BSL Corporation Bhd (Technical Buy)

• Following a steep fall of 97% from its peak of RM2.25 on 10 November 2021 to a trough of RM0.07 in mid-July this year, BSLCORP’s share price has entered into a consolidation phase since then. However, yesterday’s strong breakout from the rectangle formation to close at RM0.13 suggests a return of buying interest in the shares.

• From a technical perspective, the stock is expected to extend its breakout momentum backed by the emerging Parabolic SAR uptrend and the rising RSI indicator, as well as a spike-up in transaction volume.

• Hence, the stock is anticipated to climb towards our resistance targets of RM0.16 (R1; 23% upside potential) and RM0.19 (R2; 46% upside potential).

• Our stop loss price level is pegged at RM0.10 (representing a 23% downside risk).

• Business-wise, BSLCORP is mainly involved in the stamping and manufacturing of precision metal parts, fabrication of tools, forge base metal components, dies, the assembly of printed circuit board as well as electrical and electronics components.

• The group posted net loss of RM1m (-162% QoQ) in 4QFY22, which brought its full-year earnings to RM4.3m (-54% YoY).

• In terms of Price/Book valuation, the stock is currently trading at a multiple of 0.24x based on a book value per share of RM0.54 as of end-August 2022.

Hartalega Holdings Bhd (Technical Buy)

• HARTA’s share price might have bounced off from a trough already following its retracement from a peak of RM19.24 on 19 October 2020 to as low as RM1.46 on 20 September 2022, which has recovered since then to close at RM2.06 yesterday.

• Chart-wise, the stock is anticipated to ride on an upward sloping trendline as the stochastic indicator is plotting higher lows and the stock is rising inside the Keltner Channel while the MACD is set to cross above the signal line.

• On the back of the positive momentum, the stock will likely climb towards our resistance thresholds of RM2.28 (R1; 11% upside potential) and RM2.45 (R2; 19% upside potential).

• Conversely, we have set our stop loss price level at RM1.84 (or an 11% downside risk).

• HARTA – a global healthcare nitrile and latex gloves manufacturer with clientele across the world – reported net profit of RM28.3m (-68% QoQ) in 2QFY23 (which was hit by lower average selling prices amid an extremely high competitive environment), lifting its cumulative net earnings to RM116.6m (-96% YoY) in 1HFY23.

• Moving forward, consensus is forecasting that HARTA would deliver a net profit of RM246.2m and RM310.4m in FY March 2023 and FY March 2024, which translate to forward PERs of 28.6x and 22.6x, respectively.

Source: Kenanga Research - 11 Nov 2022