Pansar Bhd (Trading Buy)

• PANSAR – whose existing business segments consist of building materials, marine & industrial, agro engineering, electrical & office automation, heavy equipment and mechanical & electrical – has diversified into the construction and civil engineering industry following the recent completion of its acquisition of a 100% stake in Perbena for RM151m cash.

• Sarawak-based Perbena, which has logged annual net profit ranging between RM6m to RM9m in the past three financial years, has secured contracts valued at RM647m. It is currently participating in project tenders with a total estimated value of approximately RM2.2b.

• The acquisition is expected to contribute positively to PANSAR’s future earnings. For the 9-month period ended December 2020, the Group posted net profit of RM7.0m (-11% YoY) while its net cash holdings & short-term investments stood at RM41.2m.

• Technically speaking, the stock – which is presently hovering at the lower end of an ascending price channel – is expected to trend higher riding on the upward momentum that is backed by the positive stochastic crossover (whereby the %K line has cut above the %D line recently).

• With that, PANSAR’s share price is poised to climb towards our resistance thresholds of RM0.81 (R1) and RM0.88 (R2). This represents upside potentials of 13% and 22%, respectively.

• We have set our stop loss price at RM0.64 (or 11% downside risk).

OCR Group Bhd (Trading Buy)

• OCR shares could stage a technical rebound anytime soon after tumbling from a peak of RM0.475 in June last year to close at RM0.225 yesterday, which is near its one-year low.

• From a charting perspective, the stock is expected to get a lift following the bullish crossover of the stochastic indicator, which saw the %K line cutting above the %D line just when both values were below the oversold level.

• The recent sighting of the bullish dragonfly doji candlesticks also supports our positive technical stance that the share price will probably bounce up from its oversold position, with the resumption of buying interest likely to push the stock towards our resistance thresholds of RM0.26 (R1; 16% upside potential) and RM0.30 (R2; 33% upside potential).

• Our stop loss price is pegged at RM0.20 (or 11% downside risk).

• On the fundamental front, OCR – which is involved in the construction, property development, project management consultation and related businesses – posted net earnings of RM2.3m (-6% YoY) in 4QFY20 and RM0.8m (-91% YoY) in FY December 2020 as the Group’s business activities were previously hit by the Covid-19-triggered disruptions in the earlier part of last year.

Source: Kenanga Research - 21 Apr 2021