Kenanga Research & Investment

Daily technical highlights – (MI, REVENUE)

Publish date: Fri, 12 Aug 2022, 09:10 AM

Mi Technovation Bhd (Trading Buy)

• In tandem with the plunge in technology stocks since the beginning of 2022, MI’s share price has headed south to hit a low of RM1.53 in March 2022, down by ~55% from RM3.40 in January 2022. Subsequently, it bounced up to a high of RM2.18 before succumbing to renewed selling pressure.

• On the chart, the share price has been trading sideways since June 2022 with a support seen at the 52-week low of RM1.38. After closing at RM1.42 yesterday amid a spike in trading volume, an upward bias in the share price from the support line is expected as the stochastic indicator is set to unwind from an oversold position.

• An ensuing technical rebound could then drive the stock price to challenge our resistance thresholds of RM1.63 (R1; 15% upside potential) and RM1.78 (R2; 25% upside potential).

• Our stop loss price is pegged at RM1.22 (or a downside risk of 14%).

• Earnings-wise, MI – which is principally involved in the design, manufacture and distribution of wafer level chip scaling packaging (WLCSP) machines for the semiconductor industry – reported a net profit of RM18.7m (+46% QoQ) in 2QFY22 (driven by customers’ capex expansions and the strengthening USD against both MYR and NTD), bringing its bottomline to RM31.5m (+6.4% YoY) in 1HFY22.

• Moving forward, consensus is forecasting MI to make net profit of RM60m in FY December 2022 and RM75.9m in FY December 2023, which translate to forward PERs of 21.2x this year and 17.1x next year, respectively.

Revenue Group Bhd (Trading Buy)

• REVENUE’s share price saw a multi-step downtrend since May 2021 and reached an initial low of RM1.29 in March 2022 that was followed by a subsequent low of RM0.91 in July 2022. The shares closed at RM1.00 yesterday to hover near its crucial support level of RM0.92.

• A technical rebound is anticipated as the stochastic indicator is signaling a probable reversal from an oversold zone which is further reinforced by the existence of a bullish cup and handle chart pattern.

• Using the Fibonacci Retracement lines as a guide, the stock is expected to rise towards our resistance thresholds of RM1.14 (R1; 14% upside potential) first to be followed by RM1.25 (R2; 25% upside potential) thereafter.

• We have pegged our stop loss at RM0.87, translating to a downside risk of 13%.

• An integrated third party acquirer and one-stop payment solution provider, REVENUE recorded net profit of RM4.7m (+27% YoY) in 3QFY22, taking cumulative earnings to RM12.7m (+14% YoY) for 9MFY22.

• This suggests that the group is on track to achieve the consensus net earnings estimate of RM16.2m in FY June 2022, which is forecasted to jump further to RM19.4m in FY June 2023.

• Valuation-wise, this translates to forward PERs of 29.4x and 24.6x, respectively.

Source: Kenanga Research - 12 Aug 2022

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