Morning Call 7 AUGUST 2012
Flows:
Buys: MayBank, Digi, Sime
Sells: Gamuda, GenM, Axiata, AmBank
Technical Stock Alert:
1) CYPARK (RM1.75): Share was sold down 3% yesterday,
completing the 61.8% retracement from its recent peak of RM2 and forming a head
and shoulder pattern. It is currently at the neckline support of RM1.75 and
fundamentally is also at the tipping point, transforming itself from a landfill
contractor to a Renewable Energy (RE) developer. It received a major boost in
Dec 2011 when the Malaysia legislated it's RE policy, which guarantees fixed
tariffs for solar & biogas/biomass. Cypark is on track to have a RE
portfolio of 33MW solar & 27MW biogas/biomass by 2013. Catalyst will
include higher RE electricity sale, signing of it's 25-year waste management
concession agreement in Negeri Sembilan (20MW) & potential to export it's RE
competencies to Myanmar by 2014. Trading at about 6x FY13 PE & yield in excess of 5%, Trading
Buy. (AK/LJN)
2) MISC(RM4.34) -retraced 50% of its recent rally, after
having bottomed at 3.86 before rebounding to high of 4.87. The current low
volume versus the huge volume when the stock rallied further confirms that the
recent retreat is a correction of the new uptrend. The negative news have been
fully discounted with losses from the termination of the container business
fully provided for and possibly raising more than expected from the disposal of
the container vessels. The asset values of tankers and its market may also have
bottomed out too with well-followed tankers investors, like John Frederiksen of
Frontline Ltd and Turkish billionaire Mehmet Karamet, making their moves in the
market, and especially with the lack of available financing, there will be
minimal new builds. Other positives are: 1) bunker fuel cost has dropped
>20% over the last 6 months; 2) MISC's LNG arm alone is valued at 5.00/share
and is looking to add 9 new LNG vessels, all probably backed by 20 years
charter with Petronas starting from 2015; 3) MISC is still trading below book
of 4.73/share. This current retracement provides a second chance for investors
to buy into the stock.
(PT)
