Datasonic Group Bhd (Technical Buy)

• DSONIC’s share price has fallen 47% since May 2020 from its peak of RM0.79 to close at RM0.42 yesterday. With the share price likely to find support near its 52-week low of RM0.41, a technical rebound could be anticipated.

• On the chart, the share price is expected to bounce up backed by the following positive technical signals: (i) both the Stochastic and RSI indicators are set to climb out from the oversold zone, and (ii) the stock price has crossed back above the lower Bollinger Band.

• Hence, we expect the stock to rise and test our resistance thresholds of RM0.46 (R1; 10% upside potential) and RM0.50 (R2; 19% upside potential).

• Conversely, our stop loss price has been identified at RM0.38 (representing a 10% downside risk).

• Fundamental-wise, DSONIC provides ICT solutions that include smart card personalization such as secure ID or chip-based credit/debit bank cards.

• Earnings-wise, the group reported a net profit jump to RM16.7m in 3QFY23 compared with a net profit of RM1.5m in 3QFY22. This took 9MFY23 bottomline to RM53.7m (versus net loss of RM3.1m previously).

• Based on consensus forecasts, DSONIC’s net earnings are projected to come in at RM75.3m in FY March 2023 and RM93.6m in FY March 2024, which translate to forward PERs of 15.8x this year and 12.7x next year, respectively.

Nationgate Holdings Bhd (Technical Buy)

• Listed back in January this year, the share price of NATGATE reached its peak of RM1.50 in early March before pulling back subsequently to close at RM1.21 yesterday.

• Chart-wise, we believe the share price will likely resume its rising momentum as both the Stochastic and RSI indicators are anticipated to climb out from the oversold zone.

• An upward shift could then lift the stock to challenge our resistance levels of RM1.34 (R1; 11% upside potential) and RM1.45 (R2; 20% upside potential).

• Our stop loss level is pegged at RM1.09 (representing a 10% downside risk).

• Fundamentally speaking, NATGATE is principally involved in the electronics manufacturing services (EMS) business, focussing on the assembly and testing of electronic components and products to produce completed printed circuit board (PCB), semi-finished sub-assemblies, fully assembled electronic products as well as semiconductor devices.

• Earnings-wise, the group reported a net profit of RM22.2m in 4QFY22. This took FY22 bottomline to RM85.3m (versus net profit of RM59.5m previously).

• Based on consensus forecasts, NATGATE’s net earnings are projected to increase to RM123.0m in FY December 2023 and RM153.0m in FY December 2024, which translate to forward PERs of 20.4x this year and 16.4x next year, respectively.

Source: Kenanga Research - 31 Mar 2023