CCK Consolidated Holdings Bhd (Trading Buy)

• On the back of a surge in trading volume, the 5-day EMA crossed above the 15-day EMA yesterday, indicating a return of buying interest in CCK shares.

• On the chart, the upward shift in the share price (up 5.4% yesterday) will likely continue in view of the positive technical signals triggered by: (i) the stochastic indicator in the midst of climbing out from an oversold zone, and (ii) the share price cutting above both the 5-day EMA and 15-day-EMA.

• A price breakout could then propel the stock to challenge our resistance thresholds of RM0.66 (R1; 12% upside potential) and RM0.71 (R2; 20% upside potential).

• We have placed our stop loss price level at RM0.53 (representing a 10% downside risk).

• Fundamentally speaking, CCK – which is principally engaged in retailing and poultry farming (with an integrated supply chain including feed mill, breeder farms, hatchery, broiler farms, layer farm, abattoirs– stands to benefit from the government’s decision to remove the ceiling price for chicken and chicken eggs effective 1 July. The group previously reported net profit of RM11.1m (+83 YoY) in 1QFY22.

• Moving forward, consensus is forecasting CCK to make net earnings of RM35.2m in FY December 2022 and RM38.8m in FY December 2023, which translate to forward PERs of 10.4x this year and 9.5x next year, respectively.

Samchem Holdings Bhd (Trading Buy)

• After hitting resistance at the RM1.02 level, SAMCHEM’s share price subsequently pulled back to a low of RM0.76 in Jun 22, down by 25%.

• Following which, on the back of the stochastic indicator’s anticipated reversal from the oversold area and a possible double bottom reversal formation, the stock could climb towards our resistance thresholds of RM0.86 (R1) and RM0.94 (R2), representing upside potentials of 12% and 22%, respectively.

• We have placed our stop loss price level at RM0.69 (or a 10% downside risk).

• SAMCHEM is mainly involved in the distribution of industrial chemicals and lubricants (focusing on the blending of customized solvents). The group has subsidiaries around South East Asia (namely in Malaysia, Singapore, Indonesia, Vietnam, Cambodia and Myanmar) to support its large clientele base from various industries such as automotive, paints & inks, oil & gas and agriculture.

• Earnings-wise, after registering net profit of RM75.0m (+84% YoY) in FY December 2021, SAMCHEM’s bottomline came in at RM19.6m (+3% YoY) in 1QFY22.

Source: Kenanga Research - 23 Jun 2022