Pestech’s share price has fallen 72% since November 2021 from its 52-week high of RM1.02 to close at RM0.285. With the share price currently fluctuating near its 52-week low of RM0.275, a technical rebound from an oversold position is anticipated.
Chart-wise, Kenanga believes the share price will shift upward as both the Stochastic and RSI indicators are set to climb out from the oversold zone, and the stock price has crossed back above the lower Bollinger Band. The research firm expects the stock to move higher toward key resistance levels of RM0.32 (R1; 12% upside potential) and RM0.34 (R2; 19% upside potential).
Conversely, the stop loss price has been identified at RM0.25 (representing a 12% downside risk). Business-wise, Pestech is an integrated electrical power technology company with core businesses in electrical systems, transmission line & power cables, infrastructure asset management, power generation, rail electrification & signalling, and power distribution & smart grid.
The group recorded a net loss of RM13.8m in 4QFY22 mainly due to project cost overrun and delays in the shipment of
equipment from China to Malaysia on the back of the intermittent lockdowns in China. This took its full-year net profit to
RM13.7m (versus FY21’s net profit of RM66.4m). Based on consensus forecasts, its net earnings are projected to come in at RM33.7m in FY June 2023 and RM44.5m in FY June 2024, which translate to forward PERs of 8.3x this year and 6.3x next year, respectively.