Aemulus Holdings Bhd (Trading Buy)

• In tandem with the plunge in the US tech-driven NASDAQ index since the beginning of 2022, AEMULUS’ share price has been heading south to hit a low of RM0.565 in March 2022, down by ~55% since Jan 2022. Subsequently, it bounced up to a high of RM0.82 before succumbing to renewed selling pressure.

• On the chart, after finding intermediate support around RM0.60, a reversal in the share price is expected as the stochastic indicator is set to unwind from an oversold position.

• A technical rebound could then drive the stock price to challenge our resistance thresholds of RM0.705 (R1; 18% upside potential) and RM0.75 (R2; 25% upside potential).

• Our stop loss price is pegged at RM0.51 (or a downside risk of 15%).

• Fundamentally, AEMULUS is primarily involved in the design, engineering and development of automatic test equipment (ATE) products for semiconductor manufacturers and OSAT companies, focusing on the testing of semiconductor wafer and packaged devices before they are assembled into various electronic appliances.

• The group recorded a net profit of RM9.1m (+250% YoY) in 2QFY22, mainly driven by strong demand from the mobile & tablets, CMOS image sensors, data center, RF filters and automotive markets.

• Moving forward, consensus is forecasting AEMULUS to make net profit of RM18.2m in FY September 2022 and RM26.3m in FY September 2023, which translate to forward PERs of 22x this year and 15.2x next year, respectively.

QES Group Bhd (Trading Buy)

• QES’ share price was in a downtrend since August 2021 and reached a low of RM0.42 in March 2022. Following a subsequent bounce up that hit a resistance at the price level of RM0.615, the shares are currently hovering near its crucial support level of RM0.50.

• With the stochastic indicator signaling that the stock is now in an oversold zone, the stage is set for a probable rebound ahead .

• We are anticipating that the stock could rise to challenge our resistance level of RM0.57 (R1; 14% upside potential) first, to be followed by RM0.62 (R2; 24% upside potential) thereafter.

• We have also placed our stop loss at RM0.43, representing a downside risk of 14%.

• A manufacturer and distributor of inspection, test, measuring, analytical and automated handling equipment, QES reported net profit of RM 6.7m (-3.2% YoY) in 1QFY22. The decline in net profit is due to higher effective tax rate compared to 1QFY21. However, QES announced higher profit before tax of RM9.4m (+5.1% YoY) in 1QFY22 mainly attributed to continued strong global demand in the semiconductor, automotive and electrical and electronic industries.

• Moving forward, consensus is currently projecting the group would record net profit of RM22.4m for FY22 and RM27.9m for FY23.

• Valuation-wise, this translates to forward PERs of 18.6x and 15x, respectively.

Source: Kenanga Research - 17 Jun 2022