MORNING CALL 11 JULY 2012
FLOWS;
BUYS: Affin, CIMB,
SK Pet
SELLS: TNB, Digi,
GentM
Technical Stock Alert
Hartalega (RM4.45): Co continue to appeal for it's above
industry profit margin of 20%, strong capacity CAGR of about 15% over the next
8 years ( from it's NGC project) & it's strong nitrile glove demand. It
also does not expect a price war in the nitrile glove segment in 2H2012 as
demand from the nitrile migration is expected to outstrip new supply. Based on
present natural rubber & nitrile butadiene prices, nitrile gloves is still
enjoying significant cost advantage ( 22%) over NR gloves.
However, the share price has added 27% over the past 1.5
months ( from May 31). We gather it's time to lock in some profits as focus has
now shifted from sustaining high margins to EPS growth. Management has guided
that FY03/13 net profit margins will likely fall to 19% from 22% the year
before, taking into account rising price competition & higher capex as
Hartalega begins it's NGC project. Co is trading at PE of 14.4x - 11.5x for FY03/13 to 03/15 - Trim especially above RM4.50
(AK)
Parkson (RM4.75) -
share price recently broken downward channel established since early
April when the price tumbled from RM5.40 to a low of RM4.30 in mid June. The
recovery looks intact with an immediate upside of RM5.20. Group new store
expansion in China, Malaysia, Vietnam and Indonesia should help mitigate the
slow down seen in China. RSI at neutral at 51 with MACD still trending higher.
BUY
(LJL/DN)
