MY E.G. Services Bhd (Technical Buy)

• After gapping down from the prior day’s closing of RM0.955 to as low as RM0.655 on 7 February, MYEG’s share price has been climbing inside an upward sloping channel before ending at RM0.785 yesterday (which is at the lower range of the ascending channel).

• A resumption of the uptrend could be on the cards in view of the positive technical signals triggered by the stochastic indicator’s reversal from an oversold position as the 21-day EMA has just crossed above the 21-day MA line.

• An upward shift could then propel the stock to advance towards our resistance thresholds of RM0.885 (R1; 13% upside potential) and RM0.95 (R2; 21% upside potential).

• We have set our stop loss price at RM0.69 (representing a 12% downside risk).

•A SaaS group that offers solutions in the development and implementation of Electronic Government Services with a presence in Malaysia, Philippines, Bangladesh and Indonesia, MYEG reported a net profit of RM74.7m (-7.3% YoY) in 4QFY22, which lifted its full-year net earnings to RM398.7m (+26.2% YoY).

• Following which, consensus is currently projecting the group would post net profit of RM394.5m for FY December 2023 and RM428.1m for FY December 2024, translating to forward PERs of 14.7x and 13.6x, respectively.

Ramssol Group Bhd (Technical Buy)

• RAMSSOL’s share price has gapped down from the closing of RM0.44 on 23 February 2023 and fell further thereafter to as low as RM0.30 in mid-March (likely linked to its announcement of a weak set of quarterly financial results) before bouncing up to form an upward channel since then.

• The stock – which closed at RM0.38 yesterday – is poised to extend its upward shift backed by the following bullish technical signals: (i) the MACD is on the verge of crossing above the signal line, (ii) the appearance of a bullish hammer candlestick, and (iii) the strengthening stochastic signal as the indicator reverses from the oversold area.

• Hence, the stock could rise to challenge our resistance targets of RM0.425 (R1; 12% upside potential) and RM0.47 (R2; 24% upside potential).

• Our stop loss price level is placed at RM0.335 (representing a downside risk of 12%).

• Business-wise, RAMSSOL is a provider of human resources solutions, focussing on human capital management and student management solutions.

• The group posted net earnings of RM2.1m (+291% QoQ) in 1QFY23 after delivering a full-year performance of RM4.2m (- 38% YoY) in FY22.

• Going forward, consensus is projecting RAMSSOL to register a net profit of RM6.3m in FY December 2023 and RM8m in FY December 2024, which translates to forward PERs of 14.7x and 11.6x, respectively

Source: Kenanga Research - 11 May 2023