Prolexus Bhd (Technical Buy)

• After tumbling from a peak of RM0.835 in late March this year to close at RM0.395 yesterday, further downside risk for PRLEXUS’ share price may be cushioned by a horizontal trendline at RM0.37.

• Backed by bullish technical signals arising from the reversal of the stochastic indicator from an oversold position and the appearance of several dragonfly doji candlesticks, a rebound in the shares is anticipated to close a price gap that has been opened last month.

• On the chart, the stock could be making its way towards our resistance thresholds of RM0.45 (R1; 14% upside potential) and RM0.50 (R2; 27% upside potential).

• Our stop loss price level is set at RM0.35 (representing a downside risk of 11%).

• In the business of manufacturing sportswear apparels and reusable fabric face masks, PRLEXUS made net loss of RM1.7m in 3QFY22 ended April 2022 (versus 3QFY21’s net loss of RM0.6m), taking 9MFY22 net loss to RM0.3m (compared with net profit of RM23.5m previously).

• Nonetheless, the group is financially steady with its balance sheet backed by net cash holdings of RM18.3m (or 6.7 sen per share) as of end-April 2022.

Samchem Holdings Bhd (Technical Buy)

• Following its retracement from a recent high of RM1.01 in early April this year to as low as RM0.71 in mid-July, a recent bounce-off from an ascending trendline (that stretches back to February last year) has set the stage for SAMCHEM shares to shift higher ahead.

• From a charting standpoint, with the stochastic indicator in the midst of climbing out from the oversold territory and the appearance of bullish dragonfly doji candlesticks over the past two trading days, the positive price momentum is expected to continue.

• Hence, the stock could advance further to challenge our resistance targets of RM0.86 (R1; 12% upside potential) and RM0.94 (R2; 23% upside potential).

• We have pegged our stop loss price at RM0.67 (which translates to a downside risk of 12%).

• On the fundamental front, SAMCHEM is a leading regional industrial chemicals and lubricants distributor, supplying approximately 500 different petrochemicals and services to more than 7,000 clients from industries such as automotive, paints & inks, oil & gas and agriculture across the region (mainly in Malaysia, Indonesia, Vietnam and Singapore).

• Earnings-wise, the group registered net profit of RM18.2m (-5% YoY) in 2QFY22, which brought 1HFY22 bottomline to RM37.8m (-1% YoY).

Source: Kenanga Research - 6 Sept 2022