DutaLand Bhd (Trading Buy)

• DUTALND is involved in numerous types of businesses, namely property development, oil palm, commodity trading and investments.

• The group – which posted net loss of RM26.6m in FY June 2020 – is on track to turn around this year after registering net profit of RM16.4m in 1HFY21 (up from 1HFY20’s net profit of RM0.3m), driven mainly by investment returns.

• With net cash holdings & short-term investments of RM522.2m (translating to 62.7 sen per share or more than its current share price of 40.5 sen) as of end-December last year – the bulk of which consists of the balance proceeds from the disposal of plantation assets in Sabah for RM750m in May 2018 – DUTALND is in a financially strong position to weather through the prevailing challenging time.

• On the chart, the stock has plotted higher lows and higher highs since March last year to form an ascending price channel. The uptrend pattern is further reinforced in December last year when the share price broke past a negative sloping trendline that stretches back to November 2017.

• With the stochastic indicator showing the %K line on the verge of cutting above the %D line in an oversold zone, DUTALND shares will likely continue the upward trajectory ahead.

• On the way up, the stock is expected to challenge our resistance targets of RM0.46 (R1; 14% upside potential) and RM0.51 (R2; 26% upside potential).

• Our stop loss price is set at RM0.37 (or 9% downside risk from yesterday’s close of RM0.405).

Kim Loong Resources Bhd (Trading Buy)

• KMLOONG – which is principally involved in the plantation business (with total plantation land area of 15,826 hectares located in Johor, Sabah and Sarawak) and palm oil milling operations – is a proxy to the buoyant CPO prices.

• The group’s net profit more than doubled from RM41.1m in FY January 2020 to RM94.9m in FY January 2021, which benefitted from a higher average CPO price of RM2,755 per tonne (versus RM2,118 per tonne in FY20).

• An added positive is its balance sheet strength that is backed by net cash holdings & short-term funds of RM288.7m (or 30.9 sen per share) as of end-January this year.

• From a technical perspective, KMLOONG shares are on the verge of breaking out from a symmetrical triangle pattern as the price approaches the apex of the triangle.

• And riding on the positive momentum triggered by the crossing of the DMI Plus above the DMI Minus indicator, the stock could be making its way towards our resistance thresholds of RM1.70 (R1; 11% upside potential) and RM1.80 (R2; 18% upside potential).

• We have placed our stop loss price at RM1.37 (or 10% downside risk).

Source: Kenanga Research - 5 May 2021