Kelington Group Bhd (Technical Buy)

• Following a retracement from a high of RM1.43 in September 2022, a subsequent rebound from the low of RM1.21 in October 2022 that was accompanied by several long candlesticks recently may indicate the return of buying interest for KGB shares.

• Backed by the DMI Plus crossing above the DMI Minus, the rising Parabolic SAR trend and the MACD line crossing over the signal line, we anticipate the stock will continue to climb.

• Thus, we believe that KGB’s share price could climb towards our resistance thresholds of RM1.44 (R1) and RM1.57 (R2), representing upside potentials of 11% and 21%, respectively.

• Our stop loss price is set at RM1.17 (or a downside risk of 10%).

• KGB is an integrated engineering services provider with a niche in ultra-high purity (UHP) gas and chemical delivery solutions for the high technology industry. It is also involved in the industrial gases business (providing on-site gas supply & manufacturing of liquid carbon dioxide), process engineering and general contracting activities.

• Earlier this week, KGB has announced two contract wins comprising: (i) RM170m turnkey job for a bulk liquid terminal in Port Klang, and (ii) RM90m contract for the supply of UHP gas delivery systems for a semiconductor plant in Beijing, bringing its YTD job wins to RM1.62b.

• Earnings-wise, after reporting net profit of RM13.6m (+84% YoY) in 2QFY22 and RM21.9m (+68% YoY) in 1HFY22, consensus is expecting the group to make net profit of RM47.9m in FY December 2022 and RM54.6m in FY December 2023. This translates to forward PERs of 17.6x and 15.3x, respectively.

MyNews Holdings Bhd (Technical Buy)

• MYNEWS’ share price is currently moving inside an ascending price channel after rising from a low of RM0.36 in early-August 2022, breaking out from the resistance level of RM0.51 recently.

• Following which, the share price will likely continue its uptrend backed by: (i) the rising Parabolic SAR indicator, and (ii) the strengthening MACD signal.

• Thus, we believe that the stock could climb towards our resistance thresholds of RM0.575 (R1) and RM0.625 (R2), representing upside potentials of 12% and 21%, respectively.

• Our stop loss price is set at RM0.455 (or a downside risk of 12%).

• Fundamental-wise, MYNEWS is involved in the retail convenience stores business and the manufacturing of fresh food items (such as ready-to-eat food, fresh food and bakery products).

• After reporting net loss of RM1.5m (-90% QoQ) in 3QFY22, which took 9MFY22 bottomline to -RM19.5m (-43% YoY), consensus is predicting MYNEWS would narrow its net loss further to RM20.2m in FY October 2022 before turning profitable with net earnings of RM11.6m in FY October 2023 due to increased productivity (as more workers are recruited) and improved cost efficiency (arising from better wastage control). This translates to a forward PER of 30.3x.

Source: Kenanga Research - 4 Nov 2022