JHM Consolidation Bhd (Trading Buy)

• JHM is involved in the manufacturing of: (i) precision miniature engineering metal parts, (ii) assembly of electronic components, and (iii) assembly of automotive rear lighting.

• The group has recently secured a new US customer, which wants JHM to fabricate mechanical parts for the customer. Given the potential growth in orders from this customer, the group has acquired 13.8 acres of land in Batu Kawan for capacity expansion. With this, we believe this would lift the group’s earnings in the long run.

• QoQ, the group has registered a record quarter with its 3QFY20 revenue coming in at RM78.1m (+62% QoQ), lifted by its automotive earnings. Meanwhile, the group’s earnings nearly doubled to RM5.3m on the back of the recovery of its operation post MCO relaxation.

• Ichimoku-wise, the stock has broken above its bullish Kumo Clouds in early January 2021. Following which, we believe the uptrend remains intact and expect a continuation of its upward momentum.

• Based on our Fibonacci projections, our resistance levels are set at RM2.70 (R1; +12% upside potential) and RM2.85 (R2; +18% upside potential).

• Meanwhile, our stop loss is set at RM2.14 (-12% downside risk).

Sarawak Plantation Bhd (Trading Buy)

• SWKPLNT is an investment holding company with businesses in: (i) processing of fresh fruit bunch, (ii) seed production, and (iii) the provision of laboratory and management services and property investment.

• We believe the group will benefit from the rising CPO price, which is currently at c.RM3.5k per tonne (near its recent high of c.RM3.6k).

• QoQ, the group has registered a revenue of RM137.2m (+40% QoQ) in 3QFY20 due to higher sales volume of CPO and higher realised average CPO selling price during the quarter. Meanwhile, its net profit remained unchanged at RM19.5m due to lower gain in fair value of biological assets recorded.

• Chart-wise, the stock has retraced from its all-time high of RM2.35 while forming higher lows to challenge its short-term key SMA. Should the stock hold at its current level, we believe there could be a resumption in its upward momentum.

• With that, our key resistance levels are set at RM2.38 (R1; +11% upside potential) and RM2.50 (R2; +17% upside potential).

• Meanwhile, our stop loss is pegged at RM1.95 (-9% downside risk).

Source: Kenanga Research - 19 Feb 2021