BP Plastics Holding Berhad (Trading Buy)
- BPPLAS is a specialty polyethylene films and bags manufacturer with both stretch film and blown film capabilities.
- In FY20, BPPLAS registered a net profit of RM29.7m (+40% YoY) on the back of revenue of RM317m (-4% YoY). The robust earnings momentum continued in the first quarter ended March 2021 as BPPLAS registered a net profit of RM9.7m (+56% YoY) with revenue of RM100m (+29% YoY), on track to achieve a strong FY21 performance ahead.
- Moving forward, BPPLAS plans to grow its premium stretch film segment from both new and existing customers. Furthermore, as resin prices fall gradually, we reckon BPPLAS (like its peers in the plastics packaging industry) is still able to maintain its elevated average selling prices, thus potentially benefitting from higher margins in the coming quarters.
- Technically speaking, the stock appears to be in an uptrend pattern. Based on the Heikin Ashi candles, the chart shows numerous consecutive large green bars with long upper shadows, signalling an underlying bullish bias for the share price.
- When similar Heikin Ashi candle patterns have occurred previously (as pointed out by the blue arrows on the chart), the stock has enjoyed subsequent strong rallies.
- With the MACD indicator also showing strengthening upward momentum, we believe the share price could potentially challenge our resistance levels of RM1.88 (R1; 14% upside potential) and RM2.02 (R2; 22% upside potential).
- We have pegged our stop loss price at RM1.45 (12% downside risk).
Malayan Cement Berhad (Trading Buy)
- MCEMENT manufactures, sells and distributes cement and clinker as well as ready-mixed concrete. It also provides shipping services, leases vessels and trades building materials.
- MCEMENT’s most recent quarter ended March 2021 returned to the black (with a net profit of RM3.6m) following several consecutive quarters of losses, mainly thanks to higher average selling prices.
- Moving forward, consensus is expecting MCEMENT to achieve a net profit of RM9m in FY21 before soaring to RM62.3m in FY22 (compared to a net loss of RM261m in FY20), as the Group is poised for a strong recovery in tandem with an anticipated pick-up in construction activities.
- Technically speaking, the stock has been forming higher lows and higher highs since November 2020, indicating sustained buying interest at higher price levels.
- With the stock currently hovering around the lower range of the ascending price channel, this provides a timely buying opportunity.
- An anticipated rise in the share price could challenge our resistance levels of RM3.30 (R1; 12% upside potential) and RM3.58 (R2; 21% upside potential).
- We have pegged our stop loss price at RM2.63 (11% downside risk).
Source: Kenanga Research - 25 Jun 2021