Dialog Group Bhd (Technical Buy)

• DIALOG’s share price has pulled back from the peak of RM2.73 in January 2023 to close at RM2.30 yesterday. With the shares likely to find a near term support at RM2.26, a technical rebound could be anticipated.

• On the chart, the share price will likely plot an upward trajectory ahead backed by the DMI Plus crossing over the DMI Minus as the stochastic indicator is set to climb out from the oversold area after staging a positive crossover.

• Hence, the stock could climb to challenge our resistance levels of RM2.55 (R1; 11% upside potential) and RM2.70 (R2; 17% upside potential).

• We peg our stop loss price at RM2.10, representing a downside risk of 9%.

• DIALOG is an integrated technical service provider to the upstream, mid-stream and downstream segments in the oil & gas and petrochemical industry.

• Earnings-wise, the group recorded a net profit of RM127.2m (-1% QoQ) in 2QFY23, which brought 1HFY23’s net profit to RM252.9m (-1.5% YoY).

• Based on consensus estimates, DIALOG is expected to report higher net profit of RM555.8m in FY June 2023 and RM608.1m in FY June 2024, which translate to forward PERs of 23.3x and 21.3x, respectively.

Volcano Bhd (Technical Buy)

• VOLCANO’s share price has slid 25% from the peak of RM1.10 in March 2023 to a low of RM0.82 recently, possibly finding near-term support at the current level.

• Chart-wise, we believe the stock will shift upwards as: (i) the Parabolic SAR is on the rise, (ii) the stochastic indicator is in the midst of climbing out from the oversold area, and (iii) the share price has moved back above the lower Bollinger Band.

• Thus, VOLCANO’s share price could advance towards our resistance thresholds of RM0.93 (R1) and RM1.03 (R2), representing upside potentials of 13% and 26%, respectively.

• Our stop loss price is set at RM0.73 (or a downside risk of 11%).

• On the fundamental front, VOLCANO is engaged in the manufacturing of nameplates and plastic injection moulded parts.

• Earnings-wise, the group reported a net profit of RM0.8m (-60% QoQ) in 4QFY22, which bought full-year net profit to RM7.1m (-3% YoY).

Source: Kenanga Research - 27 Apr 2023