Morning Calls | 23 August 2013

FLOWS

Thursday, 23 August, 2013

BUY

CIMB, GAMUDA, MAYBANK

SELL

SKPETRO, DAYANG, MUHIBBAH, UEMS

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

GAB (3255)

22/8/2013

RM18.00

SELL

RM16.00

Share price has risen 4 folds since 2009 despite only seeing net profit increase of 53% during this period. FY13 net profit only posted a modest 5% growth with slightly disappointing dividend of 68.5sen. 4Q profit margins also saw contraction to 8%. We believe recent demand from investors for higher yielding assets as well as outflow of funds could trigger a de-rating of the stock. Risk includes 1) increase of taxes which has paused for 7years. 2) recent devaluation of MYR vs USD could impact its margins especially the premium segment 3) lack of major events 4) Heightened competition among players 5) Mean reversion of valuation. 7yr historical PE is 16x vs current 22x while dividend was 8% vs current 4.2%. Share price currently sits close to 200MA of RM17.83 and could retest RM16.00 level (19.5x JuneFY14). (TYK)

UOADEV(5200)

23/8/2013

RM2.24

ACCUMULATE

RM2.60

Share price has fallen 13% from its recent high of RM2.58. It is among the cheapest property names at 7.4xFY14PE with dividend exceeding 6%. New sales for FY13 is expected to exceed RM2bn compared to 2012 of RM1.7bn. This is supported by upcoming major launches such as Kencana Square (GDV:RM1.5bn), Kepong V (RM1.5bn) as well as Jalan Ipoh (RM2.9bn). Given its RNAV of RM3.60 we believe current valuation is undemanding. RSI has also fallen to 33%. Buy with target price RM2.60 (TYK)

Calls for  AUGUST Week 2/Week 3

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

TRC (5054)

16/8/2013

RM0.64

Trading BUY

RM0.75

RM0.59

-7.8%

TIMECOM(5031)

16/8/2013

RM4.00

BUY

-

RM3.71

-7.3%

NAIM(5073)

19/8/2013

RM3.86

Trading BUY

-

RM3.57

-7.5%

MHB (5186)

19/8/2013

RM4.07

ACCUMULATE

-

RM3.60

-11.5%

E&O(3417)

20/8/2013

RM2.19

Trading SELL

RM2.00

RM2.06

-6.0%

GAMUDA(5398)

20/8/2013

RM4.62

BUY on weakness

RM5.20

RM4.46

-3.4%

GASMSIA(5209)

21/8/2013

RM3.37

Take Profit

-

RM3.37

0.0%

DIALOG (7277)

21/8/2013

RM2.68

ACCUMULATE on weakness

-

RM2.66

-0.7%

CBIP (7076)

22/8/2013

RM2.79

BUY

RM3.60

RM2.76

-0.1%

WTK(4243)

22/8/2013

RM1.33

ACCUMULATE

1.74

RM1.33

0.00

 

We’ve added an extra feature (first column from right) to indicate our recommendation for our call.

HOLD
CONT SELL	SELL/ TAKE PROFIT
CONT BUY	STRONG BUY

 

 

 

News Bits | 23 August 2013

IDEAS OF THE DAY (SEE SEPARATE REPORTS FOR DETAILS)

l  Results Note:  BENALEC, GAB, MAGNUM, MBMR, NESTLE, PCHEM, PERISAI, PETGAS,  QL, SEB, WASEONG, WCT, YTLPOWR

l  On Our Portfolio: KIANJOO

l  On Our Technical Watch: DAIBOCHI, PADINI

NEWS HIGHLIGHTS

l  MSM M’sia 2Q profit soars 75% YoY to RM92.6m

l  icapital.biz to pay special dividend of 9.5 sen

l  Celcom targets single-digit growth in revenue yearly with launch of Escape

l  Sun Life Assurance aims to boost market position

l  DiGi keen on buying companies with low spectrum

l  AMMB to finalise insurance deal by year-end

FOREIGN NEWS HIGHLIGHTS       

l  Barrick to sell three Australian mines to Gold Fields

l  ICBC to lead China’s biggest banks in posting slower profit gain

 

ECONOMIC NEWS HIGHLIGHTS (MACRO BITS)

Malaysia

l  Malaysia Vehicle Sales Rise In July

l  Bank Negara Global Reserves At RM438.3b

 

Asia

l  China Manufacturing Activity Sees Sharp Rebound

USA

l  US Manufacturing Growth 'At Five-Month High'

l  U.S. Jobless Claims Fell To Five-Year Low Over Past Month

l  Leading Index Signals U.S. Growth To Pick Up Into 2014

l  Consumer Comfort In U.S. Declined Last Week To Two-Month Low

 

Europe

l  Eurozone Growth Hits 26-Month High, Says PMI Survey

 

Currencies

l  Dollar Follows Bond Yields Higher After Data

Commodities

l  Oil Edges Up On Strong China, Euro Zone Data

l  Gold Up After Chinese PMI Data, Downside Risk Seen.

Market Roundup | 22 August 2013

FBMKLCI   1720.37  -24.48pts  (-1.40%)   Volume  2.435b   Value RM3.443b

1) The KLCI gapped down -20pts at the opening following weaker 2Q GDP numbers and release of FOMC minutes that showed support for QE tapering. Index touched a low of 1710.17 (-34.68pts) after midday before some bargain hunting saw markets recovered to close down 25pts. Regional markets bounced off low after HSBC PMI came in better than expected. In the local market, BANKING stocks continue to see plenty of liquidity as CIMB, MAYBANK and  AMBANK lead in volume among the bluechips. Market breadth was negative with losers once again towering over gainers by 904 : 76. Futures closed 1713pts (7 pts discount).

2) Heavyweights : TENAGA -3.83% RM8.52, PBBANK-1.40% RM16.90, MAYBANK-1.30% RM9.87, MAXIS-2.08% RM7.00, IOICORP -1.88% RM5.20, AXIATA -1.05% RM6.58, GENM -2.41% RM4.05, CIMB -0.78% RM7.56, RHBCAP-5.2% RM7.30.

3) DBT : TIGER 5mil @ RM0.245 (1.295% PUC @ 6.5% premium), TECFAST 4.939mil @ RM0.10 (3.168% PUC @ 13.1% discount), AFG 2.3mil @ RM5.40 (6.9% premium)

4) Situational:-

KIMLUN -1.01% RM1.95: Kimlun announced its unit, Kimlun Sdn Bhd, had secured a contract to construct two towers of serviced apartments and ancillary buildings in Johor Bahru. The job, awarded by Wealthy Growth Sdn Bhd, a subsidiary of IOI Properties Berhad, is worth RM296.4mil, with work expected to be completed by May 2016.

5) WCT

1H June 2013   Tover +32% RM973.5m   Net +25.6% RM99.9m   EPS 9.5sen

                        In line with cons(f) RM202m

The better numbers were attributable to civil engineering and construction which recorded revenue of RM666m and op profit of RM89m due to higher contribution from the local div. Property development and investments saw revenue grow 54% to RM307m and op profit of RM62m due to higher sales recorded from property launches. Company declared an interim div of 3.5sen.

Outstanding order book of RM2.8bn and the best local proxy for exposure to Qatar World cup contracts. BOW

6) Market - Current sell off momentum could see the market test the 1700pts level with a stronger support at 1680pts.