News Bits | 27 Dec 2012

Dear Readers, 

During this festive period, will be suspending our Daily products from today and resume in the New Year. We would like to thank you for your continued support and look forward to improving your readership experience in 2013. 

Merry Christmas and a very Happy New Year.

Sincerely
The A Team,
DN, PT, LJN, AK, TYK, RL

________________________________________________________________________________

 

IDEAS OF THE DAY (SEE SEPARATE REPORTS FOR DETAILS)

l  On Our Radar: GCB

l  Technically Speaking: OLDTOWN, SPSETIA

NEWS HIGHLIGHTS

l  Silver Bird chalks up RM18m 4QFY2012 loss

l  Felda plans RM60.0b township project in Pengerang

l  TH Heavy gets stake in oil and gas deal

l  Gabungan AQRS clinches RM36m industrial property contract

l  UEM Builders' major feat in Second Penang Bridge work

l  XOX looks at possible fund-raising exercise for working capital requirements

l  Tiger Synergy awaiting response

l  Sunchirin plans privatisation

FOREIGN NEWS HIGHLIGHTS

l  Starbucks employees to send politicians message on Cliff

l  India rejects Mahindra's proposal for defense JV with Rafael

 

ECONOMIC NEWS HIGHLIGHTS (MACRO BITS)

Malaysia

l  FTA With Australia To Take Effect On Jan 1

Asia

l  Singapore November Industrial Output Recovers On Pharmaceuticals

l  Thai Exports Up 26.9% On-Year In November

l  Thai Growth Forecast Lifted To 5.7%

l  Aso Named Japan’s Next Finance Chief As Abe Primes Fiscal Pump

l  South Korea’s Manufacturer Confidence Rebounds After Election

l  North Korea’s China Trade Expanded More Than 60 % In 2011

Americas

l  US Fiscal Cliff: Treasury To Act To Delay Debt Limit

l  US Home Prices Rose In Ninth Straight Month

l  US Holiday Retail Sales Growth Weakest Since 2008

l  Chile Raised To 4th-Highest Rating At Standard & Poor’s

Currencies

l  Philippines Imposes Currency-Forward Caps To Restrain Peso Surge

l  Dollar Climbs To Highest Level vs. Yen Since 2010

Commodities

l  Oil Jumps To Nine-Week High On Us Fiscal Talks, Technicals

l  Gold Slips On U.S. Budget Woes

 

Tan Chong | Co. Visit | 24 Dec 2012

Tan Chong Meeting with Nicholas Tan (Head: Strategy & Corp Planning)   20^th Dec 2012

1) Almera

-   as at 18^th Dec, sold 11,790 units.

-      Surprisingly the higher specs RM79,800 car is selling well making up 37% of total sold. This caused some issues as TCHONG produced more cars with lower end specs.

-      Gross margins is relatively low at RM5,000 per car.

-      But there are plans to push up prices by about RM3000 after CNY.

-      Seeing some cannibalisation for Sylphy with sales falling below 100 units per month compared to closer to 200 units per month.

 

2)   New car rollouts

-      Evalia which is due to roll out in 2^nd 2013 will be a direct competitor to Toyota’s Avanza. Management is hoping for the same impact as Almera.

-      New X-trail with 3 rows seating.

-      Datsun – expected to be launched by 2014 with market segment targeted similarly to Myvi. Price will be around RM50k.

 

3)   Regionals

-      Vietnam new plant will be in full swing by April 2013. Capacity is 19,800 units.

-      Part of management’s plans is to assemble majority of its work in cheaper labour countries such as Vietnam, Cambodia and export to Malaysia for final assembly.

 

4)   Segambut land

-      Management has submitted DO but do not intend to develop at least until 2017. This would be inline with the new exhibition centre build by Naza that is expected to be completed by 2015-16. MRT first line would also be completed by 2016.

-      Plan is for a mixed development with up to 8 accesses to ease traffic congestion worries for the project.

 

5)   Targets & plans

-      Company targets to sell 56-60k cars for FY13 with 36k coming from Almera.

-      By 2014-15 management targets 30% profits from regionals.

-      CAPEX will raise to RM400mil from RM250mil this year to expand its plant capacity.

-      Showrooms will be reorganised with passenger cars separated from trucks and commercial vehicles.

 

6)   Conclusion: Buy TP: RM5.30. Currently trades at FY13PE 10x vs 5 years average of 12x. Earnings are expected to see significant gains with the roll out of Almera. FY14 is expected to see another sharp rise upon the introduction of Datsun and Evalia while TChong gains traction in Vietnam.

Morning Call | 24 Dec 2012

FLOWS

Monday, 24 December, 2012

BUY

SIME, GENTING,

SELL

MAYBANK, CIMB

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

FGV (5222)

24/12/2012

RM4.67

SELL into strength

RM4.30

FGV (RM4.67) – Stock rose to a high of RM5.50 just a few days after its IPO debut on the 5th of July before facing long 18-so weeks decline. Stock finally broke away from its lower low, lower high trend on the 21st of Dec following news of its inclusion into the FTSE Bursa KLCI index. Although group is backed by a large market cap of RM17b, FGV’s fundamentals remain weak with unexciting outlook for the next few years affected by its aging plantation profile with 50% of its palm oil trees are above the 24 year mark and is due for replanting; thus incurring more cost, with long waiting period. Technical indicators suggest that the stock is way over bought, RSI 75%, expecting selling pressure to persist due the release of the moratorium shares held by cornerstone investors which consist of 688,933,633 shares (approximately 19.8% PUC) due for release after today. Sell into Strength ahead of the year end window dressing. (RL)

AIRASIA (5099)

24/12/2012

RM2.53

Trading BUY

RM3.40

AirAsia (RM2.53) - Stock retraced further after KLCI announced the removal of Airasia from the FTSE Bursa KLCI. This takes effect today but we feel the selldown is overdone as at current depressed prices, it translates to only PER’13 of 5x. It is also supported by stochastics triggering a buy call as technical indicators are oversold with 19% RSI, MACD recovering-expecting a golden crossing to happen before year end. Recently group announced the purchase of 100 additional A320 aircraft for US$9.4bil over the next few years; in line with its target to increase fleet numbers to 510 aircrafts by 2020. We continue to like Airasia for its fundamentally solid business model, its strong balance sheet as well as its current position in the market. Looking ahead, we expect group's earnings to grow ahead of the imminent opening of klia2 in May 2013. Propose a trading buy call behind attractive cheap valuations and impressive growth story and oversold position. (RL)

Calls for DEC Week 2/ Week 3

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

HSL (6238)

13/12/2012

RM1.48

Accumulate

RM1.70

RM1.48

-0.0%

UNISEM (5005)

13/12/2012

RM0.90

Trading BUY

RM1.20

RM0.87

-3.4%

TMCLIFE (0101)

14/12/2012

RM0.33

BUY

RM0.41

RM0.370

+11.1%

BAT (4162)

14/12/2012

RM61.10

SELL

RM56.40

RM58.02

-5.3%

CYPARK (5184)

19/12/2012

RM1.54

BUY

RM2.00

RM1.59

+3.2%

DIALOG (7277)

19/12/2012

RM2.39

BUY on weakness

RM2.80

RM2.42

+1.4%

GCB (5102)

20/12/2012

RM1.61

BUY

RM1.90

RM1.60

+0.6%

NAIM (5073)

20/12/2012

RM1.79

BUY

RM2.30

RM1.78

+0.5%

MAHSING (8583)

21/12/2012

RM2.16

Accumulate

RM2.50

RM2.11

-2.3%

QL (7084)

21/12/2012

RM3.07

BUY on Weakness

RM3.60

RM3.09

+0.6%