Technical tracker - HLIB Retail Research – 25 October 2021 WO | HLeBroking

Technical tracker - HLIB Retail Research – 25 October 2021

WONG (RM1.64, Non-Rated) – Riding on the E&E and Semiconductor bull cycle

Established since 1982, Wong Engineering Corporation Berhad (WONG) and its subsidiaries offer a full array of services from design to development and production of high precision metal fabricated parts with superior quality assurance. Currently, the group supports a wide range of prominent multi-national customers from E&E, semiconductor, test instruments, telecommunication, etc. Since 2017, the group ventured into Construction and Property development (CPD) with first project at the Kuchai Lama Entrepreneur Park with a GDV of RM87.5m and grew it into one of the group's main revenue contributors (32% FY2020), whilst manufacturing contributed to the rest (68% FY2020). The group exports contributed about 18% to its FY20 revenue.

After plunging 28% from a high of RM2.17 (10th Sept) to a low of RM1.52 (5th Oct), WONG’s share prices gradually recovered to end at RM1.64 last Friday. The stock is currently trading at an undemanding 23.5x trailing P/E (36% discount against its peers’ average of 37x). As for CPD unit, with the Kuchai Lama project nearing its completion, WONG will seek out new projects and opportunities for growth to supplement its manufacturing segment.

Pending further development from CPD, we opine WONG prospects remain promising after the recent MCO3.0 disruption, premised on the bullish E&E and semiconductors demand. Going forward, the group is working toward expanding into higher value-added manufacturing activities by broadening its product offerings to include full assembly of high precision stamped and turned metal parts, as well as expanding its market share into the healthcare sector.

Technically, pending the announcement of entitlement date for the proposed bonus issue of up to 151.3m shares (on 6:5 basis) in early Nov, we expect the stock to trend near the uptrend line support near RM1.57-1.60 zones. In the wake of a higher low pattern, a decisive breakout above RM1.69 (0.236 FR from RM2.17 peak and RM1.54 bottom) will spur the prices toward RM1.80-1.90 territory. Cut loss at RM 1.52.

*Collection range: RM1.57-1.60-1.64*

*Upside targets: RM1.81-1.86-1.90*

*Cut loss: RM1.52*

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