Bumi Armada Bhd (Trading Buy)

• ARMADA’s share price could continue its upward trajectory after plotting a sequence of higher lows since early November lastyear.
   
• On the chart, the stock will likely bounce off the lower Bollinger Band and the positive sloping trendline while the stochasticsindicator is anticipated to climb out from the oversold area anytime soon.
   
• Riding on the momentum, ARMADA shares could advance towards our resistance thresholds of RM0.51 (R1; 16% upsidepotential) and RM0.56 (R2; 27% upside potential).
   
• Our stop loss price is set at RM0.38 (or 14% downside risk from yesterday’s close of RM0.44).
   
• In terms of fundamental outlook, based on consensus estimates, ARMADA – an international offshore energy facilities andservices provider that offers offshore services via two business units, namely floating production & operations (FPO) andoffshore marine services (OMS) – is projected to make net earnings of RM477.6m (+280% YoY) in FY December 2021 andRM487.8m (+2% YoY) in FY December 2022. This translates to forward PERs of 5.4x this year and 5.3x next year,respectively.
   
• This comes as the group saw its 1QFY21’s bottomline turned around to a net profit of RM162.8m (from a net loss ofRM224.0m in 1QFY20), lifted mainly by stronger contribution from the FPO segment and the absence of impairment losseson vessels recognised in the previous corresponding period.

KSL Holdings Bhd (Trading Buy)

• After overcoming a descending trendline that stretches back to mid-July 2019, a price reversal for KSL shares could be inprogress now.
   
• The positive technical stance is also driven by bullish signals arising from the stochastics (as the %K line is on the edge ofcutting above the %D line in the oversold area) and the rising momentum indicators.
   
• With that, the stock could be on its way to shift towards our resistance targets of RM0.67 (R1; 14% upside potential) andRM0.72 (R2; 22% upside potential).
   
• We have pegged our stop loss price at RM0.52 (or 12% downside risk).
   
• From a fundamental perspective, KSL is a cash-rich and profitable property developer with approximately 2,400 acres of landbank strategically located in Segamat, Batu Pahat, Muar, Mersing, Johor Bahru, Kuala Lumpur and Klang.
   
• The group, which posted a net loss of RM64.2m in FY December 2020 due to fair value loss on investment properties ofRM142.8m (compared to FY19’s net profit of RM249.9m), is on track to return to the black after announcing net earnings ofRM17.1m (+53% YoY) in 1QFY21.
   
• Financially healthy, KSL is sitting on a cash pile of RM151.0m as of end-March this year, equivalent to 14.8 sen per sharewhich accounts for one-quarter of its current share price of RM0.59.
   
• Based on its book value per share or RM2.97 as of end-March 2021, the stock is presently trading at an undemanding PBVmultiple of just 0.20x (or at 1SD below its historical mean).

Source: Kenanga Research - 30 Jun 2021