Wednesday, July 2, 2014

Morning Call | 2 July 2014


FLOWS
Wednesday, 2 July, 2014
BUY
SKPETRO, TENAGA, SIME
SELL
IHH, UEMS, MAXIS
STOCK ALERT
STOCK NAME
DATE
PRICE
BUY/SELL
TARGET PRICE
MUDAJYA (5085)
2/7/2014
RM2.51
BUY
RM2.85
Stock has fallen 12% in the past 2-months from a high of RM2.85 mainly due to delays in the commissioning of its 1440MW Indian coal power plant and weak orderbook replenishment rate. Recent 1Q’14 result was disappointing recording a drop of 3% and 40% YoY on revenue and PAT respectively mainly due to lower sales and lower margins in the manufacturing and construction segments. We believe these weaknesses has been priced in reflecting a current PER of just 10.2x and forward FY’14 PER of 12.7x compared to industry average of 16x. Moving forward, we expect earnings catalysts to come from contributions on the commencement of the Indian power plant (expected EPS 14sen contribution to bottom line) and tenderbook arising from the KIDEX highway project, 1MDB 2000MW coal power plant civil works and others (total RM5bn) and stronger contributions from the property development segment. Immediate support is seen at RM2.45-RM2.50 levels and current weakness presents a Buying opportunity on expectations of positive news flow and attractive 3.6% dividend yield, coupled with low gearing of only 2.3%, P/B of 1.1x and huge cash pile of RM307mil.  Adding to this, Co has been aggressively exercising share buy-backs which might indicate undervaluation at current level.

 
 
 
 
 
 
 
 
 
 
 
 
 
TAS (5149)
2/7/2014
RM1.50
ACCUMULATE
RM1.70
A stock that has not received much coverage, we think TAS is a good small cap proxy to both the regional O&G and logistics industries. TAS has been recording net profit CAGR of 17% over the past 3 years and this is expected to improve as they adopt the build-to-stock model which translates into shorter waiting periods and hence, higher margins. Adding to this is TAS’s plan to channel more orders to its wholly owned subsidiary in Labuan to capitalize on lower tax rate (15%). Fundamental remains strong with an orderbook of RM340mil and practically zero borrowings (RM58mil borrowings are revolving credit).The stock has recently broken its mid-term resistance of RM1.50 to hit an all time intra-day high of RM1.53 but valuation is still relatively undervalued at current PER of 10.1x compared to industry peers of 15.7. We continue to watch this stock expecting better results and would Accumulate on weakness within RM1.40-1.45 levels.

 
 
 
 
Calls for  JUNE WEEK 3/ WEEK 4 2014
STOCK
Initiation Dates
Initiation price
BUY/SELL
TARGET PRICE
LAST PRICE
% Change since Initiated
AHEALTH (7090)
25/6/2014
RM3.81
BUY
RM4.40
RM3.78
-0.8%
FGV (5222)
25/6/2014
RM4.41
BUY
RM4.80
RM4.16 (ex)
-5.7%
ARMADA (5210)
26/6/2014
RM3.52
ACCUMULATE
RM4.03
RM3.40
-3.5%
KULIM (2003)
26/6/2014
RM3.46
TRADING BUY
RM3.98
RM3.42
-1.2%
KOSSAN (7153)
27/6/2014
RM3.69
ACCUMULATE
RM4.86
RM3.78
+2.4%
PRTASCO(5070)
27/6/2014
RM1.97
ACCUMULATE
RM2.58
RM1.94
-1.6%
SCIB (9237)
30/6/2014
RM0.665
ACCUMULATE
RM0.80
RM0.675
+1.5%
AIRASIA (5099)
30/6/2014
RM2.30
BUY
RM3.10
RM2.32
+0.8%
TDM (2054)
1/7/2014
RM1.04
ACCUMULATE
RM1.20
RM1.06
+1.9%
MHB (5186)
1/7/2014
RM3.72
BUY
RM4.10
RM3.74
+0.5%
 
 
Performance
Positive
 
Negative
 
Neutral