OCNCASH (0049) – Plenty of fishes in the Ocean

Syariah: Yes

Market Listing: Main

Current Price: 0.44
 

Target Price: 0.61 (Affin Hwang Research report 28/11/2019)


Company Background

Oceancash Pacific Bhd is the manufacturer of resinated felt and non-woven products. The company operates through three business segments which include Insulation, Hygiene and Investment holding. The Insulation segment is engaged in the manufacturing and distribution of insulation products. Its Hygiene segment is involved in the manufacturing and trading of hygiene products. The Investment holding segments consist of investment holding and provision of management services. The company's geographical operations are in Malaysia, Indonesia, Japan, and Thailand among others. It generates a vast majority of income from the Hygiene segment within Malaysia.

Reasons to look at OCNCASH
 

1. Ocncash is the supplier of felt materials to local car manufacturers (Proton & Perodua).

Source: Email from the management
 

2. Local car manufacturers are going aggressive recently in terms of their strategies to boost up the number of their car sales:

Perodua

Perusahaan Otomobil Kedua Sdn Bhd’s (Perodua) more aggressive production and sales plan is expected to benefit OCNCASH as they are one of major supplier of felt materials to Perodua.

Perodua, which registered record sales of 227,243 units last year, is expecting to surpass that this year, with a target of 235,000 units, 4,000 units or 1.73% more than its original target of 231,000 at the start of the year. The more ambitious target was set after the group saw strong demand for its vehicles in the first half of this year, when it sold 121,800 units — 4% more than the 117,100 units recorded in the same period the prior year.

Source: https://www.theedgemarkets.com/article/more-aggressive-perodua-benefit-mbm-resources-umw

Proton

1. The group has guided that the new 2019 Persona and Iriz have received a total of 13,000 and 3,500 bookings respectively, a jump of 108% and 180% from their 2018 pre-facelift models.

Source: https://www.theedgemarkets.com/article/drbhicoms-turnaround-plan-may-come-sooner-expected

2. Proton is expected to release their CKD Proton X70 model beginning of 2020 so this will definitely benefit OCNCASH.

Source: https://paultan.org/2019/12/13/2020-proton-x70-ckd-rolls-out-of-tanjung-malim-plant-launch-soon-right-hand-drive-exports-planned/

3. OCNCASH also will likely to continue to get strong orders from Proton as they will be launching their Proton X50 model in October 2020.

Source: https://www.carsifu.my/news/proton-x50-coming-in-oct-2020-ckd-x70-to-be-cheaper-says-aminvestment

Future Projection for OCNCASH

1. Heading into the last quarter Oceancash’s sales traction for both its business segments is expected to sustain and consequently post a robust yoy earnings recovery from 4Q18’s disappointing performance.

2. Oceancash is likened for its hygiene segment’s growth prospects, while expecting steady demand for felts from the automotive industry to anchor its insulation segment’s performance.

Source: Affin Hwang Research Report dated 28/11/2019

3. Barring unforeseen circumstances, the Directors anticipate the Group’s performance for the financial year 2019 to be better than the financial year 2018.

Source: Prospect section Q32019 Explanatory notes

 

Technical Analysis

OCNCASH volume increased on 20/12/2019 indicating that there were some buying interest.

Candlestick pattern looks strong with good surge in volume expecting share price to do a breakout at 0.45 in which we will see the next level of direction at 0.49 for short/midterm. Long term prospect we aim for 0.61. 

Technical Indicators

1. RSI – Buy

2. MACD - Buy (Oversold Cross)

3. Stochastic – Buy

Disclaimer

At this point of time the writer has a position in OCNCASH. This article is purely meant for educational purposes only and it’s not BUY/SELL recommendation.  Please consult your remisier /dealer before making any decision.