Morning Call | 11 October 2013

FLOWS

Friday, 11th October 2013

BUY

DIALOG, AFFIN, JCY

SELL

TENAGA, POS, YTL

STOCK ALERT

STOCK NAME

DATE

PRICE

BUY/SELL

TARGET PRICE

DRBHCOM(1619)

11/10/2013

RM2.50

BUY

RM2.75

Stock is trading at the low end of its last 4 months trading range, having retraced >12% from its recent August’s high. It is especially undervalued on a p/bk basis, at 0.68x i.e. trading near distressed level especially if its parcels of land in Jalan Tun Razak, Glenmarie, Shah Alam, Puchong, Proton City Tanjong Malim, Hicom Pegoh Park in Melaka, Iskandar Johor & Rebak Island in Kedah are revalue. The sale of 613.8 acres of Iskandar land to Eco World will enhance the value of its remaining 903 acres of land in Iskandar. Backed by these strategic parcels of land, its property division has developments totalling GDV RM13.3b. On the auto segment, the revamp plans for Proton is beginning to bear fruits with the well-received launches of the competitively priced Saga SV & hatchback Suprima S. The cost saving measures from auto parts standardising and the streamlining of its supply chain is enabling the company to be competitive in its pricing vis-à-vis Perodua models. Recently, with the collaboration with Honda finalised, there is expectations that the Honda Accord-based Perdana replacement model will be adopted as the official car by the government. The defense division will also see a significant jump in contributions for FY14 & FY15 from the newly acquired CTRM & the production of armoured trucks. Buy (LJN/PT)

HUBLINE (7013)

11/10/2013

RM0.055

BUY

RM0.095

Stock has been consolidating for the last one and a half years, trading at a the bottom in a very narrow trading range of RM0.045 – RM0.055, clearly a base building formation. Yesterday, Hubline came alive in very active trading, breaking above its SMA200, confirming the positive divergences seen on the weekly & daily charts. Fundamentally, the stock is also poised for a take-off after the kitchen-sinking in the 3rd quarter where the company provided for charges such as receivables, impairment to associates, foreign exchange translation differences, and scrapped vessels together totalling RM151m. The 4Q13 from July’13 will see Hubline starting on a clean slate in a more favourable environment where the BDIY index has gained >150% from last year close. The valuation is also very attractive with its p/bk only at 0.27x (even after the hefty provisions for 3Q). Generally, regional shipping stocks see good support when their valuation hit 0.8x p/bk. Currently, Malaysian big cap shipping stocks like MISC & Maybulk trade at 1.03x p/bk and small cap shipping stocks e.g. Shinyang & Sealink trade at o.45x p/bk. Hence, Hubline is clearly undervalued. Buy (FV RM0.095 = 0.45x p/bk) (LJN/PT)

Calls for  OCT Week 1/ Week 2

STOCK

Initiation Dates

Initiation price

BUY/SELL

TARGET PRICE

LAST PRICE

% Change since Initiated

E&O (3417)

4/10/2013

RM2.01

ACCUMULATE

RM2.30

RM1.97

-2.0%

INARI (0166)

4/10/2013

RM1.11

Take Profit

<RM1.00

RM1.20

+8.1%

CIMB (1023)

7/10/2013

RM7.44

Trading BUY

RM8.40

RM7.42

-0.3%

PENERGY (5133)

7/10/2013

RM2.06

BUY

RM2.50

RM2.05

-0.5%

CMSB (2852)

8/10/2013

RM5.43

Take Profit

RM4.60

RM5.21

-4.1%

KLK (2445)

8/10/2013

RM22.90

Take Profit

RM21.00

RM22.70

-0.9%

MISC (3816)

9/10/2013

RM5.09

TRIM

RM4.80

RM5.19

+1.9%

QL(7084)

9/10/2013

RM3.82

SELL into Strength

RM3.63

RM3.83

+0.2%

CYPARK (5184)

10/10/2013

RM2.01

ACCUMULATE

RM2.40

RM2.00

-0.5%

GASMSIA (5209)

10/10/2013

RM3.91

Take Profit

RM3.40

RM3.89

-0.6%

 

HOLD
CONT SELL	SELL/ TAKE PROFIT
CONT BUY	STRONG BUY