Kenanga Research & Investment

Daily technical highlights – (MYEG, RL)

Publish date: Thu, 12 Jan 2023, 09:08 AM

MY E.G. Services Bhd (Technical Buy)

• MYEG’s share price is set to continue its run-up after staging a reversal from the low of RM0.715 on 29 August 2022 to forman ascending channel by plotting higher lows and higher highs along the way.

• Technically speaking, an extension of the upward bias could be on the horizon backed by positive indicators arising from: (i)the emerging Parabolic SAR uptrend, (ii) the MACD crossing above the signal line, and (iii) rising buying interest as indicatedby the RSI.

• Therefore, the stock is expected to advance towards our resistance thresholds of RM0.99 (R1; 11% upside potential) andRM1.07 (R2; 20% upside potential).

• We have pegged our stop loss price level at RM0.79 (representing an 11% downside risk).

• In the business of offering solutions in the development and implementation of Electronic Government Services with apresence in Malaysia, Philippines, Bangladesh and Indonesia, MYEG announced a net profit of RM150.7m (+70% QoQ) in3QFY22 which lifted its 9MFY22 earnings to RM324m (+38% YoY).

• The strong financial performance is expected to continue with consensus currently anticipating MYEG to post net profit ofRM353.4m in FY December 2022 before rising further to RM391.3m in FY December 2023.

• This translates to forward PERs of 19x and 17x, respectively.

Reservoir Link Energy Bhd (Technical Buy)

• Following a steep fall from the peak of RM0.50 in early December 2022 to as low as RM0.335 on 6 January 2023, RL’sshare price might have hit a bottom already after bouncing off from the immediate support level to close at RM0.36yesterday.

• An upward shift in price is anticipated based on the bullish technical signals arising from: (i) the emergence of Parabolic SARuptrend, (ii) the RSI steering away from the MA line, and (iii) the MACD on the verge of cutting above the signal line.

• That said, the stock could climb towards our resistance targets of RM0.40 (R1; 11% upside potential) and RM0.44 (R2; 22%upside potential).

• We have pegged our stop loss price level at RM0.32 (or a downside risk of 11%).

• An indirect proxy to steady crude oil prices, RL is a provider of well services for oil & gas operators, supporting the upstreamsegments of the industry via its range of services for well leak repair, perforation, well testing, wash & cement, wirelineservices production enhancement and the supply of oilfield products, equipment & technical personnel.

• The group registered a net profit of RM0.4m (+113% QoQ) in 3QFY22, which then narrowed its 9MFY22 net loss to RM6m (-160% YoY).

• Going forward, consensus is projecting the group to turn around with a net profit of RM3m in FY December 2022 andRM10.1m in FY December 2023, which translate to forward PERs of 34.7x and 10.3x, respectively.

Source: Kenanga Research - 12 Jan 2023

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