After tumbling 47% from its previous peak of RM4.73 on 25 March to RM2.50 currently, which is near the 52-week price
support level, KOBAY shares may stage a technical rebound ahead.
On the chart, an upward shift in the share price is anticipated in view of the positive technical signals triggered by: (i) the
stochastic %K line crossing above the %D line, and (ii) a likely move to cross back above the lower Bollinger Band. An ensuing reversal could then propel the stock to challenge our resistance thresholds of RM2.90 (R1; 16% upside potential)
and RM3.16 (R2; 26% upside potential).
Kenanga has placed a stop loss price level at RM2.18 (representing a 13% downside risk). Fundamentally speaking, KOBAY – which is principally involved in the manufacturing of precision metal components – stands to benefit from post-Covid economic recovery. Reflecting this, the group reported net profit of RM15.1m (a two-fold YoY increase) in 3QFY22, lifting its cumulative bottomline by 215% YoY to RM39.3m in 9MFY22.
The strong financial performance is expected to continue with consensus currently anticipating KOBAY to make net earnings
of RM51.9m in FY June 2022 before rising further to RM77.8m in FY June 2023. This translates to forward PERs of 15.6x
and 10.4x.
