Morning Call | 10 Jan 2013

FLOWS

Thursday, 10 January, 2013

BUY

TM, MAYBANK, MUDAJYA

SELL

MAS, GENTING, GAMUDA

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

DIALOG (7277)

10/1/2013

RM2.43

ACCUMULATE

RM2.90

Dialog(2.43) - Dialog has been consolidating in a huge ascending triangle pattern since May 2011 with an attractive break-out upside of 0.40 – 0.90 from the 2.50 resistance line of the triangle. The last 2 months have seen the trading range band narrowing to 2.40 – 2.45 which signals strong accumulation. Fundamentals have also seen improvements with consecutive 2 quarters of improving profits as Penggerang CTF project starts to contribute from its huge EPCC works. The Phase 1 is expected to be completed in 2H 2013, hence there will be a pick-up in progress billings and recognition of profits. In addition, there is potential ahead from their Balai marginal fields RSC and the JV with Halliburton on the Bayan field redevelopment for enhanced oil recoveries. Dialog is expected to benefit from the EPCC and fabrication jobs from these 2 projects. Accumulate.

SCOMI (7158)

10/1/2013

RM0.365

Trading BUY

RM0.41

Scomi(0.365) – the stock had a long correction dropping from 0.82 in 2009 before it bottomed in Q3 2012 hitting a low of 0.205. It subsequently rebounded strongly on 9 impulse waves to 0.445, substantiated by very big volume. Currently it is pulling back on relatively thinner volume and we would recommend using this opportunity to establish a trading position in Scomi. Recently it was reported that a private equity firm, Tael Partners, has disclosed that they own 9.8% of Scomi after conversion of their loan stocks. This and other conversions have also diluted the stake of the camp opposing the 110m convertible loan deal with IJM. The EGM for the approval of the IJM deal is expected to be in the later part of this month. With the entry of Tael Partners as a major shareholder of Scomi, it is likely that the EGM resolution will be carried through as generally the minorities are supportive of the entry of IJM as IJM will bring in expertise on project management for Scomi’s monorail projects. Recently Scomi has also shown significant traction in securing contracts from the O&G sector in addition to their potential in the monorail area. The small to medium caps O&G stocks have also done very well recently and Scomi should benefit as well. In addition, there is also the possible tussle of control within the current 2 camps. Incidentally, the current entry price of 0.365 is the also the conversion price of to-be-issued convertible loan stock to IJM. Trading buy

Calls for  JAN WEEK 1

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

GENTING (3182)

3/1/2013

RM9.29

BUY

RM9.82

RM9.80

+5.3%

IJM (3336)

3/1/2013

RM5.05

Trading BUY

RM5.40

RM5.16

+2.2%

MBMR (5983)

4/1/2013

RM3.37

Accumulate

RM4.00

RM3.30

-2.0%

PERDANA (7108)

4/1/2013

RM1.13

Trading BUY

RM1.30

RM1.19

+5.6%

RHBCAP(1066)

7/1/2013

RM7.77

BUY

RM8.40

RM7.89

+1.5%

TIMECOM (5031)

7/1/2013

RM3.96

BUY

RM4.32

RM4.01

+1.1%

PENERGY (5133)

8/1/2013

RM1.60

ACCUMULATE

RM2.00

RM1.59

-0.6%

SUNWAY (5211)

8/1/2013

RM2.43

BUY

RM3.00

RM2.43

+0.0%

UOADEV (5200)

8/1/2013

RM1.77

BUY

RM2.70

RM1.78

+0.6%

MUDAJYA (5085)

8/1/2013

RM2.69

BUY

RM3.64

RM2.68

+0.3%