Bumi Armada Bhd (Technical Buy)

• The share price of ARMADA slid from a peak of RM0.73 in March 2023 to as low as RM0.415 in June 2023 before making a rebound since then to close at RM0.47 yesterday. With the share price finding its key support of RM0.415, a technical rebound could be anticipated.

• Chart-wise, we believe the share price will likely resume its rising momentum as: (i) the 12-day moving average is still hovering above the 26-day moving average following the MACD golden cross in late June, and (ii) the stock price has crossed back above the lower Bollinger Band.

• Hence, the stock is poised to challenge our resistance thresholds of RM0.52 (R1; 11% upside potential) and RM0.58 (R2; 23% upside potential).

• Conversely, our stop-loss price has been identified at RM0.42 (representing an 11% downside risk).

• ARMADA is an international offshore energy facilities and services provider which owns and operates offshore vessels to support oil & gas exploration and production activities.

• Earnings-wise, the group reported a net profit of RM201m in 1QFY23 compared with a net profit of RM185.8m in 1QFY22, mainly due to higher operating income.

• Based on consensus forecasts, ARMADA’s net earnings are projected to come in at RM717.9m in FY December 2023 and RM817.9m in FY December 2024, which translate to forward PERs of 3.9x this year and 3.4x next year.

Astro Malaysia Holdings Bhd (Technical Buy)

• ASTRO’s share price has fallen 45% since late March 2022 from RM1.10 to close at RM0.60 yesterday. With the share price likely to find support at its 52-week low of RM0.575, which coincides with the recent price reversal points in February 2023, a technical rebound could be anticipated.

• On the chart, the share price is expected to shift upward, backed by both the strengthening RSI and Stochastic indicators.

• An upward shift could then propel the stock towards our resistance targets of RM0.66 (R1; 10% upside potential) and RM0.72 (R2; 20% upside potential).

• Our stop-loss level is pegged at RM0.55 (representing an 8% downside risk).

• Fundamentally speaking, a leading content and entertainment group serving its customers across the TV, radio, digital and commerce platforms, ASTRO made net profit of RM15.9m (-84% YoY) in 1QFY24, the decline primarily due to higher content costs and favourable unrealised forex loss.

• Based on consensus forecasts, ASTRO’s net earnings are projected to come in at RM339.8m in FY January 2024 and RM308.5m in FY January 2025, which translate to forward PERs of 9.2x this year and 10.1x next year.

• In addition, the stock offers attractive forward dividend yield of 6.7% based on consensus DPS estimate of 4.0 sen for FY January 2024.

Source: Kenanga Research - 3 Jul 2023