Friday, May 16, 2014

Morning Call | 16 May 2014


FLOWS
Friday, 16 May, 2014
BUY
SIME, YTL, CIMB
SELL
IOICORP, IJM, PBBANK
STOCK ALERT
STOCK NAME
DATE
PRICE
BUY/SELL
TARGET PRICE
SPSETIA (8664)
16/5/2014
RM2.97
ACCUMULATE
RM3.50
SPSetia (RM2.97) – a decent trade for potential M&A play at a level that is backed by attractive valuations which justifies investment per se even if the M&A angle does not pen out as expected. It trades at a steep discount to its historical valuations, with FY10/15 PER & p/bk of 10.9x & 1.17x, which is 2 standard deviation from historical PER of 19.4x & p/bk of 1.90x. It trades at 45% discount to RNAV (versus historical mean discount of 20%) with an unbilled sales of RM9.6b which is equivalent to 3.4x FY13 property development revenue. The sales is also sustainable as company is focusing on township developments in 2014 which have continued to see resilient demand vis-à-vis the high end segment of the market. With the current depressed valuations & back by solid pipeline developments, SPSetia is a low risk trade for an exciting potential consolidation of PNB’s property development assets in I&P (2,066ha of development land) and Sime Darby Properties (7,600ha currently & looking at another 7,520ha for future development) under SPSetia (1,193ha with GDV of more than RM70b). The rationale for the consolidation is the streamlining of businesses & operations, and as a single giant to facilitate penetration of overseas market. Management has also guided that the shariah-compliant status will be restored in the next review as its non-shariah debt level has fallen to < 33% of total debts. This will lift a significant overhang of potential Islamic fund liquidations and instead attract syariah-compliant funds into the stock. Accumulate
(LJN/PT)
 
 
 
 
 
 
 
 
 
 
 
PRESBHD (5204)  
16/5/2014
RM1.91
ACCUMULATE
RM 2.20
PresBhd (RM1.91) - is an indirect play on the biggest oil & gas infrastructure project in Malaysia for the next 5-10 years - the RAPID in Penggerang, Johor, which was reported to require at least 50,000 additional skilled workers. PresBhd is setting up a Petroleum Academy in Johor with the Johor Education Foundation (JEF). It is a 70:30 JV with JEF to provide skill and upskill training to youths aged 17-25 for the oil & gas industry, and especially for the proposed RAPID. PresBhd is likely to set up training academies in other states as the Johor Petroluem Academy is only able to train 3,000 students annually from 2015 which is a far cry from the estimated 50,000 requirement for skilled o&g workers. This effectively provides the long term growth driver for the stock. With Help International having been taken private, and its only peer in the education sector, Seg International, trading at 26.6x FY14 PER, PresBhd at FY14 16.2x PER is a bargain for exposure in the education sector. Accumulate  
(LJN/PT)
 
 
 
Calls for  MAY WEEK 1 / WEEK 2 2014
STOCK
Initiation Dates
Initiation price
BUY/SELL
TARGET PRICE
LAST PRICE
% Change since Initiated
E&O (3417)
8/5/2014
RM2.28
BUY
RM3.00
RM2.26
-0.9%
SALCON (8567)  
8/5/2014
RM0.73
BUY
RM0.805
RM0.775
+6.1%
PMETAL (8869)
9/5/2014
RM3.28
ACCUMULATE
RM4.11
RM3.60
+9.7%
CRESBLD (8591)  
9/5/2014
RM1.51
ACCUMULATE
RM1.75
RM1.52
+0.7%
MAYBULK (5077)
12/5/2014
RM1.80
BUY
RM2.23
RM1.85
+2.7%
BENALEC (5190)  
12/5/2014
RM0.965
TRADING BUY
RM1.10
RM1.16
+20.2%
WPRTS (5246)
14/5/2014
RM2.85
SELL
-
RM2.75
+3.6%
FAVCO (7229)  
14/5/2014
RM3.36
TRADING BUY
RM3.70
RM3.50
+4.1%
OCK (0172)
15/5/2014
RM1.42
TRADING BUY
RM1.70
RM1.48
+4.2%
TDM (2054)  
15/5/2014
RM1.00
TRADING BUY
RM1.20
RM0.985
-1.5%
 
 
 
 
 
 
 
Given that our call initiated on the 12 MAY 2014 to buy BENALEC (5190) has achieved our target of RM1.10,
we advocate a take profit on the stock.
 
 
HOLD
CONT SELL
SELL/ TAKE PROFIT
CONT BUY
STRONG BUY
 
 
 
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