Morning Call | 6 Nov 2012

FLOWS

Tuesday, 6 November, 2012

BUY

MAYBANK, PCHEM, AFFIN

SELL

BJTOTO, MRCB,ASTRO

Stock Alert

STOCK

DATE

PRICE

BUY/SELL

TARGET PRICE

GENTING (3182)

06/11/2012

RM9.03

BUY

RM9.68

There has been a marked shift in strategy for the last 1 month with the defensive stocks like BAT and the telcos retracing substantially and the Malaysian KLCI underperforming the regional  markets. Funds have been reallocating to the higher-beta stocks that are more sensitive to economic growth and better times, with Macao casino stocks doing very well in the HKSE, gaining from 13% to 22% the past month. Genting is an attractive proposition in this type of environment as it is has a beta of 1.39 and is a favourite of the foreign funds with its high liquidity and huge market cap for them to conveniently move their funds. It has retraced and consolidated for the last 6 months and looks to have bottomed. It is one of the cheapest casino stocks on an EV/ebitda basis, and is trading at the lower end of its PER band with PER of 12.5x for FY13. In addition, its charts exhibit a rounding bottom formation with positive divergences against its technical indicators, and recently triggering buy signals with the stock piercing through the 8.98 – 9.00 resistance level. Buy (PT)

MALTON (6181)

06/11/2012

RM0.55

ACCUMULATE

RM0.62

A property developer that is under the radar screen of the analyst community, hence a stock with huge potential as the story is not yet told. It also has construction and project management expertise which provides better margins for its projects compared to sub-contracting the jobs to external contractors. Its quarterly performance has been improving the last 3 quarters, and it now trades at very attractive valuations of historical FY06/12 PER of 3.6x and a p/bk of 0.4x. Its on-going development projects are in Bukit Rimau, Amaya Maluri and the VSQ Phase 2 corporate suites. It will be launching a high end condominium project at Cantonment Road, Penang in FY06/13. Despite a medium-to-small-sized developer, Malton has recently managed to secure a JV with Batu Kawan  Group for a joint development of 300 acres of land in Batu Kawan, Penang with an estimated GDV of RM3.8bn. Malton will be responsible for the entire development financing and is entitled to 82% of the GDV and the remaining accruing to Batu Kawan. This piece of land is strategic as it is adjacent to the Penang Second Bridge. In addition, Malton has settled out of court with Ho Hup Construction Co Bhd on their tussle of the huge tract of land at Bukit Jalil. They have instead signed a Supplementary Agreement for joint development for mutual interest and benefits. The on-going projects and the potential of the future developments will sustain and improve the company’s performance in the foreseeable future. Accumulate ahead of stock discovery. (PT)

Calls for OCT Week 3 / Week 4

STOCK

Initiation Dates

PRICE

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

DIALOG (7277)

30/10/2012

RM2.36

BUY

RM2.58

RM2.44

3.3%

GENM (4715)

30/10/2012

RM3.48

Accumulate

RM3.80

RM3.48

0.00%

SENDAI (5205)

31/10/2012

RM1.44

BUY

RM1.65

RM1.43

0.03%

JTIASA (4383)

31/10/2012

RM2.33

Accumulate

RM2.60

RM2.24

-4%

MAS (3786)

01/11/2012

RM1.03

TRADING BUY

RM1.24

RM1.03

0.00%

POS (4634)

01/11/2012

RM3.02

BUY

RM3.80

RM3.00

-0.06%

ASTRO( 6399)

02/11/2012

RM2.71

TRADING BUY

RM2.86

RM2.63

-3.04%

TEBRAU (1589)

02/11/2012

RM0.685

TRADING BUY

RM0.80

RM0.68

-0.07%

APM (5015)

05/11/2012

RM4.86

BUY

RM5.15

RM4.90

0.8%

SKPRES (7155)

05/11/2012

RM0.375

BUY

RM0.46

RM0.375

0.00%