JHM Consolidation Bhd (Technical Buy)

• A recent bounce-up from a low of RM0.71 has led JHM’s share price to break above a descending trendline that stretches back to a peak of RM1.35 in August this year before closing at RM0.72 yesterday.

• On the chart, the shares will probably continue the upward momentum based on the positive technical indicators arising from the MACD cutting above the signal line and the RSI on the verge of steering away from its MA line after climbing out from an oversold zone.

• Hence, the stock could rise to challenge our resistance thresholds of RM0.80 (R1; 11% upside potential) and RM0.88 (R2; 22% upside potential).

• Our stop loss price level is pegged at RM0.645 (representing a 10% downside risk).

• Business-wise, JHM is primarily engaged in 2 key segments: (a) electronics business unit, which is involved in the manufacture and assembly of surface mount technology of automotive rear, interior and front headlamp lighting (for the automotive industry) and motor controller (for the industrial sector), and (b) mechanical business unit, which provides one stop solutions from fabrication of tooling, design to assembly and test of LED lighting applications, microelectronic components as well as precision mechanical parts.

• The group posted a net profit of RM0.9m in 3QFY22 (a decline of 91% compared to its immediate preceding quarter mainly due to forex loss and a higher provision for taxation), lifting its 9MFY22 bottomline to RM20.4m (-5% YoY).

• Based on consensus estimates, JHM is expected to register a net profit of RM18.9m in FY December 2022 and RM48.4m in FY December 2023. This translates to forward PERs of 21.2x and 8.3x, respectively.

Swift Haulage Bhd (Technical Buy)

• SWIFT’s share price is anticipated to shift upwards after bouncing off from the intermediate support level of RM0.435 on 21 November (which coincided with a previous low in Julyy, suggesting the possible formation of a double-bottom reversal pattern).

• From a technical perspective, a continuation of the rising momentum may be on the horizon as: (i) the share price is on the verge of overcoming the Parabolic SAR downtrend, (ii) the MACD is poised to cross above the signal line, and (iii) the RSI strives to pull further away from its MA line after moving out from the oversold area.

• An extended upward bias could then propel the stock to climb towards our resistance targets of RM0.52 (R1; 11% upside potential) and RM0.58 (R2; 23% upside potential).

• We have placed our stop loss price level at RM0.42 (or an 11% downside risk from yesterday’s close of RM0.47).

• A multimodal transport operator offering logistics solutions ranging from container haulage, land transportation, warehousing & container depot and freight forwarding services, SWIFT posted a net profit of RM11.7m (-11% QoQ) in 3QFY22, which then brought its 9MFY22 bottomline to RM39.2m (+13.6% YoY).

• Consensus is projecting the group to register net earnings of RM52.9m in FY December 2022 before rising to RM60m in FY December 2023, which translate to forward PERs of 7.9x this year and 6.9x next year, respectively.

Source: Kenanga Research - 2 Dec 2022