CCK Consolidated Holdings Bhd (Trading Buy)

• After bouncing up from a recent low of RM0.57 in early October this year to close at RM0.60 yesterday, CCK’s share price could ride on an upward trajectory ahead.

• The bullish technical outlook is driven by our trading system, which is built on a Bollinger Band indicator to trigger buy signals when the share price crosses back above the lower band. Based on an exit rule of either an 18% profit or 8% stop loss (whichever comes first) from the trigger levels, the back-tested results showed that 21 of the 24 buy alerts generated by the trading system since 2015 had turned out to be profitable trades (i.e. it has correctly predicted the subsequent share price gains of 18% or more), translating to a hit rate of 88%.

• Following the appearance of 5 buy alerts (which occurred between mid-July to early October this year), the trading system is currently signalling that CCK shares could advance to the RM0.68 - RM0.70 price range or higher going forward.

• We have set our resistance thresholds at RM0.68 (R1; 13% upside potential) and RM0.73 (R2; 22% upside potential).

• Our stop loss level is pegged at RM0.53 (representing a 12% downside risk).

• Business-wise, CCK – which is involved in retailing and poultry farming with an integrated supply chain consisting of feed mill, breeder farms, hatchery, broiler farms, layer farm, abattoirs and retail stores – has a geographical presence in Sarawak, Sabah and Indonesia.

• The group reported net profit of RM5.4m (-29% YoY) in 2QFY21, taking its first half earnings to RM11.4m (-27% YoY). Going forward, consensus is projecting CCK’s bottomline to come in at RM27.3m for FY December 2021 and RM33.7m for FY December 2022, which translate to forward PERs of 13.8x this year and 11.2x next year, respectively.

Kronologi Asia Bhd (Trading Buy)

• After being locked inside a sideways trading pattern since late June this year, KRONO shares may attempt to stage a technical breakout ahead.

• An upward shift in the share price is anticipated based on the positive technical signals triggered by: (i) a reversal from the oversold position by the stochastic indicator; (ii) the emergence of a bullish dragonfly doji candlestick, and (iii) a probable crossover by the 50-day SMA above the 100-day SMA.

• With that, the stock will likely climb to challenge our resistance targets of RM0.68 (R1; 11% upside potential) and RM0.73 (R2; 19% upside potential).

• We have pegged our stop loss price at RM0.56 (or 9% downside risk from yesterday’s close of RM0.615).

• Fundamentally, as a leading provider of technology and solutions services specializing in: (i) enterprise data management (EDM), and (ii) cloud and hybrid as-a-service (AAS), KRONO stands to benefit from the rising demand for cloud-based data storage solutions.

• With a geographical presence in Malaysia, Singapore, Thailand, Philippines, Indonesia, India, Taiwan, Hong Kong and China, the group saw its bottomline coming in at RM5.1m in 2Q ended July 2021 (up from RM1.2m in the same period last year), which then took its six-month results to RM9.1m (versus a net loss of RM10.0m previously).

• An added positive is the group’s steady financial position backed by a net cash position of RM36.2m (or 5.5 sen per share) as of end-June 2021.

Source: Kenanga Research - 2 Nov 2021