The stock is an alternative to LKL as it is still cheaper
• Besides LKL, the other supplier of hospital equipment is BCM Alliance.
Current price: 11.5sen
TP technical: 25sen
Support: 10sen
• BCM Alliance, in fact, has much bigger earnings size than LKL. Yet, the former is being traded at a sub-par valuation compares against LKL and the healthcare sector.
• Ignore the P/E ratio for comparison because no earnings forecasts, LKL is pricey, in terms of share price and trailing valuation. LKL’s share price of 24sen is being traded at 1.85x PBV, and the healthcare sector is at more than 2x PBV. BCM Alliance offers cheaper entry of 11.5sen only at PBV valuation of 0.95x.
• Should BCM Alliance be traded at similar 1.85x PBV of LKL, it would derive the fair value of BCM Alliance at 22.5sen.
Earnings catalyst of BCM Alliance is same with LKL
• Like LKL, BCM Alliance would also benefit from potential increase enquiries and purchase orders for its medical equipment during this Covid-19 crisis.
• With Malaysia’s largest stimulus package to be rolled-out, which RM1.5 billion being channelled to the healthcare sector, we will see a flurry of activities in the sector and element of the multiplier effect that will benefit BCM Alliance.
• Pursuant to above, this should augurs well for the Group’s FY20 (ended Dec 2020) earnings! It could double, who knows!
From a technical perspective
• The rally in the share price of late has not reached the peak yet. Given aforementioned its positive earnings prospect, the stock could be traded above the 200-day E/SMA of 14-15sen in the near term.
• Should it close above the 200-day E/SMA, technical target price would be at 25sen, which implies 2.1x PBV.
• The share price could see further upside as a long-white body candlestick appeared yesterday, accompanied by stronger-than-average volume.
• The bullish landscape also remains intact as the share price has traded above 5, 20-day E/SMA lines and tested the 50-day E/SMA line.
• MACD Histogram is improving above zero-line, which indicates the share price is in bullish territory.
https://klse.i3investor.com/blogs/trendtrading2030/2020-03-31-story-h1485726759-_This_safe_haven_stock_in_the_Covid_19_crisis_is_still_under_the_radar_.jsp
