Eco World International Bhd (Trading Buy)

• EWINT shares will likely extend the upward trajectory following a bounce-up from the recent trough of RM0.43 in end September this year to close at RM0.47 yesterday.

• A probable run-up in the share price is anticipated in the wake of the stochastic indicator’s reversal from an oversold zone with the %K line crossing above the %D line to trigger a buy signal.

• On the back of the renewed strength, the stock could challenge our initial resistance target of RM0.53 (R1) before attempting to close the price gap that was left opened in early July this year by testing the next resistance barrier of RM0.60 (R2) thereafter. This represents upside potentials of 13% and 28%, respectively.

• We have set our stop loss price at RM0.42 (or 11% downside risk).

• Fundamentally, EWINT – whose core business involves property development outside Malaysia and currently has 18 existing and upcoming projects in the United Kingdom and Australia – offers exposure to a post-pandemic recovery in the international property markets.

• The group made net profit of RM2.5m (-93% YoY) in the 3rd quarter ended July 2021, taking its nine-month cumulative net earnings to RM69.8m (+11% YoY).

• Valuation-wise, the stock is presently trading at a Price-to-Book multiple of 0.38x (which is near 1SD below its historical mean level) based on its book value per share of RM1.24 as of end-July 2021.

Glomac Bhd (Trading Buy)

• Following a multi-year downtrend, GLOMAC shares could be in the midst of staging a rally after plotting a saucer bottom trend reversal pattern recently.

• In view of the positive technical signals triggered by the 50-day SMA crossing above the 150-day SMA and the rising MACD indicator (after climbing over the zero-line), the stock will likely extend its uptrend ahead.

• That being the case, the share price is expected to advance towards our resistance thresholds of RM0.40 (R1; 14% upside potential) and RM0.45 (R2; 29% upside potential).

• Our stop loss price is pegged at RM0.30 (which represents a 14% downside risk from yesterday’s close of RM0.35).

• On the fundamental front, GLOMAC – which is in the real estate business encompassing property development, property investment, construction, property management and car park management – reported a net profit of RM28.9m (+130% YoY) for FY April 2021 that was followed by a quarterly net earnings of RM1.7m (-61% YoY) in 1QFY22.

• Based on its book value per share of RM1.45 as of end-July this year, the stock is currently trading at a Price-to-Book multiple of 0.24x (or at 0.5SD below its historical mean).

• In terms of future corporate developments, GLOMAC is considering venturing into the data centre business as it reportedly has been in talks with two parties (one local and one international) to build data centres on the group’s strategic land bank (which is located in the Klang Valley, Selangor and Johor).

Source: Kenanga Research - 10 Nov 2021