Morning Call | 14 March 2012

Morning Call                                                                                                            14/3/2012

FLOWS:

BUYS: TNB, MRCB, Dialog

SELLS: PChem, CIMB, TM

Technical Stock Alert:

MISC (RM5.10) - Stk has lost nearly 45% of its mkt value since peaking at RM9 in 2007 bogged down by several industry wide issues cumulating in co recording its 1st ever loss in recent 4Q results dragged down by its tanker and chemical divisions as they struggle with lower rates and higher bunker charges. Recent selldown is exacerbated by its recent removal from FTSE Asia Pacific ex Japan index and Moody's downgrade on its debt ratings with a -ve outlook. However, track for a possible technical bounce nearer RM5 as RSI has reached 20-indicating stk is severely oversold (as stk has been on downtrend since Feb) and its exiting of loss making liner biz may signal the start of a turnaround backed by its LNG biz.

KURASIA (RM0.57): share price looks well supported at current levels after peaking at 65c. MACD closing gap and looks to be cutting upwards as stk has been consolidating since mid Feb. Company has submitted an application on the 19th Dec 2011 to BNM for the possible disposal of its 100% equity in Kurnia Insurans (M) Berhad (KIMB) to AmG Insurance Berhad. Assuming KIMB is valued at 2XBV, Kurasia could be worth from 75sen/share. Buy.
                                                                                                                                                                                                                                                             Top 4 Banks performance comparison:

Name                       30-Dec-11 LAST_PRICE YTD Change %

RHB CAPITAL BHD                           7.48       7.79        4.14%

AMMB HOLDINGS BHD                    5.95       6.17        3.70%

MALAYAN BANKING BHD                 8.58       8.69        1.28%

CIMB GROUP HOLDINGS BHD          7.34       7.28       -0.80%

             versus FBMKLCI +2% ytd

RHBCap (RM7.79): From figure above, this stock is the obvious outperformer (recent hi RM8) amongst the top 4 banks as well as KLCI. Its RSI has climbed to 61 while MACD has started to show signs of cutting downwards. In light of recent tightening of rulings by BNM on property & auto loans, industry could face slower loan growth. In recent results, bottomline was affected by cost escalation hence affecting margins. Another key concern is the impending costly M&A with OSK. We see limited upside and advise to lock in profits in view of challenging prospects going fwd in banking industry.