RHBInvest Research Highlights 16th November 2010

Top Story

Axiata:

• Stable outlook.
• We reiterate our Outperform call with fair value of RM5.52.

Macro View


Economic Growth:

• Slowed down in the 3Q and will likely continue into 1H 2011.
• We expect real GDP growth to slow down to 5.0% in 2011, from +7.3% estimated for 2010.

Corporate Highlights


Kencana:

• One more in the bag.
• Fair value has been raised to RM2.31. Upgrade to Outperform (from market perform previously)

Emas Kiara:

• Exiting core geosynthetics business.
• Fair value rationalised to Trading Buy and RM1.26 (from outperform and RM1.52 previously).
• Cease coverage on the stock.

Parkson:

• In line with expectations.
• Fair value estimate is thus reduced to RM7.36 (RM7.76 previously). Maintain Outperform.

Amway:
Below expectations but larger special dividend makes up for it.
Fair value estimate to RM8.30 (RM8.45 previously). Maintain Market Perform.


Technical Highlights


Daily Trading Strategy:

• Trading sentiment to remain sluggish.
• Technically, the closing with a small positive candle signals a chance of a further rebound in the immediate term.
• In fact, given the poor technical readings overall, it could risk losing the 1,500 psychological level if the sentiment fails to improve significantly.
• A key support is now seen at the previous breakout point of 1,450.
• Breaching this level will confirm a major correction phase and potentially press the index towards a lower support at 1,390

Daily Technical Watch: Time Eng

• Further weakness will force a revisit to the RM0.50 important level.
• Immediate Support at RM0.50
• Immediate Resistance at RM0.55