Downside limited amid undemanding valuation. Despite the prevailing lockdowns, we remain sanguine on FOCUSP. We expect a modest return to normalcy and recovery in consumption behaviour, supported by government stimulus packages, a low interest rate environment and gradual rolling out of vaccines. FOCUSP’s riskreward profile remains attractive with undemanding 13.4x FY21 PE (37% lower than industry) and a robust FY20-22 EPS CAGR of 30%. Increasing F&B corporate sales and starting of a second central kitchen should see the profitability of its F&B division accelerate. Furthermore, we reckon the possibility of securing new F&B corporate clients likely given the popularity of their current product offerings.

Signs of bottoming up. After hitting an all-time high of RM0.975 (31 Dec), FOCUSP slipped 20% to a low of RM0.78 (8 Jan) before recovering gradually to RM0.855 yesterday. The hammer-like candlestick (8 Jan) and a strong close above the 50D SMA (near RM0.775) bode well for a potential downtrend reversal soon. Crossing the immediate 20D SMA barrier at RM0.90 will lift the price higher towards RM0.975 and our LT objective at RM1.00 levels. Key supports are situated at RM0.80 and RM0.78. Cut loss at RM0.775.

Source: Hong Leong Investment Bank Research - 13 Jan 2021