Kenanga Research & Investment

Daily technical highlights – (EMETALL, SDS)

Publish date: Thu, 01 Sep 2022, 10:03 AM

Eonmetall Group Bhd (Technical Buy)

• Following a recent rebound from a trough of RM0.505, which broke past the 50-day SMA amid strong buying interest, we believe EMETALL’s share price will continue its upward trajectory ahead.

• Backed by the MACD line crossing above the signal line and the DMI Plus overcoming the DMI Minus, the stock is expected to move higher.

• Thus, the stock could rise to challenge our resistance levels of RM0.64 (R1; 10% upside potential) and RM0.71 (R2; 22% upside potential).

• We have pegged our stop loss price at RM0.52, representing a downside risk of 10%.

• EMETALL is involved in the designing and fabrication of metal works and palm oil related machines.

• Earnings-wise, the group’s net profit improved by 14% QoQ to RM12.8m in 2QFY22 (vs. 1QFY22‘s RM11.2m), taking the 1HFY22 net profit to RM24m (+77% YoY).

SDS Group Bhd (Technical Buy)

• Chart-wise, SDS’ share price – which started to climb from a low of RM0.32 in mid-Jul 2022 before overcoming the 50-day SMA recently - has broken out from its resistance level of RM0.465 in Aug 2022. Riding on the bullish ascending channel, the share price may continue its uptrend pattern.

• With the Parabolic SAR still rising and given a strengthening MACD signal, the stock is expected to shift higher ahead.

• Thus, we believe that SDS’ share price could climb towards our resistance thresholds of RM0.59 (R1) and RM0.63 (R2), representing upside potentials of 12% and 20%, respectively.

• Our stop loss price is set at RM0.47 (or a downside risk of 10%).

• SDS is involved in the manufacturing and distribution of bakery products through its retail and wholesale networks.

• Earnings-wise, the group reported a net profit of RM4.5m in 1QFY22 (-21% QoQ), dragged by higher raw material costs and low seasonal demand during the Ramadan period in April 2022.

Source: Kenanga Research - 1 Sept 2022

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