Thursday, October 9, 2014

Morning Call | 8 October 2014

FLOWS
Wednesday, 8 October, 2014
BUY
SKPETRO, TM, TENAGA
SELL
ASTRO, GENM, SIME
STOCK ALERT
STOCK NAME
DATE
PRICE
BUY/SELL
TARGET PRICE
MRCB(1651)
8/10/2014
RM1.59
ACCUMULATE
RM2.00
Group’s new management (Gapurna & MRCB) has proven to be effective as it has been successful in realizing its transformation plans and getting back on its growth track. YTD, the group has resolved the PJ Sentral Garden City tussle, injection of Platinum Sentral into Qcap is on track and more disposal of MRCB’s prime office (Shell Tower & Ascott Residence) into the Trust to follow imminently in hopes to degear the group’s balance sheet further. Group has also announced its role as master developer of the 26ha RRI land in SG Buloh which is estimated to have a RM8bil of GDV (exp to start work in 1Q2015). Group’s replenishment of orderbook shouldn’t be a concern as it currently has an outstanding E&C order book of around RM1.1bn and unbilled property sales of RM1.8bn which will keep them busy for at least the next 2 years. Although the valuations might be hefty, the group is asset rich and its pipeline of tenders and launches are expected to start yielding as soon as FY15. Share price fell from its high of RM1.79 and looks to have found support at the 38.2% retracement support of RM1.59. Group is trading at 30-40% to RNAV of analysts’ SOP. Accumulate on weakness. TP of RM2.00 which is 20% discount to RNAV before factoring the MX-1 (RRI land) job flows as catalyst.
(RL)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
HARTA(5168)  
8/10/2014
RM7.02
TRIM
-
HARTALEGA (RM7.02) – Share price continue to outperform the broad market gaining 26% since the end of May 15’ despite a flattish revenue and lower net profit yoy due to an increase in electricity and natural gas tariffs as well as maintenance costs. Group was also unsuccessful in passing on the additional cost to consumers given the wide range of competitors out there incurring a drop in margins. Group’s margin will most likely see a strain in terms of operation expenses following more hiring of workers of ahead of the NGC project which will commission end of 2014. Valuations appear expensive at 22x for FY15, 18x for FY16 compared to peers. Technical charts are currently overbought with RSI crossing 60%, MACD has also just turned down. We advocate a Trim on stock and switch to KOSSAN for a better growth exposure or SUPERMX on undemanding valuations.
(RL)
 
 
Calls for SEPT WEEK 4 / OCT WEEK 1 2014
STOCK
Initiation Dates
Initiation price
BUY/SELL
TARGET PRICE
LAST PRICE
% Change since Initiated
ORIENT (4006)
30/9/2014
RM7.79
BUY
RM9.00
RM7.64
-2.0%
TENAGA (5347) 
30/9/2014
RM12.28
ACCUMULATE
RM13.50
RM12.58
+2.4%
IJM (3336)
1/10/2014
RM6.47
BUY
RM7.20
RM6.47
-0.0%
UNISEM(5005) 
1/10/2014
RM1.63
Trading BUY
RM1.80
RM1.60
-1.9%
WELLCALL (7231)
2/10/2014
RM1.63
ACCUMULATE
RM1.83
RM1.60
-1.9%
MBMR (5983) 
2/10/2014
RM2.85
Trading BUY
RM3.50
RM2.82
+1.1%
ELSOFT (0090)
3/10/2014
RM1.68
Trading SELL
-
RM1.62
+3.6%
FABER (1368) 
3/10/2014
RM3.21
ACCUMULATE
RM3.50
RM3.24
+0.9%
MASTEEL (5098)
7/10/2014
RM1.03
ACCUMULATE
RM1.21
RM1.02
+1.0
MBSB (1171) 
7/10/2014
RM2.42
TRIM
-
RM2.42
0.0%
 
Given that our call initiated on the 22/9 to buy TMCLIFE (0101) has achieved our target of RM0.60,
we advocate a take profit on the stock.
 
 
Performance
Positive
 
Negative
 
Neutral