FLOWS
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Wednesday, 9 October, 2013
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BUY
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MAYBANK, PCHEM, MAHSING
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SELL
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MPHBCAP, MRCB, ASTRO
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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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MISC (3816)
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9/10/2013
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RM5.09
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TRIM
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RM4.80
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The share price has held relatively well, despite
the negative news flow over the past 2 months. Management admitted that it
was taken aback when Petronas announced in August it’s intention of owning
future LNG new ship-buildings themselves. LNG tankers earnings continue to
represent the bulk of Co’s earnings due to its long term charter agreements.
Although it can be argued that there are factors mitigating this negative
development – MISC may be engaged in provision of technical consultancy &
project management of new vessels, negotiating for a Operation & Maintenance
Contract for the new vessels and tender for new third party contracts – we
are of the opinion that the returns to MISC will very unlikely be as large as
when it owned the vessels directly. Earnings are likely to be on a long term
decline. Petronas’s CEO has also recently dismissed market talk that there
may be a second attempt to take MISC private. Given the poor structural
outlook, expected earnings decline, tough cyclical shipping business &
cautions management outlook – Trim for a medium term buy back level target of
RM4.80 as the company is supported by its SOP of RM6.00.
(AK)
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QL(7084)
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9/10/2013
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RM3.82
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SELL into Strength
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RM3.63
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Share price
has added c12% over the past 6 weeks, partly on the back of its proposed
rights ( 2R for every 10 held @ RM1.80 ) & bonus (3B for every 10 held )
issue. The cash call will raise a maximum of RM300m which will be used to
fund borrowings & expansions. Gearing is expected to fall from 0.77x as
at March 2013 to 0.33x. Despite the advantages above, it is not all positive.
Although raising funds is good, it comes at the expense of a significant
earnings dilution ( about 30% for FY14-16 ). Trading at more than 17x for
FY03/15, we reckon it’s quite fairly valued now. Given the fairly lacklustre
market conditions leading up to the Budget 2013 & RSI at 77, we
consider the price run-up a good opportunity to SELL into STRENGTH, buyback
at TP RM3.63 ( 16x FY3/15), as we still like QL’s strong earnings growth and
expansion execution.
(AK)
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Calls for OCT Week 1/ Week 2
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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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LBS (5789)
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2/10/2013
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RM1.77
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BUY on weakness
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RM2.20
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RM1.83
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+3.3%
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PERISAI (0047)
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2/10/2013
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RM1.30
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ACCUMULATE
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RM1.66
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RM1.29
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-0.8%
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MAYBULK (5077)
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3/10/2013
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RM1.83
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SELL
into strength
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RM1.55
- RM1.65
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RM1.79
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+2.2%
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GADANG (9261)
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3/10/2013
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RM0.825
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BUY on weakness
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RM1.30
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RM0.82
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-0.7%
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E&O (3417)
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4/10/2013
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RM2.01
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ACCUMULATE
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RM2.30
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RM1.98
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-1.5%
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INARI (0166)
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4/10/2013
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RM1.11
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Take Profit
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<RM1.00
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RM1.13
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-1.8%
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CIMB (1023)
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7/10/2013
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RM7.44
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Trading BUY
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RM8.40
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RM7.46
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+0.2%
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PENERGY (5133)
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7/10/2013
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RM2.06
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BUY
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RM2.50
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RM2.02
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-2.0%
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CMSB (2852)
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8/10/2013
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RM5.43
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Take Profit
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RM4.60
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RM5.30
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-2.4%
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KLK (2445)
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8/10/2013
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RM22.90
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Take Profit
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RM21.00
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RM22.66
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-1.1%
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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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