CTOS Digital Bhd (Technical Buy)

• CTOS has fallen 46% since early October last year from RM2.10 to as low as RM1.13 in June this year before recovering toclose at RM1.46 yesterday. Following that, the formation of a potential ascending triangle pattern has set the stage for alikely technical rebound ahead.

• Chart-wise, we believe the stock is expected to extend its upward momentum in view of the positive signals triggered by: (i)the rising Parabolic SAR trend, (ii) the DMI Plus crossing above the DMI Minus, and (iii) the 12-day moving average stillhovering above the 26-day moving average following the recent MACD golden cross in December.

• Hence, we expect the stock to rise and test our resistance thresholds of RM1.62 (R1; 11% upside potential) and RM1.70(R2; 16% upside potential).

• Conversely, our stop loss price has been identified at RM1.30 (representing an 11% downside risk).

• CTOS is a leading credit reporting agency in Malaysia, providing credit information and analytics digital services andsolutions that are widely used by banking and financial institutions, insurance and telecommunication companies, largecorporations, small-to-medium enterprises, and consumers for self-check.

• Earnings-wise, the group reported a net profit of RM22.8m in 3QFY22 (compared with a net profit of RM11.7m in 3QFY21)lifted mainly by key accounts (+36%) and commercial (+15%) transactions as more credit reporting activities could bemoving in tandem with an uplift in overall economic activities. This took 9MFY22 earnings to RM57.7m (versus net profit ofRM31.2m previously).

• Based on consensus forecasts, CTOS’s net earnings are projected to come in at RM83.5m for FYE December 2022 andRM102.7m for FYE December 2023, which translate to forward PERs of 40.4x and 32.8x, respectively.

Mr D.I.Y. Group (M) Bhd (Technical Buy)

• MRDIY has slid from a peak of RM2.92 in April 2021 to its 52-week low of RM1.84. Following that, the share price is expectedto shift higher after overcoming a downward sloping trendline in December.

• On the chart, the share price (which closed at RM2.05 yesterday) is expected to continue its upward momentum as bothStochastic and RSI indicators are rising.

• A technical breakout from the ascending triangle could then lift the stock to challenge our resistance levels of RM2.27 (R1;11% upside potential) and RM2.40 (R2; 17% upside potential).

• Our stop loss level is pegged at RM1.85 (representing a 10% downside risk).

• Fundamentally-speaking, Mr D.I.Y. is Malaysia’s largest home improvement retailer which is known for its low prices with avariety of products offerings ranging from hardware, electrical, household products to car accessories.

• Earnings-wise, the group reported a net profit of RM101.2m (+12% YoY) in 3QFY22 primarily attributable to positive samestore sales growth and increase in the total number of sales. This took 9MFY22 earnings to RM336.9m (versus net profit ofRM297.3m previously).

• Based on consensus forecasts, Mr D.I.Y.’s net earnings are projected to come in at RM493.7m in FY December 2022 andRM613.3m in FY December 2023, which translate to forward PERs of 39.2x and 31.5x, respectively.

Source: Kenanga Research - 29 Dec 2022