Morning Call | 4 June 2013

FLOWS

Tuesday, 4 June, 2013

BUY

SIME, GENTING, PCHEM

SELL

KNM, MAYBANK, GAMUDA

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

SCABLE(5170)

4/6/2013

RM1.82

ACCUMULATE

RM2.20

After being below the radar for more than a year, the interest in the group has picked up again recently. Talks of it securing a number of transmission jobs in Sarawak has gained momentum, including the long delayed & lucrative 500kV backbone power line ( package worth RM1b) from Sarawak Energy Bhd. With the GE13 behind us, there’s belief that the long delayed projects, and others, will be awarded soon. We’re also upbeat on the acceleration of the state’s Rural Electricity Scheme ( RES) which is only 60% completed, with RM400m worth of jobs left to be tendered out this year. SCABLE is also eyeing a number of smaller transmission jobs with a potential total value of RM400m. OB stands at RM687m. Despite the share price run-up of almost 30% since early May, it is still trading at an attractive forward PE of c8-10x FY14&15 against solid financials ( FY13 gearing 8%, ROE 20%). With the uncertainties of political risks reduced & urgency to meet the needs of power intensive industries in the state, notable under SCORE (AK)

HSL(6238)

4/6/2013

RM1.98

BUY on weakness

RM2.20

Share price has retreated c10% from the peak RM2.18 it hit in May. We see this as an opportunity to buy into the group as earnings will continue to be buoyed by the remaining phases of the Kuching Sewerage System (KSS) project & projects under SCORE. Recent reports of the upgrading of the 2,083 km double carriageway Pan-Borneo Highway ( worth RM10b), now being put as a high priority state projects by the incumbent BN ( part of its manifesto) also bodes well for HSL, as a potential beneficiary of the mega project. Group has thus far in FY13 registered good contract wins of c RM130m & has put itself in a good position to negotiate for Phase 2 of the KSS project worth cRM800m. HSL will also be buoyed by other projects under SCORE, sustained high margins given the limited competition from other UPK state contractors and strong B/S (net cash RM188m - end March 2013). Trading at less than 10x FY14, (AK)

Calls for MAY Week 4/ JUNE Week 1

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

PRESBHD (5204)

28/5/2013

RM1.70

ACCUMULATE

RM2.30

RM1.78

+4.7%

KIMLUN(5171)

28/5/2013

RM1.91

ACCUMULATE

RM2.26

RM2.19

+14.6%

HUNZPTY(5018)

29/5/2013

RM2.35

LONG TERM BUY

RM2.80

RM2.34

-0.5%

LAFMSIA(3794)

29/5/2013

RM10.98

TRADING SELL

RM9.75

RM10.66

-3.0%

TSRCAP(5042)

30/5/2013

RM0.81

Trading BUY

RM1.00

RM0.81

0.0%

BPURI(5932)

30/5/2013

RM0.805

Trading BUY on Weakness

RM1.00

RM0.785

+2.5%

TIENWAH(7374)

31/5/2013

RM2.55

ACCUMULATE

RM3.00

RM2.58

+1.1%

FAJAR(7047)

31/5/2013

RM0.72

BUY on weakness

RM0.83

RM0.695

-3.5%

KSL(5038)

3/6/2013

RM2.27

ACCUMULATE

RM2.60-2.80

RM2.20

-3.1%

KINSTEL(5060)

3/6/2013

RM0.35

Trading BUY

RM0.45

RM0.37

+5.7%