Hup Seng Industries Bhd (Technical Buy)

• HUPSENG has slid from the high of RM0.78 in mid-February this year to as low as RM0.625 in the late June and closed atRM0.655 last Friday. With the share price likely to find a key support at the 52-week low, further downside risk may becushioned by the short-term support line at RM0.60.

• Chart-wise, we believe the share price will shift upward as: (i) Parabolic SAR remains in an uptrend, and (ii) the 12-daymoving average is still hovering above the 26-day moving average following the recent MACD golden cross.

• Hence, we believe HUPSENG’s share price will rise to challenge our resistance thresholds of RM0.72 (R1; 10% upsidepotential) and RM0.80 (R2; 22% upside potential).

• Conversely, our stop-loss price has been identified at RM0.59 (representing a 10% downside risk).

• HUPSENG is an investment holding company involved in the production and sale of biscuits and confectionery food itemsas well as beverages.

• Earnings-wise, the group reported a net profit of RM9.7m in 1QFY23 compared with a net profit of RM6.8m in 1QFY22,mainly due to better sales in domestic and repricing of products.

• Based on consensus forecasts, HUPSENG’s net earnings are projected to come in at RM31.9m for FY December 2023 andRM38.5m for FY December 2024, which translate to forward PERs of 16.4x and 13.6x, respectively.

Power Root Bhd (Technical Buy)

• From a low of RM1.14 in March 2022, PWROOT has surged 99% to a peak of RM2.27 in early December last year beforemoving sideways to close at RM2.04 last Friday. With the share price currently hovering near the lower end of the channel,a continuous upward trajectory is expected.

• On the chart, a rebound is expected, backed by: (i) the share price hovering near the lower Bollinger Band (ii) the Stochasticindicator climbing out from the oversold zone.

• An upward shift could then propel the stock towards our resistance targets of RM2.26 (R1; 11% upside potential) andRM2.40 (R2; 18% upside potential).

• Our stop-loss level is pegged at RM1.84 (representing a 10% 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 RM63.1m for FY March 2024 andRM67.2m for FY March 2025, which translate to forward PERs of 14.8x and 13.9x, respectively.

Source: Kenanga Research - 10 Jul 2023