TAS Offshore Berhad (Trading Buy)

• TAS derives its income from two business units, namely: (i) Shipbuilding, and (ii) Ship Repairing Services.

• TAS returned to profitability in 3QFY21 with a net income of RM4.6m (+182% QoQ) driven by an eleven-fold jump in revenueto RM16.3m as demand for ships and ship repairing services increased amid the resumption of economic activities post theCovid-19 pandemic.

• Chart-wise, from a low of RM0.16 (at the end of October 2020), TAS’ share price has plotted a sequence of higher highs toclimb to a high of RM0.425 (in the beginning of June 2021), representing an increase of 166%.

• Since then, the stock has pull-backed to RM0.32 currently, down 25% from the peak.

• From a technical point of view, a bullish sign has occurred as the shorter-term moving average has just cut above the longerterm moving average, indicating that TAS’ share price is set to ride on an upward trajectory.

• In addition, with the Parabolic SAR indicator trending upwards, the stock could climb to challenge our resistance targets ofRM0.38 (R1) and RM0.405 (R2), which represents upside potentials of 19% and 27%, respectively.

• Our stop loss price is set at RM0.27 (or 16% downside risk from yesterday’s close of RM0.32).

Pos Malaysia Berhad (Trading Buy)

• POS – through its 3 main business segments namely, Mail, Courier and Retail – offers various services ranging from postaland related services such as: (i) sending and receiving postal packages, (ii) offering postal financial services, and (iii) selling ofphilatelic products.

• POS is able to leverage on its economies of scale to serve a wide array of customers as they have over 674 post office outletsnationwide located at strategic areas with high traffic. A proxy to the boom in e-commerce activities arising from the Covid-19pandemic, POS is in a position to capitalize and grow its revenues by providing postal services for various online businesses.

• The main revenue contributors for POS in 1QFY21 were Postal services (71%) followed by Logistics (17%), Aviation (7%) andOthers (4%). The group reported revenue of RM595m (+6% QoQ) in 1QFY21 while its net loss narrowed to RM46.8m (+4.9%QoQ) due to higher demand for postal related services during the pandemic.

• Going forward, consensus has estimated POS to register a net loss of RM65.7m for FY Dec 21 before turning around with anet profit of RM16.1m in FY Dec 22.

• With the appointment of Charles Brewer (who was previously the Chief Operating Officer of Canada Post) as the Group ChiefExecutive Officer effective 1 August, POS will likely embark on new transformation strategies to bring the group to greaterheights.

• Technically speaking, POS is expected to trend higher after the share price cut above the 30-day Moving Average recently.

• In addition, with the ADX indicator signaling an uptrend, the stock could climb to challenge our resistance targets of RM0.935(R1) and RM0.985 (R2), which represents upside potentials of 16% and 22%, respectively.

• On the downside, we have pegged our stop loss at RM0.695, which represents a downside risk of 14%.

Source: Kenanga Research - 5 Aug 2021