Negatives likely priced in; anticipate strong FY20-22 EPS growth of 29%. Despite anticipating a sluggish FY20 due to the MCO in Malaysia and lockdowns in Laos and Bangladesh, management remains optimistic for a better 2H20 and F21/22 due to its involvement in critical power utility infrastructure and the gradual easing of lockdowns coupled with healthy order book for EPCC segment at c.RM580m (1.7x cover ratio of FY19 EPCC revenue) and tower fabrication order book at about c.RM170m (1.3x cover ratio on FY19 tower fabrication revenue). Overall, risk-reward profile is attractive as the stock is only trading at 6.7x FY21f P/E (-6% to Pestech and -62% discount to 2Y mean) and 0.58x P/B (-43% to Pestech and -42% to 2Y mean), underpinned by attractive 4.9% FY20-22f yield and RM1bn tender book mainly by its Penang transmission job and also the extension to its current Laos EPCC contract. Technically, Rohas is poised for a technical rebound towards RM0.44-0.50 following the formation of a small hammer candlestick and bottoming RSI and stochastic indicators.

Potential downtrend reversal. Following a 37% YTD slump, Rohas is expected to stage a technical rebound soon following the formation of a small hammer candlestick and bottoming RSI and stochastic indicators. Breaking the LT downtrend line hurdle at RM0.44 (from 52-week high) will spur prices towards RM0.465 (3 July high) before hitting our LT target at RM0.50 (200D SMA) levels. Supports are pegged at RM0.385 (17 July low) and RM0.375 (38.2% FR). Cut loss at RM0.365.

Source: Hong Leong Investment Bank Research - 20 Jul 2020