Kenanga Research & Investment

Daily technical highlights – (BONIA, SIGN)

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Publish date: Thu, 19 Jan 2023, 10:04 AM

Bonia Corporation Bhd (Technical Buy)

• After rebounding from its support level of RM1.745 in November 2022, BONIA’s share price has subsequently formed a series of higher lows. The recent formation of several bullish candlesticks has indicated the return of strong buying interest, possibly paving the way for a continuation of the uptrend.

• We expect the upward momentum to continue based on the positive technical signals arising from: (i) the rising Parabolic SAR trend, (ii) the DMI Plus has crossed above the DMI Minus, and (iii) the bullish MACD crossover from the signal.

• Hence, the stock could rise to challenge our resistance levels of RM2.83 (R1; 11% upside potential) and RM3.14 (R2; 23% upside potential).

• We peg our stop loss at RM2.31, representing a downside risk of 10%.

• BONIA is involved in the design, manufacturing, retailing and wholesale of leatherwear, footwear, apparel, accessories and lifestyle products consisting of its own house brands and licensed brands.

• Earnings-wise, the group recorded a net profit of RM14.2m in 1QFY23 (vs. net loss of RM4.8m QoQ), lifted mainly by the reopening of the economy and strong festive season sales.

• Based on consensus estimates, BONIA is expected to report a net profit of RM40.0m in FY June 2023 and RM38.1m in FY June 2024. This translates to forward PERs of 12.8x and 13.5x, respectively.

Signature International Bhd (Technical Buy)

• SIGN’s share price has slid from a peak of RM3.35 in November 2022, down by 31% to a low of RM2.315 in December 2022. With the share price currently fluctuating near its support level of RM2.32 a technical rebound is anticipated.

• Chart-wise, we believe the stock will resume its uptrend pattern supported by a reversal by the stochastic indicator from the oversold area and the strengthening MACD histogram trend.

• Thus, we believe SIGN’s share price could advance towards our resistance thresholds of RM2.605 (R1) and RM2.94 (R2), representing upside potentials of 10% and 25%, respectively.

• Our stop loss price is set at RM2.13 (or a downside risk of 10%).

• Business-wise, SIGN is involved in the designing and distribution of kitchen and wardrobe systems.

• The group reported a net profit of RM3.1m in 5QFY22, bringing its 15MFY22 cumulative net profit to RM28.7m (following its change in financial year-end from 30 June to 31 December).

Source: Kenanga Research - 19 Jan 2023

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