Kenanga Research & Investment

Daily technical highlights – (FITTERS, PERTAMA)

Publish date: Thu, 11 Nov 2021, 10:00 AM

Fitters Diversified Bhd (Trading Buy)

• FITTERS is a diversified group with 4 business units, namely: (i) Property Development (its current development is the Zeta Deskye condominium project around Jalan Ipoh), (ii) Renewable Energy & Green Palm Oil Mill (providing a range of renewable solutions to various key segments), (iii) Molecor (Sea) Hypro PVC-O-Pipes (manufacturing and distribution of Orientated Polyvinyl Chloride (PVC-O) pipes, and (iv) Fire Protection Services (which manufactures a full spectrum of fire safety and protection equipment).

• For the most recent quarter ended June 2021, the group registered a net profit of RM6.9m (versus a net loss of RM5.0m previously), taking its 1HFY21’s bottom-line to RM1.9m (+122%YoY) amid the dampened economic conditions during the period.

• Looking at the long-term chart, the stock has dropped from a high of RM0.635 (in mid-May 2015) to a low of RM0.335 (at the end of August 2017) before treading sideways for approximately 19 months. Thereafter, the stock partially recouped its losses as it touched RM0.525 (in the beginning of March 2019) before declining by a further 70% subsequently to a new low of RM0.155. Since then, the stock has staged a partial recovery to close at RM0.475 yesterday.

• From a technical viewpoint, following the occurrence of a golden cross (as the 50-day SMA cuts above the 100-day SMA), the ongoing momentum may lift the stock to stage a rally ahead.

• In addition, with the ADX indicator signalling a bullish trend, FITTERS shares will probably advance towards our resistance thresholds of RM0.54 (R1; 14% upside potential) and RM0.57 (R2; 20% upside potential).

• We have pegged our stop loss level at RM0.42 (representing a 12% downside risk).

Pertama Digital Bhd (Trading Buy)

• On the chart, PERTAMA’s share price has dropped from a high of RM0.765 (in the beginning of June 2020) before bottoming out at RM0.33 (in the beginning of August 2020), registering a decline of 57%. Thereafter, the stock treaded sideways for a duration of around 9 months before surging to a high of RM0.635 (at the end of July 2021) and retraced 13% thereafter to close at RM0.555 yesterday.

• From a technical perspective, the stock is anticipated to move higher on account of: (i) the shorter-term EMA cutting above the longer-term EMA, and (ii) the Parabolic SAR indicator trending upwards.

• Riding on the bullish technical signals, the stock could climb towards our resistance thresholds of RM0.63 (R1; 14% upside potential) and RM0.67 (R2; 21% upside potential).

• Our stop loss price is set at RM0.49 (or 12% downside risk).

• PERTAMA is in the business of exploring and investing in a wide spectrum of fintech and govtech companies which are in a position to contribute towards the Malaysian digital ecosystem.

• In terms of business developments, PERTAMA has been developing newer services to meet the demand of customers. For example, riding on the increased demand for digital touchpoints during the pandemic, PERTAMA has introduced a new service - eJamin - which is the first digital court bail payment solution that is currently used by courts in Malaysia. In addition, the team also manages mySMS, an online communication portal that government agencies use to disseminate key information to the public.

• For the latest reporting quarter ended June 2021, the group registered a net profit of RM0.9m (mainly due to higher revenue), which is an improvement compared to a net loss of RM4.0m in the preceding period.

Source: Kenanga Research - 11 Nov 2021

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