Pekat Group Bhd (Trading Buy)

• Listed in June 2021, PEKAT’s share price has slid by 43% from a recent high of RM0.71 in April 2022 before staging a rebound from the support level of RM0.405 in mid-July.

• On the chart, we expect the upward momentum to continue backed by: (i) the rising Parabolic SAR trend, (ii) the DMI Plus crossing above the DMI Minus, and (iii) the bullish MACD signal after crossing above the zero line.

• Hence, the stock could rise to challenge our resistance levels of RM0.56 (R1; 13% upside potential) and RM0.61 (R2; 23% upside potential).

• We have pegged our stop loss at RM0.43, representing a downside risk of 13%.

• PEKAT is involved in the design, supply and installation of solar PV (photovoltaic) systems in Malaysia.

• Earnings-wise, after making RM12.7m (-7% YoY) in FY December 2021, the group subsequently recorded net profit of RM4.4m (-25% QoQ, -3% YoY) in 1QFY22, dragged by upfront costs relating to new projects that typically require preliminary assessment and works on sites to be carried out before the delivery and installation of solar panels.

Ranhill Utilities Bhd (Trading Buy)

• RANHILL’s share price has broken out from a consolidation stage (that was ranging between RM0.38 and RM0.405 from July to August 2022), bouncing off with the formation of bullish candlesticks in recent days to close at RM0.46 yesterday.

• On the back of the rising Parabolic SAR trend and positive crossover by the DMI Plus over the DMI Minus, we anticipate the stock will continue to climb further ahead.

• Therefore, the stock could rise to challenge our resistance levels of RM0.52 (R1; 13% upside potential) and RM0.57 (R2; 24% upside potential).

• We have pegged our stop loss at RM0.40, representing a downside risk of 13%.

• RANHILL is an operator of water utility network, providing water supply, waste water treatment and clean energy services.

• Based on its latest 1QFY22 results, RANHILL reported net profit of RM7.4m (+29% QoQ, +1% YoY) after making net earnings of RM30.6m (-19% YoY) in FY December 2021.

• Going forward, consensus is forecasting RANHILL to report net profit of RM41.4m in FY December 2022 and RM52.5m in FY December 2023, which translate to forward PERs of 14.4x and 11.2x, respectively.

Source: Kenanga Research - 18 Aug 2022