Morning Call | 6 Dec 2012

FLOWS

Thursday, 6 December, 2012

BUY

DIALOG, GAMUDA, YTL

SELL

AXIATA, SIME, TENAGA

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

PARKSON (5657)

6/12/2012

RM4.60

BUY

RM4.97

Stock corrected sharply from 5.30 to 4.50 after Q1 results missed expectations and at current prices the negative news have been discounted. Analysts have also brought down their estimates and there would be room for surprises on the upside especially with the Chinese government trying to stimulate domestic consumption as their No. 1 & 2 export markets of Europe and US are on austerity mode for 2013. They have announced a USD158bn infrastructure package 2 months ago and the new leaders have yesterday pledged to promote urbanization as one of their growth drivers. No wonder even a top US hedge fund manager, Jim Chanos, who is renowned for its short-selling is advocating a buy on companies that have operations in China or export to China for his 2013 strategy. Parkson falls under this category with China contributing circa 80% of their earnings. It is also in its seasonally 2 better calendar quarters of Q4 & Q1 when earnings surge due to the festive seasons. Parkson currently trades at PER of 13.2x and 11.4x for FY6/13 and FY6/14 respectively. Buy (PT)

ARMADA (5210)

6/12/2012

RM3.77

BUY

RM4.08

Armada(3.77) – an opportunity to buy as it trades at the lower end of its trading range after the sell down on November 30th without any change in fundamentals as the selling was due to MSCI rebalancing by foreign index funds. In fact, recent Q3 results have shown QoQ and YoY improvements from the 2 new FPSO contracts secured in the 2nd half of 2011 and the sustained improvement in average OSV fleet utilization & rates. With Armada starting to operate its first Indian FPSO contract this month, its performance should continue to improve going into the new financial year, and for the next 3 years the long-term FPSO contracts is expected to support a >20% eps CAGR for the co. In addition the tender of FPSO contracts that has been delayed this year will be tendered out next year as O&G exploration activities continued to be brisk in Brazil, West Africa, India, SEA and Malaysia. This is would be positive news flows for Armada as it is amongst the top 5 FPSO players in the world. Buy (PT)

Calls for Nov Week 4 / Dec Week 1

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

SPSETIA (8664)

29/11/2012

RM3.05

Accumulate

RM3.40

RM3.03

+1.0%

KULIM (2003)

29/11/2012

RM4.28

BUY

RM4.70

RM4.61

+7.7%

KPJ (5878)

30/11/2012

RM5.80

BUY on weakness

RM6.20

RM5.89

+1.6%

LIONIND (4235)

30/11/2012

RM0.91

BUY

RM1.15

RM0.930

+2.2%

MISC (3186)

03/12/2012

RM4.02

Mid Term BUY

RM4.48

RM3.99

-0.7%

OSK (5053)

03/12/2012

RM1.39

Accumulate

RM1.71

RM1.45

+4.3%

GADANG (9261)

04/12/2012

RM0.60

Trading BUY

RM0.70

RM0.600

0.00%

PCHEM (5183)

04/12/2012

RM5.66

BUY

RM6.20

RM5.74

+1.2%

CARLSBERG (2836)

06/12/2012

RM12.74

Trading BUY

RM13.60

RM12.94

+1.5%

SIME (4197)

06/12/2012

RM8.97

BUY

RM9.50

RM5.73

+0.2%