Morning Call | 30 Nov 2012

FLOWS

Friday, 30 Nov 2012

BUY

UEMLAND, SIME, DIGI

SELL

MAS, GENTING, MAYBANK, TM

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

KPJ (5878)

30/11/2012

RM5.80

BUY on weakness

RM6.20

KPJ Healthcare RM5.80: the share price recently fell to the RM5.80 level after having consolidated at cRM6 - 6.05 for the past 2 months. KPJ has reaffirmed its strategy to grow organically over the next few years, while other players were embarking on more aggressive M&A approaches. Beyond 2015, group will be looking to expand presence further into Sabah & Sarawak. It also recently announced acquisition of a 23.4% stake in Vejthani, which currently owns & operates a 500-bed hospital in Bangkok, Thailand. The acquisition marks KPJ’s entry into the Thai market as well as helping it to mitigate concentration risk in its existing Malaysian & Indonesian markets. Despite an annual capex of RM200-250m for its expansion programme, we expect KPJ to continue generating positive cash flow of about RM50-100m a year. Trading at PER of 21x & 18x for FY13 & FY14, we continue to like KPJ for its continuous expansion programme & plan to expand regionally ( EPS growth c 15% FY13/14), continued growth of medical travelers & undemanding valuation in comparison to its peer IHH healthcare ( PER of 35x & 27X for FY13/14)- BOW. (AK)

LIONIND (4235)

30/11/2012

RM0.91

BUY

RM1.15

The share price has underperformed, falling some 30% over the last 5 months as it’s steel division continued to face challenges in the form of margin pressure due to lower global steel prices. This was despite group having good demand for its steel products in the local market backed by the ETP projects. We believe the negatives are already reflected in the price. Going forward, post election, we expect the steel business to fare better from demand spillover from the up-tick in local construction activities. Besides this, group which is currently invested in a non-core high risk 29% stake in a multi-billion ringgit blast furnace project, may be finally freed of it with the entrance of a foreign party into the blast furnace project. We see its current P/Bk of 0.22x  unjustified ( historical P/Bk of 0.4X) & that it should trade closer to the historical mean. The strategic proximity of its steel mill in the Klang Valley & Iskandar region is another positive BUY. (AK)

Calls for NOV Week 3 / Week 4

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

WASEONG (5142)

23/11/2012

RM1.80

Accumulate

RM2.00

RM1.73

-4.0%

MBSB (1171)

23/11/2012

RM2.34

Trading BUY

RM2.80

RM2.27

-3.0%

WCT (9679)

26/11/2012

RM2.72

Accumulate

RM2.96

RM2.76

+1.4%

AIRPORT (5014)

26/11/2012

RM5.48

Trading BUY

RM5.70

RM5.34

-2.6%

GLOMAC(5020)

27/11/2012

RM0.815

BUY on weakness

RM1.00

RM0.81

+0.5%

BENALEC (5190)

27/11/2012

RM1.29

BUY on weakness

RM1.60

RM1.29

0.00%

SUNREIT (5167)

28/11/2012

RM1.46

Accumulate

RM1.60

RM1.47

+0.6%

PADINI (7052)

28/11/2012

RM1.85

SELL

RM1.60

RM1.76

-5.1%

SPSETIA (8664)

29/11/2012

RM3.05

Accumulate

RM3.40

RM3.13

+2.6%

KULIM (2003)

29/11/2012

RM4.28

BUY

RM4.70

RM4.36

+1.8%