SP Setia Bhd (Technical Buy)

• After getting a lift-off from its recent trough of RM0.41 around two months ago, plotting a sequence of higher lows along theway, SPSETIA’s share price is poised to extend its upward trajectory ahead.

• On the chart, the shares will likely find support at the ascending trendline and pull away from the 100-day SMA line.

• This could then push the stock towards our resistance thresholds of RM0.70 (R1; 11% upside potential) and RM0.76 (R2;21% upside potential). Our stop loss price level is pegged at RM0.57 (representing a 10% downside risk).

• Earnings-wise, SPSETIA – a property developer with effective remaining land banks of 6,687 acres valued at a GDV ofRM119.5b and total unbilled sales of RM8.4b – reported net profit of RM70.2m (up more than 6-fold) in 3QFY22, whichbrought 9MFY22 bottomline to RM217.8m (+35% YoY).

• According to consensus expectations, the group is forecasted to log net earnings of RM258.8m for FY December 2022 andRM266.7m for FY December 2023.

• In terms of Price/Book Value valuation, the stock is currently trading at a multiple of 0.21x (or marginally below the minus 1SD level from its historical mean) based on its book value per share of RM2.94 as of end-September 2022.

• And statistically, SPSETIA’s share price is expected to shift higher in the coming fortnight as the stock has historicallyregistered a positive performance in the month of December. This has been the case in 19 of the last 25 years (including themost recent five years) with an average monthly return of +5.7% since 1997.

• For history to repeat itself, its share price – which ended at RM0.63 yesterday – has to climb above the end-November 2022close of RM0.695 by next Friday, which translates to a minimum upside potential of 6.5 sen or 10.3% from the existing level.

Genting Malaysia Bhd (Technical Buy)

• GENM shares might have found an intermediate support after bouncing off from a recent low of RM2.40 about one month agoto close at RM2.63 yesterday.

• Technically speaking, the share price is on the verge of overcoming a negative sloping trendline, triggered by the positivesignals arising from: (i) the DMI Plus crossing above the DMI Minus, and (ii) the prevailing Parabolic SAR uptrend.

• A decisive breakout could then propel the stock to reach our resistance targets of RM2.90 (R1; 10% upside potential) andRM3.01 (R2; 14% upside potential).

• We have set our stop loss price level at RM2.39 (or a 9% downside risk).

• A leading global leisure and hospitality corporation, GENM reported net earnings of RM11.4m in 3QFY22 (from a net loss ofRM289.2m previously), narrowing its 9MFY22 net loss to RM126.0m (from -RM1.12b in 9MFY21)).

• Going forward, consensus is projecting the group to make net profit of RM399.8m for FY December 2022 and RM1.05b forFY December 2023, translating to forward PERs of 37.3x this year and 14.2x next year, respectively (with its 1-year rollingforward PER currently hovering at slightly below its historical mean).

• From a statistical perspective, GENM shares may show an upward bias in the short run judging by its historical priceperformance in December.

• In essence, the stock had finished higher in the month of December in 17 of the last 25 years (including the most recent fiveyears) with an average monthly return of +4.3% since 1997.

• Assuming history repeats itself, the share price could climb by at least 4 sen (or 1.5%) from the current level to surpass theend-November 2022 close of RM2.67 by next Friday.

Source: Kenanga Research - 20 Dec 2022