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FLOWS
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Monday, 14 July, 2014
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BUY
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CIMB,
SKPETRO, TM
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SELL
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IHH, DIGI, RHBCAP
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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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GTRONIC (7022)
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14/7/2014
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RM4.33
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ACCUMULATE
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RM5.00
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While the group
continue to see improve orders for their lucrative proximity sensors from one
of its European clients (+10% YOY to 140mil~ units), the group has also begun
to mass produce its new turnkey LED sensor modules that are used in
accelerometers/wearable devices in July (exp 8-10% contribution to top line
by Fy15). Like the proximity sensors, the group had also applied for a grant
and pioneer status tax incentive scheme under the government (MIDA) to
promote innovation which will reduce its effective tax rate for this product
by 1-2 ppt to 15% if approved. Overall, the group's story remains compelling
as we believe they are able to achieve 18% CAGR easily for the next 3 years.
Furthermore, the group hinted that they are currently working on several new
high margin products (TBA in 2H14) and are also in talks with several prominent
names to develop the new products. Valuation is
currently at 16x for FY15 and 13x for FY16 which is just above their 7 year
average but the group saw an improvement in PE in the last 2 years after it
switched into producing sensors from of their traditional LEDs; Paired with an attractive dividend yield and a healthy
balance sheet, we believe the current weakness in share price (attributed by
the strengthening of MYR) is an opportunity to accumulate the stock. TP of
RM5.00 based on 15x for FY16.
(RL)
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LONBISC (7126)
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14/7/2014
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RM0.885
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Trading BUY
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RM1.05
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An established consumer player which happens
to be the largest manufacturer of confectionery such as assorted cake, candy,
wafers and snack in Malaysia with manufacturing facilities located in Johor
& Selangor. The group currently has approximately 65% market share of all
shelf confectionary in Malaysia and has an impressive record of being
profitable for 12 consecutive year; albeit with a thin profit margin for
their products (~4% in FY13). Management has guided for a comfortable for 15%
net profit growth yoy (14mil in FY14 and ~16mil) for the next 2 years as the
group has ended its high capex era in 2012. Moving forward group is looking
to diversify its product range by introducing a range of potato chips and
also neutraceutical candies(incorporating candies with vitamins and
nutritions) as well as repositioning their signature swiss rolls into a more
higher end product. Valuations appear cheap at only 9x PE vs its peers of 10-14x;
p/b of 0.4x. We advocate a trading buy with a TP of RM1.05 as we expect its
valuations to catch up to its peers in these defensive markets; major support
level seen at RM0.87 level.
(RL)
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Calls for JULY WEEK 2 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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KPJ (5878)
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7/7/2014
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RM3.63
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SELL
into strength
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-
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RM3.50
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-3.1%
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TURBO (5167)
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7/7/2014
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RM1.35
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ACCUMULATE
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RM1.60
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RM1.35
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0.0%
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ECONBHD (5253)
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8/7/2014
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RM0.765
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BUY
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RM1.00
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RM0.735
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-4.0%
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GUH (3247)
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8/7/2014
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RM1.39
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BUY
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RM1.55
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RM1.38
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-0.8%
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UCHITEC(7100)
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9/7/2014
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RM1.42
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ACCUMULATE
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RM1.78
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RM1.42
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0.0%
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MEDIA (4502)
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9/7/2014
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RM2.44
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ACCUMULATE
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RM2.90
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RM2.34
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-4.1%
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BARAKAH (7251)
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10/7/2014
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RM1.58
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ACCUMULATE
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RM1.80
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RM1.60
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+1.2%
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GENTING (3182)
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10/7/2014
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RM9.80
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ACCUMULATE
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RM11.00
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RM9.77
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-0.2%
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IHH (5225)
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11/7/2014
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RM4.70
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SELL
into strength
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RM3.80
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RM4.74
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0.0%
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SUPERMX (7106)
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11/7/2014
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RM2.15
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ACCUMULATE
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RM2.60
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RM2.15
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0.0%
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\
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Performance
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Positive
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Negative
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Neutral
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