Globaltech Formation Bhd (Trading Buy)

• GLOTEC is primarily involved in the manufacturing of precision machining, stamping & tooling and automotive components. The Group’s other businesses are in the resources (namely harvesting and selling of fresh fruit bunches of oil palm) and energy (via its operation of coal bed methane assets) industries
• After seeing losses in the preceding four years, the Group turned around with net earnings of RM2.3m in FY June 2020. And the momentum carried over to 1QFY21 when its bottomline came in at RM10.7m (+438% YoY), mainly lifted by gain on disposal of gold royalty.
• GLOTEC is also financially steady with net cash holdings of RM45.2m (or 16.8 sen per share representing 41% of its existing share price) as of end-September 2020.
• On the chart, after a multi-year downtrend, the stock reversed from a trough of RM0.18 in March last year to hit a high of RM0.565 in mid-October 2020.
• Following a subsequent 28% retracement from its recent peak to close at RM0.405 yesterday, GLOTECH shares could bounce up from an intermediate horizontal support line as suggested by the recent appearance of the bullish dragonfly doji candlesticks and the crossing of the DMI Plus above the DMI Minus indicator
• Riding on the positive momentum, its share price is expected to climb towards our resistance thresholds of RM0.46 (R1; 14% upside potential) and RM0.50 (R2; 23% upside potential).
• Our stop loss price is set at RM0.35 (or 14% downside risk).

EcoBuilt Holdings Bhd (Trading Buy)

• ECOHLDS is currently focussed on the construction industry following the divestment of its digital contents and value-added services business.
• Amid a challenging industry landscape, the Group posted a marginal net profit of RM1.3m in the first quarter ended August 2020 (compared with 1QFY20’s RM0.1m) with net cash backing of RM5.0m (or 1.4 sen per share). In addition, ECOHLDS owns local quoted shares worth RM26.9m (or 7.8 sen per share) as of end-August last year.
• Going forward, ECOHLDS’ two recent contract wins in Sabah valued at RM72m (as the main contractor to undertake construction works for a retail cum commercial development project; announced on 5 January 2021) and RM166m (as the main contractor to undertake construction works for a mixed commercial development project; announced yesterday) are expected to boost its earnings visibility.
• Technically speaking, after bouncing up from a trough of RM0.075 in March last year, the stock has overcome a negative sloping trendline to subsequently plot higher highs and higher lows.
• Presently treading near the lower range of the ascending price channel, the share price will probably continue its upward trajectory ahead.
• With ECOHLDS shares still hovering above the 100-day SMA line, the stock could rise towards our resistance targets of RM0.24 (R1) and RM0.30 (R2) to extend its uptrend pattern. This translates to upside potentials of 17% and 46%, respectively.
• We have placed our stop loss price at RM0.17 (or 17% downside risk from its last traded price of RM0.205)

Source: Kenanga Research - 19 Jan 2021