Kenanga Research & Investment

Daily technical highlights – (PEKAT, CUSCAPI)

Publish date: Wed, 07 Dec 2022, 09:19 AM

Pekat Group Bhd (Technical Buy)

• Following a retracement of 25% from the peak of RM0.575 in late August this year to as low as RM0.425, PEKAT has been moving sideways before it was pulled away from the higher lows support to close at RM0.48 yesterday.

• With the positive Chaikin Oscillator readings and the RSI still hovering above the MA line indicating a surge in net buying momentum, we anticipate the stock will continue to climb higher abreast with the emerging of Parabolic SAR uptrend.

• Ergo, we believe the stock could extend its upward bias to challenge our resistance targets of RM0.53 (R1; 10% upside potential) and RM0.58 (R2; 21% upside potential).

• We have set our stop-loss price level at RM0.43 (representing a 10% downside risk).

• 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 and lighting protection) systems, and (iii) distribution of electrical products and accessories.

• The group posted a net profit of RM2.3m (+109% QoQ), lifting its 9MFY22 bottomline to RM7.7m (+17% YoY).

• Valuation-wise, the stock is currently trading at a Price/Book value of 2.4x based on a book value per share of RM0.20 as of end-September 2022.

Cuscapi Bhd (Technical Buy)

• After slumping from a recent high of RM0.485 in early-March 2022 to 52-week low of RM0.195 on 4 October, CUSCAPI may be plotting an upward channel ahead after closing at RM0.25 yesterday.

• On the chart, the chart is poised to extend its rebound from the ascending support line backed by the following bullish indicators: (i) positive Parabolic SAR indicator, (ii) the RSI is hooked up further from the MA line, and (iii) the MACD crossing above its signal line.

• Riding on the trajectory momentum, the stock could be on its way to advance towards our resistance targets of RM0.28 (R1; 12% upside potential) and RM0.31 (R2; 24% upside potential).

• Our stop loss price level is pegged at RM0.22 (or 12% downside risk from yesterday’s close of RM0.25).

• CUSCAPI is mainly involved in the provision of: (i) restaurant management solutions, offering a comprehensive range of integrated services such as outlet management solutions, information technology security solutions, IT consulting services and contact centre outsourcing services, and (ii) IT solutions to businesses across various industries, including retail, hospitality and automotive.

• After registering a net loss of RM1.3m (+66% QoQ) in 1QFY23, the stock is presently trading at a Price/Book value of 5x based on a book value per share of RM0.05, from valuation perspective.

Source: Kenanga Research - 7 Dec 2022

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