Kenanga Research & Investment

Daily technical highlights – (TEXCHEM, TTVHB)

Publish date: Wed, 07 Jun 2023, 09:17 AM

Texchem Resources Bhd (Technical Buy)

• After hitting a trough of RM0.965 at the end of May this year – its lowest price level since mid-December 2021 – a technicalrebound will probably be forthcoming for TEXCHEM shares.

• On the chart, the stock – which closed at RM0.99 yesterday – will likely shift higher to be driven by the occurrence of a bottomfailure swing by the RSI indicator (after setting higher lows in the oversold area) and an anticipated reversal from the oversoldterritory by the stochastic indicator.

• The emergence of renewed buying interest could then propel the share price to test our immediate resistance threshold ofRM1.10 (R1; 11% upside potential) initially. This may be followed by an attempt to fill a price gap (previously left opened inthe second half of May) to challenge our next resistance target of RM1.23 (R2; 24% upside potential).

• We have placed our stop loss price level at RM0.90 (representing a downside risk of 9%).

• Fundamental-wise, TEXCHEM – which has five core business segments, namely industrial, polymer engineering, food,restaurant and venture business – reported net profit of RM21.9m (-14% YoY) in FY December 2022 that was followed by amarginal net loss of RM0.2m in 1QFY23 (versus net earnings of RM13.1m in 1QFY22).

• Based on consensus expectations, the group’s bottomline is forecasted to come in at RM15.0m for FY23 and RM26.0m forFY24. This translates to forward PERs of 7.7x this year and 4.5x next year, respectively with its 1-year rolling forward PERpresently hovering at 1 SD below its historical mean.

TT Vision Holdings Bhd (Technical Buy)

• Following a lift-off from its recent low of RM0.94 about one month ago, plotting higher lows along the way, TTVHB’s shareprice is anticipated to extend its upward trajectory ahead.

• A technical breakout from a symmetrical triangle pattern may be in the works as the Parabolic SAR continues to signal anunderlying rising trend while the MACD has crossed above its signal line.

• With that said, the stock could be on its way towards our resistance thresholds of RM1.16 (R1; 9% upside potential) andRM1.26 (R2; 19% upside potential).

• Our stop loss price level is set at RM0.96 (representing a downside risk of 9% from its last traded price of RM1.06).

• Listed on the ACE Market in January this year, TTVHB – which is principally involved in the development and manufacturingof machine vision equipment (primarily used for the inspection of optoelectronics, solar cells, discrete components andintegrated circuits) and the provision of related products and services – reported net profit of RM10.2m (+22% YoY) in FYDecember 2022 that was followed by net earnings of RM0.6m in 1QFY23 (which was a turnaround from a net loss ofRM1.3m previously).

• Valuation-wise, the shares are currently trading at a Price/Book Value multiple of 5.6x based on its book value per share ofRM0.19 as of end-March 2023.

Source: Kenanga Research - 7 Jun 2023

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