Hap Seng Plantations Holdings Berhad (Trading Buy)

• HSPLANT is principally involved in cultivating oil palm and processing fresh fruit bunches. The Group operates and manages their plantations and mills as well as the infrastructure to store and transport crude palm oil (CPO) and palm kernel.

• Despite an industry-wide decline in CPO production, HSPLANT is expected to be the least affected. Moreover, with 100% of its estates located in Malaysia, the Group is poised to capitalise on higher CPO prices, unlike its peers with presence in Indonesia (where there is a price cap due to the biodiesel levy and tax structure).

• Looking ahead, consensus is expecting HSPLANT’s BVPS to come in at RM2.10 in FY20 and RM2.17 for FY21, which translates to attractive PBV of 0.83x and 0.81x, respectively, based on the current share price of RM1.75. These are both below its 5-year average PBV of 0.9x.

• Technically speaking, its share price has been trading in an ascending channel. As of late, the price has been hovering around the lower trend line.

• Moreover, there appears to be a bullish OBV divergence where the share price has formed a lower low but the OBV indicator plotted a higher low.

• Bouncing off the lower trend line, HSPLANT’s share price could challenge our resistance levels of RM1.93 (R1; 10% upside potential) and RM2.03 (R2; 16% upside potential).

• We have pegged our stop loss price at RM1.60 (9% downside risk).

Malaysia Building Society Berhad (Trading Buy)

• MBSB grants loans on the security of freehold and leasehold properties. Through its subsidiaries, the Company also operates property development and leases real property.

• Since the stock took a beating in March 2020, the share price has been trading range bound between RM0.75 and the March trough of RM0.49.

• Moving forward, consensus is expecting MBSB’s BVPS to come in at RM1.28 in FY20 and RM1.31 in FY21, which translates to attractive PBV of 0.51x and 0.50x, respectively, based on the current share price of RM0.65. These are both below its 5- year average PBV of 0.8x.

• Technically speaking, the stock has struggled to break above the resistance of RM0.75 possibly due to lingering uncertainties from the Covid-19 pandemic. However, following the recent pullback, the stock has found support at RM0.60.

• With the MACD line already above the signal line and about to cross above the zero-line, any further rise in share price could challenge our resistance targets of RM0.72 (R1; 11% upside potential) and RM0.78 (R2; 20% upside potential).

• We have pegged our stop loss at RM0.585 (10% downside risk).

Source: Kenanga Research - 11 Feb 2021