Kenanga Research & Investment

Daily Technical Highlights

Publish date: Fri, 09 Jun 2023, 09:31 AM

Cengild Medical Bhd (Technical Buy)

• Listed back in April last year, the share price of CENGILD reached its peak of RM0.58 in September last year before pullingback subsequently to close at RM0.395 yesterday.

• Chart-wise, we believe the share price will likely resume its rising momentum as: (i) both the Stochastic and RSI indicatorsare in the midst of climbing out from the oversold zone, and (ii) the share price is currently hovering at the lower end of theBollinger Band.

• Hence, the stock is poised to challenge our resistance thresholds of RM0.44 (R1; 11% upside potential) and RM0.47 (R2;19% upside potential).

• Conversely, our stop loss price has been identified at RM0.35 (representing an 11% downside risk).

• CENGILD is a healthcare service provider operating a medical centre that specialises in the diagnosis and treatment ofgastrointestinal, liver diseases and obesity.

• Earnings-wise, the group reported a net profit of RM3.3m in 3QFY23 compared with a net profit of RM1.8m in 3QFY22. Thistook 9MFY23 net profit to RM11.1m (versus net profit of RM5.6m previously).

• In terms of valuation, the stock is currently trading at Price/Book Value multiple of 3.4x (or approximately at 2 SD below itshistorical mean) based on its book value per share of RM0.12 as of end-March 2023.

Power Root Bhd (Technical Buy)

• The share price of PWROOT has been trending upwards since March 2022 from a low of RM1.16 to hit a 52-week high ofRM2.36 in December 2022 before moving sideways since then.

• On the chart, the share price is expected to shift upward backed by: (i) the strengthening RSI indicator, and (ii) the 12-daymoving average still hovering above the 26-day moving average following the recent MACD golden cross.

• An upward shift could then propel the stock towards our resistance targets of RM2.32 (R1; 11% upside potential) andRM2.42 (R2; 16% upside potential).

• Our stop loss level is pegged at RM1.87 (representing an 11% downside risk).

• Fundamentally speaking, PWROOT is a manufacturer and distributor of beverage products specialising in staple drinks (suchas coffee, tea, chocolate malt drinks and herbal energy drinks).

• Earnings-wise, the group reported a net profit of RM17.2m in 4QFY23 compared with a net profit of RM12.6m in 4QFY22.This took FY23 bottomline to RM59.4m (versus net profit of RM26.2m previously).

• Based on consensus forecasts, PWROOT’s net earnings are projected to come in at RM61.7m in FY March 2024 andRM66.4m in FY March 2025, which translate to forward PERs of 14.9x this year and 13.9x next year, respectively.

Source: Kenanga Research - 9 Jun 2023

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