Kenanga Research & Investment

Daily technical highlights – (ATAIMS, PJBUMI)

Publish date: Tue, 21 Mar 2023, 09:22 AM

ATA IMS Bhd (Technical Buy)

• Following a strong breakout from descending resistance line on 25 January 2023, ATAIMS’s share price has soared to thepeak of RM0.495 before retracing to as low as RM0.26 on 3 March 2023 and thereafter inched up from the intermediatesupport.

• As the stock price is poised to overcome the Parabolic SAR downtrend coupled with rising buying interest as indicated by thestrengthening Stochastic’s %K line against the %D line, we anticipate that the stock could climb higher from the closing ofRM0.29 yesterday.

• That said, the stock is expected to advance towards our resistance targets of RM0.33 (R1; 14% upside potential) and RM0.38(R2; 31% upside potential).

• We have placed our stop-loss price level at RM0.255 (representing a downside risk of 12%).

• ATAIMS operates in the electronic manufacturing service (EMS) industry, providing an array of services including: (i) design &engineering solutions, (ii) mould design & fabrications, (iii) plastic injection moulding, (iv) filter manufacturing and many otherelectronic engineering services.

• Earnings-wise, the group reported a net loss of RM147.4m in 3QFY23 (compared to a net loss of RM3.1m in the precedingquarter) which widened the cumulative net loss to RM165.7m in 9MFY23 (compared to a net profit of RM17.7m in 9MFY22).

• Valuation-wise, the stock is currently trading at a Price/Book Value multiple of 0.61x, based on its book value per share ofRM0.48 as of end-December 2022.

PJBumi Bhd (Technical Buy)

• After retreating 46% from the high of RM1.21 on 3 February 2023 to the trough of RM0.65 in mid-March 2023, PJBUMI mighthave found an intermediate support before it closed at RM0.795 yesterday.

• We believe the stock could swing higher on the back of the following positive technical indicators: (i) emerging Parabolic SARuptrend, and (ii) the RSI having bounced off from the oversold zone and crossing above the MA line.

• Ergo, the stock could challenge our resistance targets of RM0.90 (R1; 13% upside potential) and RM1.03 (R2; 30% upsidepotential).

• Our stop-loss price level is set at RM0.70 (representing a downside risk of 12%).

• PJBUMI – an engineering and construction services provider that focuses on designing and manufacturing of tanks andtreatment plants – saw a net profit of RM1.1m in the latest quarter ending December 2023 (no comparable historical result isavailable due to a change in its financial year-end) which brought its cumulative bottom line to a net profit of RM1.2m in FYDecember 2022.

• Based on its book value per share of RM0.29 as of end-December 2022, the stock is currently trading at a Price/Book valuemultiple of 2.7x.

Source: Kenanga Research - 21 Mar 2023

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