Astro Malaysia Holdings Berhad (Trading Buy)

• ASTRO is principally involved in the provision of a variety of entertainment contents across its TV, ratio, digital and e-commerce platforms.

• In the first quarter ended April 2021, ASTRO achieved a core net profit of RM147m, a 37.4% YoY increase, largely driven by cost savings.

• Looking ahead, consensus expects ASTRO to make a net profit of RM552m (+2% YoY) in FY January 22 and RM577m (+4% YoY) in FY January 23. These translate to forward PERs of 10.3x and 9.9x, respectively, attractive relative to its 5-year average PER of 15.3x.

• The stock also offers high prospective dividend yields of 7.1%-7.3% based on consensus DPS forecasts of 7.7 sen in FY22 and 7.9 sen in FY23, respectively.

• Technically speaking, the stock has been forming higher lows after hitting a trough of RM0.71 in November 2020. And from its recent peak of RM1.26 in June 2021, the stock has corrected 17% and found support at the 38.2% Fibonacci retracement level of RM1.05.

• Since then, the stock has begun to stage a rebound as the uptrend looks likely to resume based on positive technical signals.

• With both the MACD and Parabolic SAR indicators showing signs of rising momentum, an anticipated upward movement in the share price could potentially challenge our resistance levels of RM1.22 (R1; 12% upside potential) and RM1.29 (R2; 18% upside potential).

• We have pegged our stop loss at RM1.00 (or an 8% downside risk).

WCT Holdings Berhad (Trading Buy)

• WCT provides civil engineering services, specializing in earthworks, highway construction and related infrastructure works. The Group is also involved in property investment and development, as well as trades building materials.

• In the first quarter ended March 2021, WCT saw its core net profit rebounding to RM17.4m compared to a breakeven position in 1QFY20, which was hit by work stoppages due to a total economic lockdown.

• Looking ahead, consensus expects WCT to achieve a net profit of RM52m in FY21 (vs. core net loss of RM18m in FY20) and RM75m (+44% YoY) in FY22, which translates to forward PERs of 14.0x and 9.7x, respectively.

• Technically speaking, the stock has been forming higher lows from a trough of RM0.24 in March 2020.

• After failing to break above the RM0.58 resistance level in mid-July, the stock subsequently corrected 14% and has since found support along the 38.2% Fibonacci retracement level.

• Following which, based on the latest Heikin Ashi candles pattern, the stock is set to resume its uptrend ahead.

• With both the MACD and stochastic indicators showing signs of rising momentum, an anticipated upward movement in the share price could potentially challenge our resistance levels of RM0.58 (R1; 13% upside potential) and RM0.64 (R2; 24% upside potential).

• We have pegged our stop loss at RM0.47 (or a 9% downside risk).

Source: Kenanga Research - 13 Aug 2021