Cnergenz Bhd (Technical Buy)

• CNERGEN’s share price – which has been swinging up and down since November 2022 – has recently rebounded from a low of RM0.81 amid the appearance of several bullish candlesticks.

• We believe the share price – which ended at RM0.875 yesterday – will likely climb further after moving back above the lower Bollinger Band while the stochastic indicator is unwinding from the oversold area.

• Thus, the stock could rise to challenge our resistance levels of RM0.97 (R1; 11% upside potential) and RM1.05 (R2; 20% upside potential).

• We have pegged our stop loss price at RM0.785, representing a downside risk of 10%.

• CNERGEN is an electronics manufacturing solutions provider that specializes in surface mount technology (SMT) manufacturing solutions for the electronics and semiconductor industries.

• Earnings-wise, the group recorded a net profit of RM1.7m in 4QFY22, which brought full-year FY22 bottomline to RM21.7m (prior year comparison was not available as the Company was listed on 24 May 2022).

• According to consensus estimates, CNERGEN is expected to report a net profit of RM26m in FY December 2023 and RM28.4m in December 2024. This translates to forward PERs of 16.8x and 15.4x, respectively.

QES Group Bhd (Technical Buy)

• QES’ share price might have found an intermediate support already after pulling back from its resistance level of RM0.765 in January 2023.

• The share price has since rebounded to close at RM0.645 yesterday backed by the appearance of a bullish candlestick. We believe a resumption of the uptrend will probably continue based on the positive technical signals arising from: (i) the stochastic indicator is in the midst of climbing out from the oversold zone, and (ii) the Chaikin Oscillator indicator’s reversal towards the zero line (which shows easing selling pressure).

• Thus, we believe that QES’ share price could climb towards our resistance thresholds of RM0.71 (R1) and RM0.79 (R2), representing upside potentials of 10% and 22%, respectively.

• Our stop loss price is set at RM0.58 (or a downside risk of 10%).

• QES is a manufacturer and distributor of inspection, test, measuring, analytical and automated handling equipment.

• Earnings-wise, the group reported a net profit of RM5.5m in 4QFY22 (+25% QoQ), which brought its full year FY22 bottomline to RM26.4m (+39% YoY).

• Based on consensus projections, the group is expected to report net profit of RM27.3m in FY December 2023 and RM29.2m in FY December 2024, which translate to PERs of 19.5x and 18.4x, respectively.

Source: Kenanga Research - 24 Feb 2023