Kenanga Research & Investment

Daily technical highlights – (GENM, PWROOT)

Publish date: Thu, 23 Mar 2023, 09:05 AM

Genting Malaysia Bhd (Technical Buy)

• GENM’s share price has fallen 16% since January 2023 to close at RM2.56 yesterday. With the share price currentlyfluctuating near its support line of RM2.53, a level that was previously tested in October and December 2022, a technicalrebound could be forthcoming.

• Technically-speaking, the share price is on the verge of overcoming a negative sloping trendline, triggered by the positivesignals arising from: (i) RSI indicator climbing out from oversold territory, and (ii) stock on the verge of moving back abovethe lower Bollinger Band.

• Hence, the stock could rise to challenge our resistance levels of RM2.82 (R1; 11% upside potential) and RM2.98 (R2; 16%upside potential).

• We peg our stop loss at RM2.30, representing a downside risk of 10%.

• A leading global leisure and hospitality corporation, GENM reported a net loss of RM394m in 4QFY22 (from net earnings ofRM174.1m previously), narrowing its FY22 net loss to RM520m (from -RM946.8m in FY21)).

• Going forward, consensus is projecting the group to make net profit of RM1b for FY December 2023 and RM1.27b for FYDecember 2024, translating to forward PERs of 14.5x and 11.4x, respectively.

Power Root Bhd (Technical Buy)

• PWROOT slid from a peak of RM2.37 in December 2022, down by 22% to a low of RM1.86 in February 2023.Subsequently, it rebounded to close at RM2.11 yesterday.

• Chart-wise, we expect the upward momentum to continue supported by: (i) the stock moving above the lower BollingerBand, (ii) the DMI Plus crossing above the DMI Minus, and (iii) the MACD signal on the verge of a cross-over.

• The positive view is supported by a reversal by the stochastic indicator from the oversold area and the strengthening MACDhistogram trend.

• Thus, we believe PWROOT could advance towards our resistance thresholds of RM2.32 (R1) and RM2.47 (R2),representing upside potentials of 10% and 17%, respectively.

• Our stop loss price is set at RM1.90 (or a downside risk of 10%).

• PWROOT is a manufacturer and distributor of beverage products specialising in staple drinks (such as coffee, tea,chocolate malt drinks and herbal energy drinks).

• Earnings-wise, the group reported a net profit of RM11.3m (+88%) in 3QFY23, which took 9MFY23 bottomline to RM42.2m(versus net profit of RM13.6m previously).

• Based on consensus forecasts, PWROOT’s net earnings are projected to come in at RM55.9m for FY March 2023 andRM60.7m for FY March 2024, translating to forward PERs of 16.2x and 15.1x, respectively.

Source: Kenanga Research - 23 Mar 2023

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