AFG’s share prices have corrected ~25% from its 52-week high of RM5.70 since mid-2013. However, our banking analyst has an OUTPERFORM rating on the stock due to undemanding valuation after recent price corrections and a potential stronger earnings growth in FY15. Chart-wise, AFG formed a “Hammer” candlestick on the daily chart; a bullish reversal candlestick pattern. Meanwhile, the Stochastic indicator has rebounded from the oversold zone yesterday, indicating a strong improvement in the momentum and continuation of the short-term upcycle. Based on the positive technical outlook, we believe that AFG could be a potential rebound play. Immediate overhead resistance is now pegged at RM4.37 (R1), the 20-day SMA level. A successful breakthrough will see the stock moving higher to challenge the next resistance zone at RM4.55 (R2)-RM4.75 (R3). 

 

Source: Kenanga