Malayan Flour Mills Bhd (Trading Buy)

• An uptrend reversal could be underway for MFLOUR shares after overcoming a negative sloping trendline that stretches back to February last year.

• Technically speaking, the share price will likely chart an upward trajectory in tandem with an ongoing accelerating Parabolic SAR trend and the RSI climbing out from an oversold position.

• Riding on the strengthening momentum, the stock is expected to advance towards our resistance thresholds of RM0.72 (R1; 13% upside potential) and RM0.78 (R2; 23% upside potential).

• We have placed our stop loss price level at RM0.55 (which represents a 13% downside risk from yesterday’s close of RM0.635).

• Business-wise, MFLOUR is involved in: (i) the milling and selling of wheat flour and allied products in Malaysia, Vietnam and Indonesia, (ii) the manufacture and sale of aqua feeds and sale of related raw materials, (iii) the grains trading business (mostly corn, soybean meal and other feed ingredients), and (iv) poultry integration business.

• After reporting net profit of RM36.4m (-61% YoY) in FY December 2021, the group recently announced net earnings (from continuing businesses) of RM20.3m (-51% YoY) in 1QFY22.

• Based on consensus expectations, MFLOUR is forecasted to make stronger net earnings of RM84.7m for FY22 and RM132.0m for FY23. This translates to undemanding forward PERs of 7.6x this year and 4.9x next year, respectively (with the 1-year forward PER currently hovering at 2SD below its historical mean), suggesting that much of the headwinds might be reflected in the share price already.

NTPM Holdings Bhd (Trading Buy)

• Following a recent price gap-up, NTPM shares may attempt to break out from a consolidation pattern on the back of renewed buying interest.

• On the chart, an upward shift is anticipated as the share price has cut above the 50-day SMA and the stochastic indicator is in the midst of rising from an oversold zone.

• With that, the stock could climb to challenge our resistance levels of RM0.50 (R1; 10% upside potential) and RM0.54 (R2; 19% upside potential).

• Our stop loss price line is set at RM0.41 (or a 10% downside risk).

• A manufacturer and distributor of tissue paper and personal care products, NTPM registered net profit of RM24.8m (-57% YoY) for the 9MFY22 financial period as its overall performance was down mainly attributable to an absence of gain on the disposal of a subsidiary (which amounted to RM12.6m that was recognised in the prior period) as well as higher raw materials, packaging material and freight costs.

• Moving forward, consensus is forecasting NTPM to log net earnings of RM29.0m for FY April 2022 before rising to RM42.0m for FY April 2023 and RM50.0m for FY April 2024. This translates to forward PERs of 17.6x, 12.2x and 10.2x, respectively (with the 1-year forward PER currently trading at 0.5 SD below its historical mean).

Source: Kenanga Research - 1 Jun 2022