Kenanga Research & Investment

Daily technical highlights – (HHGROUP, RAMSSOL)

Publish date: Thu, 16 Mar 2023, 09:32 AM

Heng Huat Resources Bhd (Technical Buy)

• HHGROUP’s share price staged a strong rally from a low of RM0.425 in mid-January 2023 to reach a high of RM0.58 on 24February 2023 before pulling back to test the 78.6% Fibonacci Retracement line. The shares closed at RM0.475 yesterday.

• With the Stochastic indicator on the verge of climbing out from the oversold zone (after seeing the %K line cutting abovethe %D line) and the price crossing back above the lower Bollinger Band, we anticipate the stock will climb higher ahead.

• That said, the stock is expected to advance towards our resistance targets of RM0.54 (R1; 14% upside potential) and RM0.58(R2; 22% upside potential).

• We have placed our stop loss price level at RM0.42 (representing a downside risk of 12%).

• HHGROUP – which is involved in the manufacturing and trading of biomass materials (i.e. coconut fibre and oil palm emptyfruit bunch fibre), mattress and other related products – reported a net profit of RM9.5m (+70% QoQ) in 3QFY23, which liftedits 9MFY23’s cumulative net earnings to RM17.4m (+149% YoY).

• Valuation-wise, the stock is currently trading at Price/Book Value multiple of 2.4x, based on its book value per share ofRM0.20 as of end-December 2022.

Ramssol Group Bhd (Technical Buy)

• After gapping down from the prior day’s closing of RM0.44 to as low as RM0.37 on 24 Feb 2023 (following its announcementof a weak set of quarterly financial results), RAMSSOL’s share price continued to plunge further, testing its 52-week lowbefore finding intermediate support to close at RM0.32 yesterday.

• We believe the stock could stage a technical rebound ahead to fill the price gap given the following positive technicalindicators: (i) the share price is poised to cross back above the lower Keltner Channels, and (ii) the Stochastic indicator isclimbing out from the oversold zone.

• Hence, the stock could rise to challenge our resistance targets of RM0.36 (R1; 13% upside potential) and RM0.41 (R2; 28%upside potential).

• Our stop loss price level is set at RM0.285 (representing a downside risk of 11%).

• RAMSSOL is a provider of human resources solutions, focussing on human capital management and student managementsolutions.

• The group posted net earnings of RM0.5m in 4QFY22 (-62% QoQ), which brought its full-year bottomline to RM4.2m (-38%YoY).

• Based on consensus projections, RAMSSOL is expected to deliver net profit of RM6.3m in FY December 2023 and RM8m inFY December 2024. This translates to forward PERs of 12.7x this year and 10x next year, respectively.

Source: Kenanga Research - 16 Mar 2023

Related Stocks
Be the first to like this. Showing 0 of 0 comments

Post a Comment