Kronologi Asia Bhd (Trading Buy)

• KRONO – a regional enterprise data management (EDM) solutions provider – has just been awarded an exabyte-size cloud hyperscale supply and managed services contract by a market-leading web search, online community and artificial intelligence services provider in China. The contract is expected to start contributing to the Group’s performance in the current financial year.
• KRONO has grown steadily with its bottomline rising every year from RM3.1m in FY15 to RM18.6m in FY19. However, the Group was impacted by a one-off impairment on property, plant and equipment (of RM11.6m) in 1QFY20, which then resulted in a net loss of RM11.2m during the quarter before turning around with a net profit of RM1.2m in 2QFY20.
• Financially sound, the Group is sitting on a net cash position of RM26.7m (or 5.1 sen per share) as of end-June 2020.
• On the chart, the stock appears to have hit a bottom after reversing from a recent trough of RM0.50, a level which the share price had previously tested twice and bounced up subsequently in end-May and mid-June this year.
• A technical rebound is now in progress as KRONO shares cut above the lower boundary of the Bollinger Band following yesterday’s share price gain of 5.7% to close at RM0.56 amid strong buying interest.
• Riding on the positive momentum, the stock could climb towards our resistance thresholds of RM0.63 (R1; 13% upside potential) and RM0.73 (R2; 30% upside potential).
• Our stop loss price is set at RM0.49 (or 13% downside risk)

Complete Logistic Services Bhd (Trading Buy)

• COMPLET is involved in the provision of total logistics services that comprise lorry transportation, warehousing and marine transportation.
• The Group was profitable in spite of the business disruptions caused by the Covid-19 outbreak, posting a net profit of RM0.5m (- 68% YoY) during the April to June quarter. Prior to this, its annual reported earnings (which included exceptional items) ranged between RM9.5m and RM46.2m over the last five years.
• Interestingly, its balance sheet is sound with net cash backing of RM62.5m (translating to 49.1 sen per share or about three quarter of its current share price) as of end-June this year.
• From a technical perspective, after finding strong support at the RM0.60 level, the stock jumped to as high as RM0.765 on Monday amid heavy trading interest.
• This was followed by a share price pullback to close at RM0.65 yesterday, thus providing a buying-on-weakness opportunity for investors.
• With COMPLET shares presently treading above the 50-day SMA line, we reckon the stock could continue its upward bias to rise towards our resistance levels of RM0.73 (R1; 12% upside potential) and RM0.80 (R2; 23% upside potential).
• We have positioned our stop loss price at RM0.57 (or 12% downside risk)

Source: Kenanga Research - 4 Nov 2020