Elsoft Research Bhd (Technical Buy)

• ELSOFT’s share price – which has been consolidating inside a narrow price range of between RM0.58 and RM0.61 sinceFebruary 2023 - is on the verge of breaking out from the sideways trading pattern after closing at RM0.625 yesterday.

• Riding on the rising Parabolic SAR trend and MACD indicator, the share price will likely plot an upward trajectory ahead.

• Hence, the stock could climb further to challenge our resistance levels of RM0.69 (R1; 10% upside potential) and RM0.755(R2; 21% upside potential).

• We peg our stop loss at RM0.56, representing a downside risk of 10%.

• ELSOFT is involved in the research, design, development and manufacturing of automated test equipment (ATE), burn-insystems and application specific embedded control systems for the semiconductor and optoelectronics industries.

• Recently, it has acquired an industrial equipment maker – Xyrius Solution (which is involved in the provision of automationsolutions and customized automation industrial equipment) – for RM10m.

• Earnings-wise, the group recorded a net profit of RM31.5m in 4QFY22 (+450% QoQ), which brought full-year net profit toRM43m (+290% YoY), mainly lifted by gain arising from the disposal of a piece of leasehold land of RM31m.

• The stock is presently trading at a Price/Book Value multiple of 3.0x based on its book value per share of RM0.21 as of endDecember 2022.

Solarvest Holdings Bhd (Technical Buy)

• SLVEST’s share price has slid 28% from a peak of RM1.17 in February 2023 to a low of RM0.845 in March 2023. Asubsequent rebound backed by the appearance of a bullish candlestick marks the return of buying interest in the shares,which closed at RM0.895 yesterday.

• Chart-wise, we believe the stock will resume its uptrend as the Parabolic SAR indicator is on the rise while the MACD’shistogram is strengthening.

• Thus, SLVEST’s share price could advance towards our resistance thresholds of RM0.99 (R1) and RM1.10 (R2),representing upside potentials of 11% and 23%, respectively.

• Our stop loss price is set at RM0.81 (or a downside risk of 9%).

• SLVEST is a leading solar turnkey engineering, procurement, construction and commissioning (EPCC) provider in Malaysia,having installed a cumulative capacity of over 400MWp of solar photovoltaic systems.

• Earnings-wise, the group reported a net profit of RM5.2m in 3QFY23 (+160% QoQ), driven by the recognition of progressbillings for LSS4 projects. This took 9MFY22 bottomline to RM14.5m (+353% YoY).

• Based on consensus forecasts, SLVEST’s net earnings are projected to come in at RM20.4m in FY March 2023 andRM29.5m in FY March 2024, which translate to forward PERs of 28.9x and 20.3x, respectively.

Source: Kenanga Research - 7 Apr 2023