Perak Transit Bhd (Trading Buy)

• PTRANS - whose core business encompasses 3 segments, namely: (i) integrated public transport terminals, (ii) public bus services, and (iii) petrol stations – stands to benefit from the relaxation of social restrictions and increased travel activities amid the upcoming holiday season.

• For 3QFY21, PTRANS reported a higher net profit of RM13.6m (+13.3% YoY) mainly attributed to reduced expenses, bringing its 9MFY21 net income to RM40.5m (+41.6% YoY).

• Moving forward, consensus is forecasting PTRANS to register a net profit of RM53.3m in FY Dec 2021 and RM57.4m in FY Dec 2022, which translate to forward PERs of 7.4x this year and 6.9x next year, respectively.

• The stock also offers potential dividend yields of 4.8% p.a. based on consensus DPS projections of 3 sen in FY21 and 3 sen in FY22, respectively.

• Chart-wise, after hitting a high of RM1.01 (in mid-October 2017), the stock has plunged 63% to a low of RM0.375 (in end March 2020). Subsequently, the stock has slowly recovered to RM0.99 (at the beginning of August 2020) and treaded sideways thereafter for approximately 6 months before declining again to close at RM0.62 yesterday (registering a return of - 19.2% YTD).

• Technically speaking, PTRANS’ share price has recently risen from the lower range to the middle band of the Bollinger Band, indicating growing buying interest.

• In addition, with the ADX indicator signaling a waning downward momentum, we anticipate that the stock could see a reversal to challenge our resistance targets of RM0.71 (R1) and RM0.75 (R2), which represent upside potentials of 15% and 21%, respectively.

• We pegged our stop loss at RM0.54, which represents a downside risk of 13%.

Cypark Resources Bhd (Trading Buy)

• From a technical perspective, after treading sideways from end-September 2018 to mid-February 2020, CYPARK shares then plunged 55% from RM1.34 (in mid-February 2020) to a low of RM0.605 (in mid-March 2020).

• The stock subsequently climbed to a high of RM1.67 (at the beginning of March 2021) before declining again by 49% to close at RM0.845 yesterday.

• Technically speaking, a trend reversal may take place ahead as the stock has bounced off from the bottom band of the Donchian Channel, an indication of growing buying interest.

• And with the ADX started to move upwards, we anticipate that the stock may rise to challenge our resistance levels of RM0.95 (R1: 12% upside potential) and RM1.02 (R2: 21% upside potential).

• We pegged our stop loss at RM0.745 (or a 12% downside risk).

• Business-wise, CYPARK offers a wide spectrum of environmental remediation and landscaping services and has built a wealth of experience by completing projects over the years in the areas of: (i) renewable energy, (ii) landfill remediation, and (iii) waste management.

• In its most recent 3QFY21, CYPARK’s top-line came in at RM65.9m (+18.3% YoY) while its net income increased marginally to RM16.7m (+3.7% YoY), driven by lower administrative expenses and finance cost. This brought its 9MFY21 net income to RM49.5m (+0.8% YoY).

• Going forward, consensus is projecting CYPARK to report a net income of RM69.3m in FY Dec 21 and RM90.9m in FY Dec 22, which translate to forward PERs of 7.0x this year and 5.3x next year, respectively.

Source: Kenanga Research - 2 Dec 2021