Parkson Holdings Berhad (Trading Buy)

• PARKSON, which is involved in the operation of a chain of department stores with a geographical presence in Malaysia, Vietnam, Indonesia and China, is a post-pandemic recovery play following the gradual relaxation of strict Covid-19-related lockdowns. The resumption of consumer spending, to be further boosted by pent-up demand and year-end spending, should bode well for the group.

• PARKSON reported a narrower net loss of RM37.4m in FY June 2021 (versus net loss of RM436.4m in FY20) as bottom line was lifted mainly by an exceptional gain of RM60.5m in FY21 and the absence of exceptional loss (of RM215.6m) which hit FY20 previously. The key positive takeaway from the results is the group’s improvement in operating profit, rising from RM94.3m in FY20 to RM299.7m in FY21.

• Technically speaking, following a breakout in Aug 2021, the stock has been hovering above a range of RM0.185 and RM0.195 (as shown in the highlighted segment), which now acts as a steady support area.

• The MACD indicator is also showing waning downward momentum, thus laying the ground for an ensuing rally.

• The stochastic indicator is turning bullish too, suggesting that the stock could continue trending upwards.

• With the aforementioned positive technical signals, an anticipated upward movement in the share price could challenge our resistance levels of RM0.24 (R1; 14% upside potential) and RM0.28 (R2; 33% upside potential).

• We have pegged our stop loss at RM0.185 (or a 12% downside risk), offering a risk-reward ratio of 1.2x.

Cuscapi Bhd (Trading Buy)

• CUSCAPI shares are looking technically attractive. The stock has been in a range-bound pattern since February this year, oscillating between RM0.215 and RM0.32. With the stock currently hovering at the lower end of the range, this suggests relatively limited downside risk.

• The recent sell down (from a high of RM0.34 in early September) seems to be overdone. After drifting in the oversold territory for most parts of September following the price drop, a technical recovery may be underway now given yesterday’s bullish Marubozu candlestick formation.

• On the upside, with a bullish Parabolic SAR signal and the MACD indicator showing waning downward momentum, an anticipated upward movement in the share price could potentially challenge our resistance levels of RM0.265 (R1; 15% upside potential) and RM0.29 (R2; 26% upside potential).

• We have pegged our stop loss at RM0.20 (or an 13% downside risk).

• Business-wise, CUSCAPI is a provider of Point-of-Sale systems in Malaysia. They offer business management solutions, IT security solutions, consulting services and contact centre outsourcing services for businesses across various industries such as food & beverage, retail, hospitality and automotive.

• While its revenue has been declining over the last 3 financial years, its net loss of RM15m in FY June 2021 is an improvement from the net loss of RM20m in FY June 2020.

Source: Kenanga Research - 8 Oct 2021