MORNING CALL 12 March 2012
FLOWS;
BUYS: Maybank, PChem, Axiata
SELLS: BJtoto, MSC, DRBHcm
Technical Stock Alert;
TENAGA (RM6.39) - Breaking out of recent triple top of RM6.4). RSI of 62.7 unexcessive with immediate upside of RM6.80. Potential catalyst could come from further compensation from Petronas for the recent shortage of gas supply and/or the ongoing renegotiation of 1st Generation IPPs PPAs to help lower TNB's cost. Tenaga CS (RM0.115) offers a higher beta play as it is convertible at 5 CS: 1 share + RM6.00, i.e. premium of 1.7% and gearing 11.7x giving a potential upside target of RM0.14 or 22%. BUY
MBSB (RM2.34) - Positioned well to attain a new high on the back of the governments recent announcement of adjusting civil servants salaries higher. Price has been consolidating around the RM2.40 levels with a breach above the last high of RM2.49 likely see an upside of RM2.70.
Stock of the Day
UZMA (RM1.98)
-Price on the brink of breaking above the RM2.00 levels after the recent set of good results and big contract wins from Petronas.
-It won a RM350m contract from Petronas Carigali to provide oil well testing equipment for 5 years beginning April 2012. This bring current order book to RM1bn with outstanding tender book of RM1.7bn.
-Its specialty in enhancement of oil recovery (EOR) and improved oil recovery (IOR) is especially relevant to Petronas now after the shutdown of Petronas Sudan oilfields which were pumping 134k barrels/day.
-Trading at historical PE of 13x falling to single digit this FY, the stock is likely to gain interest and rerate once liquidity improves. BUY with an immediate target of RM2.20.