KUALA LUMPUR (Sept 15): Yi-Lai Bhd shares rose 1.72% in early trade today on renewed buying interest following a positive technical outlook for the stock.
At 9.25am, Yi-Lai had risen 1.5 sen to 88.5 sen, giving it a market capitalisation of RM128.83 million.
Kenanga Research said Yi-Lai Bhd shares may attract renewed buying interest as its new major shareholder (businessman Au Yee Boon who is now its single biggest shareholder with a 13.9% stake) is seeking to jointly venture into the information technology (IT) solution business.
In its daily technical highlights note today, Kenanga said the diversification strategy will hopefully turn around the group, whose existing tile manufacturing business had been loss-making over the past three financial years.
The research house said with its financially strong and debt-free balance sheet backed by cash holdings and unit trust investments of RM82.7 million (or 57 sen per share, representing almost two-thirds of its current share price of 87 sen) as of end-June, Yi-Lai is well positioned to scout around for interesting business deals ahead.
“From a charting perspective, after reaching a high of RM1.09 on Aug 11, the stock retraced to as low as 85 sen last Thursday on a declining trading volume, while its RSI (Relative Strength Index) is indicating that its share price is reversing out from oversold territory.
“The appearance of a pennant formation, which is a bullish continuation pattern, also suggests its share price may ride on the positive momentum going forward.
“On the back of a probable technical breakout, Yi-Lai shares could climb towards our resistance thresholds of 99 sen (R1) and RM1.10 (R2).
“This translates into upside potential of 14% and 26% respectively. Our stop-loss level is set at 78 sen (or 10% downside risk),” it said.