HEVEA (Trading Buy, TP: RM1.17). Yesterday, its share price hiked to settle at RM1.04 with a strong surge in trading volume, after a strong set of 2Q15 results and news regarding a potential M&A with SHH Resources Holdings Berhad was announced. Chart-wise, the share price rose above all three SMAs (20, 50 and 100-day SMA) and broke out from a ‘Symmetrical Triangle’ chart pattern, suggesting that the current bullish trend is likely to continue in the near-term. MACD showed that the stock is trading above its positive Signal line while RSI indicator showed a strong uptick in trend to support the technical breakout. In view of the incremental buying interest, we anticipate the share price to ride on the recent bullish news to rally towards the immediate resistance level of RM1.09 (R1) and possibly RM1.17 (R2) in the mid-term. Meanwhile, a strict stop-loss is placed at RM0.96.

HOMERIZ (Not Rated). HOMERIZ was up by 5.0 sen (5.6%) yesterday, to RM0.94. The run-up is likely due to spill-over excitement within the furniture industry from newsflow of potential acquisitions between HEVEA and SHH, while HOMERIZ, HEVEA and SHH are all beneficiaries of a weaker Ringgit. The increase was backed by above-average trading volume yesterday, while RSI and Stochastics look promising as they are both trending upwards, moving out of oversold territory. The MACD is gaining momentum as it is narrowing in on the Signal line. Should the bullish momentum persist, we expect the share price to break out of the +2SD regression line, and it could re-test its mid-term resistance and psychological level of RM1.00 (R1). Meanwhile, immediate strong support is set at RM0.88 (S1).

Source: Kenanga Research - 4 Sep 2015