MyEG Services Berhad (Technical Buy)

• Hitting a low of RM0.57 in Febuary 2023, largely attributed to the disclosure of the reversion of immigration services andprocedures to the Immigration Department, scheduled for execution in the year 2025. MYEG’s share price has been riding onan uptrend ever since and reached a high of RM0.915, showing an increment of 61% and closed at RM0.79 last Friday.

• In light of the favorable technical indicators, there is a potential for a technical recovery ahead, indicated by the risingParabolic SAR and DMI Plus still hovering above the DMI Minus.

• The stock will likely climb towards our resistance thresholds of RM0.87 (R1: 10% upside potential) and RM0.91 (R2: 15%upside potential).

• Our stop-loss level is pegged at RM0.71 (representing a 10% downside risk).

• From the fundamental point of view, MYEG primarily serves as the electronic conduit for dispensing services from diversegovernmental bodies to both Malaysian citizens and businesses.

• Earnings-wise, the group reported a profit of RM105.9m in 1QFY23 compared with a profit of RM84.6m in 1QFY22 primarilydue to recently introduced offerings from their Zetrix blockchain platform as well as the rise in foreign worker job matchingservices due to the suspension being lifted on foreign worker recruitment.

• Based on consensus forecasts, MYEG’s net earnings are projected to come in at RM391.8m in FY December 2023 andRM445.3m in FY December 2024, which translate to forward PERs of 14.9x and 13.1x, respectively.

Pekat Group Berhad (Technical Buy)

• PEKAT reached a low of RM0.375 in May 2023. We expect a gradual recovery in its share price in conjunction with itsprogressive growth in earnings. Another catalyst contributing to PEKAT’s rise in share price is Malaysia’s transition to greenenergy as a whole. PEKAT closed at RM0.495 last Friday.

• A continuation of the uptrend is supported technically by the 12 day EMA positioning above the 26 day EMA coupled with theascending Parabolic SAR.

• The stock will likely head towards our resistance thresholds of RM0.55 (R1; 11% upside potential) and RM0.58 (R2: 17%upside potential).

• Our stop-loss level is pegged at RM0.45 (representing a 9% downside risk).

• PEKAT provides solar photovoltaic (PV) solutions, as well as earthing and lighting protection (ELP) solutions.

• Fundamentally speaking, YoY, the group reported a profit of RM3.2m in 1QFY23 compared with a profit of RM4.4m in1QFY22 mainly attributed to increased material expenses and the broader industry margin’s decrease arising fromheightened competition in the solar sector.

• Based on consensus forecasts, PEKAT’s net earnings are projected to come in at RM12.0m in FY December 2023 andRM14.9m in FY December 2024, which translate to forward PERs of 26.6x and 21.4x, respectively.

Source: Kenanga Research - 21 Aug 2023