Jaya Tiasa Holdings Bhd (Trading Buy)

• Chart-wise, we are bullish on JTIASA, anticipating that its share price uptrend could continue as: (1) the stock is currently treading comfortably above the 200-day MA; (2) the shorter term moving average has crossed above the longer term moving average; and (3) the Parabolic SAR indicator is trending upwards.

• Following which, the stock could advance and test our price targets of RM0.78 (R1) and RM0.83 (R2), offering investors potential returns of 12% and 19%, respectively.

• Our stop loss price level is pegged at RM0.62, suggesting a downside risk of 11% from yesterday’s close of RM0.695.

• Business-wise, JTIASA is involved in: (i) the production of oil palm; and (ii) the manufacturing and distribution of a wide range of timber products (such as round logs, plywood and rotary veneer).

• For the latest quarter of 1QFY22, amid contraction in sales volumes of CPO and logs, JTIASA reported a revenue of RM146.0m (-34% YoY) while its net profit decreased in tandem to RM24.6m (-29% YoY).

• Going forward, given the prevailing elevated CPO prices and coupled with the group’s focus on improving their productivity and efficiency, consensus is expecting JTIASA to register a net profit of RM87.2m in FY June 22 and RM63.4m in FY June 23. This translates to forward PERs of 7.7x this year and 10.6x next year, respectively.

KSL Holdings Bhd (Trading Buy)

• From a technical viewpoint, KSL’s share price is currently on an uptrend after cutting above the 200-day MA recently. The rising momentum is also supported by the ROC indicator, which is pointing higher above the zero-line.

• In addition, its upward trajectory is projected to continue as the stock will likely hover above a positive sloping trendline that dates back to end-May 2021.

• With that, the stock could climb towards our resistance thresholds of RM0.75 (R1; 10% upside potential) and RM0.79 (R2; 16% upside potential).

• We have set our stop loss price level at RM0.615 (or a 10% downside risk).

• KSL’s business activities encompass property development, property management and property investment. Its portfolio of properties is located mostly in Johor, comprising a combination of commercial and residential properties (such as KSL City Shopping Mall, KSL Hotel & Resorts).

• Amid a challenging property market, the group still managed to show steady quarterly performances with net profits coming in at RM17.1m in 1QFY21, RM34.0m in 2QFY21 and RM8.7m in 3QFY21. This took its 9MFY21’s cumulative net earnings to RM59.8m (up 336% YoY).

• Valuation-wise, the shares are currently trading at P/BV multiple of 0.23x based on its book value per share of RM3.01 as of end-September 2021.

• Its healthy balance sheet is backed by net cash holdings of RM153.5m (or 15.1 sen per share) as of end-September last year.

Source: Kenanga Research - 10 Feb 2022