Farm Fresh Bhd (Technical Buy)

• FFB’s share price has fallen 15% since April this year from its 52-week high of RM1.86 to close at RM1.58 yesterday. With the share price finding support near its 52-week low of RM1.50, a technical rebound could be anticipated.

• Chart-wise, we believe the share price will shift upward as both the Stochastic and RSI indicators climb out from the oversold zone.

• Hence, we expect the stock to rise and test our resistance thresholds of RM1.74 (R1; 10% upside potential) and RM1.80 (R2; 14% upside potential).

• Conversely, our stop loss price has been identified at RM1.42 (representing a 10% downside risk).

• Business-wise, FFB is engaged in the business of farming, manufacturing and distribution of various dairy products and plant-based products.

• Earnings-wise, the group reported a net profit of RM15.2m in 1QFY23 compared with a net profit of RM19.2m in 1QFY22, mainly due to the Employees’ Share Option Scheme (“ESOS”) expenses of RM2.1m which was first recognized during the current quarter upon the grant of share options to employees of the Group

• Based on consensus forecasts, FFB’s net earnings are projected to come in at RM92m for FY March 2023 and RM115.6m for FY March 2024, which translate to forward PERs of 31.9x and 25.4x, respectively.

P.I.E Industrial Bhd (Technical Buy)

• The share price of PIE has slid from a peak of RM4.28 in November 2021 to as low as RM2.17 in March 2022 before staging a rebound since then to close at RM2.78 yesterday.

• On the chart, the share price is poised to shift upward as: (i) both the Stochastic and RSI indicators are set to climb out from the oversold zone, and (ii) the stock price has crossed back above the lower Bollinger Band.

• Hence, we expect the stock to challenge our resistance levels of RM3.05 (R1; 10% upside potential) and RM3.20 (R2; 15% upside potential).

• Our stop loss level is pegged at RM2.51 (representing a 10% downside risk).

• Fundamentally speaking, PIE is an integrated Electronic Manufacturing Services (EMS) provider which is also involved in the manufacturing of wires and cables for various industrial applications.

• Earnings-wise, the group reported a net profit of RM8m (-35% YoY) in 2QFY22 which brought 1HFY22 net profit to RM27.1m (+11% YoY).

• Based on consensus forecasts, PIE’s net earnings are projected to come in at RM66.5m for FY December 2022 and RM75.9m for FY December 2023, which translate to forward PERs of 16.1x and 14.1x, respectively.

Source: Kenanga Research - 28 Sept 2022