Comprehensive Analysis of Malaysian Companies

November 5, 2024 – CGS International

Introduction

In the latest edition of our Trendspotter, we delve into the performance and potential of several Malaysian companies. This report provides a thorough analysis of each company’s stock, giving investors critical insights to make informed decisions. From REDtone Digital to RGB International, we cover it all comprehensively. Let’s dive in!

REDtone Digital (0032) – Technical Buy

Overview

REDtone Digital Berhad provides telecommunications and digital infrastructure services, focusing on data, voice, and managed telecommunications network services to government and enterprises in Malaysia.

Stock Performance

REDtone Digital’s stock rose and closed at its 2-month high with a white candle. The golden cross of the 20-day over the 50-day EMAs suggests potential for further price climbs after the triangle breakout from the RM1.17 high in early October. Higher trading volumes indicate a promising upside ahead.

Technical Indicators

The Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) have strengthened, indicating rising buying momentum. Aggressive traders may consider going long here or on weakness with a stop-loss set at RM0.955. On the upside, prices may retest historical resistances at RM1.07 and RM1.17.

Key Metrics

• Entry Price(s): 1.00-1.02
• Support Levels: 0.96, 0.89
• Stop Loss: 0.955
• Resistance Levels: 1.07, 1.17
• Target: 1.07, 1.17

RGB International (0037) – Technical Buy

Overview

RGB International Bhd. is an investment holding company that manufactures, refurbishes, and services casino equipment, amusement, and electronic gaming machines.

Stock Performance

Prices are well-supported above the 200-day EMA after consolidating from the RM0.50 high. The stock broke out of a 3-week long flag pattern with a 5-candle reversal pattern. Closing above the 20-day EMA for the first time in 2 weeks supports a positive near-term outlook.

Technical Indicators

The MACD showed easing pressure while the RSI has strengthened, indicating rising buying momentum. Aggressive traders may consider going long here or on weakness with a stop-loss set at RM0.36. On the upside, prices may test historical resistances at RM0.40 and RM0.42.

Key Metrics

• Entry Price(s): 0.37-0.385
• Support Levels: 0.365, 0.35
• Stop Loss: 0.36
• Resistance Levels: 0.40, 0.42
• Target: 0.40, 0.42

Wilmar International – Maintain Add

Overview

Wilmar International remains a strong player, despite its 9M24 core net profit of US\$814.4m missing expectations. The company faced profitability challenges from its China operations and sugar division.

Stock Performance

3Q24 core net profit declined 35.7% yoy and 25.1% qoq to US\$208.1m. Despite these challenges, Wilmar International is counting on macro tailwinds in FY25F, with a revised target price of S\$3.47.

Key Metrics

• Target Price: S\$3.47
• Core Net Profit: US\$814.4m
• 3Q24 Core Net Profit Decline: 35.7% yoy, 25.1% qoq

HSBC Holdings PLC (5) – Technical Buy

Overview

HSBC Holdings PLC maintains a bullish trend, indicating a promising outlook for investors.

Stock Performance

The stock price remains intact with a bullish trend, providing multiple entry points for investors. The stop-loss is set at RM62.48, with targets ranging from RM76.00 to RM92.00.

Key Metrics

• Entry Price(s): 71.95, 68.60, 65.20
• Stop Loss: 62.48
• Targets: 76.00, 80.80, 85.40, 92.00

Laekna Inc (2105) – Technical Buy

Overview

Laekna Inc is in the early stages of a bullish trend, presenting a significant opportunity for investors.

Stock Performance

The stock is currently in the early stage of a bullish trend with multiple entry points. The stop-loss is set at RM2.48, with targets ranging from RM16.48 to RM27.00.

Key Metrics

• Entry Price(s): 11.54, 8.60, 5.20
• Stop Loss: 2.48
• Targets: 16.48, 18.74, 21.40, 27.00

Sector and Market Overview

Telco – Maintain Overweight

The Malaysian telco sector remains overweight with the announcement of a second 5G network, providing potential growth opportunities.

China Pacific Insurance – Maintain Add

China Pacific Insurance is focusing on product mix improvements, with a higher target price of HK\$37.00.

Telco – Tower (Indonesia) – Maintain Overweight

The Indonesian telco tower sector maintains an overweight rating following the 3Q24 results wrap.

Actively Managed Portfolio

The Actively Managed Portfolio recommends stocks based on technical analysis, emphasizing trend-following strategies. The portfolio aims to let profits run and cut losses short, with a maximum trading period of 1 to 6 months.

Current Portfolio

Market Overview

Most Asian stock markets rebounded on hopes for further fiscal package details by Chinese lawmakers. The local benchmark FBMKLCI rose 12.45 points or 0.78% to end the day at 1,616.43. The broader market was lifted by plantation (+1.66%), construction (+1.63%), and utilities (+0.95%). However, technology (-0.50%) and transportation (-0.30%) were the laggards. Trading volume increased to 2.42 billion, although trading value dropped to RM2.15 billion. Market breadth turned positive with 537 gainers outperforming 485 decliners.

The benchmark gapped up and formed its second white candle as well as a 3-candle reversal pattern. We expect more follow-through buying in the near term as the KLCI continues to inch higher within the 1,614-1,624 support-turned-resistance level. The falling EMAs are likely to act as resistances in the near term. Longer-term, the current rebound may remain short-lived.

Conclusion

Our comprehensive analysis of Malaysian companies reveals promising opportunities for investors. Whether it’s the technical buy recommendations for REDtone Digital and RGB International or the sector overviews, staying informed is crucial for making sound investment decisions. Keep an eye on the market trends and leverage the insights provided in this report to navigate the financial landscape effectively.