Ajiya Bhd (Technical Buy)

• AJIYA’s share price might have found an intermediate support already after retracing from RM1.91 on 13 February 2023 and bounced off from a recent low of RM1.51 on 11 May 2023 before closing at RM1.53 yesterday.

• A technical rebound is now anticipated triggered by the following bullish indicators: (i) the Stochastic is climbing out from the oversold zone, (ii) the bullish crossover by the DMI Plus above the DMI Minus, and (iii) the MACD is on the verge of crossing above the signal line.

• An extended upward trajectory could then propel the stock to climb towards our resistance targets of RM1.71 (R1; 12% upside potential) and RM1.88 (R2; 23% upside potential).

• Our stop loss price is pegged at RM1.36 (representing an 11% downside risk).

• Business-wise, AJIYA is a Malaysia-based building material manufacturer which specializes in roofing, glass and other metals as well as aluminium products.

• The group reported a net profit of RM46.1m (including an one-off gain of RM43m arising from fair value gain) in 1QFY23 after registering a full-year net profit of RM29.1m (69% YoY) in FY22.

• Valuation-wise, the stock is currently trading at a Price/Book Value multiple of 1x based on its book value per share of RM1.55 as of end-February 2023.

QES Group Bhd (Technical Buy)

• Following a retracement of 23% from the peak of RM0.67 on 11 April 2023 to a low of RM0.515 this Monday, QES’ share price has crossed back above the lower Keltner Channel to close at RM0.54 yesterday.

• From a technical standpoint, the stock is expected to extend its upward bias given that the Stochastic indicator is in the midst of climbing out from the oversold zone amid an emerging Parabolic SAR uptrend.

• Hence, the stock is poised to advance towards our resistance thresholds of RM0.60 (R1; 11% upside potential) and RM0.66(R2; 22% upside potential).

• Conversely, our stop loss level is set at RM0.48 (representing an 11% downside risk).

• QES is a manufacturer and distributor of inspection, test, measuring, analytical and automated handling equipment.

• Earnings-wise, the group reported a net profit of RM5.5m in 4QFY22 (+25% QoQ), which brought its full-year FY22 bottomline to RM26.4m (+39% YoY).

• Based on consensus projections, the group is expected to report net profit of RM27.8m in FY December 2023 and RM30.7min FY December 2024, which translate to PERs of 16.2x and 14.5x, respectively

Source: Kenanga Research - 19 May 2023