Kenanga Research & Investment

Daily Technical Highlights - (MALAKOF , CYPARK)

Publish date: Wed, 17 May 2023, 11:03 AM


Malakoff Corporation Bhd (Technical Buy)

• An ongoing price rally for MALAKOF shares – which started climbing from a low of RM0.57 in mid-October last year to as high as RM0.72 in late April this year – is expected to carry on backed by the stochastic indicator’s reversal from the oversold zone and the appearance of bullish dragonfly doji candlesticks.

• Currently hovering near the lower end of an ascending price channel, the shares – which ended at RM0.67 yesterday – will likely find support at the 50% Fibonacci retracement line (at RM0.64).

• On the way up, the stock could advance to challenge our resistance targets of RM0.74 (R1; 10% upside potential) and RM0.80 (R2; 19% upside potential). Our stop loss price level is pegged at RM0.61 (representing a downside risk of 9%).

• An independent power and water producer with core expertise that includes thermal power generation, renewable energy (solar, small hydro, biogas, biomass, waste-to-energy), environmental solutions, water desalination, electricity distribution & district cooling system, operations & maintenance and project management services, MALAKOF made net profit of RM41.9m (+178% YoY) in 4QFY22, lifting its full-year bottomline to RM302.2m (+16% YoY).

• According to consensus expectations, the group is set to show rising net earnings of RM364.2m in FY December 2023 and RM371.9m in FY December 2024. This translates to prospective PERs of 9.0x this year and 8.8x next year, respectively with its 1-year rolling forward PER presently treading marginally below the minus 1SD level from its historical mean.

• An added investment appeal is the stock’s attractive FY23-FY24 dividend yields of 8.1% and 8.2% based on consensus DPS estimates of 5.4 sen for FY23 and 5.5 sen for FY24, respectively.

Cypark Ressources Bhd (Technical Buy)

• Following a retracement from the recent peak of RM1.23 in February this year, CYPARK shares might have already bottomed after bouncing off from an intermediate support line (at RM0.71).

• A technical rebound – to be driven by the stochastic indicator’s unwinding from an oversold position and the existence of a bullish dragonfly doji candlestick – will probably be forthcoming should the share price (which closed at RM0.725 yesterday) overcome a negative sloping resistance line ahead.

• That being the case, the stock could climb towards our resistance thresholds of RM0.82 (R1; 13% upside potential) and RM0.89 (R2; 23% upside potential).

• We have placed our stop loss price level at RM0.63 (or a downside risk of 13%).

• Fundamentally, CYPARK is involved in the development and provision of integrated renewable energy, construction &engineering, green technology & environmental services and waste management & waste-to-energy businesses.

• The group reported net profit of RM6.8m in the quarter ended January 2023, which brought cumulative net earnings to RM55.5m for the 15-month period ended January 2023 (no comparable data is presented as the company is changing its financial year-end to 30 April).

• In terms of Price/Book valuation, based on its book value per share of RM2.33 as of end-January 2023, the stock is currently trading at a multiple of 0.31x (which is at slightly above the minus 1SD level from its historical mean).

Source: Kenanga Research - 17 May 2023

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