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FLOWS
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Friday, 18 January, 2013
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BUY
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DIGI,
KNM, TENAGA
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SELL
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CIMB,
AMMB, DRBHICOM
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STOCK
ALERT
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STOCK NAME
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DATE
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PRICE
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BUY/SELL
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TARGET PRICE
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KNM (7164)
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18/1/2013
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RM0.525
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Trading BUY
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RM0.66
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The
group has recorded positive earnings for the past 4 quarters, after
inconsistent performances prior. OB stands at RM4.7b ( RM2.1b of which is the
Peterborough project & RM0.7b the Orizon Wte project - both of which have
yet to see further development ). The Peterborough project has yet to secure
debt financing, but we understand the financial close could be achieved by
1Q2013. Although OB depletion is a concern, KNM reassured the reason is
because it is more selective in terms of taking on new projects now, opting
for jobs with gross profit margins in excess of 15% only. The tender book is
higher now at RM19b. On the Borsig listing on the SGX that would unlock value
for KNM, management has targeted 3Q2013. Co is trading at P/Bk of 0.38x &
PE 8.9x FY13. Due to the improved earnings of its core business, we believe the
downside risk to share price is limited, while re-rating catalysts arise from
the takeoff of the Peterborough projects, eventual listing of Borsig &
improved OB replenishment when RAPID & Brazil projects come in. (AK)
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SENDAI (5205)
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18/1/2013
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RM1.27
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ACCUMULATE
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RM1.87
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Share
price has been on the slide, down c21% since July 2012. Co just announced its
first job in 2013, securing a structural steel works job for the Abu Dhabi
International Airport worth RM325m. This gave another strong evidence of
Sendai’s firm presence in the Middle East construction sector. With this win,
OB has been boosted to RM1.86b. Moving forward, we also expect group’s
investment in Technic ( 13.9%) to bear fruit in the medium term, as the
O&G sector could complement its steel fabrication business ( can leverage
on Technic’s established track record).Trading at PE 7.6x FY13 ( compared to
construction sector’s forward PE 8-13x), we believe it should trade closer to
11x, given that it’s a good proxy to the infrastructure boom in Middle East
(esp Qatar, host of the 2022 FIFA World Cup), proxy to the Klang Valley MRT
projects & strong reputation as a preferred structural steel specialist
for international contractors. (AK)
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Calls
for JAN WEEK 2/WEEK 3
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STOCK
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Initiation Dates
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Initiation price
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BUY/SELL
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TARGET PRICE
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LAST PRICE
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% Change since Initiated
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MISC (3816)
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11/1/2013
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RM4.15
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Trading BUY
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RM4.80
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RM4.26
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+2.1%
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WCT-WB (9679WB)
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11/1/2013
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RM0.435
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ACCUMULATE
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RM1.00
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RM0.43
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-1.2%
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YTLPOWR (6742)
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14/1/2013
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RM1.60
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ACCUMULATE
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RM1.80
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RM1.63
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+1.6%
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AIRPORT (5014)
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14/1/2013
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RM5.62
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BUY
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RM6.34
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RM5.50
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-2.1%
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HLIND (3301)
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15/1/2013
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RM4.53
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ACCUMULATE
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RM5.20
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RM4.49
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-0.6%
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BSTEAD (2771)
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15/1/2013
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RM4.95
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ACCUMULATE
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RM5.50
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RM4.93
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-0.6%
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COASTAL (5071)
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16/1/2013
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RM2.03
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BUY
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RM2.40
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RM2.08
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+2.5%
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SPSETIA (2771)
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16/1/2013
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RM3.20
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BUY
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RM3.70
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RM3.21
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-0.3%
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ARMADA (5210)
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17/1/2013
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RM3.81
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ACCUMULATE
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RM4.12
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RM3.82
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+0.3%
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MALTON (6181)
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17/1/2013
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RM0.535
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Trading BUY
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RM0.62
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RM0.54
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+1.0%
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Friday, January 18, 2013
Morning Call | 18 Jan 2013
