HLBank Research Highlights

Technical Tracker - DNEX: Expect a rosy FY6/22; Poised for a downtrend resistance breakout

HLInvest
Publish date: Thu, 30 Sep 2021, 10:16 AM
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This blog publishes research reports from Hong Leong Investment Bank

Three pillars of growth. DNEX (listed in 1983) is a leading ICT services provider in Malaysia (with key expertise in trade facilitation, system integration & consultancy, and RFID for border crossing systems etc). It has also added value via a mix of the upstream and downstream portfolios in the energy industry i.e. equipment supply and maintenance, oilfield services, upstream oil and gas via investment in Ping. To deepen and complement its involvement in the technology value chain, DNEX has also expanded into the manufacturing of semiconductor wafers sector via its acquisition of 60% stake in SilTerra (Beijing CGP Fund: 40%).

Anticipate a fruitful FY2022. The recent completion of strategic investments in SilTerra and Ping in FY2021 will put DNEX in a strong position to capitalise on the robust semiconductor industry and ride on the recovery cycle of the O&G industry . Together with its resilient IT & eServices operations owing to the re-opening of the economy and rapid pace of digitalisation, the group is cautiously optimistic of positive FY2022 results.

Poised for a downtrend line breakout. After correcting 39% from the all-time high of RM1.05 to a low of RM0.64, the stock staged a strong rebound to end at RM0.785 yesterday (above multiple key 20D/30D/50D SMAs). We expect a brief sideways consolidation to digest the recent robust volume (average 147m in 5 days) before resuming its uptrend. A successful breakout above the downtrend line resistance (near RM0.81) from RM1.05 will spur the stock towards RM0.845-0.865 barriers hitting our LT objective at RM0.935 levels. Collection range is RM0.74-0.785 levels. Cut loss at RM0.73.

 

Source: Hong Leong Investment Bank Research - 30 Sept 2021

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