Cnergenz Bhd (Technical Buy)

• Following its retreat from the peak of RM1.13 in late-September last year to as low as RM0.80 on 3 November 2022,CNERGEN’s share price has subsequently swung up and down inside an ascending channel before closing at RM0.84yesterday.

• Currently hovering near the bottom of the price channel, the stock is poised to swing higher ahead based on the followingpositive technical signals: (i) the share price has crossed back above the lower Keltner Channel, (ii) the rising Stochasticindicator after climbing out from the oversold zone, and (iii) the emergence of a bullish hammer candlestick.

• Ergo, the strengthening momentum could propel the stock to challenge our resistance thresholds of RM0.96 (R1; 14% upsidepotential) and RM1.05 (R2; 25% upside potential).

• Our stop loss price level is pegged at RM0.74 (representing a downside risk of 12%).

• CNERGEN – an electronics manufacturing solutions provider that specializes in surface mount technology (SMT)manufacturing solutions for the electronics and semiconductor industries – reported a net profit of RM1.7m in 4QFY22, whichbrought full-year FY22 net earnings to RM21.7m (prior year comparisons were not available as the Company was listed on 24May 2022).

• Based on consensus projections, the group is expected to deliver a net profit of RM27.4m in FY December 2023 before risingfurther to RM29.7m in FY December 2024. This translates to forward PERs of 15.3x and 14.1x, respectively.

Texchem Resources Bhd (Technical Buy)

• TEXCHEM’s share price – which has trended downward from the high of RM3.93 in mid-August 2022 to as low as of RM1.51on 16 March 2023 – might have found an intermediate support already, setting the stage for a technical rebound ahead.

• On the chart, with the easing of selling pressure as indicated by the declining trading volume recently, the stock is poised tobreak out from the descending resistance line backed by the Stochastic indicator’s reversal from the oversold area.

• That said, the stock could climb towards our resistance targets of RM1.80 (R1; 13% upside potential) and RM2.00 (R2; 25%upside potential).

• Conversely, our stop loss price level is set at RM1.42 (representing a downside risk of 11% from yesterday’s closing price ofRM1.60).

• Fundamental-wise, TEXCHEM has five core business segments, namely industrial (i.e. chemicals trading), polymerengineering, food, restaurant (via the Sushi King brand) and venture business.

• The group logged a net loss of RM0.3m in 4QFY22 (-111% QoQ), which brought its full-year FY22 bottomline to RM21.9m(-12% YoY). The decline in net profit was mainly due to lower demand for its industrial chemical and polymer products(following inventory adjustments by its clients) and an ESOS expense (amounting to RM9.4m).

• Going forward, consensus is estimating that TEXCHEM would report net profit of RM38m in FY December 2023 and RM44min FY December 2024, which translate to forward PERs of 4.9x and 4.3x, respectively.

Source: Kenanga Research - 30 Mar 2023