FOCUSP’s risk-reward profile is increasingly attractive after sliding 40% from a 52-week high of RM0.77 to RM0.46. Current valuation is undemanding at 9.2x FY21 P/E (48% discount against peers 17.6x), supported by a decent 4.3% DY. Even after ascribing a huge 35% discount to the average due to its small market cap, the stock still offers a good upside of 19.6% towards our technical TP at RM0.55 (11x on FYEPS 21). Undoubtedly, FOCUSP’s short term outlook remains difficult given the Covid-19 pandemic and further extensions of MCO. However, long term prospects remain positive due to its focus on a pivot to e-commerce and cost savings from rental waivers and reduction in staff cost, as well as steady demand from key corporate customers and ongoing discussions to supply to new corporate clients (airline and another convenient stores chains) for its F&B businesses. Technically, the stock is poised for a triangle breakout in the short term to challenge RM0.50-0.55 resistance levels.

Pending a bullish triangle breakout soon. After plummeting 58% from a 52-week high of RM0.77 (21 Feb) to a low of RM0.32 (17 Mar), FOCUSP has been firming up above multiple key 20D/30D/50D/200D SMAs to end at RM0.455 last Friday. The stock is ripe for a bullish traingle breakout soon, as technical indicators are on the mend. A successful breakout above RM0.465 downtrend line is expected to spur prices towards RM0.49 (38.2% FR) and RM0.50 (28 Apr high) before reaching our LT target at RM0.55 levels. Supports are pegged at RM0.43 (10D SMA) and RM0.425 (200D SMA). Cut loss at RM0.42.

Source: Hong Leong Investment Bank Research - 12 May 2020