Kenanga Research & Investment

Daily technical highlights – (OKA, AJIYA)

Publish date: Thu, 21 Oct 2021, 09:15 AM

OKA Corporation Bhd (Trading Buy)

• OKA is one of the country’s largest integrated manufacturers of precast concrete products that are mainly used in the drainage, sewerage, buildings and water related infrastructure works.

• In spite of the movement restrictions imposed due to the Covid-19 pandemic, OKA has remained profitable with a net profit of RM3.3m (+725.0% YoY) in 1Q ended June FY22, driven mainly by higher revenue (+70.6% YoY to RM23.2m).

• As the upcoming Budget 2022 (due to be unveiled next Friday) may include the announcement of new infrastructure projects to pump prime the economy, this may lift sentiment on OKA shares ahead.

• From a technical perspective, OKA’s stock price has pulled back from a high of RM1.315 in end-August 2017 to a low of RM0.38 in the middle of March 2020. Thereafter, the stock – which closed at RM0.89 yesterday – has been plotting higher highs to form an uptrend.

• We believe a continuation of the upward trajectory for the share price is currently underway due to the following bullish technical signals: (i) the 5-day MA has crossed over the 21-day MA, and (ii) the rising ADX indicator has just crossed above the 40-mark.

• With that, the stock could advance to challenge our resistance thresholds of RM0.995 (R1; 12% upside potential) and RM1.065 (R2; 20% upside potential).

• We have pegged our stop loss price at RM0.80 (or 10% downside risk).

Ajiya Bhd (Trading Buy)

• Chart-wise, the stock has traded sideways between a range of RM0.415 to RM0.49 from the end of July 2019 to the end of February 2020 before plunging to a low of RM0.20 around the middle of March 2020. Thereafter, the stock surged 250% to hit a high of RM0.70 in mid-August 2020.

• The stock subsequently drifted lower and slowly climbed to reach a new high of RM0.80 in the beginning of May 2021, before retracing 24% to close at RM0.61 yesterday.

• With the recent emergence of positive technical signals following the shorter-term EMA cutting above the longer-term EMA and the rising ADX indicator, the stock is poised to rise to challenge our resistance targets of RM0.69 (R1) and RM0.72 (R2), which represent upside potentials of 13% and 18%, respectively.

• Our stop loss price has been set at RM0.54, which represents a downside risk of 11%.

• Business-wise, AJIYA’s core activities encompasses 2 business units, namely (i) Ajiya Metal Group, which is involved in the manufacturing of metal roofing system, metal frame products, structural products, roof tile effect products and other related products, and (ii) Ajiya Glass Group, which is involved in the production of tempered and laminated safety glass, insulating safety glass, decorative safety glass and other related products.

• Reflecting the improved operating environment, AJIYA reported a net profit of RM5.7m in 2QFY21 versus a net loss of RM4.0m in the same period previous year, bringing its 1HFY21 net profit to RM12.2m, a significant improvement compared to the net loss of RM0.9m reported in the previous corresponding period.

Source: Kenanga Research - 21 Oct 2021

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