Morning Call | 16 Nov 2012

FLOWS

Friday, 16 Nov 2012

BUY

UEMLAND, MRCB, TM

SELL

GAMUDA, IJM, TENAGA

SECTOR ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

COASTAL (5071)

16/11/2012

RM2.01

BUY

RM2.40

The market is expecting a stronger set of 2H12 results on the back of higher margin vessel deliveries, after a dismal 1HY performance ( marred by extensive discounts given ). Net margin has been guided to be around 15-25% from FY12 onwards (from a higher 26% in previous years) due to normalization of market conditions in the shipbuilding industry. Besides this, Co is looking into different businesses like fabrication & engineering, FPSO & FSO, although these have yet to gain traction. Despite the brief +10% run that Coastal has enjoyed since end Oct, Co’s only trading at PE of 5.6x for FY13, below the estimated 7x for other O&G small caps. We still see this stock as being undervalued – BOW. (AK)

QL (7084)

16/11/2012

RM3.15

BUY

RM3.55

The stock price has consolidated for the past 6 months. QL’s marine products manufacturing (MPM) expansion plan in Indonesia and it’s integrated livestock farming ( ILF) in Cianjur, Indonesia appears to be on track. It is also enhancing its frozen marine product capability in Perak & Johor, enabling it to cater for demand during monsoon season. We are optimistic QL will be able to replicate it’s success in Indonesia. With growth from this new strategic market, enhanced frozen marine product capability & maturing oil palms in Kalimantan, it should be able to support a low teen EPS CAGR in over the next 3 years. Trading at FY03/14 PE of 14x, we still see substantial 20% upside to stock (based on its 3-year average PER of 17x) – Accumulate. (AK)

Calls for OCT Week 3 / Week 4

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

DIGI (6947)

07/11/2012

RM5.09

HOLD

-

RM4.87

-

MAXIS (6012)

07/11/2012

RM6.74

Buy On weakness

RM7.15

RM6.59

-2.2%

BJTOTO(1562)

08/11/2012

RM4.32

Defensive BUY

RM4.65

RM4.30

-0.4%

SUPERMX(7106)

08/11/2012

RM2.07

ACCUMULATE

RM2.08

RM2.05

+1.0%

DRBHCOM (1619)

09/11/2012

RM2.40

Trading BUY

RM2.80

RM2.42

0.7%

CMSB (2852)

09/11/2012

RM3.28

ACCUMULATE

RM3.60

RM3.30

+0.6%

GAMUDA (5398)

12/11/2012

RM3.66

BUY

RM4.00

RM3.70

+1.1%

UEMLAND (5148)

12/11/2012

RM2.13

TRIM

RM1.90

RM2.17

+1.95%

KLK (2445)

14/11/2012

RM20.72

BUY

RM4.00

RM20.80

+0.4%

TWSPLNT (6327)

14/11/2012

RM4.03

BUY

RM1.90

RM4.02

+0.1%