Aug 25, 2016

PESTECH – Short Term Recovering After Sell Down?

PESTECH Stock Code: 5219

pestech analysis

Above: Pestech Daily Chart

PESTECH was one counter among many that faced immense sell-down last week, and had since found some footing at the RM1.42/RM1.45 level. Recently, some buying support emerged with the stock recording three-consecutive days of gains since Monday, where it closed 2.0 sen (1.35%) to settle at RM1.50 yesterday. MACD histogram is looking to stage a bullish crossover, while the inclining of RSI and Stochastic from their respective oversold territory are also supportive of the case that buying interest is resurfacing. We also do observe that long upper shadows appear over the past few days to hinder the stock’s attempt for a higher high. From here, we reckon that a swift recapture of the RM1.56 (R1) level would be comfortable for the stock to challenge RM1.64 (R2) next. Support levels are seen at RM1.42 (S1)/RM1.30 (S2).

source: Kenanga Research – 25/08/2016


The Company is principally engaged in the provision of comprehensive power system engineering and technical solutions for design procurement and installation of High Voltage and Extra High Voltage substations transmission lines and underground cables for electricity transmision and distribution in the local and international markets and also manufacture proprietary power system components and equipment.

Aug 24, 2016

DRB-HICOM – Trading Sell Opportunity

Stock Code: 1619. Shooting star patterns and toppish indicators may induce more profit taking

DRB-HICOM’s Daily Chart: Shooting Star Patterns signal price tops and reversals

DRB-HICOM daily chart
DRH_HICOM Weekly Chart: Downside bias amid extremely technically overbought
DRB_HICOM weekly chart

  • Positives are likely priced in. Positive news that DRBHCOM’s plans to sell a stake in Proton to a foreign strategic partner and the disposal of a 90% equity interest in Corwin Holding Pte Ltd (which owns a leasehold property known as The Verge in Singapore) to Lum Chang Holdings has boosted its share prices from monthly low of RM0.90 to as high as RM1.43 before ending at RM1.35 yesterday.
  • While we are overall positive on the planned disposals, as part of DRB’s rationalization objective to improve its balance sheet and realize its investments gain, the recent surge in share prices could have priced in the positives as the group is still likely to record a huge loss of RM301m in FY17 before returning to black in FY18 with a small RM17m profit.
  • Losing momentum. We believe the recent 50% surge in share prices from monthly low has triggered concern about price sustainability, compounded by the grossly overbought daily and weekly indicators. In addition, the shooting star patterns and weakening volume in the daily and weekly charts are bearish reversal signals.
  • Front technical perspective, we see Trading Sell opportunity with an immediate support near RM1.30 (23.6% FR). A decisive breakdown below RM1.30 will trigger further decline towards RM1.27 (10-d SMA) and RM1.22 (38.2% FR). On the flipside, any rebound will see upside capped at RM1.40, RM1.43 (YTD high on 22 Aug) and RM1.45 (52-week high).
source: Hong Leong Investment Bank – 24/08/2016
The Company an investment holding company trades in vehicles. The Company is involved in design and construction of the Electrified Double Track Project between Rawang and Ipoh. It also holds investments in the automotive property and construction and services sectors.

Aug 17, 2016

WASEONG – Cup and Handle pattern


Stock Code: 5142

waseong share analysis

  • Look beyond 2016. WASEONG (WSC) is one of HLIB institutional oil & gas stock picks with a TP of RM1.00 (9x FY17 P/E). We opine that the 3- year Nord Stream 2 AG 2,400km pipe coating contract is a powerful rerating catalyst to WSC as it provides more future’s earnings certainty, thereby reversing the dim prospects of the group’s plantation, renewable energy and industrial trading & services divisions. Although the contract value has yet to be finalized (likely be announced within weeks), we believe the total contract value could be ~RM2.6bn, which is a strong boost to existing order book of RM0.9bn.
  • Currently, WSC has a tenderbook of about RM5bn. Based on its track record, its job winning momentum could be sustained through next year whereby oil prices are expected to improve due to narrowing of oil supply growth. At RM0.855, WSC is trading at 0.61x P/B, a substaintial 48% discount to its peers.
  • Cup and handle pattern signals brighter future ahead. The Cup with Handle is a bullish continuation pattern that marks a consolidation period followed by a breakout that turns from a bearish bias to a bullish bias. We believe WSC is in the midst of staging a Cup and Handle pattern breakout as share price is closing above all the key 10-d/20-d/30-d/50- d/100-d/200-d SMAs.
  • Key upside target is RM0.905 (23 Feb 15 high). A decisive breakout above RM0.905 will spur prices higher to RM0.93 (2 Aug 16 high) and our LT objective at RM0.975. Meanwhile, key supports are RM0. 84 (200- d SMA) and RM0.825 (20-d SMA). Cut loss at RM0.81.s

source: Hong Leong Investment Bank – 17/08/2016

The Group is principally involved in four business activities namely provision of specialized pipe coating services for the oil and gas industry manufacturing of steel pipes for the oil and gas and infrastructure sectors provision of industrial engineering services and distribution of building materials.

Aug 11, 2016

Sarawak Cable: Pending a bullish wedge pattern


SCABLE Stock Code 5170

scable weekly chartscable research

  • Values emerge after selldown. In the wake of fizzling thematic play on Sarawak state election (7 May) and a disappointing 1Q16 results (26 May), SCABLE’s share price tumbled 15.9% from 3M high of RM1.51 to a low of RM1.27 on 24 June before closing at RM1.30 yesterday. Whilst 1Q16 results was a disappointment, HLIB retains a BUY rating (pending the release of 2Q16 results on 26 Aug) with a SOP TP of RM1.92, in anticipation of a pickup in earnings over the coming quarters.
  • We opine that current share price 30.5% correction from 52-week high of RM1.87 offers opportunity for LT investors to accumulate SCABLE, given its undemanding valuation of 9x FY17 P/E (against HLIB’s average 12x construction’s P/E) and 1.25x P/B (10-year average 1.7x), supported by a steady 2015-18 earnings CAGR of 11% and decent FY17 yield of 3.3%.
  • Pending a bullish wedge pattern. In the next 2-4 weeks, SCABLE is likely forming a bullish wedge pattern, breaking the wedge resistance (near RM1.36) and advance further towards RM1.42 (200-d SMA) and LT objective at RM1.50 (50% FR). However, in the short term, SCABLE may undergo a brief sideways consolidation with key supports at RM1.27 and RM1.23 (weekly lower Bollinger band), as share prices closed below key 10-d/20-d/30-d/50-d SMA supports yesterday. Cut loss at RM1.22.

Source: Kenanga Reserach 11/08/2016

The Grouop is mainly involved in the manufacture and sale of power cables and wires in Sarawak East Malaysia.

Aug 9, 2016

Jaya Tiasa - Target Price RM1.28, 1.35

Stock Code: 4383
  • Last closing price RM1.20
  • Potential return 12.5%
  • Support RM1.14
  • Stop Loss RM1.13
jaya tiasa analysis
Buying interest. There were breakouts from 8-months downtrend line and RM1.18 resistance level on high volume yesterday. We observed increasing buying interests which pushed the price up for the past two days. Average traded volume for the past two days was substantial at 3.8m shares compared to previous 14-day average of 0.7m. Positive buying momentum was further signified by bullish MACD and RSI indicators, which may continue to lift Jaya Tiasa shares higher to next resistance level of RM1.28, followed by RM1.35.
However, failure to hold at support level of RM1.14 may indicate weakness in the share price and hence trigger a cut-loss signal.
source: PublicInvest Research  – 9/8/2016
The Company is a fully-integrated timber producer in Malaysia with access to 1.76 million acres of timber concessions in the state of Sarawak Malaysia.The principal activities of the Company are investment holding provision of management services extraction and sale of logs manufacturing and sale of timber products reforestation and oil palm plantation.

Jul 27, 2016

Still Underweight On Malaysia’s Stock Market



Not surprisingly, institutional investors we met in Singapore remained UNDERWEIGHT on Malaysia, citing a lack of catalysts. Nevertheless, there remains interest in infrastructure-related plays and exporters. Among the timely top picks are Genting Bhd and small-mid caps Bumi Armada, BIMB Holdings and WCT Holdings.

Malaysia’s appeal as a low-beta market. We recently met a handful of institutional fund managers in Singapore which are UNDERWEIGHT in Malaysia, citing the lack of catalysts. Nevertheless, there is: a) general agreement that the FBMKLCI would remain a low-beta market and hence outperform during a regional market downturn, and b) selective investment interests related to the key topics covered, such as politics (a potential general election in 2017, a potentially new political party set up by Tun Dr Mahathir), the impact of EPF setting up a Syariah fund in 2017, and investment ideas (infrastructure-related and export-oriented sectors, and stocks with potential event-catalysts such as Genting Bhd and Bumi Armada).
Of limited interests. It was interesting to note that there were little interests to discuss the US Justice Department’s action against the defrauders of 1MDB, indicating that the market has assumed that this event would not destabilise the country’s current political situation. This is consistent with our assessment of lower political risk premium in 2016 vs 2015, and that the ringgit would remain weak (end-16 target: RM4.15/US$). Also notable was the limited interest in high-yield plays in Malaysia.

Maintaining our view that the FBMKLCI would remain in the doldrums in 3Q16 before trending up in 4Q16 to reach our end-16 target of 1,700, based on 15.8x 2017F PE, +0.7SD above historical mean PE. We still expect: a) the FBMKLCI to trade at a narrow range of 1,600-1,728, and b) small-mid caps to modestly outperform large caps (-3.0% ytd, 2H16-to-date: +1.2%).
Our top picks include large caps Gamuda, Genting Bhd and Tenaga Nasional; and smaller caps BIMB Holdings, Hume Industries, Kim Loong Resources and VS Industry. BUY-rated stocks with near-term event catalyst include WCT Holdings and Bumi Armada, apart from Genting Bhd. However, following its 11.9% price run-up from the recent low, Genting Bhd’s share price could be swayed either way after 27 July when its 20%-owned Tau-Rx is scheduled to reveal the latest findings of its final clinical trial results in Alzheimer's Association International Conference 2016 (AAIC).
Meanwhile, maintain SELL on Hartalega, UMW and TM. Of these, Hartalega could be the most vulnerable in the near term as pricing and margins of nitrile gloves could have continued to slide in the past couple of months.
STOCK PICKSmalaysian stock picks
ESSENTIALS Minimal impact on EPF’s creation of a syariah fund. Recall that the Employees Provident Fund (EPF) recently announced that contributors now have the option to switch from the existing savings scheme to one based on Islamic principles called Simpanan Syariah, which will be activated in 2017. The initial value of Simpanan Syariah is RM100b and once contributors opt for this fund, they cannot switch back to the conventional fund.
epf asset allocation
We maintain our view that EPF’s need to carve out up to RM100b of its funds (representing 15% of its fund size in 1Q16) would not force the conventional fund to immediately and materially re-jig its portfolio. Naturally, the carve-out process (which we label as “‘Post Split”) would force EPF to transfer a proportion of its syariah-compliant holdings (eg telecommunications and plantation stocks) into Simpanan Syariah, leaving the conventional fund with a higher weightage in banks. Nevertheless, as shown on our sensitivity analysis below (which assumes a market cap proportional transfer of syariah-compliant stocks into Simpanan Syariah), the conventional fund’s sector holdings post split (ie sector weightage to domestic equity holdings) would not drop materially for the generally syariah-compliant sectors, and the increase in weightage in banks would still remain well below the banking sector’s weightage in the FBMKLCI.
bursa malaysia events chart
 Nevertheless, the creation of Simpanan Syariah as well as the ongoing growth of syariah compliant funds, will benefit syariah-complaint stocks, which typically command scarcity premiums. Among syariah-compliant stocks, we like BIMB Holdings.
source: UOBKayHian (Singapore) research – 26/07/16

Jul 25, 2016

Tunepro Technical Analysis

Stock Code: 5230
tunepro analysis
TUNEPRO has formed a Breakout-Pullback-Continuation pattern above the RM1.55 level with tunepro dataimproved volumes. The MACD Indicator is trending positively above zero. The RSI, however, is overbought. Price may rally towards the RM1.90 level after a short consolidation. Support will be pegged around the  RM1.55 level.
source: Malacca Securities Research – 25/07/16
The Group are an insurance product manager for their online partners (currently AirAsia Tune Hotels and AirAsia Expedia) where the Group among others design and manage insurance products that will be sold to the customers of their online insurance partners. The Group is an underwriter directly and via reinsurance of general and life insurance products across the Asia-Pacific region. The Group operate two core businesses an online insurance business through which insurance products are sold to customers as part of their online booking process with the Group online partners and other general insurance business currently only in Malaysia.