Hextar Industries Bhd (Trading Buy)

• Following the crossover by the 50-day MA above the stock price in mid-January 2022, the share price rose by 83% toRM0.32 in February 2022 before forming a bullish flag pattern after which the stock broke out of the pattern to trend higher.
   
• The rising momentum is supported by the reversal in direction of the ADX indicator and the stochastic indicator’s %K and %Dmaintaining their position in the overbought region.
   
• With that, the stock could rise to challenge our resistance levels of RM0.36 (R1; 13% upside potential) and RM0.39 (R2; 22%upside potential).
   
• We have pegged our stop loss at RM0.29, which represents a downside risk of 9%.
   
• Business-wise, the group manufactures agro-chemicals, produces quarry machinery as well as distributes and suppliesquarry industrial products for quarry industry.
   
• For the latest results, the group’s revenue climbed by 60% to RM47.8m in 1QFY22 from RM30.0m in 1QFY21 thanks tohigher demand of fertilisers and performance recovery post the Enhanced Movement Control Order in the preceding quarter.In line with the higher revenue, the group’s core PATAMI jumped by >100% from RM0.6m in 1QFY21 to RM2.1m in 1QFY22.
   
• As the group’s demand for fertilisers is particularly driven by the oil palm plantation activities, the adoption of B20 palm oilbiofuel programme by 2022 by the Malaysian government should continue to create demand for fertilizer, thus, improving theperformance of the fertilizer industry.
  
  

Hextar Industries Bhd (Trading Buy)

• Following the crossover by the 50-day MA above the stock price in mid-January 2022, the share price rose by 83% toRM0.32 in February 2022 before forming a bullish flag pattern after which the stock broke out of the pattern to trend higher.
   
• The rising momentum is supported by the reversal in direction of the ADX indicator and the stochastic indicator’s %K and %Dmaintaining their position in the overbought region.
   
• With that, the stock could rise to challenge our resistance levels of RM0.36 (R1; 13% upside potential) and RM0.39 (R2; 22%upside potential).
   
• We have pegged our stop loss at RM0.29, which represents a downside risk of 9%.
   
• Business-wise, the group manufactures agro-chemicals, produces quarry machinery as well as distributes and suppliesquarry industrial products for quarry industry.
   
• For the latest results, the group’s revenue climbed by 60% to RM47.8m in 1QFY22 from RM30.0m in 1QFY21 thanks tohigher demand of fertilisers and performance recovery post the Enhanced Movement Control Order in the preceding quarter.In line with the higher revenue, the group’s core PATAMI jumped by >100% from RM0.6m in 1QFY21 to RM2.1m in 1QFY22.
   
• As the group’s demand for fertilisers is particularly driven by the oil palm plantation activities, the adoption of B20 palm oilbiofuel programme by 2022 by the Malaysian government should continue to create demand for fertilizer, thus, improving theperformance of the fertilizer industry.

Source: Kenanga Research - 30 Mar 2022