From a technical perspective, the reading from key indicators remains positive as the share price has broken out from its resistance level of 50 sen.
The chartist at Kenanga Research reckoned that the stock could rally beyond the next resistance level of 55 sen. A word of caution is that the stock would be vulnerable to profit-taking as it approaches 60 sen.
As for the downside, current support is pegged at the 14-day simple moving average (SMA) of 48 sen. An additional floor is resting at the 21-day SMA of 45.5 sen.
Fundamentals-wise, the stock is a turnaround story after a dismal year ended March 31, 2014 (FY14). Factory utilisation has normalised to a confortable 75% level from its low of 60% in FY14.
SKP is one of the key original equipment manufacturers (OEMs) for Dyson over the past 5 years, and recently expanded its portfolio to manufacture new vacuum cleaners and fans.
The group is completing a new factory in Senai, Johor targeted in October this year to cater for new contracts.
Its retained earnings base of RM130mil suggests that the group has strong capability to finance future expansion. SKP is currently sitting on a net cash of RM93.1 mil, which translates into 10.3 sen a share.
BY IZWAN IDRIS
The comments above do not represent a recommendation to buy or sell.
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