Morning Call 24 AUGUST 2012
FLOWS:
BUYS: MRCB, UEMLand
SELL: UMW,
Genting, Sime, Maybank
Technical Stock Alert:
Bernas (RM3.46) - stk has retraced from peak of RM3.68
with MACD severely oversold and RSI at 40 following poor 2Q results affected by
higher cost of importing rice due to stronger USD. This situation is only
temporary as RM has firmed up against USD. Recently, co has been given 10yr
extension by Govt to continue importing rice and co controls about 45% local
rice demand. Co has maintained will pay out 75% of earnings which may improve
once co utilizes s108 tax credits (due by end 2013) resulting in yield improving to as high as 9% from
current 8%. If compared to MSM PER 14.7x, yield mere 3.73% v Bernas PER 15x-Buy
for yield accretion.
Sendai (RM1.49) - structural steel specialist which is
well positioned to take advantage of recent Govt initiative to build more power
plants in country. In addition it is stepping up efforts to increase its
presence in M.East (tendering for A.Dhabi Airport extension, National
Exhibition Centre etc) to enhance current OB of RM1.4bn. Co has secured RM844m
contracts ytd (well on track to achieve targeted RM1bn OB replenishment).
Technically poised for a rebound as stock has been consolidating for past few wks,
with RSI 38, MACD flattening out. Looks attractive as is currently below its
IPO px of RM1.62, cheap PER 8x, rerating catalyst on further proj
awards-Trading buy.
