Morning Call | 24 December 2014

BENALEC RM0.59 - The share price has fallen c30% over the last 2 months. This translates to attractive multiples of 8.9x & 7.7x for FY6/15 & 16 ( vs mid cap construction industry PER average of 10-13x). The group recently disposed off 9 pieces of land in Malacca amounting to 58.6 acres for cash consideration of RM107m. The sale will help provide earnings visibility for at least the next 2 years. Group still has about 341 acres of land in Malacca and Pulau Indah which are held for sale, which could be worth cRM595m. Benalec’s near term earnings visibility has improved, but key re-rating catalyst remains it’s Johor project and the signing of the SPA with 1MY Strategic Terminal Oil for 1000 acres of land in Tanjung Piai. A detailed EIA has been submitted to the Dept of Environment. MACD has just cut up with RSI @ 35 - Trading Buy ( TP RM0.78 based on 10x FY16). (AK) 

MAYBULK RM1.14 - Following the poor Q3 results, the share price has eased c20% . Group is now trading at P/Bk of 0.63x ( vs 4 year historical average of 1.3x), translating to a PER of 16x for FY12/15. At current levels, we reckon most of the negatives have been reflected in the price. Earnings risks such as lower anticipated dry bulk charter rates and lower contribution from its 20% SGX-listed associate, POSH Group, have been more than reflected in price. Ahead, the weaker Ringgit against the US Dollar and lower bunker fuel prices could lend support to Maybulk’s earnings. The Seaborne Chinese iron ore imports are projected to rise, mainly driven by strong expansion of Australian iron ore production capacity, will also auger well for demand of Maybulk’s vessels. POSH’s headwind in it’s Mexican JV due to non payment by clients, is also being managed. Technically, MACD has just cut upwards with RSI @ 38 - Opportunity to accumulate. (AK)

Morning Call 130212

FLOWS;

BUYS: SPSetia, Pchem, MRCB, AFG

SELLS: TM, Gamuda, Axiata

Technical Stock Alert;

MAS (RM1.58) - Retraced from its recent high of RM1.74 after bouncing off a low RM1.30 in December. We don't expect the price to breach below its SMA 200 levels of RM1.54 and view any weakness around these levels as an excellent opportunity to accumulate for an immediate upside of RM1.88. Transformation after the share swap with AirAsia continues gain traction with the recent appointment of ex AirAsia management personel as the new COO of MAS.

KURASIA (RM0.60) - Renewed interest in the counter in the past few days is threatening to push it out of its consolidation pattern between RM0.58-RM0.60. A breach above the RM0.61 levels could see it hit a target of RM0.72. It is currently in a process to dispose of Kurnia Insurans, the general insurance arm of Kurnia to AMG Insurance.

Stock of the Day

Benalec - (RM1.38)

- Charts indicate a small double bottom at RM1.30 with chances of breaching above the RM1.40 levels.

- Johor remains topical at the moment as the Government continues to spend a significant amount of its budget in the state which augurs well for Benalec as they are currently in the process of reclaiming 3485 acres in Tg Piai and 1760 acres in Pengerang over the course of 10-15 years.

- Both these locations have been earmarked for the development of Johor into a oil hub.

- Trading at undemanding PE of 10x with a potential of 50% earnings growth in the following year. BUY