Kenanga Research & Investment

Daily technical highlights – (MALAKOF, DRBHCOM)

Publish date: Wed, 15 Mar 2023, 10:29 AM

Malakoff Corporation Bhd (Technical Buy)

• Despite sliding from a recent high of RM0.74 early this month to close at RM0.675 yesterday (or back to where it was in endFebruary this year), the uptrend pattern of MALAKOF’s share price remains intact.

• A resumption of the upward trajectory is currently anticipated following the golden cross by the 50-day SMA above the 100-day SMA while the Parabolic SAR is still showing a positive bias signal.

• On the chart, the stock could close the price gap seen early this week, probably shifting higher towards our resistancethresholds of RM0.75 (R1; 11% upside potential) and RM0.80 (R2; 19% upside potential).

• We have placed our stop loss price level at RM0.61 (representing a downside risk of 10%).

• Business-wise, MALAKOF is an independent power and water producer whose core businesses include power generation,water desalination, operations & maintenance and waste management & environmental services.

• The group logged a net profit jump to RM41.9m (+178% YoY) in 4QFY22, which brought full-year bottomline to RM302.2m(+16% YoY).

• Consensus is currently forecasting MALAKOF to register net earnings of RM361.2m in FY December 2023 and RM364.5m inFY December 2024, translating to forward PERs of 9.1x this year and 9.0x next year, respectively.

• In addition, based on consensus DPS estimates of 5.4 sen for FY23 and 5.5 sen for FY24, the stock presently offersprospective dividend yields of 8.0% and 8.1%, respectively.

DRB-Hicom Bhd (Technical Buy)

• As DRBHCOM’s share price approaches its recent low of RM1.37 early this month after closing at RM1.39 yesterday, atechnical rebound from an oversold position may be in the offing.

• An ensuing upward shift is probable as both the stochastic and RSI indicators are poised to climb out from the oversoldterritory while the MACD has just cut above the signal line.

• This could then pave the way for the stock to fill the price gap (that was left opened in the second half of February), possiblystrengthening towards our resistance targets of RM1.58 (R1; 14% upside potential) and RM1.71 (R2; 23% upside potential).

• Our stop loss price level is set at RM1.22 (representing a downside risk of 12%).

• DRBHCOM – a conglomerate with core businesses in the automotive, aerospace & defence, banking, postal, services andproperties sectors – reported net loss of RM100.1m in 4QFY22 (from net profit of RM117.5m in 4QFY21), taking full-yearbottomline to RM187.7m (from net loss of RM296.4m previously).

• Going forward, consensus is projecting the group to make net earnings of RM324.5m in FY December 2023 and RM374.5min FY December 2024. In terms of valuation, this translates to forward PERs of 8.3x this year and 7.2x next year, respectively.

Source: Kenanga Research - 15 Mar 2023

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