Maybank IB Views

QL Resources RM3.34: Buy
Good start for the 2nd decade of listing Shariah-compliant

Another good year. 4QFY11 net profit of RM31.6m (-4.8% YoY; +19.3% QoQ) took QL's FY11 net profit to RM124.5m (+16.5% YoY), which was within our forecast and consensus. FY11 marks the 10th straight year of double-digit net profit growth since its listing in FY00. We expect another year of strong earnings growth (+30%) premised on the new surimi lines in Surabaya, maturing plantation in Eastern Kalimantan and its palm pellet project. We maintain our Buy call and target price of RM3.75.

Technicals
The FBM KLCI tumbled 12.05 points to close at 1,528.98 yesterday. Its resistance areas of 1,528 and 1,550 will cap market gains, whilst the weaker support areas are located at 1,510 and 1,526.Due to the DJIA’s much weaker tone last night, we will see some heavy liquidation activities today. We expect the FBM KLCI to remain under heavy selling today, as the global market malaise takes hold.

Trading idea is a Take profit call on HAPSENG.

Other Local News
AirAsia: To go bigger and may place big order for Airbus. Datuk Seri Tony Fernandes signalled ambitious plans for AirAsia as he closed in on a potentially massive deal to buy Airbus aircraft, which could rival a recent USD16b, 180-plane deal as one of the world's largest. (Source: The Star)

TM: VADS partners Cisco in telepresence service. VADS Bhd, a subsidiary of Telekom Malaysia Bhd (TM), is hopeful of double-digit growth over the next few years for its upcoming telepresence service. (Source: Business Times)

Puncak Niaga: Forays into oil and gas, secure water supply project. Puncak Niaga Holdings Bhd has acquired 40% equity in Global Offshore (Malaysia) Sdn Bhd (GOM) and KGL Ltd (KGL) respectively for a cash consideration of USD8.4m (RM25.2m) and USD15.2m (RM5.6m) respectively. Separately, a consortium consisting of a 40:60 unincorporated JV between Quality Concrete and Puncak Niaga has secured a RM667.3m contract for a rural water supply project in Sarawak. (Source: Bursa Malaysia)

TNB: Cabinet to decide on Wednesday on tariff increase for TNB. The Cabinet is expected to decide on Wednesday, May 25 if there should be a tariff increase for Tenaga Nasional Bhd. (Source: The Edge Financial Daily)

E&U: First block of Kimanis 100MW Plant to be completed in 2013. The first generation block of 100 MW of the proposed 300MW Combined Cycle Gas Turbine Power Plant in Kimanis is expected to be completed in Dec 2013. The power plant and its related projects, costing about RM1.6b is expected to supplement Sabah’s increasing demand for electricity. (Source: Bernama News)

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VADS Berhad

VADS’ core businesses are the management of computer network systems and call centers. It is an information technology (IT) company that can provide total solutions for companies seeking to outsource their internal computer and network requirements.

Standard and Poor's (S&P) quoted in his stock commentary today that "We reiterate our Buy recommendation and raise our 12-month target price to MYR7.00 (from MYR5.44 adjusted for a 1 into 2 share split)".

VADS intends to pay out 40% - 60% of net earnings as dividends giving reasonable yields forecast at 3.6%. With MYR19 mln net cash at end-Jun. 2007, we believe the conservative payout policy leaves VADS with sufficient reserves to make further strategic acquisitions or failing which, to raise the payout going forward. (S&P)

VADS Berhad Weekly Chart

From the weekly chart showed that VADS Berhad stock trading at 423.6% fibonacci extention level which already achieved the second target price. A doji star occured where the doji gap above previous candle on the uptrend sometime showing that the trend will change. This signal confirmation can be validated after the next candle occured. On the techincal indicator 14-weeks RSI showing that the price is in overbought area at 78. Additionally bearish divergencce occured in daily and weekly chart RSI.

Even the S&P recommendation is to buy this stock in his report, my TA said that we have to wait until we get a good price which I assume this stock will make correction before its continue to north direction.

Trade on your own risk. Happy learning and happy investing!

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