Morning Call | 11 Jan 2013

FLOWS

Friday, 11 January, 2013

BUY

CIMB, IOIC, PERDANA

SELL

DIALOG, JCY, KLK

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

MISC (3816)

11/1/2013

RM4.15

Trading BUY

RM4.80

The share price has retraced c32% ytd and has consolidated around the RM4.10 level for the past 1.5 months. It’s 9MFY12/12 core net profit came in below expectations, largely due to the higher than expected final losses from the now defunct container shipping business. However, management has guided for a seasonally stronger 4Q, mainly due to stronger petroleum tanker freight rates ahead of winter months in the northern hemisphere. Chemical freight rates are unlikely to recover significantly in the short term due to slowdown in manufacturing activities worldwide, particularly China. With the continued lending curb on the shipping sector by European Banks & consolidation in the global shipping sector, there’s a strong likelihood that a sustainable recovery can come about. We believe this to be a good time to position for the recovery, the play backed by the steep decline of MISC’s share price ytd, worst in financial performance seen to be over & the superior solvency strength of major shareholder Petronas – Trading Buy, TP of RM4.80 ( 1x P/Bk).(AK)

WCT-WB (9679WB)

11/1/2013

RM0.435

ACCUMULATE

RM1.00

Contract flows has been very strong with the 2012 sum at RM1.9b, compared to the meager RM187m the year prior. Group’s OB stands at RM3.2b, with 55% located in the Middle East (Qatar & Oman). It’s active tender book @ RM3.5b. Besides these, WCT also has a strong chance to secure the RM3b race course project in Iskandar Malaysia ( Peter Lim, Johor royal family & Khazanah’s project ) as Co has built 3 of the designer’s other F1 race tracks. On its Property division, management has maintained its FY12 sales target of RM700m (estimated YTD sales to Nov @ RM600m). Management acknowledges the potential steep net gearing rise given its land-banking activities (OUG land, Kemayan Mall in JB & Medini) & guides to keep it below 1x. The share price has consolidated cRM2.40 level for the past 2 months, implying a FY13 PE of 10.3x (below its long term forward mean of 14x). We expect share price to recover once election risk dissipates, TP RM3.00 ( PE 13x FY13) – Accumulate WCT-WB ( trading at a 5.2% disc - exercise price RM1.85, ratio 1:1, gearing 5.45, mat date 22/04/2013), which offers a cheaper entry to WCT.(AK)

Calls for  JAN WEEK 1/WEEK 2

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

MBMR (5983)

4/1/2013

RM3.37

Accumulate

RM4.00

RM3.30

-2.0%

PERDANA (7108)

4/1/2013

RM1.13

Trading BUY

RM1.30

RM1.21

+6.7%

RHBCAP(1066)

7/1/2013

RM7.77

BUY

RM8.40

RM7.83

+0.8%

TIMECOM (5031)

7/1/2013

RM3.96

BUY

RM4.32

RM4.10

+3.5%

PENERGY (5133)

8/1/2013

RM1.60

ACCUMULATE

RM2.00

RM1.59

-0.6%

SUNWAY (5211)

8/1/2013

RM2.43

BUY

RM3.00

RM2.42

-0.3%

UOADEV (5200)

9/1/2013

RM1.77

BUY

RM2.70

RM1.80

+1.7%

MUDAJYA (5085)

9/1/2013

RM2.69

BUY

RM3.64

RM2.74

+2.1%

DIALOG (7277)

10/1/2013

RM2.43

ACCUMULATE

RM2.90

RM2.40

-1.2%

SCOMI (7158

10/1/2013

RM0.365

Trading BUY

RM0.41

RM0.360

-1.5%