Monday, March 30, 2015

Morning Call | 30 March 2015


FLOWS
Monday, 30 March, 2015
BUY
TENAGA, SKPETRO, PCHEM
SELL
MAYBANK, DIGI, ASTRO
STOCK ALERT
STOCK NAME
DATE
PRICE
BUY/SELL
TARGET PRICE
IHH (5225)
30/03/2015
RM5.97
TAKE PROFIT
-
Take profit as stock is overbought with weekly rsi of 78 and trading at lofty valuations -  forward PER of 51.5x & 22% earnings growth vs EMF’s healthcare sector average forward PER of 24.9x & 22% earnings growth (last 5 years average forward PER of 45.5x). Its p/bk of 2.51x is also much higher than its historical average of 1.87x. Recently, its proposed acquisition of Radlink-Asia has been blocked by the Competition Commission of Singapore as the acquisition would have “a substantial lessening of competition”. Singapore is the biggest contributor to IHH’s revenue & M&A is an important strategy for IHH’s accelerated growth in Singapore & to reduce IHH’s forward PER. Now that this has been curtailed, IHH ‘s growth may be affected, hence its premium PER over its peers should also be reduced. In addition, there is a risk that its growth may also be impacted by the uncertainties of the GST implementation & the Turkish lira loss of 6.5% vs MYR since 31/12/14.
(PT)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PCHEM (5183) 
30/03/2015
RM5.48
REDUCE
-
The stock is trading near the upper end of the trading range RM5.50 – 5.60) which has capped its past 4 rallies. In an environment of sharp falling oil prices, PChem, as one of the 2 gas-based olefins producers in Asia will be less competitive & its profit will be hit by a double whammy of lower ASP & reduced margin. In addition, 1Q15 saw extreme volatility in feedstock prices coupled with key petrochemical prices plunging 30% - 35% which resulted in inventory destocking & spotty consignment purchases by consumers. This will mean that 1Q15 earnings will likely disappoint & potentially unnerve many. Yet, it trades at FY15 PER of 16.6x which is significantly above 5-year forward PER average of 13.3x. The current strength is an opportunity to reduce exposure.
(PT)
 
 
 
 
 
 
Calls for MARCH WEEK 3/WEEK 4 2015
STOCK
Initiation Dates
Initiation price
BUY/SELL
TARGET PRICE
LAST PRICE
% Change since Initiated
TAMBUN (5191)
23/03/2015
RM1.84
ACCUMULATE
RM2.10
RM1.84
0.0%
MMCCORP (2194) 
23/03/2015
RM2.40
BUY
RM3.00
RM2.49
+3.7%
KNM (7164)
24/03/2015
RM0.635
ACCUMULATE
-
RM0.695
+9.4%
TAANN(5012) 
24/03/2015
RM3.90
ACCUMULATE
RM4.50
RM3.88
-0.6%
JAKS (4723)
25/03/2015
RM0.54
ACCUMULATE
RM0.80
RM0.56
+3.7%
CHINWEL (5007) 
25/03/2015
RM1.49
ACCUMULATE
RM1.75
RM1.44 (ex)
-3.3%
GKENT (3204)
26/03/2015
RM1.27
Trading BUY
RM1.40
RM1.22
-4.0%
TOPGLOV (7113) 
26/03/2015
RM5.58
TAKE PROFIT
BB – RM4.70
RM5.49
-1.7%
DELEUM (5132)
27/03/2015
RM1.55
ACCUMULATE
RM1.85
RM1.55
0.0%
MITRA (9571) 
27/03/2015
RM1.60
BUY on weakness
RM2.00
RM1.62
+1.2%

 

 

Performance
Positive
 
Negative
 
Neutral
 

 

 

 

 
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