Morning Call | 4 Jan 2013

FLOWS

Friday, 4 January, 2013

BUY

CIMB, IOIC, DIGI

SELL

DIALOG, JCY, SIME

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

MBMR (5983)

4/1/2013

RM3.37

Accumulate

RM4.00

MBM Resources share price recovered 3.4% yesterday, bringing the price back closer to RM3.40 level, where it earlier consolidated for about 2 months. We remain positive on MBM’s growth prospects. From its 3Q results, the group vehicle sales outperformed the industry, growing 14.4% yoy for the 9 months (TIV +2%). MBM continues to expand its presence in automotive retailing. It benefited from the shift in marketing focus to the Myvi from Viva (less affected by the tighter financing rules). Federal Auto also enjoyed a strong up-tick in sales volume. Earnings growth going forward will also come from its maturing 3S automotive distribution network & rising volumes at Hirotako. While it’s 78% owned Oriental Metal Industries (OMI) continues to be a drag, MBM will be out of this when its 1m unit alloy wheel manufacturing plant is fully operational in mid-2013 ( on schedule). As for its JV with Hino, the construction of the plant will commence Feb 2013 & scheduled for completion end 2013, paving the way for better margins from the manufacturing the full range of Hino’s CVs for the domestic market. At current valuation of PER 7.8x FY13 & P/Bk 1x, MBM remains the most inexpensive amongst its peers, given its growth prospects - Accumulate

PERDANA (7108)

4/1/2013

RM1.13

Trading BUY

RM1.30

Perdana still has one of the most upside to a recovery in OSV demand in the O&G sector & also offers investors exposure to Dayang’s Pan Malaysian tenders. Management has indicated that on-going tenders now are looking at securing OSVs for longer term (3-4 years). Currently, only about 30% of Co’s vessels are on LT charters. It envisage that 70% of its vessels would be LT charters in the next 1-2 years (higher contract value & better charter rates). Co is also negotiating to sell its old vessels, which could result in small disposal gains but more importantly, lower operating costs. The Pan Malaysian contracts are reported to be worth RM10b for 5 years. Should Dayang successfully bid for the job, Perdana could also have its workboats & barges contracted till 2018. Current valuations of 9.3x FY14 implies further upside. Valuations will also be supported by the value of its fleet (P/Bk 1.2x) & further contract wins. However, share price has added some 15% over the last month – BOW

Calls for DEC WEEK 4/ JAN WEEK 1

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

GCB (5102)

20/12/2012

RM1.61

BUY

RM1.90

RM1.69

+4.8%

NAIM (5073)

20/12/2012

RM1.79

BUY

RM2.30

RM1.82

+1.6%

MAHSING (8583)

21/12/2012

RM2.16

Accumulate

RM2.50

RM2.07

-4.38%

QL (7084)

21/12/2012

RM3.07

BUY on Weakness

RM3.60

RM3.15

+3.6%

FGV (5222)

27/12/2012

RM4.67

SELL into Strength

RM4.30

RM4.61

-1.5%

AIRASIA (5099)

27/12/2012

RM2.53

Trading BUY

RM3.40

RM2.89

+12.5%

STAR (6084)

2/1/2013

RM2.58

BUY

RM3.00

RM2.74

+6.3%

BENALEC (5190)

2/1/2013

RM1.39

BUY

RM1.60

RM1.39

0.00%

GENTING (3182)

3/1/2013

RM9.29

BUY

RM9.82

RM9.50

+3.3%

IJM (3336)

3/1/2013

RM5.05

Trading BUY

RM5.40

RM5.10

+1.0%