Power Root Bhd (Trading Buy)

• PWROOT’s share price has tumbled to a low of RM1.24 in March 2022 before subsequently bounced off from the trough to plot an ascending price channel.

• Continuing the uptrend pattern, the share price will likely break out from an intermediate sideways pattern to be driven by: (i) the rising Parabolic SAR, and (ii) the DMI Plus hovering above the DMI Minus.

• Thus, we believe that PWROOT’s share price could climb towards our resistance thresholds of RM2.02 (R1) and RM2.14 (R2), representing upside potentials of 12% and 19%, respectively.

• Our stop loss price is set at RM1.59 (or a downside risk of 12%).

• Fundamental-wise, PWROOT is involved in the manufacturing and distribution of beverage products.

• The group reported net profit of RM12.6m (+110% QoQ) in 4QFY22, which took full-year FY March 2022 bottomline to RM26.3m (-8% YoY) mainly on the back of favourable product sales mix and lower advertising expenses.

• Going forward, consensus is predicting PWROOT to report higher net profit of RM38.1m in FY March 2023 and RM44.3m in FY March 2024, which translate to forward PERs of 19.7x and 17x, respectively.

SKP Resources Bhd (Trading Buy)

• After falling from a peak of RM2.34 in Nov 2021 to a low of RM1.17 in March 2022, SKPRES shares staged a subsequent rebound with a sequence of higher highs and higher lows.

• On the chart, the recent appearance of several bullish candlesticks has indicated the return of buying interest in SKPRES.

• With the Parabolic SAR indicator showing an uptrend and the DMI Plus crossing above the DMI Minus, we believe that the stock will likely strengthen further to challenge our resistance levels of RM1.84 (R1; 13% upside potential) and RM2.03 (R2; 25% upside potential).

• On the downside, our stop loss has been set at RM1.42, which translates to a downside risk of 13%.

• Business-wise, SKPRES is predominately engaged in the manufacturing of plastic products and moulds at its plant in Malaysia.

• The group reported a net profit of RM51.2m in 4QFY22 (+11% QoQ), which brought full-year FY March 2022 net profit to RM169.8m (+27% YoY).

• Going forward, consensus is forecasting SKPRES to report higher net profit of RM184.4m in FY March 2023 and RM210.3m in FY March 2024, which translate to forward PERs of 13.8x and 12.1x, respectively.

Source: Kenanga Research - 29 Jul 2022