RHB Invest Reasearch

Friday, December 3, 2010

Top Story

Two banks reported better-than-expected numbers while the rest were in line.
Positive trends noted during the quarter were: 1) continued loan growth, which helped take net interest income higher; 2) higher non-interest income qoq; and 3) overheads remained well under control and thus, CIR fell further to 46.6% from 47.2% in 2QCY10.
Maintaining Overweight rating on the sector.

Sector Call

DiGi, TM and in particular, Maxis, saw improvements in EBTIDA margins. Celcom’s EBITDA margin, however, was marginally squeezed by an uptick in sales & marketing expenses due to aggressive subscriber acquisition initiatives.
TM remains the likeliest telco player to pay out special dividends.
Revise our call on the sector to Overweight.

Corporate Highlights

  • Still going strong 2QFY11 net profit of beat our expectation slightly by 7% and consensus by 25%, on an annualised basis.
  • No change to our forecasts and Outperform call

A slice of action in RM269m Semantan Pipeline contract
Fair value upgraded to RM6.16m
Recommendation upgraded to Market Perform, from underperform previously.


Raising the odds of special dividends next year.
Maintain Market Perform at RM3.55.

Technical Highlights

Daily Trading Strategy:
  • Further confirmation needed to secure a technical rebound …
  • The rebound has led the FBM KLCI higher to above the 10-day and 40-day SMAs near 1,494 – 1,497 and the important psychological level of 1,500.
  • This has revived its near-term technical outlook, which could have already turned more bearish should it have not recovered yesterday.
  • The FBM KLCI must still acquire a confirmation candle today, and that the 10-day SMA must recover to above the 40-day SMA to void the previous bearish signal and secure a technical rebound going forward.
  • A slip back to below the 1,500 level and the SMAs will tarnish any positive possibility and turn the index back into the bearish zone again.

Daily Technical Watch: DRB-Hicom
  • A fresh breakout from the RM1.39 resistance level…
  • Immediate support at RM1.39
  • Immediate resistance at RM1.55


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