MORNING CALL 10 JULY
2012
FLOWS;
BUYS: DRBHcm, Gamuda, PBBank
SELLS: TimeCom, YTL, CIMB
Technical Stock Alert;
SARAWAK PLANTATIONS (RM2.80) - This is our main value
call for a play in expected rising palm oil prices due to its unwarranted cheap
valuation of 8.6x PE (based on 2012 earnings CPO average of RM3100) and P/Bk of
1.4x. It has 51,965 ha landbank of which 29,574 ha is planted. 73% of the
planted area is at its prime mature producing age. Technically its share price
has broken above its SMA 50 resistance of RM2.75 and is likely to test an
immediate resistance of RM3.00, with a medium term target of RM3.20 based on
10x PE. Accumulate.
MMHE(5.35) - a contrarian call but with positive signs
gleaned from price actions and supported by a few recent brokers' upgrade. The
chart clearly confirms MMHE has bottomed and had an initial strong bounce,
followed by the consolidation phase in a trading band of 5.40 to 5.10 for the
last 3 weeks. MMHE looks poised for its next leg up, targeting a minimum 6.10
level. Potential catalysts are news flow of sizeable contract wins such as
reported by Upstream Online that the MMHE-Technip JV is in pole position to win
the Sarawak Shell Malaikai tension-leg project, initially estimated to be
RM1.5bn-2bn. Petronas has also announced that their Board has decided to go
ahead with their proposed plan to build a floating regasification terminal in
Sabah and the award is likely to be awarded to Daewoo Engineering whose local
partner is MMHE. Buy
