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 140212

FLOWS;

BUYS: Sime, MAS, DRBHcm

SELLS: JCY, CIMB, BJToto

Technical Stock Alert;

MRCB (RM2.12) -  Current market consolidation is providing an opportune time to accumulate stocks which had run up earlier. MRCB achieved a recent high of RM2.27 after breaking out from its ST resistance levels of RM2.13. The price has now retraced back to these levels. BUY on weakness with stronger support at RM2.05.

Maybulk (RM1.91) - The stock was one of the outperformers in Dec/Jan, rising from RM1.40 to a high of RM2.73. The stock has since fallen back substantially since the company denied any knowledge of the privatization rumours. The stock should find some initial support between the RM1.80-1.90 levels.

Stock of the Day

KEuro - (RM1.24)

- Pay no premium over the final awarding of the West Coast Highway after the price retraced from its high of RM1.45.

- Recap, its 64.2% owned West Coast Expressway SB obtained approval from the Public Private Partnership Unit of the PM's Deptn to buil a RM7.07bn highway linking Banting to Taiping. The highway will cover 316km of which 224km will be tolled. The project is awarded based on a BOT basis with a concession period covering 60 years.

- Buy on weakness at current levels of RM1.25 with a stop loss of RM1.16. Medium term target of RM1.60.

Market Roundup 300112

FBM30 1513.55, -7.35 points (-0.48%), Volume 2,307.5mil, Value 1,841.5mil

1) KLCI gave away morning gains with losses accelerating after midday as investors took profits ahead of European summit on the region's debt crisis and after the U.S. economy expanded less than forecasted. China also failed to deliver a forecasted reduction in bank reserve requirements. Selling pressure of GENTING, TENAGA, IOICORP after midday saw index dropping and closed near its low of 1512.03 (-8.87pts). Market breadth managed to stay positive with gainers leading losers 460:387. Futures closed 1502 (11.5 points discount).

2) Heavyweights: GENTING-2.33% RM10.90, TENAGA-2.13% RM5.97, IOICORP-1.28% RM5.40, MAXIS-2.46% RM5.56, HLBANK-1.71% RM11.50, YTL-2% RM1.47, PBBANK+0.6% RM13.52, CIMB+0.58% RM6.89

3) DBT: MYEG 20mil @ RM0.65 (3.3% PUC), PROTON 5mil @ RM5.40, AIRASIA 5mil @ RM3.57.

4) Situationals:

MAYBULK-13.2% RM2.30: Maybulk which has risen 72% ytd plunged 13% after the company said it is not aware of any reasons or any corporate exercise that may have contributed to the increase in share price and high trading volume of Maybulk shares in response to Bursa UMA query.

E&O+4.3% RM1.70: Share price reached RM1.75, near its highest level (RM1.78) on new revelations stemming from an online portal relating to Sime Darby's acquisition of a 30% stake in the company.

5) PBB: FY12/11 Rev+16% RM12.8b Net+14% RM3.48b EPS 99.5s Div 48s, Results in line with cons RM3.45b

For 12 months yoy, the higher Net was mainly due to higher net interest & net income from Islamic banking +8.6%, while net fee/comm income +8.4%. In addition, impairment allowances on loans had shown a drop of 9.9%, despite the 1.5% collection impairment allowances set aside for the strong loan growth. These were partially offset by the higher other operating expenses +5.2%. Total loans grew by 13.5% ( mainly arising from property financing, passenger vehicles & lending to SMEs), total deposit +13.3%, impaired loan ratio further improved to 0.9% from 1.1% LY. The group's capital position remained healthy, with tier-1 capital & RWCR at 10.1% & 15.3% respectively. PBT by operating segments - Retail ops +17.5%, HP -5.5% ( lower interest margin & higher loan impairment allowances), Corporate lending +16.3%, Treasury & Capital market +20%, Investment bank +2%, Fund management +17.5% & Overseas ops -4.8% (foreign exchange movement & lower net interest income). Qoq, PBT -2%, Net -2.4%. These were mainly due to certain loan recoveries in the preceding quarter which were non-recurring in nature. Group declared a 2nd interim dividend of 28s, bringing total dividend for FY12/2011 to 48sen or 48% net profits (10% lower than cons 53.1s).

The bank's numbers are indicative of an overall industry slowdown with lower loan growth and contracting margins. Prefer for CIMB for core bank exposure.

6) Market - Range bound on index with interest remaining on situational mid caps, Trading buy on MMC, an under performing company under the Syed Mokhtar stable with short term catalyst possibly coming from the listing of subsidiary, Gas Malaysia.