Nov 24, 2015

BINTAI – Received RM64.9M Contract In Cambodia

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below: BINTAI Daily Chart

bintai analysis BINTAI was in the limelight after it received a RM64.9m mechanical, electrical and plumbing contract for the Rosewood Hotel in Phnom Penh, Cambodia. In tandem with strong volume traded, the share price has staged a strong rally of 4.5 sen (15%) to stage a breakout from its multi-month downtrend resistance level to close at RM0.345 yesterday. The MACD has also staged a crossover from its Signal line to indicate a bullish outlook ahead, while strong buying momentum is showcased by the uptick in RSI and Stochastic. On the flip side, we view that a short-term consolidation with upside-bias could be on the cards as the strong rally yesterday may be overdone. Near-term upside is seen capped at the RM0.39 (R2) level, with immediate resistance set at RM0.35 (R1).

Source: Kenanga Research – 24/11/2015


The principal activities of the Group are the provision of specialized services in mechanical and electrical works construction of power plants and transmission lines property investment and development and undertaking of turnkey construction projects.

Nov 23, 2015

IFCA MSC May Trend Higher


IFCA MSC BHD Stock Code: 0023 Board: ACE

IFCA  MSC  may  trend  higher  after  breaching  the  downtrend  line  to cross the 100-day MAV line in its latest session. Traders may buy as a  bullish  bias  could  be  present  above  the  MYR0.91  level,  with  a target  price of MYR1.03, followed by MYR1.08.  The stock may drift lower  if  it  cannot  sustain  above  the  MYR0.91  mark.  In  this  case, further  support  is  anticipated  at  MYR0.845,  where  traders  can  exit upon a breach.

IFCA MSC Daily Chart:

IFCA  MSC  analysis

Source: RHB Research – 23/11/ 2015

The Company is principally involved in R&D and selling of enterprise-wide integrated business solutions.

Nov 17, 2015

WCT Trading Buy

WCT Target Price RM1.50   Stock Code: 9679

wct chart analysis

In tandem with high trading volume, WCT rebounded strongly from its -2SD regression level to break out from its 1-month’s down trend resistance yesterday. The technical outlook is promising, given that both RSI and Stochastic are showing strong upticks to suggest swelling buying momentum, with the latter reversing strongly from its oversold region to reinforce a rebound play potential. Should follow-through buying interest persist, we view that the share price could retest its previous 1.5 month’s high level of RM1.50 (R2) in the near-term.

source:  Kenanga Research  17/11/15

The Company is principally an investment holding company which provides management services to its subsidiary and associated companies. Its two main subsidiaries are primarily involved in civil engineering and construction property development investment and management activities.

Nov 16, 2015

Denko May Trend Higher


DENKO Stock Code: 8176

Denko Industrial Corporation may trend higher after inching above the  MYR0.35  level  in  its  latest  session,  albeit  marginally.  Traders may buy as  a  bullish  bias could be present above this level, with a MYR0.405  TP, assuming the MYR0.385 level can be overcome.  The stock  may  take  a  breather  if  it  cannot  sustain  above  the  MYR0.35 mark. In this case, further support is anticipated at MYR0.32, where traders can exit upon a breach.

buy denko

source:  RHB Research – 16/11/15

The Group is originally involved in the manufacture and distribution of packaging materials also manufactures and distributes plastic pipes and ladies' undergarments and provides maintenance services for sewerage systems.

Nov 12, 2015

3QCY15 Earnings Preview: Expect Largely Positive Growth Among Major Sectors


KLCI: 1,685.70 points 2015 Year-end Target: 1,650 points

Aggregate adjusted earnings of FBM KLCI stocks may increase +15.6%qoq and +8.5%yoy. For the quarter ended September 2015, the aggregate reported earnings of FBM KLCI current constituents is estimated at RM13.66b. Against the combined RM13.56b earnings reported in preceding quarter, it is expected to record a rather minute sequential growth of +0.8%qoq in 3QCY15. Conversely, adjusted for extraordinary and non-recurring items, the on-quarter growth may be glaringly higher at +15.6%qoq. On the other hand, the on-year reported growth figure in 3QCY15 is estimated to fall by -1.7%yoy. However, the adjusted on-year growth number might be starkly better at +8.5%yoy, which is also a reversal to the -11.4%yoy adjusted growth performance of the prior quarter.

3QCY15 aggregate reported earnings is estimated at RM13.66b (adjusted at RM15.15b)malaysia aggregate earning

Largely positive adjusted performance among major sectors. We are expecting largely positive earnings performance among the FBM KLCI’s Big 5 sectors, i.e. Banking, Oil & Gas, Utility, Telecommunication and Plantation. Of the Big 5 sectors, only Banking and Plantation are expected to report slight negative on-year earnings growth. On the other hand, we expect positive on-quarter growth for all Big 5 sectors excepting Plantation.

FBM KLCI: Quarterly adjusted earnings (RM million) and growth estimates

FBM KLCI Quarterly adjusted earnings table

•  Banking. We continue to expect earnings growth of banks in 3QCY15 on year-on-year basis to remain unexciting. This is due to: i) persistent NIM pressure contributed by strong competition for deposits impacting banks’ funding cost and lower asset yield, (ii) market volatility affecting treasury and IB income resulting in challenges to grow NOII and iii) higher credit charge-off from lower recoveries as well as due to higher provisions due to asset quality weakness of international operations and upticks in impairment of domestic loans. Our top picks are Hong Leong Bank (BUY, TP: RM14.60) for its defensive qualities and Maybank (BUY, TP: RM9.80) for its diversified earnings and attractive dividend yield.
•  Oil & Gas. On aggregate, the O&G constituent stocks registered mostly positive year-over-year earnings growth in 3QCY15. Petronas Chemicals’ 3QCY15 earnings grew the most both year-on-year and quarter-on-quarter due to the exceptionally good plant utilisation rate of 88%. Petronas Dagangan also posted commendable year-on- year results as average selling prices were higher despite a decline in volume sold. However, Petronas Gas experienced a reversal in profit growth as its gas cost rose significantly subsequent to the government’s decision of periodically removing subsidies on gas price. As for the only O&G service provider listed on Bursa, SapuraKencana staged a commendable growth (excluding the provisions done for its oilfields) as its drilling division experience a high vessel utilisation rate of 98.5%. Despite the challenging environment, we are still
bullish on SapuraKencana (BUY, TP: RM2.89) due to its diversified business offerings and strong orderbook of RM23b.
•  Utility. This sequential earnings growth of Utility sector was boosted by the recognition of the Imbalance Cost Pass Through (ICPT) for the 17-month period from January 2014 to May 2015 in the preceding quarter amounting to RM1.82b by Tenaga Nasional Berhad (TNB). Furthermore, its on-year earnings growth was contributed by the easing trend in fuel costs due to the decline in coal and gas prices, and couple with a more favourable generation mix. We maintain our BUY call on TNB with a TP of RM15.60.
•  Telecommunication. The expected weak on-year growth performance among telecommunication players is reflective of the maturing and competitive industry landscape whereby ARPU is continually under pressure but expenditures, particularly for marketing and branding, remain high. This is further exacerbated by the introduction of goods and services tax in April 2015 which impacted the purchasing power of subscribers. We do not think the competitive and fast-evolving operating environment landscape will improve anytime soon. Widening the
coverage area of 4G LTE as well as introducing more value added services would be some of the key determinant factors to remain competitive in the industry. Under the prevailing competitive landscape, we favour Digi (BUY, TP: RM7.04).
•  Plantation. 3QCY15 average CPO price of RM2058/MT was lower by 7%yoy hence is likely to result in lower earnings for plantation companies. However, as for KLK, we are expecting earnings improvement on-year as its Manufacturing division is expected to recover from the losses in same quarter last year. Recall that in 3QCY14 (or 4QFY14 for KLK), the oleochemical sub-division in the Manufacturing division suffered a write down of RM13m due to a sharp drop in its selling products. Meanwhile, PPB may register modest earnings growth of 3%yoy as we expect its earnings recovery trend to continue. We also expect Wilmar’s Oilseeds and Grains division margin to stay positive in 3QCY15 with higher volume processed. Quarter-on-quarter, 3QCY15 average CPO price of RM2058/MT was lower by 6%. Accordingly, we expect plantation companies to register lower sequential earnings. However, we expect PPB earnings to be much stronger on-quarter as Wilmar’s Sugar Milling division usually turned into profit seasonally in 3Q due to the processing of harvested sugar cane in Australia.

Beginning of the end to the earning drought? Stabilization, or even more so improvement, in earnings sentiment could be an enduring catalyst for the equity market going forward. While corporate earnings had incessantly disappoint both ours and consensus expectations during the 6 previous result seasons, nevertheless, the ongoing reporting season has up until now seems pointing towards the beginning of the end to the prolonged drought in earnings growth. Recall that in 2QCY15 there were 9 underperformers against only 4 outperformers among FBM KLCI constituents (1QCY15: 10 underperformers, 0 outperformer). While it may be too early to tell, the ongoing 3QCY15 season might fare comparatively better as there is only 1 underperformer against 3 outperformers thus far out of 11 results released.

Reiterate FBM KLCI year-end 2016 target at 1,800 points. We restate our assertion that empirical observations between earnings and price are conclusive with regard to the nature of their secular direct relationship. This is despite the ever present ‘noises’ from short-term price volatility which is influenced by market sentiment and other situational issues. Against the backdrop of recovering earnings growth next year, we reiterate our 2016 FBM KLCI target at 1,800 points. The baseline target equates to PER16 of 16.0x and +0.5SD. Also, we maintain our year-end 2015 FBM KLCI baseline target of 1,650 points (with upper and lower range of 1,700 and 1,600 points respectively) which equates to PER16 of 14.7x and -0.3SD.

FBM KLCI: Earnings versus Price
FBM KLCI Earnings versus Price

source: MIDF Research 09/11/2015

Nov 9, 2015

MATRIX - Flag Formation Breakout



MATRIX Daily Chart:matrix share analysis
MATRIX has experienced a flag formation breakout above the RM2.47 level with higher-than-average volumes. The MACD Indicator is trending higher, but the RSI is overbought. Price may rally towards the targets of RM2.67 and RM2.81 after a mild retracement. Support will be located around RM2.42.
source:  Malacca Securities – 09/11/2016 
The Company principally an investment holding company while their subsidiary companies are mainly involved in property development sales of land investment holding project management and procurement of building materials and administrative services.

Nov 6, 2015

IJM – Maintain Buy


We visited IJM and gather that its: a) all-time high construction orderbook, which could still potentially grow; b) earnings from its Kuantan Port operations may positively surprise; and c) its property division could meet its RM1.5b sales target in spite of 1QFY16 recording only about RM300m in sales. Results from the following quarters could also see one-off gains due to completion of asset sales that have been announced. Maintain BUY. Target price: RM3.95. IJM remains our top pick.

ijm financial data 
• We recently met IJM Corp to receive its latest updates on the operations of its various businesses. We understand that although the company’s construction orderbook is at its all-time high, there could still be a possibility of further growth. Aside from that, the property division may do a major catch-up in terms of sales to reach its internal sales target of RM1.5b.

Orderbook at all-time high, but could still expand. IJM’s construction orderbook stands at about RM7b, which is at its all-time high level. Management is comfortable with this figure, but noted that it could still take on selective jobs if margins are attractive. According to media reports, IJM together with several other companies have been shortlisted by Prolintas to undertake the construction job of two major highways, including the Damansara-Shah Alam Expressway (DASH) and the Sungai Besi-Ulu Kelang (SUKE). Both have a combined construction value of RM9.5b.
Could also be one of the beneficiaries of the RM28b Pan Borneo highway. During the recent Budget 2016 announcement, the government unveiled that it is allocating about RM16.1b and RM12.8b for the Sarawak and Sabah stretches of the toll-free Pan Borneo highway respectively. While the Eastern Malaysian names would be the front runners of the construction jobs, IJM believes that it also stands a chance of clinching some of the projects given the massive size of the project which would need support from the Peninsula Malaysia contractors in order for the highway to be completed by the targeted year of 2021.
Building jobs are also ample.  We understand that IJM has been approached by several developers to undertake building construction jobs. We gather that the low cost environment currently has allowed IJM’s pricing to be more competitive compared with the lower tiered contractors. Hence, developers are choosing to appoint more established and financially strong contractors to minimise their development risks.

ijm key fiancial data
Property division could play a major catch-up in the following months.  As of 1QFY16, its property division recorded about RM300m in property sales, which represents only about 20% of management’s full-year sales target of about RM1.5b. We gather that in spite of the slowdown in the property market, IJM is confident of achieving its sales target this year, driven by its ongoing developments in Seremban, Klang Valley, Batu Kawan (Penang) and Pengerang (Johor).
Port operations are doing tremendously well.  IJM’s Kuantan Port is catered to handle about 26m tonnes of cargo yearly (before its expansion plans are completed in 2018 and 2022 respectively). Our channel checks gather that the throughput for 2015 could easily surpass the yearly optimum capacity for the port due to the intensified mining activities that are ongoing in Kuantan. In 1QFY16, the port contributed about RM66m in PBT, a strong growth from its 1QFY15 PBT of a mere RM28m.
The Light could further boost construction orderbook by RM2b.  IJM Land, a wholly-owned subsidiary of IJM Corp recently partnered with Perennial Real Estate Holdings Ltd to develop the commercial component of IJM’s highly successful The Light development in Penang. The 50-50 partnership would see the JV developing the 32.8 acres of land into an integrated mixed development with a shopping mall, residential and office towers, two hotels with a convention centre. IJM would benefit in two ways from this partnership including: a) land sale gain, and b) being the main contractor for the construction jobs worth about RM2b. Aside that, in the longer term, the mall would also provide an additional form of recurring income for the group.

• We trim our FY16 and FY17 forecasts by about 5% and 6% respectively after reducing our targeted property sales assumption from RM1.7b to RM1.5b and delaying the contribution assumption for its key construction jobs.
• Our earnings forecasts are based on core profit numbers, and do not include the one-off gains from the disposal of assets that is expected to complete this year, which includes: a) gain from the disposal of the Swarna Tollway in India (gain of about RM93m), and b) a disposal of 32.8 acres of land to a JV equally held by IJM Corp and Perennial Real Estate for the IJM Light commercial development
• Key risks include: a) execution risk, b) regulatory risk, and c) fluctuation in raw material prices which will impact margins.

• Maintain BUY with a SOTP-based target price of RM3.95. We believe that its multi-year construction projects (WCE and Kuantan Port Extension) coupled with its strategic property landbanks and concession assets would continue to grow shareholder’s value in the long run. Our target price implies 17x FY17F PE.
• The stock currently trades at 15x FY17F PE, slightly above its 10-year historical range of 14.5x. We continue to like IJM Corp for its strong construction orderbook as well as a portfolio of infrastructure assets that would provide the company with stable recurring income and cashflows.

• Winning of new construction jobs.
• Better-than-expected property sales.
• Development of new deep water terminal at Kuantan Port.

source: UOBKayHian 02/11 15