CSC Steel Holdings Bhd (Technical Buy)

• Following a sharp sell-off to hit a low of RM1.06 in mid-July 2022, its share price has rebounded to close at RM1.16 yesterday.

• Chart-wise, the share price is expected to continue its upward momentum as both the Stochastic and RSI indicators climb out from the oversold zone.

• Hence, we believed that CSCSTEL’s share price could climb towards our resistance thresholds of RM1.28 (R1; 10% upside potential) and RM1.35 (R2; 16% upside potential).

• Conversely, our stop loss price has been identified at RM1.04 (representing a 10% downside risk).

• CSCSTEL is involved in manufacturing and sales of steels and related products. The group specializes in galvanised steel products and colour-coated steel products for the building material industry.

• Earnings-wise, the group reported a net profit of RM17.1m in 2QFY22 compared with a net profit of RM15.4m in 2QFY21. This took 1HFY22 net profit to RM29.1m (versus RM37.3m previously).

• Based on consensus forecasts, CSCSTELs net earnings are projected to come in at RM70.2m in FY December 2022 and RM66m in FY December 2023, which translate to forward PERs of 6.1x and 6.5x, respectively.

Inari Amertron Bhd (Technical Buy)

• The share price of INARI has slid 45% from a peak of RM4.30 in late November 2021 to as low as RM2.36 in July 2022 before making a rebound since then to close at RM2.55 yesterday. With the share price falling towards its 52-week low, further downside risk may be cushioned by the short-term support line at RM2.36.

• With both Stochastic and RSI indicators’ reversing from oversold area and coupled with the stock price crossing back to the lower Bollinger Band, we anticipate that the stock will continue to trend upwards.

• Thus, we believe the share price will rise further to challenge our resistance levels of RM2.80 (R1; 10% upside potential) and RM2.95 (R2; 16% upside potential).

• Our stop loss level is pegged at RM2.30 (representing a 10% downside risk).

• INARI is involved in the electronics manufacturing services (EMS) industry, providing Outsourced Semiconductor Assembly and Test (OSAT) niche services in Radio Frequency (RF) System in Package (SiP) for smart mobile devices, fiber-optic transceivers and other electronics manufacturing services.

• Earnings-wise, the group reported a net profit of RM85.9m in 4QFY22 compared with a net profit of RM85.4m in 4QFY21. This took FY22 net profit to RM388.5m (versus RM324.3m previously).

• Based on consensus forecasts, INARI’s net earnings are projected to come in at RM432.8m in FY June 2023 and RM476.6m in FY June 2024, which translate to forward PERs of 21.9x and 19.9x, respectively.

Source: Kenanga Research - 30 Sept 2022