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 the manufacturing of
  lighting and kitchen solutions.

• In FY20, the Group’s revenue fell 23% to RM811m and core net profit dropped 40% to RM90m. Its 1QFY21 results – with revenue of RM269m (+8% QoQ; +27%
  YoY) and core net profit of RM26m (-5% QoQ; +1% YoY) – were below expectations, affected by margin squeeze mainly due to elevated steel costs.

• Still, looking ahead, consensus is expecting KERJAYA’s net profit to grow by 39% and 28% to RM125m and RM161m in FY21 and FY22, respectively. This
  translates to forward PERs of 12.2x this year and 9.5x next year respectively, compared to the 5-year historical mean of 12.3x.

• Technically speaking, from a peak of RM1.53 in mid-April, the stock fell (likely due to renewed fears of economic lockdowns) to as low as RM1.08.

• Following which, in mid-May, the stock found support at the 50% Fibonacci retracement level of RM1.19. At the same time, the formation of a large hammer
  candlestick shows the strong rejection of lower prices, which subsequently paved the way for the stock to extend its higher lows trend.

• Since then, the stock has continued to trend higher. With the MACD indicator currently showing strengthening upward momentum, we believe the share price could
  potentially challenge our resistance levels of RM1.38 (R1; 12% upside potential) and RM1.48 (R2; 20% upside potential).

• We have pegged our stop loss price at RM1.10 (11% downside risk).

Techbond Group Berhad (Trading Buy)

• TECHBND is a manufacturer of industrial adhesives with manufacturing facilities in Malaysia and Vietnam, serving customers in Asia, Africa and the Middle East. Its
  industrial adhesives are used in a variety of products, including wood-based products, paper and packaging products, cigarettes and cigarette packs, automotive 
  applications, personal care products, mattresses as well as building and construction applications.

• In FY20, TECHBND’s revenue fell 12% to RM71m attributable to: (i) weaker demand from local manufacturers, particularly from the wood-working industry, and (ii)
  disrupted global supply chain due to the US-China trade war. Despite the decline in revenue, net profit rose by 52% to RM10.7m, as lower material costs and stable
  ASPs led to improved profit margins.

• Continuing the rising earnings momentum, in the quarter ended 31 March 2021, TECHBND achieved revenue of RM21.6m (- 8.9% QoQ; +26.3% YoY) and net
  profit of RM3.8m (+50% QoQ; + 51.5% YoY).

• Moving forward, TECHBND will continue to focus on its expansion plans to cater for the robust overseas and domestic demand across its business segments.

• Technically speaking, from a peak of RM0.87 in early-February this year, the stock has subsequently fallen by 49% before bottoming at RM0.44 early this month when it bounced off the 61.8% Fibonacci retracement level.

• The emergence of the rounding bottom pattern, coupled with yesterday’s formation of a large green candlestick, indicate the resurgence of positive momentum.

• With the MACD indicator also showing strengthening upward momentum, an anticipated rise in the share price could challenge our resistance levels of RM0.56 (R1;
  12% upside potential) and RM0.61 (R2; 22% upside potential).

• We have pegged our stop loss price at RM0.45 (10% downside risk).

Source: Kenanga Research - 11 Jun 2021