Dufu Technology Corp. Bhd (DUFU, 7233)

• DUFU may extend it upward trajectory after it gapped up and broke out from the three-weekascending triangle pattern yesterday. The higher trading volume propelled the stock to close at a new 52-week high. With the stock now separated from all EMAs and supported by positive technical readings in RSI and EMA, the uptrend is likely to persist in the short term.

• We expect the rising momentum to steer the stock higher and test the next resistance of RM2.55(R1), followed by RM2.74 (R2).

• On the downside, stop-loss is set at RM2.05, below the 20-day EMAs.

• Fundamentally, we see DUFU to benefit from Microsoft's USD2.2bn investment in Malaysia,particularly due to increased demand for high-capacity HDDs driven by AI. In addition, Seagate Technology's decision to raise prices, following Western Digital Corporation's move, further strengthens this outlook. Considering that DUFU's HDD division derives 60% of its revenue from Seagate and 30% from Western Digital, it signifies substantial potential for revenue growth.

Source: Rakuten Research - 7 May 2024

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