OCK Group Bhd (Trading Buy)

• OCK – is a business that services the telecommunication sector while having an existing portfolio of more than 4,200 telecommunication towers located in Malaysia, Myanmar and Vietnam.

• In recent times, OCK has come under the limelight as they are perceived to be a beneficiary of the upcoming 5G rollout riding on the back of their stellar performance in previously implementing the 3G network.

• The group reported a second quarter net profit of 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 RM14.1m, up 8.5% YoY.

• Based on consensus estimates of OCK reporting a net profit of RM32.3m in FY21 and RM34.7m in FY22, the stock is currently perceived to be trading at a PER of 16.2x this year and 15.1x times next year.

• OCK’s stock price had pulled back 63.1% from a high of RM0.88 around the middle of September 2017 and bottomed out at a low of RM0.325 in the middle of March 2020.

• Thereafter, the stock – which closed at RM0.495 yesterday – has been plotting higher lows to form an uptrend.

• Following which, an upward trajectory in the stock price could continue as: (i) the shorter-term moving average has pierced above the longer-term moving average (generating a buy signal) and (ii) the rising OBV indicator (reflecting positive volume pressure).

• Given that an ascending triangle formation could be observed on the chart, this could set the stage for the share price to rise and challenge our resistance targets of RM0.56 (R1) and RM0.59 (R2), which represent upside potentials of 13% and 19%, respectively.

• Our stop loss price has been set at RM0.44, which represents a downside risk of 11%.

Jag Berhad (Trading Buy)

• Technically speaking, after declining to a low of RM0.15 (beginning September 2020), the stock rallied 260% and peaked at RM0.54 (beginning May 2021). Subsequently, the stock retraced 45% and traded sideways for 4 months and closed at RM0.365 yesterday.

• Following which, an upward trajectory in the stock price could continue as the 50-day Moving Average has crossed the 100 day Moving Average; - signaling a golden cross - a potential for a major rally in the stock’s price

• In addition, with the Parabolic SAR indicator trending upwards, the stock could test our resistance targets of RM0.415 (R1; 14% upside potential) and RM0.43 (R2; 18% upside potential).

• Our stop loss price is pegged at RM0.32 (or 12% downside risk).

• JAG has 2 business units, namely: (i) Jaring Metal which is a fully fledged recycling company that specializes in recycling E waste products such as recycling electronic components from tv’s, computers and other peripherals, whereas (ii) Jag Prop which is a business unit that has recently embarked on a mission of becoming a boutique developer – with an upcoming project named 51 Evernew Kemuning

• In terms of financial results, JAG posted a net profit of RM4.6m in 2QFY21 (+109% YoY), taking its 1HFY21 earnings to RM10.0m (+170% YoY)

Source: Kenanga Research - 27 Oct 2021