Kenanga Research & Investment

Daily technical highlights – (CARIMIN, EWEIN)

Publish date: Fri, 22 Apr 2022, 08:40 AM

Carimin Petroleum Berhad (Trading Buy)

• Chart-wise, CARIMIN shares have bounced off from a double-bottom pattern in mid-March 2022 to plot higher lows thereafter.

• Following the formation of two bullish long candlesticks this week, the stock broke out from an ascending triangle to close higher at RM0.71 yesterday.

• With the Parabolic SAR indicator rising and coupled with the MACD histogram gaining bullish momentum, we believe the stock could rise further to challenge our resistance levels of RM0.80 (R1; 13% upside potential) and RM0.91 (R2; 28% upside potential).

• We have pegged our stop loss at RM0.62, which represents a downside risk of 13%.

• Business-wise, the group provides technical and engineering support services to the oil and gas industry. Their range of services includes hook up and commissioning, marine services, manpower supply and civil construction.

• For 1HFY22, the group’s revenue rose by 21% YoY to RM123.1m from RM101.5m in 1HFY21 thanks to a 74% increase in the group’s Construction, Hook Up and Commissioning as well as Topside Major Maintenance (CHUCTMM) segment (which was mainly contributed by its Integrated Hook up and Commissioning (IHUC) contract). Despite the rise in revenue, the group’s core net profit plunged by 44% YoY from RM11.0m in 1HFY21 to RM6.1m in 1HFY22 due to higher operating cost arising from logistic restrictions. Nevertheless, with the lifting of Covid-19 related restrictions, its performance will likely strengthen going forward.

• In terms of valuation, based on its book value per share of RM0.723 as of end-December 2021, the shares are currently trading at a Price/Book Value multiple of 0.98x (or at 0.5 SD above its 5-year historical mean).

Ewein Berhad (Trading Buy)

• Following the share price slide from a high of RM0.43 in September 2021 to a low of RM0.255 (-41%) in January 2022, the stock has reversed direction to climb higher since then.

• Yesterday, the stock formed a long Marubozu candlestick, indicating strong buying interest in the shares, before closing at RM0.33.

• We believe the stock will likely strengthen further on the back of positive technical signals arising from: (i) the recent formation of a golden crossover after the 20-day SMA has crossed above the 50-day SMA, and (ii) the DMI Plus trending up to pull further away from the DMI Minus.

• Thus, the stock could rise and challenge our resistance levels of RM0.37 (R1; 12% upside potential) and RM0.40 (R2; 21% upside potential).

• On the downside, our stop loss price has been set at RM0.295, which translates to a downside risk of 11%.

• Business-wise, EWEIN is a metal fabrication company which is involved in the design and fabrication of sheet metals, moulds, dies and tools. The group’s businesses are segregated into: (i) manufacturing, (ii) property development, (iii) property management & letting, and (iv) other peripheral activities.

• For its recent financial result, the group’s revenue dropped by 52% from RM194.2m in FY20 to RM94.0m in FY21 due to: (i) adverse impact arising from the Covid-19 pandemic, and (ii) additional costs incurred on the enhancement and finalization works for the City of Dreams project. In line with the lower revenue, the group’s core net profit declined by 29% to RM6.9m in FY21 from RM9.7m in FY20.

• Valuation-wise, based on its book value per share of RM0.837 as of end-December 2021, the stock is currently trading at a Price/Book Value multiple of 0.39x (or at 1SD below its 5-year historical mean).

Source: Kenanga Research - 22 Apr 2022

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