SIMEPLT (Technical Buy)

• A 7.3% uptick in Crude Palm Oil (CPO) futures to RM3,810 over the recent five-day trading period has positively impacted local plantation equities, as evidenced by a significant rise in trading volume. SIME Darby Plantation (SIMEPLT), a major stakeholder in this sector, has successfully reversed its previous declining trend, ending 2.1% or 9.0 sen higher at RM4.33 as of yesterday's close. The stock has also surpassed its 5-day and 13-day Simple Moving Averages, indicating a likely emerging bullish trend.

• From a technical analysis standpoint, indicators such as the Stochastic Oscillator and the Tom Demark Pressure Ratio (TDRP) are showing early signs of moving out of the oversold zone, suggesting a bullish trajectory going forward.

• Should the stock sustain a break above the immediate resistance at RM4.35, it could potentially rally towards RM4.58. Conversely, a dip below the key support level at RM4.10 could set off a new bearish cycle.

• Our recommendation is to establish a position at RM4.30, aiming for a take-profit point at RM4.55, which implies an estimated upside of roughly 6%. To minimize downside exposure, we propose setting a stop-loss at RM4.10, corresponding to a downside risk of about 4.7%.

Source: Kenanga Research - 19 Oct 2023