Morning Call 230212

FLOWS;

BUYS: PBBank, CIMB, Sime, MRCB

SELLS: IOIC, Maxis, IJM

Technical Stock Alert;
MPHB (RM2.87) - Signs of weakening MACD indicating current levels unsustainable as the price has risen from a recent low of RM2.70 to a high of RM2.96. Current trend likely to see price revisit initial support of RM2.70.

TM (RM5.03) - Current attempt to break its record high of RM5.09 looks likely to succeed with an immediate target of around RM5.20. The current interest is stirred by building expectations of a special dividend to be declared when it announces its full year results. A push towards and above our target of RM5.20 would represent an opportunity to sell into strength as the stock remains one of the most expensive telcos in terms of PEs and expectations of built up in competition from fix line broadband offerings after last year wholesale bundling to other players.

Stock of the Day;

UOADEV (RM1.45)
- Share price has retraced 61.8% from its recent high of
RM1.60. Current price appears attractive as they are trading at 6.5xPE and 1XBV and sharply below its IPO price in June last year of RM2.52.
- Company has a dividend policy of 30-50% of operating profit.

Based on consensus estimates of 22sen, company could be paying dividend as high as 11sen giving a yield of 7.5%. Buy with immediate target price of RM1.60.

Morning Commentary 180112

Good morning,

1) DRB Hicom: announced that it has bought up to 39.9m shares in Proton Holdings in the market yesterday, ahead of it's acquisition of Khazanah's 42.74% block in the company. The shares amounted to a 7.27% stake in Proton and were acquired between RM5.40 & RM5.47 per share. With this, assuming that the proposed acquisition is successfully completed, DRB will hold more than 50% of the voting shares in Proton. As such, the proposed MGO will not be conditional upon acceptance. It is not clear if DRB's plan is to delist Proton, or whether it still need access to the capital market. Meanwhile, with such a huge amount required for the Proton purchase, it is speculated that TS Syed Mokhtar may be looking at a few alternatives, which may include borrowings from foreign banks or selling off DRB's 70% stake in Bank Muamalat; Neutral.

2) Axiata: is said to be in talks to buy a stake in India's Tikona Digital Networks Ltd, according to sources. Axiata was holding discussions with Mumbai based Tikona owners Goldman Sachs Group, Oak Investment Partners & Everstong Capital Advisors, who collectively control 71% of Tikona. A deal might value Tikona at about US$1b. Investing in Tikona would allow Axiata, which owns a stake in Indian mobile phone carrier Idea Cellular Ltd, to tap into the rising demand for data services in India, the world's 2nd largest wireless market. Tikona holds licences to offer wireless broadband internet services in regions including Gujarat, Himachal Pradesh & Rajashtan, according to the Department of Telecommunication; neutral, to await more details.

3) TM: TM is in negotiations with 20 property developers to deliver it's high-speed broadband (HSBB) infrastructure services to new property projects, riding on a slew of real estate projects in the pipeline. TM representative said it was focusing on urban centres, such as the Klang Valley, Penang & Johor to take up it's HSBB offering for residential, commercial & office buildings. Last year, TM signed 11 agreements with property developers nationwide for the provision of HSBB services in new projects; +ve & expected.

4) Mkt: maintain range trade, accumulate on weakness CIMB, MAS, Perdana, Alam.

Morning Commentary 030112

Good morning,


1) Adventa FY10/11 Rev+26% RM429.9m, Net-88% RM4.2m, EPS 2.75s


Sales in-line, core earnings RM13.4m, 25% below cons RM17.8m.


For Q4 yoy, Revenue +20%, from higher shipments & better prices. There was an exceptional loss of RM9.2m in the current quarter (loss due to fire at one of it's plant RM6.73m & a loan deposit written off RM2.5m) which resulted in the quarter registering it's 1st quarterly loss of RM3.66m. PBT was RM5.57m before the exceptional loss, +43% when compared to corresponding period last year. Qoq, Rev+12%, while Loss before tax stood at RM3.6m vs PBT of RM3m in preceding quarter. PBT would have been +55% if not for the exceptional loss of RM9.2m. Ahead, the erratic dynamism of commodities & currencies create a difficult environment for management of costs & sales prices. The global slowing economic environment, particularly the Eurozone market is a concern. The stretched credit terms for these countries may cause the group's trade funding to increase. However, lower latex cost, the emerging threat of bird flu & higher US dollar will provide support for glove makers going into 2012- HOLD.


2) Boustead: Boustead Holding's 51% subsidiary MHS Aviation Bhd (MHS) is buying 16 aircrafts for RM586.2m from DRIR Management SB & DRIR Rotor SB. DRIR Management & DRIR Rotor are wholly owned subsidiaries of DRIR Equities SB, which owns the balance of 49% in MHS. MHS provides air transport & technical services to O&G companies. In addition to owning it's own aircrafts, it also leases aircrafts from DRIR Management & DRIR Rotor. Boustead said the price was based on "willing buyer willing seller" basis after considering a valuation report from Lloyd Helicopter Asia Pte Ltd. MHS would pay RM530.7m cash in the deal. The remaining RM55.5m was deemed paid, as it was part settlement of debts owed by DRIR Management & Rotor to MHS. Boustead has also proposed to provide MHS a loan of up to RM460m, of which RM422.1m will be to partly finance the acquisition & remaining RM37.9m as working capital; Neutral. The acquisition is part of Boustead's strategy to make MHS an aviation service provider which has a wide range of aircrafts, that will support MHS's plan to actively source for new contracts.


3) TM: Telekom Malaysia Bhd plans to spend up to RM3b in capex this year as it continues to roll out high speed broadband (HSBB) access to more areas and expand it's internet access beyond homes & offices via WiFi hotspots, group CEO said in an interview. Previously, TM's focus has been on providing access via fixed lines to homes & offices. TM is looking to invest RM2.7b to RM3b in capex this year to provide access, build it's core network & support systems, he added. As at Q3 2011, TM had invested RM1.4b but CEO would not say what the final figure was for the full year capex for 2011. TM's capex is normally internally funded. Group now has 200,000 Unifi subscribers & about 17,000 hotspots in the country. The key places where users are most likely to be needing WiFi are in the shopping malls and universities, more so since all smart devices are WiFi enabled - Neutral.


4) Mkt: broad market especially mid & small caps to rally while big cap index stocks to pull back after their year-end window dressing.