Kim Hin Joo (Malaysia) Bhd (Technical Buy)

• KHJB’s share price might have hit an intermediate bottom already after retracing from a high of RM0.305 in late September last year to a seven-month low of RM0.20 end-March. The stock ended at RM0.21 yesterday.

• On the chart, a technical rebound could be forthcoming following: (i) the appearance of a bullish stochastic divergence pattern (with the %D line forming two rising bottoms in the oversold area while the price drifted lower), (ii) the stock price crossing back above the lower Bollinger Band, and (iii) the recent sighting of a bullish dragonfly doji candlestick.

• With that said, KHJB shares will probably bounce up towards our resistance targets of RM0.25 (R1; 19% upside potential) and RM0.28 (R2; 33% upside potential).

• We have placed our stop loss price level at RM0.18 (or a downside risk of 14%).

• A leading retailer of baby, children and maternity products in Malaysia under the Mothercare brand with a network of more than 530 distribution points, KHJB stands to benefit from the growing demand from an increasing number of young families in the country.

• Earnings-wise, the group made net profit of RM0.5m (-77% YoY) in 4QFY22, which brought FY December 2022’s bottomline to RM4.8m (+5% YoY).

• Based on its book value per share of RM0.21 as of end-December 2022, the stock is presently trading at Price / Book Value multiple of 1.0x (or at 1SD below its historical mean).

Cuscapi Bhd (Technical Buy)

• Following a 36% slide from a high of RM0.28 in early February this year to as low as RM0.18 end-March, CUSCAPI shares – which closed at RM0.195 yesterday – may be due for a technical rebound ahead.

• An upward shift in the share price is anticipated based on the positive signals arising from: (i) the reversal by both the stochastic and RSI indicators from the oversold condition, and (ii) the appearance of two successive dragonfly doji candlesticks last week.

• This could then drive the stock to challenge our resistance thresholds of RM0.23 (R1; 18% upside potential) and RM0.26 (R2; 33% upside potential).

• Our stop loss price level is set at RM0.16 (representing a downside risk of 18%).

• Business-wise, CUSCAPI is primarily involved in the provision of: (i) restaurant management solutions, offering a comprehensive range of integrated services such as outlet management solutions, information technology security solutions, IT consulting services and contact centre outsourcing services, and (ii) IT solutions to businesses across various industries, including retail, hospitality and automotive.

• The group reported net loss of RM1.3m in 2QFY23 (from net loss of RM0.8m in 2QFY22), taking its 1HFY23 net loss to RM2.6m (versus minus RM1.3m previously).

• In terms of Price / Book Value rating, the stock is presently trading at a multiple of 3.68x (or around its historical mean) based on its book value per share of 5.3 sen as of end-December 2022.

Source: Kenanga Research - 4 Apr 2023