PETRON (Trading Buy, TP: RM5.44). PETRON’s share price rose to a fresh 4-year’s high yesterday, with a 26.0 sen gain (+6.0%) to close a RM4.59. Just last month, the company released a strong earnings report card with 9M15 EPS of 75.7 sen from a loss of 6.3 sen a year earlier on better operating efficiencies, stable margins, and robust growth in sales performance. From a technical perspective, PETRON has confirmed a bullish Pennant formation. This signals a continuation of the prior uptrend after the brief pause. The 14-day Stochastic indicator is also in a bullish state. Hence, we expect follow-through buying to continue in the coming weeks with a measurement objective (MO) of RM 5.53. Traders may buy now, with a target price of RM 5.44 (5 bids below MO). At the same time, losses should also be contained by having a stop-loss (SL) 5 bids below the RM4.23 20-day SMA support (S1) at RM 4.18.

SKPETRO (Not Rated). SKPETRO had caught our attention after the share price confirmed a technical rebound by breaking out from its downtrend resistance level to close 18 sen (+9.94%%) higher at RM1.99. The share price has been consolidating for the past few months due to the lacklustre Crude oil prices. On the chart, SKPETRO has settled above its 20-day SMA level on the back of strong trading volume yesterday. MACD has started to initiate a bullish technical crossover, while RSI has trended up strongly to imply strengthening buying momentum. We reckon that the recent strong share price rally could be due to the year-end window dressing activity, as investors look to accumulate weakness. Thus, we view that follow through buying interest could potentially rally the share price further towards RM2.10 (R1) and retest its previous high level of RM2.29 (R2) in the near-term. Nevertheless, we do not discount a possibility of immediate consolidation before the next run up due to the overdone rally recently and uninspiring crude oil price performance.

Source: Kenanga Research - 29 Dec 2015