Homeritz Corporation Bhd (Trading Buy)

• HOMERIZ shares bounced off from the support level of RM0.50 in March 2022 which was followed by the formation of long candlesticks recently, indicating the presence of sustained buying momentum.

• With the Parabolic SAR indicator showing a rising trend and coupled with a strengthening MACD signal (as both the MACD line and the signal line have crossed above the zero line), we anticipate the stock will continue to trend higher ahead.

• Thus, we believe that HOMERIZ’s share price could climb towards our resistance thresholds of RM0.62 (R1; 10% upside potential) and RM0.655 (R2; 16% upside potential).

• Our stop loss price level is set at RM0.51 (or a downside risk of 10%).

• Fundamental-wise, HOMERIZ is engaged in the designing, manufacturing and sales of upholstery furniture products.

• HOMERIZ reported a net profit of RM8.5m in 1QFY22 (+16% YoY), driven by: (i) higher average selling prices on selected products, and (ii) a strengthening USD against the Ringgit.

• Based on consensus forecasts, on the back of improved productivity and factory expansion, the group is expected to record a net profit of RM29.4m in FY August 2022 and RM31.2m in FY August 2023, translating to forward PERs of 7.9x and 7.5x, respectively.

Mobilia Holdings Bhd (Trading Buy)

• After a recent rebound from the lower boundary of a sideways pattern at RM0.175 in early-March 2022, a price breakout could be underway for MOBILIA shares.

• On the chart, the share price is expected to climb further as: (i) the Parabolic SAR indicator has plotted its first uptick signal, (ii) the stochastic indicator has made a positive crossover, and (iii) the DMI Plus is pulling further away from the DMI Minus.

• Thus, the stock could rise further and challenge our resistance levels of RM0.24 (R1; 14% upside potential) and RM0.255 (R2; 21% upside potential).

• We have pegged our stop loss price set at RM0.185, which translates to a downside risk of 12%.

• Business-wise, MOBILIA is engaged in the designing and manufacturing of home furniture, such as dining room, living room and bedroom furniture.

• After posting a net loss of RM0.8m in the preceding quarter (3QFY21), MOBILIA turned around with a net profit of RM4.4m (+51% YoY) in 4QFY21, taking its full-year FY December 2021’s bottomline to RM8m (-7% YoY). The final quarter performance was mainly lifted by higher sales volume (following the resumption of business operation) and a strengthening USD against the Ringgit.

• Forward earnings will likely come in stronger as we gather MOBILIA’s organic growth will be driven by: (i) a capacity expansion, (ii) an expanded clientele base spread across more export markets amid the reopening of international borders and a recovery in the global economy, and (iii) the currency impact of a weaker Ringgit versus the USD for its export sales (which makes up 65% of total sales).

Source: Kenanga Research - 28 Apr 2022