OCK Group Bhd (Trading Buy)

• OCK operates in the telecommunication sector and its business operations are divided into 4 divisions, namely: (i) Telecommunication Network Services, (ii) Trading of Telco and Network Services, (iii) Green Energy and Power Solutions and (iv) M&E Engineering Services.

• With an existing portfolio of more than 4,200 telecommunication towers located in Malaysia, Myanmar and Vietnam, OCK is strategically positioned to capitalise on the upcoming 5G networks rollout.

• The group’s 2QFY21 net income rose to RM6.9m (+7.8% QoQ) due to higher segmental contributions from the Telecommunication Network Services and Green Energy and Power Solutions, taking its first half’s net profit to RM14.0m, up 8.5% YoY.

• Consensus is expecting OCK to make a net profit of RM31.2m in FY21 and RM32.4m in FY22, which translate to forward PERs of 17.2x and 16.6x, respectively.

• OCK’s stock price has pulled back from a high of RM0.575 around the end of February 2021 to a low of RM0.44 in end-June 2021 before recovering partially to close at RM0.51 yesterday, registering a 11.3% decline from the peak.

• Following the share price surge of 8.5% on heavy volume yesterday, the technical rebound will probably continue as: (i) the 30-day Moving Average has crossed above the 50-day Moving Average, and (ii) the Parabolic SAR indicator has just started trending upwards.

• Riding on the bullish technical signals mentioned above, OCK shares will probably climb towards our resistance targets of RM0.57 (R1) and RM0.59 (R2), which imply upside potentials of 12% and 16%, respectively.

• Our stop loss price is set at RM0.455 (representing a downside risk of 11%).

Padini Holdings Berhad (Trading Buy)

• From a technical viewpoint, PADINI offers a potential trading opportunity as a golden-cross has occurred (with the 50-day Moving Average cutting above the 100-day Moving Average), which indicates a likely resumption of the upward trajectory.

• This comes as the stock price might have already bottomed after slipping from a high of RM6.20 (in the beginning of August 2018) to a low of RM1.78 (in mid-March 2020). Following a subsequent recovery, the stock was last traded at RM3.08 yesterday, registering a return of 7.5% YTD.

• In addition, with the Parabolic SAR indicator trending upwards, PADINI shares could appreciate to challenge our resistance thresholds of RM3.47 (R1) and RM3.58 (R2), which represent upside potentials of 13% and 16%, respectively.

• On the downside, we have pegged our stop loss price at RM2.77, which represents a downside risk of 10%.

• PADINI is a homegrown fashion company with its own brand labels and operates over 140 stores in Malaysia, serving various segments of the society.

• The group’s 4QFY21 revenue increased to RM209.8m (+20.4% QoQ) while its net profit rose in tandem to RM10.5m (+162.5% QoQ). This took its full-year FY21 net profit to RM54.0m (-28% YoY).

• Consensus is expecting PADINI to post rising net profit of RM99.0m in FY Jun 22 and RM130.3m in FY Jun 23. This translates to forward PERs of 20.5x and 15.5x, respectively.

Source: Kenanga Research - 23 Sept 2021