Aeon Co. (M) Bhd (Trading Buy)

• Following a retracement from a high of RM1.69 in early May 2022, a recent rebound from a tough of RM1.40 recently has paved the way for AEON’s share price to form an uptrend reversal ahead.

• With the Parabolic SAR indicator showing its first uptick signal and bullish stochastic crossover in the oversold territory, we anticipate that the stock will continue to trend upwards.

• Thus, we believe AEON’s share price could climb towards our resistance thresholds of RM1.74 (R1; 12% upside potential) and RM1.89 (R2; 21% upside potential).

• Our stop loss price level is set at RM1.38 (or a downside risk of 12%)

• Business-wise, AEON is engaged in retailing and property management services. The retailing segment contributes c.85% of the group’s revenue, while the remaining comes from property management services.

• The group reported a net profit of RM28.1m (+28% YoY, -60% QoQ) in 1QFY22 on the back of higher sales commission and rental income from its property management services segment to cushion its higher expenses on seasonal year-end annual rebate recognition.

• Based on the consensus estimates, the group is expected to report a net profit of RM104.8m in FY Dec 2022 and RM119.8m in FY Dec 2023, translating the forward PERs of 20.8x and 18.4x, respectively.

Coastal Contracts Bhd (Trading Buy)

• COASTAL shares bounced off from its support level of RM1.65 in May 2022, which was followed by the formation of the Marubozu White candlestick, indicating strong buying interest in the shares.

• On the chart, the stock is expected to climb further as: (i) rising Parabolic SAR and (ii) bullish MACD signal with strong histogram.

• Thus, the stock could rise further and challenge our resistance levels of RM2.19 (R1; 13% upside potential) and RM2.36 (R2; 22% upside potential).

• We have pegged our stop loss price set at RM1.70, which translates to a downside risk of 12%

• COASTAL provides fabrication and sale of marine transportation vessels, property letting, ship repairs and maintenance, and other services related to marine vessels.

• Fundamental-wise, the group recorded net profit of RM44.3m (+275% QoQ) in 3QFY22, which taking 9MFY22 bottomline to RM78.1m (>100% YoY), mainly lifted by (i) full contribution from its Perdiz and Papan onshore gas plant and (ii) strengthening in USD against the Ringgit from its gas processing division.

• Based on the consensus forecast, COASTAL is expected to record a net profit of RM102.5m in FY Jun 2022 and RM114.5m in FY Jun 2023, translating forward PERs of 10.2x and 8.8x, respectively.

Source: Kenanga Research - 8 Jun 2022