Morning Call | 17 June 2013

FLOWS

Monday, 17 June 2013

BUY

AMBANK, UEMLAND, KLK

SELL

JCY, MAYBANK, MRCB

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

GADANG

17/6/2013

RM0.81

BUY

RM1.04

The share price has retraced c16% in the recent pull back after a strong ascend from early May (+60%). Judging from contracts win of late, Gadang is increasingly being seen as an emerging civil engineering giant. OB is healthy at RM1.4b, which should support earnings visibility until 2016. We see group securing cRM500 jobs every year, given the robust construction sector, Co's strong track record & strong B/S (net cash/share of 25s). The improving profitability of the group is expected to continue after FY13. Besides construction, we also like Gadang's efforts to diversify into property, utilities & plantation. Currently trading at forward PE of 6.3x, a 20% discount to its small cap construction peer's average PE of 8x for FY14. We deem this discount unwarranted - Buy (TP RM1.04, PE8x FY05/14). (AK)

DELEUM(5132)

17/6/2013

RM3.06

ACCUMULATE

RM3.50

The recent pullback in price from its recent high of RM3.85 (c20%) should appeal to investors. For a small O&G service provider, its outstanding OB of RM1.4b (largely made up of long term service contracts in the Power & Machinery and Oilfield Services segments) should last the group into 2018. Gas turbine servicing & retrofit projects will provide core sustainable income going forward (60-70%). Recurring income is also secured under the OFS segment, via slick line umbrella contracts for Sabah & Sarawak. Riding on the O&G uptrend, we expect to see continued net profit growth into FY14 & 15. Catalyst ahead include additional Pan Malaysian contract in OFS, ad-hoc retrofit works, turnaround in its Maintenance, repair & overhaul ( MRO) segment. Trading at forward PE of 8.8x FY14, it’s still at a discount to peers ( UZMA 11x, closest peer) & industry PER. Healthy dividend payout of c50% pa could provide yields of c 5.5% for FY13. Potential value play in O&G – Accumulate (TP RM3.50 at FY14 10x PE). (AK)

Calls for JUNE Week 1 &2

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

PMETAL(8869)

10/6/2013

RM2.57

ACCUMULATE

RM3.00

RM2.50

-2.8%

MUHIBAH(5703)

10/6/2013

RM1.43

BUY

RM2.09

RM1.37

-4.2%

PARKSON(5657)

11/6/2013

RM3.80

ACCUMULATE

RM4.45

RM3.90

+2.6%

QL(7084)

11/6/2013

RM3.29

Trading BUY

RM3.59

RM3.20

-2.7%

TM(4863)

12/6/2013

RM5.45

ACCUMULATE

RM6.00

RM5.46

-0.1%

DSONIC(5216)

12/6/2013

RM3.16

SELL into Strength

RM2.50

RM2.99

-5.6%

GCB(5102)

13/6/2013

RM1.75

BUY

RM2.40

RM1.74

-0.6%

NOTION(0083)

13/6/2013

RM0.76

BUY

RM0.89

RM0.74

-2.7%

MAYBANK(1155)

14/6/2013

RM10.04

BUY

RM10.58

RM10.18

+1.3%

MRCB(1651)

14/6/2013

RM1.55

BUY

RM1.80

RM1.59

+2.6%