Malakoff Corporation Bhd (Technical Buy)

• MALAKOF’s share price has fallen 31% since early August 2021 from RM0.88 to close at RM0.61 yesterday. With the share price likely to find support at its 52-week low of RM0.575, which coincides with two recent price reversal points in March 2022 and June 2022, a technical rebound could be anticipated.

• Chart-wise, we believe the share price will shift upwards to close the gap that emerged in 28 Sept 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 RM0.67 (R1; 10% upside potential) and RM0.70 (R2; 15% upside potential).

• Conversely, our stop loss price has been identified at RM0.55 (representing a 10% downside risk).

• MALAKOF is involved in the design, construction, operation & maintenance of combined cycle power plant, power generation and sale of electricity.

• Earnings-wise, the group reported a net profit of RM119.1m in 2QFY22 compared with a net profit of RM117.7m in 2QFY21, which brought 6MFY22 bottomline to RM170m (versus 6MFY21’s net profit of RM178.2m).

• Based on consensus forecasts, MALAKOF’s net earnings are projected to come in at RM313.4m in FY December 2022 and RM326.8m in FY December 2023, which translate to forward PERs of 9.5x this year and 9.1x next year, respectively.

• The stock also offers attractive dividend yields of 8.0% and 8.4% based on consensus DPS estimates of 4.9 sen for FY22 and 5.1 sen for FY23, respectively.

NCT Alliance Bhd (Technical Buy)

• The share price of NCT has trended downwards from a peak of RM0.73 in March 2021 before closing at RM0.36 yesterday.

• On the chart, the share price is expected to stage a technical rebound backed by an anticipated reversal by both the Stochastic and RSI indicators from the oversold area.

• A technical breakout could then lift the stock to challenge our resistance levels of RM0.40 (R1; 11% upside potential) and RM0.42 (R2; 17% upside potential).

• Our stop loss level is pegged at RM0.32 (representing an 11% downside risk).

• Fundamentally speaking, NCT is a real estate developer which offers property development services for various housing projects with a geographical presence mainly in Genting Highlands and Penang.

• Earnings-wise, the group reported a net profit of RM11.1m (+38% QoQ, 17% YoY) in 2QFY22, which brought 6MFY22 bottomline to RM19.1m (+100% YoY).

• In terms of valuation, the stock is currently trading at Price/Book Value multiple of 0.8x (or approximately at 1 SD below its historical mean) based on its book value per share of RM0.46 as of end-June 2022.

Source: Kenanga Research - 13 Oct 2022