Stocks to watch: DRB-Hicom, Pos Malaysia, Iris, KLK

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Stocks to watch: DRB-Hicom, Pos Malaysia, Iris, KLK PDF Print

Tags: DRB-Hicom Bhd | HPI Resources Bhd | IRIS Corp Bhd | Kuala Lumpur Kepong Bhd | Pos Malaysia Bhd | PPB Group Bhd | Ranhill Bhd
Written by Joseph Chin of theedgemalaysia.com
Saturday, 23 April 2011 11:10
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KUALA LUMPUR: Sentiment on Bursa Malaysia should see some improvement in the week ahead on Monday, April 25 following the fresh corporate newsflow.

However, worries about the impact of the continuing high oil price, inflationary pressures and weakening consumer demand could sap some of the enthusiasm. Oil and gas related counters and also infrastructure stocks could provide some support.

The FBM KLCI index closed 3.58 points down to 1,522.75 on Friday, weighed by losses including at Genting, IOI Corp and Genting PLANTATION []s.

At Bursa Malaysia, stocks which could see trading activity are DRB-HICOM BHD [], POS MALAYSIA BHD, Iris Corp Bhd and KUALA LUMPUR KEPONG BHD . Also in focus could be PPB GROUP BHD, HPI RESOURCES BHD and RANHILL BHD.

Khazanah Nasional Bhd has divested its strategic 32.21% stake in Pos Malaysia to DRB-Hicom Bhd at RM3.60 per share or RM622.79 million, deemed a landmark divestment by the government’s investment arm of its entire stake in a major government-linked company.

On Friday, Pos Malaysia’s share price closed two sen higher at RM3.37 with 595,000 shares done while DRB-Hicom fell two sen to RM2.30 with 2.32 million units transacted.

Pos Malaysia said based on the audited results for the financial year ended Dec 31, 2010, its audited consolidated net profit was RM67.11 million and audited consolidated net assets RM828.59 million.

Iris Corp has secured a US$149.96 million(RM451.61 million) contract from the government of Tanzania to supply 25 million identification cards based on the Smartcard TECHNOLOGY [].

Iris Corp said the contract was for five years, comprising 36 months for implementation and 24 months for maintenance and support. The scope of work and deliverables were 25 million smart cards which shall be used as the National ID cards of Tanzania

Kuala Lumpur Kepong Bhd said its unit KL-Kepong Industrial Holdings Sdn Bhd sold its remaining 40% stake in Barry Callebaut Malaysia Sdn Bhd to Luijckx BV for RM117.68 million cash.

HPI Resources’ net profit for the third quarter ended Feb 28, 2011 soared 121.5% to RM6.94 million from RM3.13 million a year earlier, driven by higher demand. Revenue for the quarter rose by 11.6% to RM105.43 million from RM94.46 million in 2010, while earnings per share was 12.43 sen.

HPI said the strong performance was primarily the result of both its paper milling and corrugated packaging divisions demonstrating double-digit expansion in revenues and operating profits.

Malaysian palm oil trader -- Pacific Inter-Link Sdn Bhd – has filed a suit against PPB Group Bhd’s 18.3% owned Wilmar International Ltd, seeking US$444 million in damages.

Wilmar said its unit Wilmar Trading Pte Ltd (WTPL), was served with a writ of summons on Thursday issued by the High Court of Malaya at Shah Alam.

Pacific Inter-Link had alleged defamation and unlawful interference with its economic interests and business with regard to WTPL's contracts of sale of palm oil products with other parties.

Ranhill Bhd’s unit Ranhill Power Sdn Bhd has received the Securities Commission’s approval to issue up to RM800 million of debt notes which will have a tenure up to 15 years.

The proceeds from the issue will be on-lent to Ranhill to finance in full the redemption of the US$220 million guaranteed notes issued by Ranhill (L) Ltd.

The funds would also be to finance the service reserve account requirement, the first guarantee fees payable and the expenses/ costs incurred in relation to the establishment of the Sukuk, and to on-lend to Ranhill to reimburse advances made by Ranhill to Ranhill Engineers and Constructors Sdn Bhd to complete the CONSTRUCTION of Senai-Desaru Expressway.

Read more...

Maybank IB Views

SECTOR UPDATE
Oil & Gas: Overweight
ODS-Petrodata's perspective

Broad-based views. ODS-Petrodata expects an improved outlook for the offshore fabricators and shipyard operators in 2011. The vessel market remains in an overbuilt state but charter rates have hit rock bottom. Management believes the overall recovery is progressing but the volatile oil price is a concern. We are of the same opinion. We remain Buyers of Dialog, KNM, Kencana, PGas, SapCrest and Wah Seong. We are placing Alam, Petra Perdana and TOFF (all presently Sell calls) under review as we re-assess the vessel market outlook.

ECONOMICS
External Trade, February 2011
Exports beat street but "Japan factor" looms on the road ahead...

Exports growth in Feb' 11 surprised on the upside as it grew by +10.7% YoY (revised Jan ‘11: +4.6 YoY; Maybank IB: +1.8%) while imports sustained double-digit growth as it rose by +11.5% YoY (Jan ’11: +13.5% YoY; Maybank IB: +13.7% YoY). MoM, exports and imports contracted by -5.5% and -12.6% respectively as the short working month effect was amplified by Chinese New Year holidays. For the first two months of 2011, exports and imports gained by +7.5% YoY and +12.6% YoY respectively vs. 27.6% YoY and 29.5% YoY in Jan-Feb 2010. No change in our full-year forecasts i.e. 8.3% export growth, 8.9% import growth and RM122.6b trade surplus.

Technicals
The FBM KLCI closed lower by 2.41 points to 1,553.07 yesterday. Its resistance areas of 1,556 and 1,576 will cap market gains, whilst the obvious support areas are located at 1,529 and 1,554.

Trading idea for today is a Buy call on MHC.

Other Local News
Maxis: To raise non-voice revenue to 50% by 2012. Maxis Bhd aims to raise its non-voice revenue to 50% next year from 41.5% currently boosted by the launch of the Maxis Integrated Partner in Education (MIPE) programme. (Source: The Edge Financial Daily)

TM: Gets SC nod to raise up to RM2b. Telekom Malaysia Bhd (TM) has received approval from the SC to raise up to RM2b via commercial papers and medium term note programmes to meet capital expenditure requirements. (Source: Bursa Malaysia)

Pos: Khazanah board to meet this week on Pos. Khazanah Nasional Bhd's nine-member board is scheduled to meet this week to finalise bids made for Pos Malaysia. (Source: Business Times)

Press Metal: Plans expansion. Press Metal Bhd proposed the phase-2 expansion of its aluminium smelting operation that would be located at the new Samalaju Industrial Park, Bintulu, Sarawak. (Source: Bursa Malaysia)

Iskandar: Two probes into Iskandar Investment last year. There were two separate probes done within Iskandar Investment Bhd (IIB) last year following complaints of how contracts were awarded. The investigations found cases of mismanagement, criminal breach of trust, procedures that were not followed and leaks of confidential information. (Source: Business Times)

Banking: Market to dictate number of banks. The market will determine the number of banks in the country, which are currently well-capitalised. Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said banks have reached a "minimum size and are well-capitalised with quality capital that has enabled them to take advantage of economies of scale". (Source: The Star)

Read more...

Maybank IB Views

COMPANY UPDATE
Public Bank RM13.04: Hold
Consumer lending still resilient...for now

Momentum sustained. The key takeaway from a recent Public Bank visit is that lending momentum remains very much intact on the consumer front, but that rate competition for both loans and deposits is unlikely to ease anytime soon. Our earnings forecasts are broadly maintained. While we like the stock for its solid fundamentals, much is reflected in the current share price (prospective 2011 P/BV of 3x, ROE: 23.9%) we believe, and we see little catalyst in the near term. Hold maintained with an unchanged DDM-derived TP of RM14.10 (payout ratio: 52%, cost of equity: 10.6%, terminal growth rate: 5%).

ECONOMICS
CPI, Feb 2011
Inflation rate heads further up...

Inflation rate in Feb '11 was a higher-than-expected and a 22-month high of +2.9% YoY (Jan '11: +2.4% YoY; Maybank-IB: +2.5% YoY; Consensus: +2.7% YoY). Sequentially, consumer prices increased by +0.5% MoM (Jan '11: +0.6% YoY; Dec '10: + 0.4%). "Food and Non-Alcoholic Beverages" (FNAB) and "Transport" accounted for 72.7% of the YoY increase. Meanwhile, "core" inflation rate which excludes FNAB prices and Transport costs picked up by +1.5% YoY (Jan '11: +1.2% YoY), led by higher prices of services, notably "Restaurants & Hotels", "Health" and "Education". We have revised our headline 2011 inflation rate forecast to +3% from +2.5% last week.

Technicals
The FBM KLCI rose 11.66-points and closed at 1,515.55 last Friday. The local market rose despite Japan’s nuclear woes at its reactor plants, Middle East tensions in Libya and Yemen as well as Portugal’s debt woes.The obvious support areas for the FBM KLCI are located in the 1,474 to 1,515-zone. The very firm resistance zone of 1,518 and 1,576 will see heavy liquidation activities.

Other Local News
AMMB-RHBCap: Merger may be back on the table. A proposal to merge AMMB Holdings Bhd and RHB Capital Bhd, which first surfaced in 2007, is back on the table. (Source: The Edge Financial Weekly)

MISC: Eyeing IHC Merwede. International shipping publications are speculating that national carrier MISC Bhd could be a potential investor in Holland’s IHC Merwede Holding BV. (Source: The Edge Financial Weekly)

MAS: Firefly banking on Iskandar to develop southern hub. FlyFirefly, a unit of Malaysia Airline System Bhd (MAS) will develop the Sultan Ismail International Airport as its southern hub in tandem with developments taking place at Iskandar Malaysia, the southern economic development corridor in Johor. (Source: The Edge Financial Daily)

Pos Malaysia: Declares 17.5 sen dividend, MPC joins bid. Pos Malaysia Bhd has recommended a first & final and special dividend totalling 17.5 sen per ordinary share less 25% tax in respect of the financial year ended Dec 31, 2010. Separately, Malaysian Pacific Corp Bhd and Amanah Raya Bhd are believed to have submitted a joint bid for the 32.2% equity stake in Pos Malaysia Bhd held by Khazanah Nasional Bhd. (Source: Bursa Malaysia, The Edge Financial Daily)

Mamee: To upgrade facilities. Mamee-Double Decker (M) Bhd, which aims to achieve an annual revenue of RM1b in five years, will spend 90% of its RM100m capital expenditure (capex) this year to upgrade its facilities and machinery in one of its Malacca plants. (Source: The Star)

SC: Zarinah’s term extended. The Securities Commission (SC) said the tenure of its chairman Tan Sri Zarinah Anwar has been extended for one year with effect from April 1. (Source: The Star)

Iskandar: 2012 to be tipping point for Iskandar. The first phase of catalyst projects in the ambitious Iskandar Malaysia will begin operations next year, signaling the beginning of a strong and sustainable metropolis of international standing. (Source: The Star)

Read more...

Stocks to watch: Pos Malaysia, HELP, TA Enterprise, Maybulk

KUALA LUMPUR: The FBM KLCI posted six straight days of gains last Friday, March 25, with the FBM KLCI up 0.77% or 11.66 points to 1,515.55 following the recent aftermath of the Japan earthquake and the on-going Mid-East turmoil but trading is expected to be lacklustre in the week ahead.

On Friday, Wall Street advanced for a third straight day, giving the S&P its best weekly performance since early February, but volume remained light as global uncertainty persisted.

The Dow Jones industrial average gained 50.03 points, or 0.41%, to 12,220.59. The Standard & Poor's 500 Index rose 4.14 points, or 0.32%, to 1,313.80. The Nasdaq Composite Index added 6.64 points, or 0.24%, to 2,743.06.

For the week, the Dow gained 3.1%, the S&P climbed 2.7% and the Nasdaq advanced 3.8%.

As for Bursa Malaysia, overall trading has been lacklustre and gains restrained also on concerns of high oil price, rising food prices and the impact on inflation, which is forecast to climb between 2.5% and 3.5% this year.

Malaysia’s consumer price index rose 2.9% in February 2011 from a year ago as prices for food & non-alcoholic beverages and non-food rose. The CPI rose 0.5% from January. For the period of January-February, the CPI rose 2.7% from the previous corresponding period.

The index for food & non-alcoholic beverages and non-food for the month of February 2011 showed increases of 4.7% and 2.1% respectively as compared to the same month in 2010.

While the market has managed to eke out marginal gains, investors are expected to nibble on selected stocks with on-going news, including RHB Capital and companies which announced their results including HELP INTERNATIONAL CORPORATION [] Bhd and TA ENTERPRISE BHD.

Companies like POS MALAYSIA BHD, MALAYSIAN BULK CARRIERS BHD and PACIFICMAS BHD would see trading interest after declaring dividends.

Pos Malaysia declared dividends totaling 17.5 sen for the financial year ended Dec 31, 2010.

PacificMas announced a windfall, with an interim dividend of RM1.398 per share less 25% income tax (net RM1.0485 per share) and single tier dividend of 30 sen per share (tax exempt) for the financial year ending Dec 31, 2011.

Maybulk declared a final single tier dividend of 10 sen per share for the financial year ended Dec 31, 2010. The dividend would be paid on May 6 this year.

Read more...

Maybank IB Views

ECONOMICS
4Q10 Real GDP
Within expectations...

4Q10 real GDP growth slowed for the third consecutive quarter to +4.8% YoY. QoQ, the economy expanded by +1.5% (2Q10: +2.5%). Real GDP growth for the whole of 2010 was +7.2% (2009: -1.7%). Domestic demand -especially consumer spending and gross fixed capital formation - provided the lift to the economy as external trade eased further. Forward-looking indicators like global PMI and Malaysia's index of leading economic indicators point to steady global and domestic growth momentum in the early part of 2011. Therefore, we expect growth to stabilise at around 5% in 1H 2011 (2H 2010: +5.1%) before accelerating to 6% in 2H 2011, thus maintaining our full-year 2011 forecast of 5.5% growth.


SECTOR UPDATE
Banking: Overweight
As interest rates rise...

Minimal impact expected from base case scenario. Regional rate hike concerns are unlikely to dissipate anytime soon, in our view, and Malaysian banks are unlikely to be spared the volatility. Analysis of our base case monetary policy scenario, however, suggests that the overall impact to bank earnings is minimal, with a positive bias to most banks within our coverage with possibly the exception of AMMB, should interest rates rise. Our top picks are CIMB and RHB Capital.


RESULTS REVIEW
AMMB Holdings RM6.32: Hold
An issue of sentiment

Downgrade to Hold. While we do not expect a significant impact to bank earnings under our monetary policy response assumptions, it is our view that AMMB is unlikely to outperform its peers in this current environment of rising interest rates, by virtue of its less favorable asset-liability mix. Valuations at current levels are fair vis-a-vis its peers, while dividend yields lag. 3QFY11 results, meanwhile, were uninspiring. Our DDM-derived target price is lowered to RM6.80 from RM7.10 on rolling forward valuations and earnings downgrades.

Technicals
The FBM KLCI rebounded 23.04-points and closed at 1,517.56 last week, as a locally-led rebound rally emerged after the previous week’s foreign sell-down. The obvious support areas for the FBM KLCI are located in the 1,474 to 1,517-zon and resistance at 1,519 and 1,576 will.

Trading idea for today is a ACCUMULATE call on SCIENTX.

Other Local News
UMW: Toyota targets 90,000 units sales. Automobile giant UMW Toyota Motor is anticipating nationwide sales to exceed 90,000 units this year to maintain its market share at 15% this year. UMW Toyota's strategy was to launch a series of new models this year, such as the new Lexus CT200h hatchback next week. (Source: The Star)

Pos: Khazanah starts restricted tender for Pos. Khazanah Nasional Bhd has entered into the second stage of the divestment process of its 32.2% stake in Pos Malaysia Bhd, starting with the restricted tender process for bidders. Bidding would be on a level playing field whereby the emphasis would be on bidders who would be able to introduce sound strategies and business plans sustainable to bring the postal entity to the next level of growth. (Source: The Edge Financial Daily)

Ramunia: In talks with Coral Alliance. Ramunia Holdings Bhd is in talks with oil and gas outfit Coral Alliance Sdn Bhd-believed to be linked to Tengku Datuk Ibrahim Petra and Robert Lee, former directors of Petra Energy Bhd- for a possible synergistic tie-up or even an acquisition of the latter. In any case, a joint venture or an acquisition of Coral Alliance by Ramunia will benefit the latter as Coral Alliance is said to be the frontrunner for a hook-up and topside maintenance contract from Petronas. (Source: The Edge Financial Weekly)

Ivory: Secures major tenants for Penang Times Square. Penang-based Ivory Properties Group Bhd has signed up several tenants that will take up sizeable areas in Times Square, along Jalan Datuk Keramat. The shopping centre’s total tenancy will increase from about 50% now to about 80% by April or May. The new tenants are reputable restaurateurs such as Tao, Ming Garden and Coffee Island. (Source: The Edge Financial Weekly)

Manufacturing: Solutia to invest RM305m on sulfur factory. US-based Solutia Inc is set to invest RM305m to build a new high-tech facility to manufacture insoluble sulfur, a vulcanising agent for critical application in tire industry. It is part of an expansion plan to the current plant operating in Gebeng industrial area here and by doing so, Solutia will double the capacity, making it the world’s largest manufacturing site for insoluble sulfur. (Source: The Star)

EPF: Declares 5.8% dividend for 2010. The Employees Provident Fund (EPF) announced a 5.8% dividend for the year ended Dec 31, 2010, slightly higher than the 5.65% given out in 2009. The RM21.6b dividend payout is the highest in the history and a 11.55% increase compared with the RM19.37b paid out in 2009. (Source: The Edge Financial Daily)

Read more...

Maybank IB Views

COMPANY UPDATE
Hartalega Holdings RM5.44: Buy
The nitrile wave keeps rolling Shariah-compliant

Upgrade to Buy with a RM6.80 DCF-based TP. Hartalega is set to profit from the structural demand switch to nitrile gloves, at the expense of latex gloves. Demand for nitrile gloves will continue to encroach into the latex gloves market as nitrile gloves ASP discount to latex widens (atypical in the past). Top Glove's M&A search for nitrile glove-makers and latex gloves' declining earnings are some of the recent developments that support our Buy call for Hartalega.


Technicals
The FBM KLCI closed lower by 4.45 points at 1,570.04 yesterday. Its resistance areas of 1,570 & 1,576 may cap market gains, whilst its firmer support areas are located at 1,558 and 1,568.

Trading idea for today is a SHORT TERM BUY call on TM.


Other Local News
Axiata, DiGi: To save RM2.2b with network deal. Celcom Axiata Bhd and DiGi Telecommunication Sdn Bhd have signed a Network Collaboration Agreement. The scope of the tie-up will initially focus on the sharing of telecommunication sites, access transmission (microwave links), aggregation transmission and trunk fibre transmission. Full realization of cash savings is estimated to be about RM2.2b over 10 years. They expect to see incremental savings as early as 2012 and gradually ramping up to an average annual savings of RM150m to RM250m after 2015. (Source: Bursa Malaysia)

Pos: Khazanah to invite bids for Pos stake. Khazanah Nasional Bhd will invite bids this week through its advisor CIMB Investment Bank Bhd for the divestment of its 32.2% stake in Pos Malaysia Bhd. Pos Malaysia's stake divestment would be a two-stage process, with the first stage addressing regulatory aspects such as the increase in postage tariff rates and rise in salaries and allowances for most of Pos Malaysia's staff. While stage one has not been fully completed as other regulatory aspects such as the Postal Bill have yet to be addressed, Khazanah will proceed with stage two, where it will draw up a bidding and evaluation process to select a new shareholder for Pos Malaysia. (Source: The Star)

Proton: Seeks RM2.35b funding to revive Lotus. Proton Holdings Bhd is in talks with CIMB Bank and several others to secure loans and investments totaling GBP480m (RM2.35b) needed to turn around Group Lotus. The funds will mainly come from loans and the rest will be from Proton's additional investments and revenue from Group Lotus. (Source: The Star)

KPJ: To acquire two medical centres. KPJ Healthcare Bhd’s wholly owned subsidiary, Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB) is buying a 100% stake in Sibu Medical Centre Corp Sdn Bhd (SMCC) and Sibu Geriatric Health & Nursing Centre Sdn Bhd (SGHNC). KPJSB will pay RM26.9m for SMCC and RM1.24m for SGHNC. (Source: Bursa Malaysia)

Jetson: Buys lands in Penang for Rm14m. Kumpulan Jetson Berhad's 51% owned subsidiary, Jetson Development Sdn Bhd has acquired 48,290 sq ft of lands in Penang for RM14m from Malaysian Building Society Bhd (MBSB). The three pieces of land are located in Georgetown. (Source: Bursa Malaysia)

Property: Transactions may hit RM100b. A total of 342,179 property transactions worth RM96.8b were recorded between January and November last year, which means the full year's transactions could reach the RM100b mark. This is the first time transactions value has reached this figure. (Source: The Star)

Manufacturing: To attract over RM50b. Malaysia expects investments in the manufacturing sector to surge to more than RM50b this year. The manufacturing sector, which was the fastest growing sector last year, attracted RM47.2b in approved investments in 910 projects, a 44.8% jump compared with RM32.6b received in 2009. The US was the largest source with investments totaling RM11.7b, mainly in electrical and electronics (E&E), machinery and equipment and scientific and measuring equipment. Other top investors were Japan, Hong Kong, Singapore and Germany. (Source: Business Times)

Khazanah: Portfolio at record RM75b. Khazanah Nasional Bhd saw the net worth of its portfolio rise 39.4%, or RM21.2b, to a record RM75b as at Dec 31, 2010 from RM53.8b in 2009. Total shareholders' return on Khazanah's portfolio of listed companies in 2010 stood at 33.4%, outperforming the FTSE Bursa Malaysia KL Composite Index's total return of 23.3% over the same period. (Source: The Star)

Read more...

Maybank IB Views

Market Strategy
Riding the high waves

Positives dominate. We expect Malaysian equities to scale new highs in 2011 supported by: (i) liquidity flows as funds continue to move into emerging markets, courtesy of the US’ 2nd dose of quantitative easing (QE2), (ii) the growing possibility of an early general election (GE), (iii) domestic investment upcycle from direct investments and the Economic Transformation Programme (ETP) implementation, and (iv) corporate exercises – M&As, privatisations and GLIC divestments – helped by low interest rates and ample liquidity.


ECONOMICS
2011 Outlook
Global Headwinds, Local Undercurrents

Volatile external environment amid “sustainability, solvency and stability” risks... Uncertainty remains over the strength and staying power of US recovery, hence the extension and expansion of monetary and fiscal stimulus. Eurozone sovereign debt turmoil persists amid concerns over the vulnerability of the peripheral economies and contagion to other countries, financial institutions’ exposure via intra-regional loans and holdings of government papers, as well as the public and banking sectors’ funding gaps. For emerging markets, namely Asia Pacific (ex-Japan) and BRIC, the issue is that of macroeconomic and financial stability as they grapple with “bubblenomy” risk arising from the combination of hot money inflows, excessive currency movements as well as general and asset price inflation.


SECTOR UPDATE
Banking: Overweight
Nov '10 statistics: Chugging along robustly

Remain Overweight. Bank Negara reported that loans to households continued to take the lead in Nov 2010, up +1.3% MoM and +13.9% YoY. Loans to businesses, which account for a smaller 44.5% of total system loans, was up +1.4% MoM but this translated into a comparatively slower +10.3% YoY. We remain Overweight on Banking as the over-riding theme in 2011 should be for project financing requirements under the ETP to spur loans growth further.


COMPANY UPDATE
IJM Corporation RM6.23: Buy
Property merger is off Shariah-compliant

Call under review. The aborted IJM Land-MRCB merger is a major disappointment as expectations have been built in for a much stronger outlook under an enlarged group. No change to our earnings forecasts which have yet to incorporate the merger potential. However, share price, which has been up 11% since the merger was proposed, is closing in to our RM6.40 RNAV. Our target price is under review pending an update with management to revisit its prospects.


Axis REIT RM2.37: Buy
Another yield accretive acquisition Shariah-compliant

Last acquisition for 2010. We are positive on the latest office purchase in Cyberjaya given its fair pricing as well as attractive 8% net property yield (vs. 6.9% funding cost). This yield-accretive acquisition is expected to enhance our 2011-12 EPS forecasts by 1.5-3.4%. We continue to like AXRB’s proven track record and hands-on management. Maintain Buy with a higher RM2.63 TP (+1.2%).


Dialog Group RM1.79: Buy
Bags ABF's EPCC job Shariah-compliant

We are bullish on fabricators. Dialog's ABF EPCC job win exhibits stronger orders and tender pipelines, and the momentum is set to sustain in 2011, especially for CTF-related EPCC works. We have raised Dialog's SOP target price to RM2.60, now incorporating part of its deepwater Pengerang centralized tankage facilities (CTF) project, which will feature prominently over the next few years. Buy.


Technicals
The FBM KLCI gained 7.33-points and closed at 1,518.91 last week, as some profit taking activities on stocks trimmed the market's initial advance. The obvious support areas for the FBM KLCI are located in the 1,474 to 1,518-zone. The key resistance areas of 1,520 and 1,531 may cap any rebound activity. we favour marginal chances of an upside break towards 1,531.99 in the medium-term.

Our weekly trading idea is a SHORT-TERM BUY call on TDM.


Other Local News
RHB, Pos Malaysia: To launch new banking service. RHB Banking Group, in a collaborative effort with Pos Malaysia Bhd, is launching the Pos Malaysia-RHB Shared Banking Services to enable banking services for its customers at selected Pos Malaysia outlets nationwide. The first phase would involve 21 selected Pos Malaysia outlets in the Klang Valley and Negri Sembilan. (Source: The Star)

Construction: RM144m allocated for infrastructure facilities in Kelantan. The Rural and Regional Development Ministry has allocated RM144m to provide infrastructure facilities in Kelantan during 2011. The projects include the provision of water and electricity supply, construction of roads, and building of houses for the poor. (Source: The Star)

Construction: RM1.46b island project revived. The RM1.46b Pulau Melaka twin reclaimed island project has been revived after a decade of financial and legal woes. The project, that involves the construction of some 400 commercial shop lots comprising a total of 1,534 units, would resume by September 2011. Most of the development work on the island has been completed with 521 units finished. (Source: The Star)

Mining: Advance SCT restarts Malaysian aluminium smelting plant. Advance SCT Ltd, one of Singapore's largest traders of aluminium, copper and stainless steel scraps, has restarted its aluminium smelting plant in Malaysia last month. The smelter would produce 200 to 400 tonnes of aluminium ingots monthly. It has also secured an exclusive contract to supply at least 1,000 tonnes a month of first grade copper scraps to China-based Qingyuan Shengli Copper Material Co Ltd. (Source: The Star)

Plantation: Oil palm dealers concerned about MPOB's new rule. The Malaysia Oil Palm Dealers Association (MOPDA) has expressed concern over Malaysian Palm Oil Board’s (MPOB) move to bar dealers from buying and selling oil palm fresh fruit bunches (FFB). The MPOB ruling, effective since 1st January 2011, allows estates, smallholders and dealers to sell directly to millers, preventing small dealers from being monopolised by big dealers, and enhancing the quality of oil palm fruits so that the oil extraction rate would exceed 25%. (Source: The Star)

Insurance: AXA Affin, BH Insurance to merge. AXA Affin General Insurance Bhd will merge with BH Insurance (M) Bhd and operate as single entity starting Jan 1. The combined turnover of the two entities puts them among the top five insurers in the country. (Source: The Star)

Read more...

RHB Invest Research

Top Story


Jaya Setia:

• Still a plantation company in the making
• Indicative value is RM4.83. Maintain Outperform

Corporate Highlights



Pos Malaysia:

• Maiden boost from postal tariff hike.
• We cut FY10-12 net profit forecasts by 30-41% largely to reflect the lower-than-expected bottom line impact from the tariff hike.
• We value POSM at RM3.17.

KNM:

• Moving Forward Confidently.
• 
  
• The company looks to grow its technology and plant services division and also offer total project solutions
• This is as it believes such projects have lesser competitors and can fetch fatter margins.
• The company currently has an order backlog of RM2.4bn and tender book of RM16bn
• It expects to win at least RM3bn worth of contracts in FY11.
• We maintain our Outperform call on the stock with a fair value of RM2.33.

Hartalega:

• Stop-Work Order From Prime Minister Department due to chemicals discharged from its factories
• Three government agencies to conduct investigations on the complaints and declared that the factory did not pose any health risks to residents.
• It is still business as usual as Hartalega has not received any stop-work order from MDKS.
• Our indicative fair value is maintained at RM5.64.
• Market Perform call on the stock reiterated.

Technical Highlights


Daily Trading Strategy:

• Although the index managed to close the day at above the critical psychological level at 1,500 yesterday, there is a high risk of losing the 10-day and 40-day SMAs near 1,494 and 1,499, before heading towards the recent low of 1,474.02 and the critical level at 1,450 soon.
• Given the poor volume performance on the trading floor, and the volatile regional markets performances, investors are likely to continue their selling mode in the near term, in our opinion.
• Though the looming election plays and the speculation of more corporate M&A activities ahead may fuel further speculative interests in the short-term.
• The broader and regional economic concerns may prompt the longer-term investors to continue locking in more profits going forward.
• As a result, we prefer to stay biasly negative for the near-term technical outlook.

Daily Technical Watch: DRB-Hicom

• A surge towards the all-time high level possible if it removes RM2.34 today.
  
• Immediate support at RM2.23
• Immediate Resistance at RM2.34

Read more...

Pos Malaysia Berhad Current Support

Pos Malaysia Berhad currently traded in downtrend line. Take a breath a the 161.8% Fibonacci line and continue to south direction. RSI-14 days already in oversold area. Anyway, current support is RM2.10. See chart below;

Happy trading!

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Another Stock To Monitor

Here I enclose 3 stocks to be monitored. RSI-14 in oversold area and share trading price last trading session is near the Fibonacci Extension level.

Pos Malaysia Bhd Daily Chart


Air Asia Bhd Daily Chart


Mobif Bhd Daily Chart

The confirmation for entry is very much depend on the volume itself. I will update soon which only trigger my entry. Maybe by next week or January next year. Tomorrow is holiday. I am wishing you all "Selamat Hari Raya Aidiladha".

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Stock To Monitor - RSI Oversold

Titan Petrochemical and Pos Malaysia currently in oversold area using RSI 14 days. Both in downtrend mode and were traded near their popular fibonacci level, 100% and 161.8% level as well. See both charts below:

Titan Petrochemical Daily Chart

Bullish divergence occurred on this stock. Price set low while RSI 14 days not. Double bottom may exist for couple of days. Patience is virtue!

Pos Malaysia Daily Chart

My strategy for this counter is waiting for the bottom reversal which I expected that at the level 161.8% fibonacci level. You may also wait the chart patterns appeared and confidently enter the market with tight stop loss.

Happy trading and happy learning!

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