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FLOWS
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Thursday, 24 October, 2013
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BUY
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MAYBANK, COASTAL, CIMB
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SELL
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GENTING, DIALOG, UEMS
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STOCK ALERT
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STOCK NAME
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DATE
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PRICE
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BUY/SELL
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TARGET PRICE
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ENGTEX(5056)
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24/10/2013
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RM1.60
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BUY on weakness
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RM2.00
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The share has been drawing more interest of
late, on expectation of a demand up-cycle for the group’s products.
Management estimates future water pipe demands could exceed RM5.4b after the
water issue is resolved, driven by the Langat 2 Water plant and the Pengerang
project, the RM5b worth of pipes for replacement market and the demand from
new townships ( esp in Klang Valley & Johor). It’s manufacturing plants
have been running at 50% average utilization rates, so production can easily
be ramped up to 70-80% utilization to meet the increased demand, which will
also mean operating leverage can kick in to counter the impact of rising
costs. The replacement market is significant, as water loss due to leakage
averaged c37% in 2011, with some states recording more than 50%. Co is also
aiming to participate in the Singapore government’s NEWater project. The
share price has jumped some 9% over the last few day, bringing valuations to
6-7x for FY13/14. Although this is quite in line with its 5-year average PER
of c6X, we consider this attractive given the Co’s strong growth
potential. – BOW (TP RM2.00, 8x FY14).
(AK)
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FAVCO (7229)
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24/10/2013
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RM2.79
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ACCUMULATE
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RM3.60
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The share price has consolidated around the RM2.80 level
for the past 2 months, after the disappointing Q2 results, which were weighed
down by weaker revenues & higher tax expenses. We believe the negatives
are already in the price & is currently a good time to re-look at Favco
as it is still backed by a strong RM832m OB, earnings growth expected at c12%
for FY12-15 & with the Malaysian O&G sector still firmly on an capex
upcycle. After an unexciting 3QCY13 where there was a lull in O&G
contract awards, we expect contract flows to pick up in 4Q13/1H14. New flows
to look out for include replacement contracts for the Pan Malaysian T&I
works, new marginal fields (3rd licensing round), Newfield asset
sales, EOR contracts and further tenders for the RAPID projects. We think the
O&G sector is still firmly in a capex upcycle & the stronger contract
flows will benefit Favco’s core business of manufacturing customised cranes
for the offshore O&G, construction and port /wharf industries. Trading at
7.8x for FY14, we consider it still cheap, compared to the O&G’s sector
average of 15x FY14 EPS. – Accumulate (TP RM3.60, based on 10x FY14).
(AK)
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Calls for OCT Week 2/ Week 3
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STOCK
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Initiation Dates
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Initiation price
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BUY/SELL
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TARGET PRICE
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LAST PRICE
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% Change
since Initiated
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MALTON (6181)
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17/10/2013
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RM0.97
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Trading BUY
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RM1.20
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RM0.97
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0.0%
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SENDAI (5205)
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17/10/2013
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RM1.42
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ACCUMULATE
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RM1.80
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RM1.45
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+2.1%
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NAIM (5073)
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18/10/2013
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RM3.75
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ACCUMULATE
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RM5.12
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RM3.90
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+4.0%
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OLDTOWN (5201)
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18/10/2013
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RM2.48
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Trading BUY
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RM2.88
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RM2.54
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+2.4%
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UEMS (5148)
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21/10/2013
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RM2.51
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ACCUMULATE
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RM3.22
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RM2.62
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+3.9%
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MRCB (1651)
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21/10/2013
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RM1.46
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ACCUMULATE
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RM1.70
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RM1.46
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0.0%
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WEIDA (7111)
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22/10/2013
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RM1.74
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BUY
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RM2.45
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RM1.75
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+0.5%
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WCT(9679)
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22/10/2013
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RM2.45
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BUY
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RM3.08
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RM2.42
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-1.3%
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MAXIS (6012)
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23/10/2013
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RM7.21
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TAKE PROFIT
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RM6.70
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RM7.19
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-0.3%
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KULIM (2003)
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23/10/2013
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RM3.27
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ACCUMULATE
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RM3.80
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RM3.27
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0.0%
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HOLD
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CONT SELL
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SELL/ TAKE PROFIT
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CONT BUY
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STRONG BUY
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