Kenanga Research & Investment

Daily technical highlights – (COSMOS, INFOTEC)

Publish date: Thu, 13 Apr 2023, 09:28 AM

Cosmos Technology International Bhd (Technical Buy)

• After retracing from the peak of RM0.645 in mid-February to as low as RM0.45 in late-March this year, COSMOS’ share price has subsequently moved upward to break out from the descending resistance line to close at RM0.51 yesterday.

• On the chart, the stock could climb higher on the back of the following positive technical signals: (i) the 9-day MA has crossed above the 21-day MA, (ii) a continuation of Parabolic SAR uptrend, and (iii) the MACD is still hovering above the signal line after staging a crossover.

• That said, we believe the stock could advance towards our resistance targets of RM0.575 (R1; 13% upside potential) and RM0.63 (R2; 24% upside potential).

• We have pegged our stop loss price level at RM0.45 (or a downside risk of 12%).

• COSMOS - which is a flow control equipment distributor and fabricated metal parts manufacturer - reported a net profit ofRM1.5m in 3QFY23 (compared to net profit of RM0.1m in the preceding quarter), which lifted its cumulative 9MFY23’sbottomline to RM3.2m (prior year comparison was not available as the Company was listed on 6 October 2022).

• Based on its book value per share of RM0.20 as of end-January 2023, the stock is currently trading at Price / Book Valuemultiple of 2.6x.

Infoline Tec Group Bhd (Technical Buy)

• A recent rebound from its trough of RM0.725 on 28 March 2023 has subsequently led INFOTEC’s share price to break out from a downtrend channel before pulling back marginally to close at RM0.89 yesterday.

• Riding on the strengthening momentum, an extended upward trajectory could be forthcoming for the stock based on the following bullish technical indicators: (i) an emerging Parabolic SAR uptrend, (ii) the 9-day MA has crossed above the 21-dayMA, and (iii) a rising RSI indicator.

• Thus, the stock is expected to climb towards our resistance thresholds of RM1.00 (R1; 12% upside potential) and RM1.10(R2; 24% upside potential).

• Conversely, our stop loss price level is set at RM0.78 (representing a downside risk of 12%).

• INFOTEC is principally engaged in the designing and implementation of information technology (IT) infrastructure as well as the provision of cybersecurity solutions to suit the clients’ business needs.

• The group registered a net profit of RM3.6m in 4QFY22 (-49% QoQ), which brought its full-year net earnings to RM12.1m inFY22 (no prior year comparison was available as the Company was listed on 13 July 2022).

• The stock is presently trading at Price / Book Value multiple of 4.0x based on its book value per share of RM0.22 as of end December 2022.

Source: Kenanga Research - 13 Apr 2023

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