Kerjaya Prospek Group Berhad (Trading Buy)

• KERJAYA is principally involved in the construction of high-end commercial and high-rise residential buildings, property development and manufacturing of lighting and kitchen solutions.

• Fundamentally, the Group is backed by a strong construction order-book size of RM3.5b with an existing tender-book of RM2b (comprising mainly building jobs) to replenish its order-book with potential new contract wins.

• Moving forward, consensus expects the Group to achieve a core net profit of RM137m and RM159.7m in FY21 and FY22, respectively. At the current share price, these imply undemanding forward PERs of 10.7x and 9.1x respectively, both of which are below its 5-year historical average PER of 12.4x.

• Technically speaking, its share price was forming an ascending triangle as the stock failed to break above the former resistance level of RM1.135 previously, while consistently forming higher lows along the way.

• Last week, the share price finally broke above the resistance level with the formation of a hammer candlestick on the following trading day.

• 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 RM1.32 (R1; 12% upside potential) and RM1.38 (R2; 17% upside potential).

• We have pegged our stop loss price at RM1.06 (10% downside risk), which is below its most recent swing low.

Malaysian Resources Corporation Berhad (Trading Buy)

• MRCB provides construction and engineering services, multimedia, property development and management, IT services and independent power generation. The Group also manufactures and sells ceramic tiles and pre-stressed spun concrete piles.

• The Group’s earnings visibility is underpinned by current healthy unbilled property sales of RM1.1b and its outstanding construction order-book and tender-book which stand at RM20.5b and RM2.5b, respectively.

• Moving forward, consensus expects the Group to achieve core net profit of RM36.4m and RM57.1m in FY21 and FY22, respectively. These imply forward PERs of 59x and 38x, compared to the 5-year average PER of 41x.

• Technically speaking, the share price has recently bounced off the support level of RM0.47, with the latest candlestick displaying a bullish green hammer.

• The stochastic oscillator is also starting to point upwards, showing early signs of an upward momentum.

• With the MACD line staying above zero and heading upwards, an anticipated upward movement in share price could challenge our resistance levels of RM0.57 (R1; 18% upside potential) and RM0.61 (R2; 26% upside potential).

• We have pegged our stop loss price at RM0.42 (13% downside risk).

Source: Kenanga Research - 25 Mar 2021