Southern Cable Group Bhd (Technical Buy)

• Presently hovering just above a recent trough of RM0.285 on 21 November this year (its lowest level since November 2020), SCGBHD’s share price may stage a technical rebound anytime soon.

• An upward shift in the shares is anticipated following the appearance of several bullish dragonfly doji candlesticks lately while the stochastic indicator has plotted a sequence of higher highs.

• On account of the bullish technical signals, the stock could advance towards our resistance targets of RM0.34 (R1) and RM0.38 (R2), translating to upside potentials of 17% and 31%, respectively.

• We have pegged our stop loss price level at RM0.25 (or a 14% downside risk from yesterday’s close of RM0.29).

• In the business of manufacturing cables and wires that are used for power distribution and transmission, communications as well as control and instrumentation applications, SCGBHD stands to benefit from an increased infrastructure spending (including 5G network rollouts) by utility players such as Tenaga Nasional, Telekom Malaysia and Petronas.

• The group reported net profit of RM3.8m ( 172% YoY) in 3QFY22, which lifted its 9MFY22 bottomline to RM10.0m ( 24% YoY).

• Forward earnings visibility will be underpinned by an existing order book of RM752.9m (which represents 1.14 times over the group’s FY21 revenue) to be recognized progressively until 2024.

Source: Kenanga Research - 13 Dec 2022