Kenanga Research & Investment

Daily technical highlights – (CAREPLS, VS)

Publish date: Thu, 06 Apr 2023, 09:33 AM

Careplus Group Bhd (Technical Buy)

• After leaping from a 52-week low of RM0.225 on 14 March this year to reach a recent high of RM0.35 on 24 March,CAREPLS’ share price has subsequently formed a bullish wedge pattern before breaking out to close at RM0.325 yesterday.

• Riding on the strengthening momentum, the stock could climb higher backed by the following positive technical signals: (i) theshare price has crossed above the 21-day EMA line, and (ii) the MACD is still hovering above the signal line.

• Ergo, the stock is poised to challenge our resistance thresholds of RM0.37 (R1; 14% upside potential) and RM0.42 (R2; 29%upside potential).

• Our stop loss price level is set at RM0.285 (representing a downside risk of 12%).

• A medical and laboratory gloves manufacturer, CAREPLS reported a net loss of RM18.9m in the latest quarter endedDecember 2022 (no comparable historical result is available due to a change in its financial year-end), bringing its cumulativebottomline to a net loss of RM103.2m in 9MFY22.

• Based on its book value per share of RM0.67 as of end-December 2022, the stock is presently trading at Price / Book Valuemultiple of 0.49x.

V.S. Industry Bhd (Technical Buy)

• Following a retracement of 25% from RM1.03 in mid-February 2023 to as low as RM0.775 on 24 March, VS’ share price hassubsequently bounced up from an intermediate support level to close at RM0.83 yesterday.

• An extended upward trajectory could be forthcoming for VS based on the following signals: (i) an emerging Parabolic SARuptrend, (ii) the existence of golden cross in the MACD indicator, and (iii) a rising RSI indicator.

• That said, we anticipate the stock to advance towards our resistance targets of RM0.94 (R1; 13% upside potential) andRM1.02 (R2; 23% upside potential).

• Conversely, we have placed our stop loss price level at RM0.73 (or a downside risk of 12%).

• Business-wise, VS is a leading integrated Electronic Manufacturing Services (EMS) provider in the region, offering one-stopmanufacturing solutions to global brand names for office and household electrical & electronic products.

• The group posted net profit of RM30.4m (-32% YoY) in 2QFY23, bringing 1HFY23’s bottomline to RM91.1m (+8.6% YoY).

• Going forward, consensus is projecting VS to make net profit of RM202.8m for FY July 2023 and RM256.2m for FY July2024, which translate to forward PERs of 15.7x and 12.5x, respectively.

Source: Kenanga Research - 6 Apr 2023

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