Genting Malaysia Bhd (Trading Buy)

• GENM operates a tourist resort in Genting Highlands which includes hotels, restaurants, casinos and recreational & amusement facilities. The group, through its subsidiaries, also develops and leases property, operates leisure & hospitality services and provides time share ownership schemes.

• Earnings-wise, GENM reported a core net loss of RM1.0b in 9MFY21, compared to a core net loss of RM1.3b in 9MFY20 (+23% YoY), mainly thanks to better contributions from Genting UK and its North America units that have turned profitable after the reopening of their operations.

• The group’s Malaysia business could potentially see a boost following the latest recommendation made by the National Recovery Council (NRC) to fully reopen Malaysia’s international borders as early as 1 March 2022 as the resumption of foreign tourist arrivals should help lift GENM’s bottomline moving forward.

• Chart-wise, the stock has been moving in a sideways consolidation pattern since March 2021, bouncing off its lower boundary recently with RM2.73 seen to be a strong support level since last year.

• The long bullish candlestick that emerged on 8 February 2022 – which pushed the price up by 8% above its support level - indicates investors’ positive sentiment arising from the official launch of the long-awaited Genting SkyWorld’s Theme Park attraction.

• With the Parabolic SAR indicator recently shifting its direction to trend upwards, which coincides with the stock’s rebound and coupled with the MACD histogram showing bullish momentum, the stock may continue to rise and challenge our resistance levels of RM3.30 (R1; 11% upside potential) and RM3.52 (R1; 19% upside potential).

• We have pegged our stop loss at RM2.69, which represents a downside risk of 9%.

IJM Corporation Bhd (Trading Buy)

• Chart-wise, the stock – after treading steadily in a sideways pattern above a support level of RM1.71 - gapped down by 13% on 14 December 2021 as its shares traded ex-entitlement for a special DPS of 15 sen.

• After falling further thereafter to bottom out in late January 2022, the stock has regained its strength to trend upwards, which is supported by the rising Parabolic SAR indicator and the RSI reversal from the oversold region.

• An extension of the price uptrend could potentially challenge our resistance levels of RM1.65 (R1; 13% upside potential) and RM1.71 (R1; 17% upside potential).

• On the downside, our stop loss has been set at RM1.32, which translates to a downside risk of 10%.

• In terms of business activities, IJM provides construction services and is also involved in property development.

• For 1HFY22, the group’s core net profit plunged by 73% YoY to RM16.0m mainly due to weaker PBT contributions from both the construction (-41%) and property (-60%) segments.

• Going forward, consensus is predicting the group to report a core net profit of RM276.5m in FY March 22 and RM350.0m in FY March 23, which translate to forward PERs of 19.2x and 15.1x, respectively.

Source: Kenanga Research - 11 Feb 2022