KUALA LUMPUR: HLG Research said the traded volume and share price of DXN HOLDINGS BHD [] had rallied since July 28 after it released its 1QFY11 results.
The research house said on Monday, Sept 27 that the traded volume and share price had since then jumped 5% and 16% on-week to 2.3 million'' shares a day and RM1.13, respectively.
Despite the share prices rally, it still likes DXN because of (1) its current business structure of controlling and effectively managing the supply chain - upstream and downstream; (2) its strong foothold in the international markets and ahead of many competitors in global expansion; (3) stable and strong financial position, sound management and strong dividend yield; (4) DXN's dividend policy of distributing at least 50% of its net profit to shareholders, to be paid on a quarterly basis; and (5) Possible earnings and dividend upgrade as management is guiding a stronger 2QFY11 results and overall FY11 performance.
'Pending the release of its 2Q results in mid October, we maintain our three-month technical target of RM1.36, implying a 8.2 times (about 25% discount to industryprice-to-earnings of 10.7 times) on 16.6 sen FY11 EPS. In terms of price-to-book, DXN is also trading at huge 65% discount to the industry's price-to-book of 3.4 times,' it said.
DXN tested its resistance upper boundary of its channel formation around RM1.15 last Friday, Sept 24.
Some selling pressure could emerge over the next few days but it stands a chance to break out of the channel.
Should the price swing above the resistance trend line, the research house expects the bulls to gain pace quickly. Thereafter, price should move a tad closer towards RM1.21 and RM1.30.
HLG Research said its positive stance was also premised on the improving technical landscape.
'Risk takers may buy now in anticipation for a breakout run while a more risk-averse investor may accumulate near its key SMAs support at RM1.10 (50% FR), RM1.05 (38.2% FR) and RM1.00. Cut loss below RM1,' it said.
The research house said on Monday, Sept 27 that the traded volume and share price had since then jumped 5% and 16% on-week to 2.3 million'' shares a day and RM1.13, respectively.
Despite the share prices rally, it still likes DXN because of (1) its current business structure of controlling and effectively managing the supply chain - upstream and downstream; (2) its strong foothold in the international markets and ahead of many competitors in global expansion; (3) stable and strong financial position, sound management and strong dividend yield; (4) DXN's dividend policy of distributing at least 50% of its net profit to shareholders, to be paid on a quarterly basis; and (5) Possible earnings and dividend upgrade as management is guiding a stronger 2QFY11 results and overall FY11 performance.
'Pending the release of its 2Q results in mid October, we maintain our three-month technical target of RM1.36, implying a 8.2 times (about 25% discount to industryprice-to-earnings of 10.7 times) on 16.6 sen FY11 EPS. In terms of price-to-book, DXN is also trading at huge 65% discount to the industry's price-to-book of 3.4 times,' it said.
DXN tested its resistance upper boundary of its channel formation around RM1.15 last Friday, Sept 24.
Some selling pressure could emerge over the next few days but it stands a chance to break out of the channel.
Should the price swing above the resistance trend line, the research house expects the bulls to gain pace quickly. Thereafter, price should move a tad closer towards RM1.21 and RM1.30.
HLG Research said its positive stance was also premised on the improving technical landscape.
'Risk takers may buy now in anticipation for a breakout run while a more risk-averse investor may accumulate near its key SMAs support at RM1.10 (50% FR), RM1.05 (38.2% FR) and RM1.00. Cut loss below RM1,' it said.
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