Gamuda Berhad (Trading Buy)

• GAMUDA’s business activities encompasses: (i) engineering and construction services, (ii) property development services, and (iii) infrastructure concession services.

• Amid a challenging economic backdrop, the group’s 4QFY21 revenue decreased marginally to RM886.7m (-4.3% YoY) while its net income increased to RM214.1m (+1,337% YoY) in the absence of impairment losses. This brought its full-year FY July 2021 net profit to RM588.3m (+58.3% YoY).

• Going forward, consensus is expecting GAMUDA to post a net profit of RM548.8m in FY July 22 and RM580.3m in FY July 23. This translates to forward PERs of 13.4x and 12.6x, respectively.

• In terms of corporate development, the group has announced its target to secure RM10b worth of new order works in FY22, possibly coming from key projects such as the Penang South Island (PSI) reclamation jobs and infrastructure developments in Australia. The group is also a potential beneficiary of a likely revival of the MRT3 project.

• Chart-wise, the stock plunged to a low of RM2.60 (in mid-August 2021), registering a decline of 35% from its peak of RM4.00 (at the end of March 2021). The stock subsequently climbed to a high of RM3.37 (in mid-October 2021) before declining to a low of RM2.76 (at the end of November 2021) and closed at RM2.92 yesterday.

• Following the recent share price crossover above the lower Bollinger Band, and coupled with the RSI reversing from the oversold region, we believe GAMUDA’s stock price will likely continue to climb.

• As such, the stock could rise to challenge our resistance thresholds of RM3.29 (R1; 13% upside potential) and RM3.48 (R2; 19% upside potential).

• We have pegged our stop loss price at RM2.60 (an 11% downside risk).

Hibiscus Petroleum Bhd (Trading Buy)

• From a technical perspective, from a high of RM0.755 (in mid-June 2021), the stock saw a decline of 13% to a low of RM0.65 (in the beginning of July 2021). Subsequently, the stock treaded sideways for 2 months before spiking up to RM0.97 (in mid October 2021). Thereafter, the stock retraced 22% from its peak to close at RM0.755 yesterday.

• With the share price currently treading above the 100-day Moving Average and the Parabolic SAR indicator beginning to trend upwards, we anticipate the stock could continue to climb and challenge our resistance targets of RM0.865 (R1) and RM0.90 (R2). This represents upside potentials of 15% and 19%, respectively.

• We have pegged our stop loss price at RM0.67, which translates to a downside risk of 11.0%.

• Business-wise, HIBISCS operates as an independent upstream exploration and production company with interest in multiple concessions located in the United Kingdom and Australia.

• On the back of higher oil prices, HIBISCS’ 1QFY22 revenue came in at RM246.7m (+69% YoY) while its bottom-line stood at RM41.5m (+315% YoY).

• Consensus is expecting HIBISCS to post a net profit of RM238.3m in FY Jun 22 and RM378.3m in FY Jun 23. This translates to forward PERs of 6.4x and 4.0x, respectively.

Source: Kenanga Research - 9 Dec 2021