P.I.E. Industrial Bhd (Technical Buy)

• Following a retracement from the peak of RM3.55 on 29 July 2022 to as low as RM2.29 last week, PIE’s share price might have reversed direction after breaking past a downward sloping trendline to pull away to close at RM2.59 yesterday.

• Backed by bullish technical signals arising from the rising RSI and Parabolic SAR indicators, the stock will likely extend its upward momentum as the MACD indicator still hovers above the signal line.

• On the chart, the stock could climb towards our resistance targets of RM2.85 (R1; 10% upside potential) and RM3.07 (R2; 19% upside potential).

• We have set our stop loss price level at RM2.33 (which translates to a downside risk of 10% from yesterday’s last price of RM2.59).

• An integrated Electronics Manufacturing Services (EMS) provider which is also involved in the manufacturing of wires and cables for various industrial applications, PIE reported net profit of RM8m (-58% QoQ) in 2QFY22 to bring its 1HFY22 net earnings to RM27.1m (+12% YoY).

• Moving forward, consensus is forecasting the group would deliver net earnings of RM66.5m in FY December 2022 and RM75.9m in FY December 2023, which translate to forward PERs of 15x and 13.1x, respectively.

SP Setia Bhd (Technical Buy)

• SPSETIA’s share price has tumbled to a low of RM0.41 in October 2022 before bouncing up subsequently to plot an ascending price channel to close at RM0.525 yesterday.

• Chart-wise, the stock is poised to rebound further to be driven by: (i) a rising trendline, (ii) the strengthening RSI signal, (iii) the Parabolic SAR upward momentum, and (iv) the MACD pulling away from the signal line.

• Thus, we believe the share price is anticipated to propel towards our resistance thresholds of RM0.585 (R1) and RM0.635 (R2), representing upside potentials of 11% and 21%, respectively.

• Our stop loss price level is pegged at RM0.47 (or a downside risk of 10%).

• SPSETIA is a leading real estate player with a portfolio of 47 ongoing property development projects and an effective remaining land bank of 7,042 acres valued at a gross development value of RM120.9b.

• The group reported a net profit of RM80.1m (+19% QoQ) in 2QFY22, which lifted its 1HFY22 net profit to RM147.6m (-2% YoY).

• According to consensus estimates, SPSETIA is expected to register a full-year net profit of RM285.6m in FY December 2022 and RM287m in FY December 2023.

• Based on a book value per share of RM3.48 as of end-June 2022, the stock is currently trading at a Price/Book multiple of 0.15x.

Source: Kenanga Research - 17 Nov 2022