Ancom Nylex Bhd (Technical Buy)

• ANCOMNY’s share price has fallen 27% since end-February 2022 from a high of RM1.37 to close at RM1.00 yesterday. With the share price likely to find its key support at RM1.00, a technical rebound could be anticipated.

• Chart-wise, we believe the share price will shift upward ahead as both the Stochastic and RSI indicators are set to climb out from the oversold zone while the share price has crossed back above the lower Keltner Channel.

• Hence, this could then propel the stock towards our resistance thresholds of RM1.10 (R1; 10% upside potential) and RM1.20 (R2; 20% upside potential).

• Conversely, our stop loss price has been identified at RM0.90 (representing a 10% downside risk).

• As the only one of two producers of the closest substitute products in Thailand, ANCOMNY stands to benefit from increased demand for its active ingredients (AI) in herbicides following the ban of paraquat (an economical chemical-based toxic weed killer which is also lethal to human and causes environment pollution) in Thailand since 2020.

• Earnings-wise, the group reported a net profit of RM16.4m in 3QFY23 compared with a net profit of RM15.1m in 3QFY22. This took 9MFY23 bottomline to RM56.9m (versus net profit of RM36.3m previously).

• Based on consensus forecasts, ANCOMNY’s net earnings are projected to come in at RM74.7m in FY May 2023 and RM101.1m in FY May 2024, which translate to forward PERs of 12.5x this year and 9.2x next year, respectively. 

Solarvest Holdings Bhd (Technical Buy)

• SLVEST’s share price has pulled back after hitting a resistance barrier of RM1.17 in early February this year before moving sideways since then to close at RM0.865 yesterday.

• On the chart, a technical rebound will likely be forthcoming in view of: (i) the Stochastic indicator due for a reversal from the oversold area, and (ii) the stock price has crossed back above the lower Bollinger Band.

• A technical breakout from the consolidation patte.

rn could then lift the stock to challenge our resistance levels of RM0.96 (R1; 11% upside potential) and RM1.00 (R2; 16% upside potential).

• Our stop loss level is pegged at RM0.78 (representing a 10% downside risk). • Fundamentally speaking, SLVEST is a leading provider of solar turnkey engineering, procurement, construction and commissioning (EPCC) services 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, reversing from a net loss of RM2.0m in 3QFY22 driven mainly by the recognition of progress billings for the LSS4 projects. This took 9MFY23 bottomline to RM14.5m (versus net loss of RM3.2m previously).

• Based on consensus forecasts, SLVEST’s net earnings are projected to come in at RM20.4m in FY March 2023 and RM29.5m in FY March 2024, which translate to forward PERs of 28.3x this year and 19.6x next year, respectively.

Source: Kenanga Research - 12 May 2023