Ecomate Holdings Bhd (Technical Buy)

• After a steep fall of 22% from RM0.89 on 15 Dec 2022 to as low as RM0.695 on 16 Dec 2022, ECOMATE’s share price hasbeen consolidating in a sideways channel before closing at RM0.74 amid heavy transaction volume yesterday.

• On the chart, a price breakout from the consolidation pattern is anticipated in view of the following bullish technical signals:(i) the emerging Parabolic SAR uptrend, (ii) the MACD is strengthening against the signal line, and (iii) the rising buyinginterest as indicated by the RSI.

• Thus, the stock will likely climb towards our resistance thresholds of RM0.83 (R1; 12% upside potential) and RM0.92 (R2;24% upside potential).

• Our stop loss level is set at RM0.655, which translates to a downside risk of 11%.

• Business-wise, ECOMATE is involved in the manufacturing of ready-to-assemble furniture products, focusing on exportmarkets mainly in Asia and North America.

• The group has registered a net profit of RM1.2m in 3QFY23m (-25% QoQ), which consequently took its 9MFY23 bottomlineto RM4.8m (+50% YoY).

• In terms of valuation, the stock is currently trading at a Price/Book Value multiple of 7.4x based on its book value per shareof RM0.10 as of end-November 2022.

• Meanwhile, ECOMATE has just announced a plan to transfer its listing status from the ACE Market to the Main Market,which is expected to boost its investability to a wider group of investors going forward.

Fiamma Holdings Bhd (Technical Buy)

• Following the formation of a double-top reversal pattern on 9 Dec 2022, FIAMMA’s stock price has subsequently retracedfrom its peak of RM1.30 to an intermediate support level of RM1.01 on 3 Feb 2023 before inching up to close at RM1.04yesterday.

• We believe that the stock could shift higher ahead given that the price has crossed above the lower Bolinger Band (whichcoincided with a bounce off from the ascending trendline) as the stochastic indicator is climbing out from the oversold zonewhile the MACD has crossed above the signal line.

• With that said, an upward shift is expected to propel the stock price towards our resistance targets of RM1.16 (R1; 12%upside potential) and RM1.25 (R2; 20% upside potential).

• We have pegged our stop loss level at RM0.925, representing a downside risk of 11%.

• FIAMMA is principally engaged in the business of: (i) trading and services, focusing on the distribution and servicing ofelectrical home appliances, sanitaryware, kitchen & wardrobe systems as well as built-in furniture, bathroom accessories,medical devices and healthcare products, and (ii) property development and property investment.

• The group reported a net profit of RM7.7m (+97% YoY) in 4QFY22, which brought its full-year earnings to RM36.8m (+6.7%YoY).

• Going forward, consensus is forecasting the group to register marginally lower net earnings of RM35m in FY September2023 before rising to RM37.1m in FY September 2024, translating to forward PERs of 14.5x and 13.7x, respectively.

Source: Kenanga Research - 9 Feb 2023