and RM0.535 (LT objective, 200D SMA and 76.4% FR). Key supports are located at RM0.39-0.40 levels. Cut loss at RM0.38 territory.

Source: Hong Leong Investment Bank Research - 6 May 2020