Kenanga Research & Investment

Daily technical highlights – (PEKAT, PTRB)

Publish date: Thu, 09 Mar 2023, 09:11 AM

Pekat Group Bhd (Technical Buy)

• PEKAT’s share price has been swinging up in an ascending price channel since October 2022 before retracing from the peak of RM0.565 in early February 2023 to close at RM0.46 yesterday.

• Technically speaking, a rebound may be forthcoming which could then propel the stock – currently hovering near the lower end of the price channel – to swing higher backed by the following positive indicators: (i) the MACD is on the verge of crossing above its signal line, (ii) the share price has bounced up from the lower Bollinger Band, and (iii) the selling pressure is easing as indicated by Chaikin Oscillator.

• Following the appearance of a doji candlestick two days ago, the stock is anticipated to advance towards our resistance targets of RM0.52 (R1; 13% upside potential) and RM0.57 (R2; 24% upside potential).

• Our stop loss price level is set at RM0.41 (representing a downside risk of 11%).

• Listed on the ACE Market in June 2021, PEKAT is chiefly involved in: (i) the design, supply and installation of solar PV (photovoltaic) systems and power plants, (ii) the supply and installation of ELP (earthing and lighting protection) systems, and (iii) the distribution of electrical products and accessories.

• The group posted a net profit of RM2.3m (-60% YoY) in 4QFY22, which brought its full-year bottom line to RM10m (-19% YoY) in FY December 2022.

• Valuation-wise, the stock is currently trading at a Price/Book Value multiple of 2.3x based on a book value per share of RM0.20 as of end-December 2022.

PT Resources Holdings Bhd (Technical Buy)

• Following a sharp fall of 28% from the peak of RM0.685 in mid-February this year to as low as RM0.495 in March 2023, PTRB’s share price is set to bounce off from its intermediate support line after closing at RM0.51 yesterday.

• Chart-wise, we believe the stock is set to resume its upward trend after crossing back above the lower Bollinger Band (that was followed by the emergence of a doji candlestick) while the stochastic indicator is poised to climb out from the oversold zone.

• That said, the stock is expected to make its way to reach our resistance thresholds of RM0.58 (R1; 14% upside potential) and RM0.65 (R2; 27% upside potential).

• We have placed our stop loss price level at RM0.455 (or a downside risk of 11%).

• PTRB is engaged in the processing and trading of frozen seafood products, catering to both the domestic as well as international markets (namely Saudi Arabia, China and Philippines).

• The group registered a net profit of RM8.3m (+11% QoQ) in 2QFY23, which then lifted its 1HFY23’s cumulative earnings toRM15.9m (no prior period comparison was available as the Company was only listed on the ACE Market in late-September last year at an IPO offer price of RM0.36 per share).

• Based on its book value per share of RM0.30 as of end-October 2022, the stock is currently trading at a Price/Book Value multiple of 1.7x.

Source: Kenanga Research - 9 Mar 2023

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