Formosa Prosonic Industries Bhd (Trading Buy)

• FPI is a Malaysia-based company that is involved in the manufacturing and sales of speaker systems. The group produces products such as wireless speakers, conventional speakers, musical instrument products and acoustic products.
• In view of the rising Covid-19 cases globally, we foresee FPI may benefit from upgrades by consumers of their home-office sound systems as they spend more time at home.
• The group registered a better 3QFY20 sales of RM281.1m (+161% QoQ) following the resumption in business activities post the MCO lockdown. Its net income rose in tandem to RM25.8m (+206%) due to better sales mix and economies of scales which resulted in better operational efficiency. Financially, the group has a strong balance sheet with short term funds and cash holdings of RM226.1m or 91 sen per share as of end-3QFY20.
• Chart-wise, the stock has been in a range-bound between the 20-day and 50-day SMA lines recently. Yesterday’s bullish engulfing candlestick has lifted the stock to an all-time high of RM2.58. Given that the shorter-term key SMA continues to stand above the longer-term key SMA, we thus believe the stock could continue its upward momentum.
• Based on our Fibonacci projections, our resistance levels are set at RM2.90 (R1; +14% upside potential) and RM3.10 (R2; +22% upside potential).
• Meanwhile, our stop loss is set at RM2.20 (-13% downside risk).

Dayang Enterprise Holdings Bhd (Trading Buy)

• DAYANG operates in the oil and gas industry providing: (i) offshore topside maintenance services, (ii) minor fabrication works, and (iii) offshore hook-up and commissioning services for oil and gas companies.
• The group has recently secured: (i) a contract extension from Sarawak Shell and Sabah Shell until June 2021, and (ii) a 3- year maintenance contract from Mubadala Petroleum’s Entity MDC Oil & Gas, which would increase earnings visibility going forward.
• QoQ, the group registered an increase in revenue to RM230.2m (+34% QoQ) in 3QFY20 given the higher work orders received from its top-side maintenance segment. Meanwhile, the group’s net income turned from a net loss of RM985k in 2QFY20 to a net profit of RM36.1m amid better productivity and efficiency in 3QFY20.
• Chart-wise, the stock has been trading between the range of RM1.10-RM1.30 since late December last year. Ichimoku-wise, we believe the stock is heading for a “Kumo-Bounce” to continue trending upwards.
• With that, our key resistance levels are set at RM1.38 (R1; +16% upside potential) and RM1.54 (R2; +29% upside potential).
• Meanwhile, our stop loss is pegged at RM1.02 (-14%, downside risk).

Source: Kenanga Research - 15 Jan 2021