MORNING CALL 23 AUGUST 2012
FLOWS;
BUYS: PetGas,
CIMB, UEMLand
SELLS: UMW, TNB,
GentM
Technical Stock Alert;
TWS (RM8.08) - Price has been on a steep decline since
touching a high of RM9.42 in June. The sell off likely linked to a downgrade in
the counter after its 1Q results which showed a sharp 68% decline in net
earnings to RM41.5m. The dip is mainly attributable to margin compression in
its rice segment, its main contributor amongst the various commodities
including palm oil, sugar and rubber it is involved in. The margin compression
was caused by higher average cost of imported rice and higher operating
expense. Prospects are expected to improve with higher global paddy production
as well as the entrance of India as a major exporter. This could be reflected
in its next set of numbers due out within a week. RSI is at extreme oversold
levels of 19 with an immediate rebound target of RM8.50 and RM8.80. Trading
BUY. (Key risk of further contraction in earnings, cut loss support of RM7.80)
MHB(4.78) - stock bottomed at 4.58 in May 2012 before
rebounding sharply to 5.65 due to possibility of award of a few sizable
contracts and supported by a few brokers' upgrade. Currently at 4.78, it has
retraced 81% of the rebound and is in an oversold position with RSI at 25%, MHB
is at an attractive level to start accumulation again. The Q2 results reported
a continued dropped in PBT despite a sharp improvement in QoQ revenue of 45%.
This was due to the contributions from projects that came with the newly
acquired yard (previously owned by Sime). Co was prudent in that while revenue
was recognised, minimal profit was taken into the books as the jobs were at
their early stages. Hence, H2 2012 would likely see better profit recognition
from these jobs and provide for a basis for brokers' further upgrade. Other
major jobs, like Tapis EOR project and Telok gas topsides & structures,
would also contribute to a better H2 performance. In addition, there will be
positive newsflows from the success of their tender for jobs in Turkmenistan
and the Malikai project. These are jobs where MHB is strongly tipped to be the
front runner. Accum
(PT)