Kenanga Research & Investment

Daily technical highlights – (REVENUE, RGTBHD)

Publish date: Fri, 13 Jan 2023, 09:09 AM

Revenue Group Bhd (Technical Buy)

• REVENUE’s share price slid from a peak of RM2.42 in April 2021 to as low as RM0.46 recently before closing at RM0.465yesterday. With the share price likely to find support near its 52-week low of RM0.46, a technical rebound is anticipated.

• Chart-wise, we believe the share price is expected to stage a reversal as: (i) both the Stochastic and RSI indicators are setto climb out from the oversold zone, and (ii) the stock price has crossed back above the lower Bollinger Band.

• Hence, we expect the stock to rise and test our resistance thresholds of RM0.51 (R1; 10% upside potential) and RM0.55(R2; 18% upside potential).

• Conversely, our stop loss price has been identified at RM0.42 (representing a 10% downside risk).

• Fundamentally, REVENUE is a provider of complete and customisable cashless payment solutions via its fully integratedplatforms, including the deployment of Electronic Data Capture (EDC) terminals and offering of electronic transactionprocessing services.

• Earnings-wise, the group reported a net loss of RM3.3m in 1QFY23 compared with a net profit of RM3.5m in 1QFY22,mainly due to lower gross profit margins and higher administrative expenses.

• Based on consensus forecasts, REVENUE’s net earnings are projected to come in at RM9.3m in FY June 2023 andRM12.8m in FY June 2024, which translate to forward PERs of 24.1x this year and 17.5x next year, respectively.

• Meanwhile, the REVENUE was in the news recently following the sudden changes in its boardroom amid talks of allegedillegal activities undertaken by two directors, which then stirred uncertainty among investors. Still, after seeing a 28% plungeon 5 January tohit a record low of RM0.46, the selling momentum has subsequently eased off, suggesting a technicalrebound from an oversold position may be on the horizon.

RGT Bhd (Technical Buy)

• The share price of RGTBHD has slid from a peak of RM0.77 in November 2021 to as low as RM0.32 in September 2022before making a rebound since then to close at RM0.38 yesterday.

• On the chart, as both the stochastic and RSI indicators are set to unwind from the oversold zone, the stock will likely showan upward bias ahead.

• Hence, we expect the stock to move higher towards our resistance levels of RM0.42 (R1; 11% upside potential) and RM0.45(R2; 18% upside potential).

• Our stop loss level is pegged at RM0.345 (representing a 9% downside risk).

• As an integrated, one-stop solution manufacturer of hygiene care and air care products – such as soap, sanitizer andfragrance dispenser - RGTBHD offers exposure to the growing demand for these products which are widely used to preventand control the spread of viruses.

• Earnings-wise, the group reported a net profit of RM2.3m in 1QFY23 compared with a net profit of RM1.1m in 1QFY22,underpinned by higher demand for its hygiene care and air care products.

• In terms of valuation, the stock is currently trading at a Price/Book Value multiple of 2.5x (or approximately at 0.5 SD belowits historical mean) based on a book value per share of RM0.15 as of end-September 2022.

Source: Kenanga Research - 13 Jan 2023

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