Kenanga Research & Investment

Daily technical highlights – (GENM, SDS)

Publish date: Fri, 02 Jun 2023, 10:03 AM

Genting Malaysia Bhd (Technical Buy)

• GENM’s share price has been moving sideways after hitting a high of RM3.04 in March 2021 to close at RM2.51 yesterday.With the share price likely to find its key support at RM2.49, a technical rebound could be anticipated.

• Chart-wise, we believe the share price is on the verge of overcoming a negative sloping trendline as: (i) both the Stochasticand RSI indicators are set to climb out from the oversold zone, and (ii) the stock is anticipated to move back above the lowerBollinger Band.

• Hence, we expect the stock to rise and test our resistance thresholds of RM2.78 (R1; 11% upside potential) and RM2.90(R2; 16% upside potential).

• Conversely, our stop loss price has been identified at RM2.26 (representing a 10% downside risk).

• GENM operates a tourist resort in Genting Highlands which includes hotels, restaurants, casinos and recreational &amusement facilities. The group, through its subsidiaries, also develops and leases property, operates leisure & hospitalityservices and provides time share ownership schemes.

• Earnings-wise, the group reported a net loss of RM27.4m in 1QFY23 compared with a net loss of RM126.5m in 1QFY22.

• Nonetheless, based on consensus forecasts, GENM is expected to turn around with net earnings of RM744.1m in FYDecember 2023 and RM1,087.5m in FY December 2024, which translate to forward PERs of 19.1x this year and 13.1x nextyear, respectively.

SDS Group Bhd (Technical Buy)

• The share price of SDS has slid from a peak of RM0.965 in February 2023 to close at a low of RM0.625 yesterday.

• On the chart, the share price is expected to stage a rebound backed by: (i) both the Stochastic and RSI indicators are in themidst of climbing out from the oversold zone, and (iii) the share price is currently hovering at the lower end of the KeltnerChannel.

• A technical rebound could then lift the stock to challenge our resistance levels of RM0.70 (R1; 12% upside potential) andRM0.75 (R2; 20% upside potential).

• Our stop loss level is pegged at RM0.57 (representing a 9% downside risk).

• Fundamentally speaking, SDS is involved in the manufacturing and distribution of bakery products (such as Top Baker andDaily’s) through its retail and wholesale networks.

• Earnings-wise, the group reported a net profit of RM4.5m in 4QFY23 compared with a net profit of RM5.7m in 4QFY22. Thistook FY March 23’s bottomline to RM24.5m (versus net profit of RM10.6m previously).

• In terms of valuation, the stock is currently trading at Price/Book Value multiple of 2.5x (or approximately at 0.5 SD above itshistorical mean) based on its book value per share of RM0.25 as of end-March 2023.

Source: Kenanga Research - 2 Jun 2023

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