Westports Holdings Bhd (Technical Buy)

• Following a recent rebound from a 31-month low of RM3.04 early this month, WPRTS’ share price – which ended at RM3.17 yesterday – may continue its positive trajectory ahead.

• An upward shift in the shares is currently anticipated after the MACD crosses over the signal line while the RSI indicator is in the midst of reversing from the oversold territory.

• With that said, the stock could be on its way to reach our resistance targets of RM3.48 (R1; 10% upside potential) and RM3.60 (R2; 14% upside potential).

• We have pegged our stop loss price level at RM2.87 (representing a 9% downside risk).

• WPRTS – which is the largest listed port operator in Malaysia focussing on container and conventional cargo handling as well as providing a wide range of port services – reported net profit of RM162.3m (-9% YoY) in 2QFY22. This brought its 1HFY22 net earnings to RM314.1m (-19% YoY).

• Going forward, consensus is forecasting the group to log net profit of RM623.0m for FY22 and RM714.0m for FY23, which translate to forward PERs of 17.4x this year and 15.1x next year, respectively (with its 1-year rolling forward PER presently hovering at 2SD below its historical mean).

Pekat Group Bhd (Technical Buy)

• After slumping from a recent high of RM0.58 in late August this year, PEKAT shares may be nearing an intermediate bottom based on the existing positive technical signals.

• On the chart, a share price reversal could be in the offing following the bullish golden cross by the 50-day SMA over the 100- day SMA while the stochastic indicator is set to climb out from the oversold zone.

• Riding on the strengthening momentum, the stock will probably advance towards our resistance thresholds of RM0.49 (R1; 13% upside potential) and RM0.54 (R2; 24% upside potential).

• Our stop loss price level is placed at RM0.39 (representing a 10% downside risk from yesterday’s close of RM0.435).

• Listed on the ACE Market in June last year, PEKAT is principally involved in the: (i) design, supply and installation of solar PV (photovoltaic) systems and power plants, (ii) supply and installation of ELP (earthing & lighting protection) systems, and (iii) distribution of electrical products and accessories.

• For the second quarter ended June 2022, the group made net profit of RM1.1m (+3% YoY), lifting its 1HFY22 bottom-line to RM5.5m (-2% YoY).

• Valuation-wise, based on a book value per share of RM0.19 as of end-June 2022, the stock is trading at a Price/Book Value multiple of 2.29x (or slightly below the minus 1SD threshold from its historical mean).

Source: Kenanga Research - 18 Oct 2022