Malacca Securities Sdn Bhd expects follow-through buying interest for SDS Group Bhd’s (SDS) shares to be seen in the near term, targeting RM0.785 to RM0.79, with a LT target at RM0.825.
“Support is set around RM0.68 to RM0.69, with a cut loss set around RM0.67,” it said in a Technical Focus note today (Dec 27).
The research house said the group’s share price has been consolidating sideways and experienced a flag breakout above RM0.71, closing at RM0.73.
“SDS has recorded solid earnings (as it is a) strong household brand in Johor for bakery goods, coupled with steady store expansions.
“The increasing trend towards urbanization increases consumer demand for convenient ready to eat goods to save time, which will benefit SDS’s bakery goods,” it said.
Thus, Malacca Securities said one of the standout trading catalyst for SDS, a group is involved in the manufacturing and retailing of bakery products, is that it’s a strong household brand coupled with steady expansion.
“Established in 1987, SDS has become a household brand name in Johor for bakery goods. The strong customer base of SDS coupled with the targeted expansion of stores each year will further contribute to the potential sales growth of SDS,” it said.
The group has a wholesale divisions comprises of Top Baker and Daily’s Bakery, whereas retail outlets are operated under SDS.
It said that SDS has also has a solid start for FY2024, as in 2Q24, SDS achieved a net profit of RM9.5 million, which represents a growth of 90.3% quarter-on-quarter (QoQ) and 8.73% year-on-year (YoY).
“At the same time, revenue increased to RM84.8 million, representing an increase of 19.0% QoQ and 14.5% YoY, on the back of strong sales from the mid-autumn festive season products,” it said.
The research house added higher urbanisation trends to benefit bakery goods consumption.
“Since local consumers are trending towards higher urbanization, the stronger preference for convenience when selecting daily food choices would grow towards foods that are pre-prepared to save on time.
“Hence, ready-to-eat goods such as bakery products will benefit from this growing trend,” Malacca Securities said.
