Morning Call | 14 Dec 2012

FLOWS

Friday, 14 December, 2012

BUY

GAMUDA, CIMB, AMBANK

SELL

AIRASIA, UMW, PCHEM

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

TMCLIFE (0101)

14/12/2012

RM0.33

BUY

RM0.41

TMCLife(0.33)-  stock has been consolidating in a triangle pattern for the last 1 year after being in a bear trend since the high of 0.565 in 2010.  It is now sitting on the upper resistance of the triangle and is poised for a break out. With Berjaya Group back to accumulating the stock for the past 2 weeks and the impending Q2 results, the chances for this break out is good. After reporting consecutively 11 quarterly losses due to start-up costs and higher fixed costs when the operations were moved to Tropicana Medical Centre, the company broke even in the last quarter of the last financial year and was again profitable in Q1 FY2013 after achieving critical mass for the new Centre and costs saving from disposing of non-core assets & paring down debts. The Q2 FY2013 results, which is due within these 2 weeks, is expected to continue to reflect these improvements will be an appropriate catalyst for the break out. Downside for the stock is limited as Peter Lim’s stake is at 0.465 (but have free warrants which is half the size of his shares) and Berjaya Group’s original purchase price was transacted at prices ranging from 0.42 to 0.505. Buy  (PT)

BAT (4162)

14/12/2012

RM61.10

SELL

RM56.40

BAT(61.10) – the current orchestrated window dressing rebound is a perfect opportunity to take profit on BAT. The good bounce off its recent low has achieved its retracement targets and is hitting resistance walls. BAT has been on an uptrend for the last 14 years from its last low in September 1998. However, in the first 13 years, it had been on a gradual accent but in the last year it was an unsustainable steep climb, the sort one sees in a blowout final leg of a bull market. This is due to the herd instinct of funds seeking for safety in volatile markets. Recently, there have been signs of assets reallocation away from defensive stocks to growth or higher beta names, and the dividend yielding & safety stocks have been hurt. BAT was no exception. It fell sharply from a high of 64.79 to a low of 53.20 in just more than a month, a drop of 18%. A safe 4% dividend yielding stock does not hold water anymore with this volatility and potential for capital losses. In addition, impending tobacco regulations from the Health Ministry in the first quarter of 2013 would be negative for the sector. The number of cigarette sticks sold by BAT has also been falling over the years even though revenue is higher, helped by higher prices. Market share has been usurped by illicits and stiff competition from other brands. Take profit  (PT)

Calls for DEC Week 1/ Week 2

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

YTLPOWR (6742)

07/12/2012

RM1.51

BUY

RM2.00

RM1.55

+2.6%

IJMLAND (5215)

07/12/2012

RM2.08

BUY

RM2.60

RM2.06

-1%

FAVCO (7229)

10/12/2012

RM1.64

BUY

RM2.00

RM1.66

+1.2%

DIJACOR (5401)

10/12/2012

RM1.04

BUY

RM1.20

RM1.04

+0.0%

ALAM (5115)

11/12/2012

RM0.705

Trading BUY

RM0.85

RM0.70

-0.7%

PENERGY(5133)

11/12/2012

RM1.70

Accumulate

RM2.00

RM1.69

-0.7%

CRESBLD (8591)

12/12/2012

RM0.84

BUY

RM1.00

RM0.820

-2.4%

MRCB (1651)

12/12/2012

RM1.57

Trading BUY

RM1.70

RM1.55

-1.3%

HSL (6238)

13/12/2012

RM1.48

Accumulate

RM1.70

RM1.47

-0.8%

UNISEM (5005)

13/12/2012

RM0.90

Trading BUY

RM1.20

RM0.88

-2.2%