Thursday, October 31, 2013

Morning Call | 31 October 2013


FLOWS
Thursday, 31 October 2013
BUY
PERDANA, ARMADA
SELL
CIMB, MAYBANK
STOCK ALERT
STOCK NAME
DATE
PRICE
BUY/SELL
TARGET PRICE
GTRONIC (7022)
31/10/2013
RM3.00
ACCUMULATE
RM3.50
Group has already lined up their next upcoming high margin product (the optical interface sensors & multiport that are used in smartphones, tablets and gaming applications) that will be introduced in 4Q 2013/1Q 2014. Group should see a revenue contributions from the new addition by 2015. We continue to like the group for its growth story as well as its net profit margin that grew from 10% to 14% in FY12 and is expected to grow to 17% in the next 2-3 years from its new product. In addition to the group’s strong balance sheet (net cash of RM0.52sens/share), group also expects a CAGR of 25% growth in net profit averagely for the next 3 years. Valuations seem attractive a 13.3x for FY14, and only 11x for FY15, current dividend yield is still attractive at current price at 5.8% for the last 12 months and is expected to increase to 7.1% in fy15 when the earnings from their turnkey product kicks in. The share price has fallen from an all-time high of RM3.17 (ex div of 9 sens) to the RM3.00 level and we think this is an opportunity to accumulate on any weakness. We rate it a defensive buy due to its visible earnings stream and attractive yield of 5.7%.
(RL)
 
HUAYANG (5062)
31/10/2013
RM2.11
BUY
RM2.62
We continue to like Huayang for being one of the few property developers to focus on the affordable housing market which will enjoy resilient demand for the next few years especially ahead of the governments initiative to encourage more mid low developements (e.g Pr1ma a mid low housing dev project). Also, Huayang should not be impacted by the Budget 2014 property cooling measures as they do not have any initial exposure to the DIBS. Despite the weaker first half results, the group is expecting to reveal better numbers as the billing was heavily loaded towards the 2h FY2014 backed by unbilled sales of RM559mil. Moving forward, we think that the continue trend upwards couple with the growing need for mass housing will benefit the group. Valuation of the group is attractive with only 6x** multiple for FY14 and c.5x** for FY15. Pays div of 4.2% at this price and expect an increase to 6% by 2015 due to more launches in the Puchong region. BUY with a TP of RM2.62 based on 10% to our RNAV of RM2.91.
(RL)
 
Calls for  OCT Week 3/ Week 4
STOCK
Initiation Dates
Initiation price
BUY/SELL
TARGET PRICE
LAST PRICE
% Change since Initiated
ENGTEX(5056)
24/10/2013
RM1.60
BUY on weakness
RM2.00
RM1.74
+8.7%
FAVCO (7229)
24/10/2013
RM2.79
ACCUMULATE
RM3.60
RM3.04
+8.9%
BRAHIMS (9474)
25/10/2013
RM1.50
BUY
RM2.04
RM1.49
-0.6%
GLOMAC(5020)
25/10/2013
RM1.19
Trading BUY
RM1.45
RM1.13
-5.1%
KEURO(3565)
28/10/2013
RM1.26
ACCUMULATE
RM1.58
RM1.24
-1.6%
CARLSBG(2836)
28/10/2013
RM12.46
Trading BUY
RM15.00
RM12.90
+3.5%
MAGNUM (3859)
29/10/2013
RM3.31
Trading BUY
RM3.60
RM3.31
0.0%
KPJ (5878)
29/10/2013
RM6.15
ACCUMULATE
RM6.80
RM6.13
-0.4%
IJM (3336)
30/10/2013
RM5.84
ACCUMULATE
RM6.70
RM5.83
-0.2%
UOADEV (5200)
30/10/2013
RM2.22
BUY
RM2.68
RM2.18
-1.9%

 

HOLD
CONT SELL
SELL/ TAKE PROFIT
CONT BUY
STRONG BUY