KUALA LUMPUR (March 15): Kenanga Research said a price reversal could be underway for Globetronics Technology Bhd shares following a recent bounce from a trough of RM1.19 on March 8, which mirrored its previous low of RM1.20 during the Covid-19-triggered sell-off in March 2020.

In its daily technical highlights on Tuesday (March 15), the research house said the formation of a double-bottom reversal pattern appears to be on the cards as the share price is expected to shift higher based on the positive technical signals generated by: i) the existence of a bullish moving average convergence divergence (MACD) indicator after rising in the oversold zone while the price was dropping; and ii) the unwinding of the stochastic indicator from an oversold position.

“On the chart, the stock could be making its way towards our resistance thresholds of RM1.52 (R1; 13% upside potential) and RM1.68 (R2; 24% upside potential).

“Our stop loss price level has been placed at RM1.18 (or a 13% downside risk from the last traded price of RM1.35),” it said.

The research house said that going forward, the consensus is projecting the group to show an increase in net earnings to RM55.5 million for the financial year ending Dec 31, 2022 (FY22) and RM62.9 million for FY23.

“This translates into forward price-earnings ratios of 16.3 times this year and 14.4 times next year respectively, which stand at approximately 0.5-1.0 standard deviation below its historical mean,” it said.