TCS Group Holdings Berhad (Trading Buy)

• TCS is principally involved in the provision of construction services for: (i) commercial, residential and industrial buildings, and (ii) infrastructure works such as road works, highways and bridges.

• As such, TCS is a proxy to the construction sector as the Group stands to benefit from potential contract wins with the government likely to roll out infrastructure projects to pump prime the economy.

• Technically speaking, the stock has been treading in an ascending channel since November 2020. As of late, the price has found support at the lower boundary of the channel and the 38% Fibonacci retracement level.

• The stochastic oscillator is also showing signs of rising momentum with the %K line rising above the %D line.

• Continuing its uptrend, an anticipated upward movement in the share price could challenge our resistance levels of RM0.73 (R1; 15% upside potential) and RM0.78 (R2; 23% upside potential).

• We have pegged our stop loss price at RM0.55 (13% downside risk).

TSH Resources Berhad (Trading Buy)

• TSH is engaged in cultivating, processing and refining oil palm with customers mainly in Malaysia, Singapore and Spain.

• According to the Group’s most recent earnings announcement, TSH has benefited from higher crude palm oil (CPO) and palm kernel prices, which lifted its quarterly net profit by 77% YoY to RM33m in 4QFY20, bringing its FY20 net profit to RM79m.

• Looking ahead, with current CPO price still high, consensus is expecting the Group to achieve rising net profits of RM87.8m and RM95.9m in FY21 and FY22, which translate to healthy growth rates of 11% and 9%, respectively. The forecasted bottomline figures represent forward PERs of 17.6x and 16.1x, respectively.

• Technically speaking, since March 2020, the price has been plotting higher lows to form an ascending triangle. With the upward trendline intersecting with the resistance line, we believe that the stock is poised for a positive breakout ahead.

• With the MACD line treading above the signal line and heading upwards, an anticipated upward movement in the share price could challenge our resistance levels of RM1.24 (R1; 11% upside potential) and RM1.34 (R2; 20% upside potential).

• We have pegged our stop loss price at RM1.00 (11% downside risk).

Source: Kenanga Research - 18 Mar 2021