MORNING CALL 14
AUGUST 2012
FLOWS;
BUYS: Benalac, Coastal, CIMB
SELLS: Genting, Dialog, Mulpha
Technical Stock Alert;
PERISAI (RM0.935) - We reaffirm our BUY call on Perisai dated, 11 June @ RM0.865 as its price has managed to break through its initial resistance levels of RM0.92 and looks headed to retest this year's high of RM1.04. The increased bullish outlook for the company could come on the back of another M&A for oil and gas assets as it transforms itself into a serious player. 2Q results are due out on the 15th AUG.
Stock Idea - Trading Sell DIGI
Digi(4.79) - has outperformed the market significantly, with gains of 27% ytd versus the KLCI of 7%, and has returned 247% vs the KLCI 105% since the low of the credit crisis in 2008. Digi is a trading sell at current levels due to the followings:
- Based on a sample of 6 sililar major telcos in M'sia,
S'pore & Indon by B'berg, Digi is the most expensive in PER valuation but
only pays the 4th highest div yield.
- Maxis, the market leader, faced by falling revenue from
voice market share, has aggressively attacked the prepaid migrant market with a
sharp cut in IDD rates. Digi had earlier brushed off this threat but
subsequently responded with a cut in IDD rates of up to 77%. This will reduced
their bottom line significantly as the IDD segment contributes 20% of its
revenue and it is very tough to increase market share with the other telcos
also looking to increase market share or at the minimum guarding their share
jealously.
- Global asset allocations - recently there has been a
shift in allocations from the defensive crowded sectors to the severely
underweighted cyclical sectors in view of the increasingly likelihood of
central banks' intervention.
- Digi is currently trading at 12% above its SMA100.
Historically, each time the divergence approaches 13%, the stock will correct sharply
and retrace back to the mean. RSI overbought on both the daily & weekly
basis at 83% & 84% respectively. In addition the weekly MACD has a
potential negative divergence with the price.
- Other M'sian telcos like Axiata & Maxis have
corrected with potential tops in place.
