Listed in Dec 2013, Kronologi Asia Berhad (KRONO) provides on-site and off-site enterprise data management (EDM) and data storage solutions to Asia Pacific businesses. It offers customers backup, storage, and recovery services for digital data to ensure business continuity for its clients. Currently, KRONO derives its profit through exporting to countries such as Singapore (36.6% of FY20 revenue), Philippines (35.4% of FY20 revenue), China (6.2% of FY20 revenue), etc. The demand for data backup is expected to stay buoyant driven by the inevitable surge in the use of the internet usage due to the Covid-19 pandemic. On top of that, the adoption of advanced technologies such as IoT and Machines learning had boded well to the EDM markets with an expectation of 12.1% CAGR growth rate in the Asia Pacific market. As a result, we view KRONO's recent full acquisition of its China associate company positively as it will strengthen its vast untapped market share in China.

After sliding from a high of RM0.945 (22 Feb) to a low of RM0.58 (21 May) before closing at RM0.635 yesterday, KRONO is currently trading at an undemanding 1.22x trailing P/B (32% discount against its 5-years average of 1.8x). Going forward, the management expects KRONO’s prospect to remain promising as customers find increasing value in As-A-Service and Data Management hybrid solutions, with penetration in new markets.

To recap, KRONO had implemented multiple tranches of private placements ranging from RM0.63-0.66 since May 2021. Hence, downside risk is likely to be well cushioned. Technically, KRONO is poised for a LT downtrend line breakout soon with indicators showing uptick bias. A successful breakout above RM0.6 5 (downtrend resistance) would signal a new uptrend leg had begun and may spur the prices towards its RM0.68-0.70-75 levels. Cut lost at RM 0.59.

Source: Hong Leong Investment Bank Research - 15 Oct 2021