Market higher in early trade, external boost

KUALA LUMPUR (Feb 20): Blue chips climbed in early trade on Monday, in line with the firmer regional markets, as sentiment was boosted by China’s policy easing and prospects for Greece to clinch a second bailout fund

At 9.14am, the FBM KLCI was up 4.62 points to 1,561.77. Turnover was 164.34 million shares valued at RM78.67 million. There were 230 gainers, 84 losers and 166 counters unchanged.

CIMB Equities Research said in its market report that prices has last week continued to linger near the key resistance band of 1,560-1,565, where sellers have been strong.

“The KLCI tested the wedge resistance twice but it failed to breakout on both occasions. It is still too early to call for a reversal but a close below 1,550 would tip the scale in favour of the bears.

“If prices fail to take out the 1,566 high soon, then there is a good chance that the strong run-up in trading volume over the couple of weeks could potentially be deemed as a buying climax. A close below the 1,550 levels would likely send the index back towards 1,525 and 1,500 next. Breaking 1,525 would likely signal a weaker trend in the weeks ahead,” CIMB Research said.

Among the gainers on Bursa were Aeon, up 38 sen to RM8.08, BAT 16 sen to RM52.68 and Petronas Dagangan 16 sen to RM18.18.

Mudajaya rose 10 sen to RM3.05, IJM nine sen to RM5.99 and UMW eight sen to RM6.98.



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CIMB Research has technical buy on Unisem at RM1.51

KUALA LUMPUR (Feb 20): CIMB Equities Research has a technical buy on Unisem at RM1.51 at which it is trading at a price-to-book value of 0.9 times.

It said on Monday Unisem looks set to break out of its wedge resistance. A breakout of the resistance trend line (now at RM1.54) should lift prices back towards RM1.66 and RM1.75.

“Although MACD signal line is still dwindling, we believe the downtrend will reverse soon. RSI indicator has hooked upward.

“Risk takers may take some position here while others should join the buying bandwagon when the candles swing past the RM1.54 level. Be quick to cut loss if the RM1.44 level is breached,” said CIMB Research.



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CIMB Research has technical buy on Oldtown at RM1.28

KUALA LUMPUR (Feb 20): CIMB Equities Research has a technical buy on Oldtown at RM1.28 at which it is trading at a price-to-book value of 2.0 times.

It said on Monday that Oldtown broke out of its wedge resistance on Friday with strong volume.

“We see this as a prelude to more upside ahead. If we are right, the next upswing is likely to push prices towards RM1.34, RM1.40 and RM1.50,” it said.

CIMB Research said MACD signal line is poised for a positive crossover while RSI has also hooked upward. The improving technical bodes well for the stock.

It said that aggressive traders may start to nibble now. However, it is crucial to put a stop at below the RM1.20 level. Violating this level is bearish for the stock.



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CIMB Research has technical sell on EP Manufacturing at 96 sen

KUALA LUMPUR (Feb 20): CIMB Equities Research has a technical sell on EP Manufacturing at 96 sen at which it is trading at a price-to-book value of 0.6 times.

“The uptrend channel from its September 2011 low may have exhausted. Selling pressure begins to pick up near the RM1.02 resistance level. Looking at the chart, we think the stock is due for a consolidation, with support seen at 90 sen and 84 sen,” it said.

CIMB Research said the indicators are showing signs of exhaustion. MACD signal line is poised for a negative crossover while RSI has also hooked downward.

“Unload on strength looks like a good option here as near term gains are likely capped at 98.5 sen to RM1.02. Put a buy stop at RM1.04,” it said.



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RHB Research maintains Market Perform on IJM Land, FV RM2.33

KUALA LUMPUR (Feb 20): RHB Research Institute is maintaining its market perform on IJM Land Bhd with a higher fair value of RM2.33.

It said on Monday the launch of 1,879-acre Canal City in 3Q2012 will rightly meet the sector’s switch to the middle-end housing. The gross development value could potentially be expanded to RM12 billion to RM15 billion, vs RM10 billion in its RNAV estimate.

“We are confident that Phase 1 (GDV RM250m) will be well-received, driven by: (i) limited new phases in established townships nearby; (ii) continued pent-up demand on mid-end housing, which banks are still supportive in their lending; and (iii) lack of sizeable self-contained new township development in the Klang Valley by reputable developer,” it said.

RHB Research revised up its GDV and margin assumption for Canal City. This results in an RNAV enhancement of 14 sen a share. Based on an unchanged 15% discount to RNAV, its fair value was raised to RM2.33.



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AmResearch maintains Buy on Ann Joo Resources, lower FV of RM2.73

KUALA LUMPUR (Feb 20): AmResearch is maintaining its Buy on Ann Joo Resources with a slightly lower fair value of RM2.73 a share (previously: RM2.79) to factor in a more muted 4QFY11 and initial start-up cost for its new blast furnace project.

It said on Monday that notwithstanding, it projects FY12F to be a turnaround year for Ann Joo on account of:

(i) Stronger domestic demand with the imminent roll-out of domestic projects, particularly the Sg.Buloh-Kajang (SBK) MRT;

(ii) Earnings are at an inflection point (4.7 times jump in FY12F net profit to RM139 million);

(iii) Normalisation of key input costs (e.g. iron ore, scrap, coking coal); and

(iv) Full-year impact from its blast furnace operations.

“After a recent re-rating of CONSTRUCTION [] stocks, we recommend investors to catch the next MRT ‘wave’ through domestic steel plays,” it said.

AmResearch said with capex front-loaded, Ann Joo is one of only five integrated local suppliers of construction steel that can ride on the imminent roll-out of MRT works, irrespective of the contractors involved – maiden orders may kick in from June onwards.

"Ann Joo’s earnings are at its inflection point, rising from RM30 million in FY11F to RM139 million and RM179 million in FY12F-13F amid attractive forward PEs of 7.0 times and 9.0 times, below its six-year average historical price-to-earnings of 11 times," said the research house.



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HDBSVR: Buying interest in Malaysian stocks to resume

KUALA LUMPUR (Feb 20): HwangDBS Vickers Research (HDBSVR) said buying interest in Malaysian stocks could resume on Monday due to better external sentiment.

“If so, then the benchmark FBM KLCI may pull away from its immediate support level of 1,555 ahead,” it said on Monday.

HDBSVR said although Wall Street saw mixed closings last Friday – ending between -0.3% and +0.4% – the futures markets were up on Monday morning. The DJIA March futures contract was trading at a 56-point premium to the spot rate at 8.15am Malaysian time, lifted by hopes that Greece is on track to receiving international financial aid.

In terms of share price actions, oil & gas counters may be in the limelight, including:

(a) Tanjung Offshore, which could be a merger & acquisition target according to a business weekly report;

(b) SapuraCrest Petroleum, after entering into a joint venture in relation to the building, CONSTRUCTION [] and operation of three pipe-laying support vessels pursuant to a previously secured contract to charter and operate the three vessels at a contract value of US$1.4 billion; and

(c) MMC Corporation, following its announcement that the listing of its subsidiary Gas Malaysia would be delayed from 1Q12 to 2Q12.



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Stocks to watch: Shell, MMC, Sarawak Cable, Wing Tai

KUALA LUMPUR (Feb 18): Stocks on Bursa Malaysia could advance on Monday, Feb 20 following positive developments in Greece and China’s move to shore up the slowing economy.

Reuters reported late Saturday that Greece's cabinet tackled on Saturday how to implement austerity demanded by the EU and IMF as a 130-billion-euro (US $171-billion) rescue seemed within reach, while the euro zone considered modifying a deal with private creditors to help Athens reduce its huge debts.

In another development, China's central bank cut the amount of cash that commercial lenders must hold as reserves on Saturday for the second time in nearly three months, the latest step to shore up the slowing economy.

The People's Bank of China (PBOC) delivered a 50-basis-point cut in banks' reserve requirement ratio (RRR), effective from next Friday, Feb. 24, after repeatedly defying market expectations for such a move.

At Bursa Malaysia, stocks to watch include Shell Refining Company (Federation of Malaysia) Bhd, MMC CORPORATION BHD [], Sarawak Cable Bhd and Wing Tai Malaysia Bhd.

Shell Refining posted net losses of RM99.49 million in the fourth quarter ended Dec 31, 2011 compared to the net profit of RM114.66 million a year ago.

Shell attributed the losses due to weak refining margins which had also impacted the FY11 results, where it reported net losses of RM125.74 million.

MMC said on Friday the listing of its 41.8% owned Gas Malaysia Bhd on the Main Market of Bursa Malaysia Securities was delayed to the second quarter of 2012.

MMC said Gas Malaysia was “still in the midst of complying with the conditions imposed by the Securities Commission”.

Sarawak Cable has scrapped the MoU with Sinohydro Corporation (M) Sdn Bhd and KEC International Ltd to develop transmission lines in Sarawak.

This latest development could possibly see Sarawak Cable going alone to undertake the project.

On Aug 17, 2011, the three parties had signed the MoU to prepare and submit proposals for the project.

Meanwhile, Wing Tai Malaysia Bhd saw its major shareholder increasing its stake to 61.07% or 191.218 million shares with the recent acquisition of 2.20 million shares on Feb 17.

The Edge Malaysia reports that Century Logistics ahs put the FSU setback behind it. The service provider is confident of matching its 2010 record performance this year despite a minor setback with its floating storage units in 2H2011.

S P Setia Bhd reported that the Securities Commission has declined a ruling application sought by the joint offerors of S P Setia – Permodalan Nasional Bhd and S P Setia president and CEO Tan Sri Liew Kee Sin.

The joint offerors had decided not to appeal. However, the decision would not impact the joint offer.



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