RHB Research expects RCE 4Q earnings to weaken

KUALA LUMPUR (Feb 15): RHB Research Institute said RCE’s 3QFY03/12 net profit of RM24.8 million (down 24.4% on-year; down 7.8% on-quarter) was in line with its and consensus expectations.

It said on Wednesday that this was despite 9MFY12 net profit of RM84.9 million (down 3.2% on-year) accounted for 83.5%-84.5% of its and consensus full-year net profit forecasts.

“We expect 4Q11 to weaken further amid a loan book that continues to contract and in the absence of further gains from sale of AMFIRST REITS [] now that RCE has fully disposed off its holdings in the REIT,” it said.

RHB Research said its fair value of 57 sen was unchanged and based on target CY12 PER to 4.5 times. Market Perform call maintained.



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KLCI slips in early trade, select blue chips weigh

KUALA LUMPUR (Feb 15): The FBM KLCI slipped in early trade on Wednesday, weighed by select blue chips in cautious sentiment ahead of Bank Negara Malaysia announcing the fourth quarter 2011 gross domestic product growth data.

Meanwhile, regional markets consolidated on Wednesday as investors waited on Greece to demonstrate its commitment to deliver harsh reforms in exchange for a vital rescue deal, while European officials scaled back expectations Athens will live up to its promises, according to Reuters.

At 9.05am, the FBM KLCI was down 2.16 points to 1,563.89.

Gainers led losers by 124 to 72, while 137 counters traded unchanged. Volume was 64.07 million shares valued at RM30.86 million.

Among the early decliners were GAB, Carlsberg, Hibiscus, MBM Resources, Naim Indah Corp, JCY International and CIMB.



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AmResearch maintains Buy on Dialog Group at RM2.85

KUALA LUMPUR (Feb 15): AmResearch is maintaining its Buy call on Dialog Group with an unchanged sum-of-parts derived fair value of RM2.85 a share.

It said on Wednesday its fair value implied a CY12F PE of 30 times, above its three-year average of 25 times but below its peak of 40 times in 2007.

“Dialog’s 1HFY12 net profit of RM86 million (+25% on-year) came in within expectations, accounting for 42% of our and street’s estimates.

“For comparison, 1HFY11 accounted for a slightly higher 45% of FY11 net profit. We expect a stronger 2HFY12 contribution from Dialog’s engineering and procurement division as the land reclamation for the Pengerang Phase 1 tank terminal is scheduled for completion by June this year,” it said.

AmResearch said additionally, the pace of earnings recognition for its tank terminal operations is expected to accelerate as the 76,000 cu metre-Tanjung Langsat Terminal 1 phase 3 was completed in August 2011 while 171,000 cu metre-Langsat Terminal 2 was completed in December last year.

“We remain positive about the group’s expanding recurring earnings profile. The stock currently trades at an attractive CY12F PE of 26 times, below its 2007 peak of 40 times,” said the research house.



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OSK Research sees upside target for Green Ocean at 24.5 sen

KUALA LUMPUR (Feb 15): OSK Research said the trading volume on Green Ocean Corporation Bhd rebounded on Tuesday after the stock’s consolidation of Feb 8’s sharp gains.

It said on Wednesday that Tuesday’s strong volume indicates the stock’s desire to maintain a posture at above Feb 8’s opening point.

“As it is uncommon for such strong gains to fully evaporate, traders may consider accumulating Green Ocean shares while the stock is still in consolidation mode.

“We are eyeing the 24.5 sen level as the first upside target while our cut-loss is pegged at below the 16 sen level,” it said.



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CIMB Research has technical buy on K-Star Sports at 31.5 sen

KUALA LUMPUR (Feb 15): CIMB Equities Research has a technical buy on K-Star Sports at 31.5 sen at which it is trading at a price-to-book value of 0.4 times.

It said on Wednesday that although prices pared early gains, it thinks K-Star is poised for stronger rebounds.

“The triangle breakout suggests that momentum is slowly building up. For risk takers, you might want to take some position here to ride the next upswing. The following resistance levels are 33.5 sen and 35 sen,” it said.

CIMB Research said the MACD signal line has staged a positive crossover while RSI is also rising.

“The short term reading reinforces our bullish stance on the stock.

“Any pullback is an opportunity to accumulate. However, always place a stop at below RM0.30 to limit downside exposure,” said the research house.



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CIMB Research has technical sell on Hock Seng Lee at RM1.65

KUALA LUMPUR (Feb 15): CIMB Equities Research has a technical sell on Hock Seng Lee at RM1.65 at which it is trading at a price-to-book value of 2.3 times.

It said on Wednesday that Tuesday’s black candle confirmed the bearish reversal pattern on Monday.

“It seems that the RM1.75 high would likely be its near term resistance. The next downleg could potentially bring prices towards RM1.58 and RM1.49,” it said.

CIMB Research said the easing technical readings do not bode well for the stock. MACD histogram bars are losing ground while RSI has also hooked downward.

“Once the short term support at RM1.63 is violated, expect selling pressure to accelerate. Hence, any rebound is an opportunity to sell into strength. Put a buy stop at RM1.76, just in case,” it said.



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CIMB Equities Research has technical sell on MMC Corp at RM2.90

KUALA LUMPUR (Feb 15): CIMB Equities Research has a technical sell on MMC Corporation at RM2.90 at which it is trading at a price-to-book value of 1.3 times.

It said on Wednesday that MMC Corporation is hovering in an uptrend channel but it thinks the stock is likely to take a breather soon.

“Yesterday’s sharp pullback shows that sellers are gaining pace fast. If the wedge support is breached, expect next downleg to be sharp, possibly pushing prices towards RM2.70 and RM2.54,” 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.

“Use any rebound towards RM3.00-RM3.06 to unload on strength. Unless prices swing past the RM3.10 level, we would rather stick with the bear’s camp,” it said.



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CIMB Research maintains trading buy on Hap Seng Plantations at RM3.05

KUALA LUMPUR (Feb 15): CIMB Equities Research is maintaining its Trading Buy call on Hap Seng PLANTATION []s at RM3.05 and has a target price of RM3.27.

It said on Wednesday investors should discount Hap Seng Plantations’ 6% FY11 results shortfall and focus on its cheap ratings.

“It is the cheapest Malaysian planter in our universe, boasting an enterprise value per hectare that is below market price. We cut our FY12-13 EPS to account for higher replanting costs, which were one of the reasons for the results shortfall,” it said.

CIMB Research said it maintained its Trading Buy call and target price (based on 11.3 times price-to-earnings) as it believes that investors have overlooked the stock’s undemanding valuations and solid dividend yields.



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