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FLOWS
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Tuesday, 1 July, 2014
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BUY
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GENM,
TM, SIME
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SELL
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RHBCAP, IOICORP, SKPETRO
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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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TDM (2054)
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1/7/2014
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RM1.04
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ACCUMULATE
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RM1.20
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Stock has attractive long-term potentials in its 2 main
divisions of plantation and healthcare which are expected to see significant
increase in contributions in the next 2-3 years. TDM is especially cheap on
an asset valuation basis with a p/bk of 0.26x with minimal intangibles in its
balance sheet as the NTA/share of RM3.94 is very close to its book
value/share Of RM3.98. The group is steadily planting up its Indonesian
landbank (37,856 hectares) since 2009 and expect to fully plant it by 2018.
While 63% of its plantations are currently below the year of 16 years, the TDM’s
management only expects a boost in earnings from FY15/16 where its Indonesia
estates will contribute more significantly. Its healthcare division operates
4 private hospitals, i.e. Kelana Jaya Medical, Kuantan Medical, Kuala
Terengganu Medical, and Taman Desa Medical. TDM’s healthcare division (~7%
Pbt) is in the midst of expanding the capacity of 3 of the existing hospitals
as it plans to double the bed capacity within the next 3 years. PER valuation
is also attractive as it’s trading at 13.68x for FY15. TDM is a good proxy to
the plantation sector as it trades at a lower valuation than its peers and
is highly sensitive to CPO prices with every MYR100/tonne change
affecting its earnings by 8-9% per annum to its earnings. With expectations
of EL Nino in the 2H14 and commitment by Indonesia & Malaysia to raise
domestic bio-diesel blend, TDM is poised for better times ahead. Accumulate
(LJN/PT)
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MHB (5186)
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1/7/2014
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RM3.72
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ACCUMULATE
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RM4.10
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After rebounding off its low of RM3.01 in May’13 to a high
of RM4.47 in July’13, MMHE has been consolidating in a trading band of RM4.00
to RM3.50 for the past 11 months. This chart is reflective of MHB’s
operational performance in the past year due to the delay in award of
contracts by Petronas. However, there were reports recently on more Petronas
EOR projects up for grabs, coupled with up to 10 central processing
platforms(CPP) being tendered out. MHB has tendered for up to RM5b worth of
jobs (versus current order book of RM2.3b), with some of the bigger jobs
(worth >US$1b) being CPP projects in the Baronia, Sepat, Bergading, Bokor
& Dulang fields. As they have completed a few major jobs towards the end
of last year, the yard utilisation has dropped to <60%, providing the
capacity to bid for these huge contracts. MHB has the largest fabrication
yard facilities in Malaysia and its ultimate parent is Petronas, hence MHB is
expected to garner their fair share of the contracts awarded. Margins are
expected to recover to 8-10% from 6.7% in 2013 after the completion of
problematic jobs last year, and underpinned by good progress in its Malikai
tension leg platform project & contributions from the SK13 project. There
is also the potential of a successful negotiation on reimbursements of
additional work done to complete the previous jobs where the costs have been
recognised but not the revenue. The renewed focus by Petronas on local
E&P development, EOR initiatives & marginal field developments is a
significant boost to MHB’s outlook. The Shariah-compliant status of MHB could
also enhance its appeal compared to other O&G large-caps like Bumi Armada
& SKPetro which may no longer be Shariah-compliant by end-2014.
Accumulate
(LJN/PT)
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Calls for JUNE WEEK 3/ WEEK 4 2014
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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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KUB (6874)
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24/6/2014
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RM0.555
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TRADING BUY
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RM0.725
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RM0.575
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-3.6%
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GKENT (3204)
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24/6/2014
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RM1.90
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TRADING BUY
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RM2.67
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RM1.71
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-10.0%
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AHEALTH (7090)
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25/6/2014
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RM3.81
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BUY
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RM4.40
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RM3.80
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-0.3%
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FGV (5222)
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25/6/2014
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RM4.41
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BUY
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RM4.80
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RM4.16
(ex)
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-5.7%
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ARMADA (5210)
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26/6/2014
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RM3.52
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ACCUMULATE
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RM4.03
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RM3.40
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-3.5%
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KULIM (2003)
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26/6/2014
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RM3.46
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TRADING BUY
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RM3.98
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RM3.43
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-0.9%
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KOSSAN (7153)
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27/6/2014
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RM3.69
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ACCUMULATE
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RM4.86
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RM3.70
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+0.2%
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PRTASCO(5070)
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27/6/2014
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RM1.97
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ACCUMULATE
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RM2.58
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RM1.97
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0.0%
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SCIB (9237)
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30/6/2014
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RM0.665
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ACCUMULATE
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RM0.80
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RM0.675
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+1.5%
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AIRASIA (5099)
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30/6/2014
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RM2.30
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BUY
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RM3.10
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RM2.30
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0.0%
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Performance
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Positive
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Negative
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Neutral
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