Morning Call 030212

FLOWS.

BUYS: Armada, CIMB, Digi 

SELLS: IOIC, YTL, TNB

Technical Stock Alert:

Alam M (RM0.78) - Stock has recently broken out of its downward channel. Continued trading interest above 80sen could see the stock touch its short term resistance levels of 90sen. BUY

Ramunia (RM0.395) -  Stock has been consolidating well above the 38sen level after Bursa approved its regularization plan on 18/1. Looking to break above 40sen. Immediate target 45-50sen levels. Completed purchase of FPSO at USD85mil and Palau Indah fabrication yard. Possible contract awards after removal from PN17 affected list.

Stock of the Day

Wah Seong - (RM2.13)

- Refocusing its efforts to the domestic markets. Aiming to capitalize on Petronas pipeline rehabilitation program where a significant portion of the pipes are over 30 years old and in need of replacement.

- They are also the main candidate to secure pipe coating jobs for Petronas's North Malay Basin Project.

- Chances of securing contracts in Australian LNG fields of Julimar and Browse enhance as main competitor, Bradshaw will be preoccupied with the jobs they secured last year in two other LNG fields.

- A push above the RM2.17 levels (SMA 200) could see the stock rerate back up to its 52 wk high of RM2.45. BUY

Morning Commentary 291211

Good morning,

1) Alam: Alam has secured a RM29.8m job from Sarawak Shell to install offshore transport modules (the E8 & F13K Modules Offshore Transportation & Installation contract) for the oil major. In a Bursa statement, Alam said the 9 months contract commenced in Q4 of this year and is expected to complete by May 2012. The contract is not renewable, but is expected to contribute positively to earnings & NTA fro FY11 ending Dec and beyond; +ve, this brings jobs won this year to more than RM230m. The earnings recovery for Alam remains in tact, led by the turnaround in it's OIC services division & tightening conditions in the vessel charter industry.

2) PPB: PPB Group's flour milling arm FFM Bhd (80% owned) has received regulatory go-ahead for 1 of it's 3 proposed 20% stake acquisition in Wilmar International Ltd's Chinese flour milling units totalling RM80.14m - paving the way for greater collaboration between the 2 companies controlled by Robert Kuok. In a Bursa statement yesterday, PPB said FFM's 100% owned subsidiary Waikari SB has received the go-ahead from the Chongqing authorities to subscribe to 20% stake in Wilmar's Yihai (Chongqing) Foodstuff Co Ltd for US2.4m. Waikari is also paying US5.33m for a 20% stake in Yihai Kerry (Beijing) Oils, Grains & Foodstuff Ltd and US2.58m for 20% of Yihai Kerry (Shengyang) Oil, Grains & Foodstuff Co Ltd; +ve & expected. The proposals, which give FFM access to Wilmar's distribution network in China, are expected to contribute significantly to PPB's group future earnings, but would not materially impact earning for FY12/2011. The proposals are expected to be completed within 5 months.

3) Healthcare: The 3 parties - Faber Mediserve SB, Pantai Medivest & Radicare (M) SB- which are vying for the hospital support service (HSS) concessions by the govt are likely to get their contract renewed within the next month, according to sources close to the matter. The govt has renewed the contract for a period of 6 months initially and had called for a tendering process by these 3 companies a month before their contract ended in Oct 2011. It is learnt that the 3 parties were the only companies which were called to submit their tenders for renewal because of their experience & expertise in providing HSS for hospitals in Malaysia; +ve if true for Faber, which has a 50% market share in terms of revenue. Faber's concession covers 81 govt hospitals in Perak, Kedah, Penang, Perlis, Sabah & Sarawak.

4) Mkt: expect to remain resilient despite the correction in overseas markets in view of window-dressing activities.