KRONO is a beneficiary of digital acceleration as customers build out their digital capability in enterprise data management (EDM) to improve efficiency and mobility as part of their operational transformation to the new normal. After a disruptive 1HFY2021 due to the Covid-19 lockdowns, Krono remains optimistic of a better 4QFYE Jan 2021 and long term prospects in anticipation of higher demand for its EDM solutions from geographic footprint across key Asian markets. Meanwhile, the recent RM23m contract awarded in Nov 20 by Baidu Cloud Computing Technology (Beijing) for an exabyte-size cloud hyper-scale supply and managed services contract, and the launch of the Malaysia Digital Economy Blueprint on 19 Feb will certainly offer significant mid to long term growth opportunities for the group. At RM0.89, KRONO is trading at 1.9x P/B (44% lower than industry 3.5x), supported by net cash of RM21m or NCPS of 4sen.

Bullish ascending triangle breakout. Following the bullish ascending triangle breakout on 11 Jan (a continuation pattern that usually breakouts in the same direction of the prior uptrend), the stock has been trending higher above all major SMAs before closing at RM0.89 last Friday in a high volume of 18.6m shares (vs 90D average of 11.6m shares). As long as the share price stays above RM0.82 (20D SMA), KRONO may advance further towards RM0.96. A successful breakout above this hurdle could spur prices higher towards RM1.00 before reaching our LT objective at RM1.09 levels. Supports are pegged at RM0.85 (10D SMA) and RM0.82. Cut loss at RM0.815.

Source: Hong Leong Investment Bank Research - 21 Feb 2021