Market Roundup | 24 Oct 2012

FBM30 1667.99     +3.09points (+0.19%) Volume 1,132mil   Value 1,465.5mil      

1) KLCI continue to forge ahead as investors sentiment was buoyed by news report that China HSBC PMI rose to a 3 months high of 49.1 in October. However gains eased from its high of 1670pts following announcement that Germany's manufacturing contracted more than estimated. Properties+2.61% was the key movers led by UEMLAND+11%, SUNWAY+8%, Tebrau+8% and IGB+3% while Astro recovered to closed at day's high 2.89. Market breadth turned positive with advancers outpacing decliners 411:271. Futures closed 1672pts (1 point discount).

 

2) Heavyweights: GENTING+1.71% RM8.94, UEMLAND+11.4% RM2.15, CIMB+0.66% RM7.64, PBBANK+0.27% RM15.02, HLBANK+1.27% RM14.38, TM+0.66% RM6.10, MAYBANK-0.55% RM9.00, AXIATA-0.3% RM6.63

 

3) DBT: NICE 22.3mil @ RM0.10 (19% PUC, 16.7% discount), MERGE 2.7mil @ RM0.35 (4% PUC)

 

4) Situationals:

UEMLAND+11.4% RM2.15: UEMLAND has entered into a 40:60 JV agreement with Singaporean business space solutions provider Ascendas Land International Pte Ltd to develop an integrated eco-friendly tech park in Nusajaya, Johor at a projected investment value of S$1.5bil (RM3.7bil). The 210ha freehold integrated tech park would be located in Gerbang Nusajaya within the Nusajaya regional city in Iskandar Malaysia. The proposed development is expected to take place in three phases over nine years with the launch of Phase 1 targeted in the last quarter of next year

 

5) BUMI ARMADA

Announced today that its subsidiaries have secured 5 contracts in Gaban, 2 in Republic of Congo, 2 in Saudi Arabia worth approximately RM147m with an optional extension value of RM102m.  The vessels involved include Armada Firman 2, an accommodation workboat, Armada Tuah,84,85, AHT towing support vessels, Armada Hibiscus, an accommodation work barge.

 

+ve with further contract wins from Petronas Carigali expected for their OSVs and also the long awaited FPSO from ONGC. BUY

 

6) Market - Underlying strength of the market reflected by its resilience today despite the sharp falls in the US/Europe overnight. We continue to advocate portfolio building on laggards in anticipation of a strong 4Q/early 1Q.

Morning Call 210212

Flows;

BUYS:  AMMB, Maybank, Axiata

SELLS: TNB, UEMLand, CIMB

Technical Stk Alert;

Integra (RM1.32) - stk has been trading within a tight RM1.32-1.37 range for past few wks. MACD has turned oversold-accumulate with possibility of breaking above the trading range to head towards its old double top formation at RM1.70. Recent corporate developments incl: directors reshuffling, increased capacity handling of coal for TNB's power plants in Manjung, Perak as well as possibility of securing an agreement with Vale on usage of its ports.

UEMLand  (RM2.31) - Price has retraced from high of RM2.47 on recent developments in Tebrau/Danga Bay news and has been consolidating arnd RM2.30 lvls.  MACD has been at oversold lvls since beginning of 2012 in line with recent underperformance of 2nd tier GLCs. Interest may rotate back into this largest landbank owner in IDR as newsflows on more FDIs, improved bilateral r/s with Spore and property launches emerge later this yr. TRADING BUY

Stk of the Day

Orient (RM5.65)

- vol picked up today as price spurted +5% indicating a breakout from its trading range of RM5.30 lvls.

- MACD is seen cutting upwards after being at oversold lvls since beginning of the yr.

- Co is sitting on cashpile of RM2.2bn with assets still at BV since 1970's.

- Recent diversification from auto into plantation and property development augurs well for co following expectations of improved CPO px due to adverse weather conditions.

- Trades at 25% disc to NTA RM7-Accum with immediate upside at RM6 but longer term outlook nearer to NTA.

Newz Bits 210212

Highlights of the day

§         UEM Land Holdings (Initiating Coverage): Key proxy to Malaysian property exposure (HOLD, TP: RM2.25) [download report]

UEM Land Holdings (UEML) is the country’s largest property player in terms of market capitalization of RM10.0bn and total asset of RM7.8bn. Its acquisition of Sunrise completed in early 2011 has improved its earnings outlook. We initiate coverage on UEM Land as we view positively its progress and developments in Nusajaya which should reach its “tipping point” by end 2012. However, we are concerned with Nusajaya’s ability to attract sufficient human traffic to the area as well as the sudden increase in development projects in Iskandar Malaysia (IM). Hence, we recommend a HOLD on the counter with target price based on UEML’s RNAV of RM2.25.

§         Economics (Update): 1Q2012: Prepare for cooling [download report]

We expect the Malaysian economy to grow slower by approximately 4.0% from 5.1% in 2011. Slackening global demand growth will reduce inflationary pressure and so, we expect the inflation rate to grow slower as well from 3.2% in 2011 to 2.7%. This provides the Monetary Policy Committee some room to cut the Overnight Policy Rate by at least 25bps to minimize unfavorable output fluctuation. Meanwhile, the ringgit may strengthen to around 2.95 against the US dollar.

Other reports

§         Newz Bits [download report]

§         Economics (Leading Economic Indicator): December 2011: Solidifying pessimism [download report]

Other Malaysian news

§         Mitrajaya: Gets three projects worth RM182m

§         MAHB: In talks with Russian airline

§         KSL: Expected to launch RM2.5bn Bandar Bestari this year

§         Iris Corp: Unit Iris Land in PNG housing project

§         Compugates Holdings: Plants seeds of growth with timber foray

§         Automotive: Vehicle sales down 25%

§         Building Materials: Tax spotlight on green building materials

§         Construction: CRC in high-speed rail game?

§         Plantation: CPO prices at 8-month high, may rise further

§         Technology: Silterra aims to grow in step with industry

Global news

§         Europe: ECB settles no bond purchases for first time since August

§         Europe: French business sentiment halts slump on recovery signs

§         Europe: Bundesbank sees improved German prospects from 2Q

§         Japan: Trade deficit widens to record as exports slump

§         Thailand: Economy shrinks more than estimated after floods

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Morning Call 020212

FLOWS;

BUYS : Maxis, IJM, MAS

SELLS : Genting Msia, Tenaga, KNM

Technical Stock Alert;

BJCorp (RM0.95) - trading activity increased since Tuesday with the stock signaling a possible move upwards from its past month consolidation levels of 93sen. Immediate upside target of RM1.05-1.10 levels.

Axiata (RM4.67) - selldown from RM5.20, touched its ST support levels of RM4.65 on the 31 Jan. Track for volume activity to die down as we expect strong local fund support below these levels as it remains a key component counter commanding 6.13% weighting in the KLCI.

Stock of the Day

UEMLAND (RM2.32)

- interest stirred from current M&A in Tebrau, refocusing attention to the Iskandar Region

- Largest landowner in Nusajaya with 11,000 acres.

- Aggressive product launch this year of RM5bn worth of projects with a guided sales target of RM3.2bn

- Recent addition (13 December 2011) to the KLCI.

- We rate this a trading buy with a break above the RM2.40 levels likely to see the stock trend higher towards the RM2.60 mark.