Revenue Group Bhd (Trading Buy)

• Via revPAY, REVENUE offers a single platform, multi-channel payment solutions (from physical terminals to virtual payments to QR payments) to different customers. The Group derives its income from the deployment of Electronic Data Capture (EDC) terminals, electronic transaction processing and solutions & services related to payments infrastructure.

• A proxy to the e-commerce theme, REVENUE saw its annual net profit rising in 5 of the past 6 years, up from RM2.1m in FY June 2015 to RM8.4m in FY June 2020 while net cash stood at RM28.9m (or 7.4 sen per share) as of end-June 2020.

• In terms of recent news flows, REVENUE has just secured a contract to develop and implement the MyDebit tokenisation platform for Payments Network Malaysia (the operator of the country’s national payments network and central infrastructure), which would pave the way for the use of debit/ATM cards for online payments securely.

• The Company has also announced in early November a proposal to transfer its listing status from the ACE Market to Main Market by the first half of 2021.

• From a technical perspective, after sliding from a high of RM1.40 in late August, the stock has recovered from a trough of RM1.01 at the beginning of November to close at RM1.22 amid strong trading volume yesterday.

• With the share price cutting above the 50-day SMA line recently, the stock is expected to ride on an upward momentum ahead.

• We have positioned our resistance levels at RM1.36 (R1; 12% upside potential) and RM1.50 (R2; 23% upside potential) for REVENUE’s share price to test on the way up.

• Our stop loss price is set at RM1.10 (or 10% downside risk)

Asia Poly Holdings Bhd (Trading Buy)

• With social distancing and physical separation being practiced everywhere, ASIAPLY (as the biggest manufacturer of acrylic products in Malaysia with a market share of 50%-60%) stands to benefit from the high demand for cast acrylic sheets which are increasingly installed in shops, restaurants, offices, hospitals and other common spaces to stop the Covid-19 virus transmissions.

• ASIAPLY – which exported c.73% of its manufactured acrylic sheet products overseas in FY19 – is also a beneficiary of the ongoing US-China trade war as American buyers source for cheaper cast acrylic sheets from Malaysia to be used in a wide range of applications such as in the building & construction, industrial, transportation, healthcare, automotive and consumer sectors.

• Driven by the buoyant demand particularly from new customers in US and Europe, ASIAPLY is turning around after posting losses in the last two financial years. In 3QFY20, the Group saw its net profit jumping to RM4.1m (compared with 3QFY19’s net loss of RM2.1m and 2QFY20’s net earnings of RM0.9m) on the back of sales of RM30.1m (+49% YoY, +143% QoQ). This has consequently lifted its YTD bottomline to RM4.7m (from net loss of RM6.6m previously).

• An added positive is its sound balance sheet position with net cash of RM34.5m (or 4.8 sen per share) as of end-September 2020.

• On the chart, ASIAPLY shares – which were actively traded yesterday before closing at RM0.385 – could stage a technical rebound ahead following a pullback from a high of RM0.51 in October this year.

• With the RSI indicator starting to climb out from an oversold territory, the stock will likely resume its uptrend (which remains intact as its share price continue to tread above the 50% Fibonacci retracement level).

• On the way up, ASIAPLY’s share price is expected to climb towards our resistance thresholds of RM0.45 (R1) and RM0.52 (R2). This represents upside potentials of 17% and 35%, respectively.

• Our stop loss price is pegged at RM0.33 (or 14% downside risk).

Source: Kenanga Research - 17 Nov 2020