Kenanga Research & Investment

Daily technical highlights – (REVENUE, DNEX)

Publish date: Fri, 24 Jun 2022, 09:27 AM

Revenue Group Bhd (Trading Buy)

• From a high of RM2.42 in April 2021, REVENUE’s share price has fallen 61% to end at RM0.945 yesterday, its lowest closing level since March 2020. With the share price currently hovering near a key support level of RM0.92, a technical rebound could be forthcoming.

• On the chart, as both the stochastic and RSI indicators are set to unwind from the oversold zone, the stock will likely show an upward bias ahead.

• Thus, we believe that REVENUE’s share price will rise to challenge our resistance levels of RM1.05 (R1; 11% upside potential) and RM1.13 (R2; 20% upside potential).

• On the downside, our stop loss has been set at RM0.85 (representing a 10% downside risk).

• Fundamentally speaking, REVENUE is a provider of complete and customisable cashless payment solutions via its fully integrated platforms, including the deployment of Electronic Data Capture (EDC) terminals and offering of electronic transaction processing services.

• The group recently reported an all-time high quarterly core net profit of RM4.7m (+25% YoY) in 3QFY22, lifting 9MFY22’s bottomline to RM12.7m (up 29% YoY).

• Moving forward, based on consensus forecasts, the group will make a net profit of RM16.2m for FY June 22 and RM19.4m for FY June 23, which translate to forward PERs of 27.6x this year and 23.1x next year, respectively.

Dagang Nexchange Bhd (Trading Buy)

• A technical rebound could be anticipated following DNEX’s share price retracement from its recent high of RM1.33 in February this year to as low as RM0.755 yesterday.

• This is based on the positive signals arising from the stock price crossing back above the lower Bollinger Band as well as an expected reversal by both the stochastic and RSI indicators from the oversold zone.

• Riding on the upward momentum, we believe that the stock could climb towards our resistance thresholds of RM0.83 (R1; 10% upside potential) and RM0.93 (R2; 23% upside potential).

• Our stop loss price level is pegged at RM0.69 (representing a 9% downside risk).

• Fundamental-wise, DNEX is involved in the information technology solution, e-services for trade facilitation, semiconductor and oil & gas / energy sectors. Earnings-wise, DNEX posted a net profit of RM51.6m in 3QFY22 (prior corresponding period comparison is not meaningful). The main earnings contributor to the group was the technology division (which contributed 60.7% of total revenue) while the energy segment (26.9%) and the information technology segment (12.4%) made up the balance.

• Based on consensus estimates, DNEX’s net earnings is projected to come in at RM187.5m for FY June 22 and RM230m for FY June 23, which translate to forward PERs of 12.8x this year and 10.4x next year, respectively.

Source: Kenanga Research - 24 Jun 2022

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