Malaysian Steel Works saw a bounce-off from a recent low of RM0.28 – which coincided with two preceding troughs that had then paved the way for a subsequent rebound in its share pricing further suggesting that a triple-bottom reversal pattern could be in the making.
Kenanga added that backed by the simultaneous crossovers of the DMI Plus above the DMI Minus and the share price
above the 50-day SMA, the stock – which ended at RM0.305 yesterday amid heavy trading interest – will likely extend the
positive trajectory ahead.
An anticipated upward shift is expected to lift the stock price towards resistance thresholds of RM0.34 (R1; 11% upside
potential) and RM0.39 (R2; 28% upside potential). Kenanga has set its stop loss price level at RM0.27 (which represents a downside risk of 11%). MSW is an integrated steel manufacturer focusing on the production of high-tensile deformed steel bars, mild steel round bars and steel billets (which are mostly used in the construction and infrastructure sectors), the company made a net profit of RM32.5m in FY December 2021 (versus FY20’s net loss of RM14.7m) that was followed by quarterly net earnings of RM13.2m (+57% YoY) in 1QFY22.
Valuation-wise, based on a book value per share of RM1.26 as of end-March 2022, the stock is presently trading at a
Price/Book Value multiple of 0.24x (or approximately 0.5 SD below its historical mean)