Apr 18, 2018

Technical Buy - KOBAY

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Trading Idea - KOBAY TECHNOLOGY BHD (stock code 6971)

● Target Price RM1.30
● Last closing price RM1.12
● Potential return 16.0%
● Support RM1.05
● Stop Loss RM0.950

buy kobay

Possible upside. KOBAY is showing signs of recovery from recent major pullback. Improving RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in near term. Should resistance level of RM1.13 be genuinely broken, it may continue to lift price higher to subsequent resistance level of RM1.30. However, failure to hold on to support level of RM1.05 may indicate weakness in the share price and hence, a cut-loss signal.

source: PublicInvest Research -  18/04/2018

Apr 17, 2018

Malaysia’s Stocks Immune To a Trade War

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Many stocks have been caught up in the sell-off, which include domestic-centric stocks that should not have been directly impacted by a limited trade spat. We highlight four such stocks: Genting Malaysia, Mynews Holdings, Petron Malaysia and WCT.

US And China Trade Tariffs
There is no trade war yet….
… but the rhetoric on both the US and Chinese sides had been escalating until President Xi Jinping’s conciliatory speech at the Boao Forum for Asia on Apr 10, where he pledged “new phase of opening up” for China’s markets.

So far, the proposed measures over the past three months have been as follows:
● Jan 22: President Donald Trump approved a 30% tariff on solar panels and a 20% tariff on washing machines which affect China and South Korea the most.
 ● Feb 16: The United States Department of Commerce presented several options to combat China’s trade practices, including tariffs of 24% on all steel imports (and 7.7%
on aluminium) which are widely seen as aimed particularly at China, the world’s largest steel maker.
 ● Mar 7: Europe pushed back as the EU officials threatened to place tariffs on American-made goods if the US would impose such tariffs on imported steel and aluminium.
●  Mar 8: The US approved 25% tariffs on steel and 10% on aluminium; Mexico and Canada were granted initial exemptions.
 ● Mar 22: President Trump announced a plan to impose annual tariffs on USD50bn worth of goods from China.
 ● Mar 22: China made its own threat stating it would impose tariffs on USD3bn worth of American-made goods. The move was in response to the earlier decision in March by the Trump administration to impose steel and aluminium tariffs; this announcement came shortly after President Trump had disclosed his USD50bn tariff plan.
 ● Mar 22: The US decided to grant more exemptions on its steel and aluminium tariffs by offering temporary exemptions to the EU, South Korea and others.
 ● Apr 2: China imposed tariffs of up to 25% on 128 American-made products (including wine, pork, pipes, etc.) in response to the US-imposed tariffs on steel and aluminium. This action would mainly affect the US farm land and the rust belt communities, which have been politically important for President Trump.
 ● Apr 3: The US targeted electronics and it formally proposed tariffs on USD50bn worth of Chinese-made products, including flat-screen TVs, medical devices, aircraft parts and batteries.
 ● Apr 4: China countered with tariffs on soybeans, cars and chemicals and proposed USD50bn in tariffs on additional American-made products.
 ● Apr 5: President Trump doubled down and said he was considering imposing additional tariffs on USD100bn worth of goods, in response to China's retaliation.
 ● Apr 10: While speaking at the Boao Forum, President Xi promised a new round of opening up in China. Chinese officials were quick to emphasise that these measures were always a part of China’s economic plans and were not in response to the US threats.

There is an important reason to take this war of words seriously. For many years, before he became President, Mr Trump has been critical about the global trade system being unfair to the US economy and it is one area where he has been consistent. President Trump has always felt the US was not getting a fair deal from its trading partners. China has been singled out as the most “unfair” partner of all as it ran the largest trade surplus with the US at USD375bn in 2017 2 .

Regardless, there is a reason to predict this won’t go much beyond words. After all there are no winners in this war and this fact alone makes one believe that an actual trade war may not actually materialise. The issue really comes down to what each party hopes to achieve, what tools they have at their disposal, and ultimately what each is willing to compromise.

To be fair, the US complaints do have a certain amount of legitimacy, since China is not as open to imports from the US as the US is to imports from China. Just a couple of examples: the tariff China applies on US-made cars is 25% while the US imposes only a 2.5% tariff on Chinese-made autos; also, there is a forced transfer on technology that is imposed by China on the US firms, when setting up of joint ventures, as there are limits on ownership.

However, making the trade deficit the poster child is probably the way to go. The US current account deficit largely reflects a shortfall of domestic savings to investments, and unless the savings or investments rates change, the trade deficit will largely remain unchanged. If the US imposes tariffs on China, it may reduce its deficit with China but it may also in turn increase its deficit with some other countries. Therefore its overall deficit (as a percentage of GDP) would probably remain unchanged. There may also be a secondary effect - if the overall cost of imports rises, it would in turn affect the exchange rate, and hence the magnitude of the deficit.

In any case, if the US does go down the tariff route, the main impact on ASEAN is likely to
be through the value chains, and most likely be felt on electronics and electrical appliances sectors which we have addressed before.

The Chinese tariffs are likely to have a different effect as there isn’t really a value chain that uses intermediate inputs from the ASEAN which ends in the US. In any case, the Chinese tariffs are directed at agricultural products and more likely, the main result will be through a rise in the price of certain global commodities.

If matters get bad, there could be a rise in risk aversion, and markets may move to a “risk
off” setting. The Fed, despite its claims that its actions will not be affected by tariffs, is likely to take the rise in policy rates to a flatter trajectory than what we are predicting. At the very least, the Fed may take on a "wait and see" approach and which case the safe haven ssets, such as the US Treasuries and currencies such as the JPY, are likely to rally.
If things get really worse, it is possible that China may use other methods which it has at its disposal and the US doesn’t. For instance, there is already speculation that China may hoose to devalue the CNY 3 . There also is a possibility that China could threaten to sell or
even outright sell part of their holdings of US Treasuries, even at a loss.

Ultimately, how this pans out will depend on what both sides really want. In our view, if the US wants a greater access to the Chinese markets, it is likely to obtain it. If, on the other hand, this is actually a battle for the future of technology, such as robotics, electric cars, aerospace, or for cutting edge investments in artificial intelligence, the US may find a China that is not malleable. If restrictions are applied on Chinese acquisitions, then we may really be seeing a trade war.

For now, our expectations are that the war of words may continue with occasional threats
and occasional concessions and the markets may dance in step. This matter should probably stop at a certain stage, before it actually becomes a war of action. In such a scenario, various opportunities present themselves, both in defensive stocks or in stocks
where there has already been an over-correction.

Malaysia

Of the stocks under our coverage, about 71% have seen an YTD decline, battered not only by negative sentiment arising from the US-China trade tantrums but also by caution over the impending 14 th General Election (GE14). Both the US and China are important trading partners for Malaysia, while the electrical & electronic (E&E) segment is a major component of Malaysia’s exports. Naturally, technology sector names have been the worst affected as investors price in the potential negatives. However, many other stocks have been caught up in the sell-off and include domestic-centric stocks that should not be directly impacted by a limited trade spat. We highlight four such stocks.

malaysia stocks trade war

Genting Malaysia (GENM MK, BUY, TP: MYR5.94)
We like Genting Malaysia’s earnings resiliency from its casino operations, which in our view could prove to be one of the best defensive picks amidst current US-China trade friction. While the share price has underperformed the benchmark FBM KLCI YTD, we advise investors to accumulate on weakness as we continue to see the opening of its 20 th Century Fox outdoor theme park by end-2018 to be a major visitation re-rating catalyst. This could then spur patronage to its hilltop casinos and hence improve profitability in the long run.

To briefly recap, the new facilities under its Genting Integrated Tourism Plan (GITP) would continue to open progressively over the next 6-12 months. Management reaffirmed that the 20 th Century Fox outdoor theme park is set to open later this year, while the Skytropolis indoor theme park would commence operations in 2H18. Out of the MYR10.4bn capex allocation, the group has thus far spent MYR6bn to date, with the remaining likely to be utilised by 2018/2019. Overall, 4Q17 visitor arrivals to the hilltop resorts grew to 6.7m (+34% YoY) and we expect further upside come 2H18 upon opening of new facilities.

Mynews Holdings (MNHB MK, BUY, TP: MYR2.03)
Mynews’ prospects are largely driven by the domestic market, and we think it is unlikely to be affected by the trade friction. This is given that all of its Mynews convenience store outlets are based in Malaysia and all of the products are sourced locally. We like Mynews for its attractive value proposition of exciting earnings growth, ambitious multi-pronged expansion plans, as well as the leadership of an entrepreneurial and driven management team. Its earnings growth would be underpinned by the outlet expansion as well as the rising demand for convenient ready-to-eat (RTE) food, which would be captured by its food manufacturing plant.

Petron Malaysia (PETRONM MK, BUY, TP: MYR10.70)
The group’s products are mainly sold in Malaysia (largely gasoline and diesel products) and pricing is pegged to weekly changes in Means of Platts Singapore (MOPS), therefore a trade war would not affect the group’s business directly. We like this stock because we think it has been oversold on overblown concerns of weaker refining margins. After factoring in significantly weaker (27% lower) gross margin/bbl in 2018, the implied FY18F P/E is at 8.9x, still an attractive level for a mid-cap. In addition, its petroleum product sales are also strong, with high single-digit growth (market growth was close to nil) achieved in FY17 due to effective marketing strategies. Petron Malaysia focuses on refining and distribution of petroleum products, concentrating largely on the Malaysian domestic market.

WCT (WCTHG MK, BUY, TP: MYR2.18):
A potential breakdown in trade negotiations between the US and China, in our view, would have little bearing on the Malaysian construction industry. High impact public transportation projects that have been announced or awarded such as the Mass Rapid Transit Line 3 MRT3), KL-Singapore high speed rail (HSR) and the East Coast Rail Link (ECRL) sit atop the Malaysian government’s list of priorities due to their social and economic benefits. In addition, funding for the projects has either been identified (HSR, ECRL) or is in the final stages of being determined (MRT3).

The Malaysian stretch for the HSR project is to be funded by the Malaysian Government, while the ECRL project would be funded by a soft loan provided by China Exim Bank. The MRT3 project, meanwhile, is expected to be funded by a consortium of local and international banks. A potential breakdown in trade negotiations between the US and China is unlikely to significantly shift China’s commitments on its One Belt One Road (OBOR) initiatives – and ECRL’s soft loan from China Exim Bank – in our view.

For exposure to the construction sector, we recommend that investors buy WCT. The company was one of only a handful of contractors that secured work packages for both the MRT2 and Light Rail Transit Line 3 (LRT3) – where It was the only company to secure three packages totalling MYR1.7bn. Hence, we see WCT as a good proxy to the bulge in government spending for domestic public transportation projects. The stock is underappreciated, in our view, having retraced 25% YTD. This is despite the company sitting on an outstanding orderbook of MYR5.6bn, which is a record for the company, and underpins our forecasted 3-year earnings CAGR of 21%.

source: RHB Research Institute – 13/04/2018

Apr 11, 2018

GE14 Election Themed Stocks

The upcoming general election could be a moderate market sway factor; 2H18’s market outlook would be cautious regardless of the outcome. While ruling coalition BN is set to retain the parliamentary majority in a three-way contest, there are still uncertainties relating to popular vote count and hotly-contested states. We expect the FBMKLCI to mildly trend up towards polling day, although the market remains divergent (amid deep profit-taking in small/mid caps).

WHAT’S NEW
Possibilities explored in GE14. The consensus is for Barisan Nasional ( BN) to retain its majority in parliament (albeit at a lower popular vote count) in the country’s 14 th general election (GE14), which is widely expected to take place in early-May 18. A big positive factor for BN is Pan-Malaysian Islamic Party’s (PAS) splinter from the main opposition coalition Pakatan Harapan (previously named Pakatan Rakyat), which creates a three-corner fight that opens up the possibilities of BN regaining a two-third majority in parliament (currently 59.9%) and regaining control of the states of Kelantan and Selangor. On the other hand, Pakatan Harapan is raising its challenges in BN’s incumbent states of Kedah, Johor and East Malaysia, boosted by the joining of former prime minister Tun Dr Mahathir Mohamad (who counts in his support sacked deputy prime minister Tan Sri Muhyiddin Yassin, a strongman in Johor). Meanwhile, sacked United Malays National Organisation (UMNO) vice president and Sabah strongman Datuk Seri Shafie Apdal formed a new opposition party, Sabah Heritage Party (WARISAN), in 2016.

Mild uptick anticipated, but cautious environment post GE14. Despite the current caution, FBMKLCI should mildly firm up as we head towards the polling date, in line with most previous pre-GE market behaviour. However, expect more mixed performances in the small/mid-cap space, as investment sentiment has turned defensive much earlier than expected. Our base-case scenario of post-GE result reaction remains market neutral to slightly negative, and we continue to brace for a more subdued investment climate post GE14 particularly in 2H18 (although should the market continue to languish, there would be a temporarily rebound post-GE), as global liquidity contraction remains the over-riding issue. We maintain our end-18 FBMKLCI target of 1,830 which implies a forward PE of 15.3x (+0.4SD to the historical mean).

ACTION
Valid GE plays. Although the current cautious investment sentiment implies fewer beneficiaries and shallower returns, our key GE14 beneficiaries identified should still deliver attractive stock returns – MRCB, Felda Global Ventures, KPJ Healthcare and Affin Bank. Other notable beneficiaries (although some are loosely linked to the theme) include some construction companies (eg Gabungan AQRS) and index heavyweights (particularly banks like CIMB).

Top picks in this theme are BUY-rated large caps CIMB Group and Gamuda , and small/mid caps Cahya Mata Sarawak , Gabungan AQRS , and Protasco , and HOLD- rated MRCB . These stocks also offer upside post-GE

election theme stocks

ESSENTIAL
The journey towards GE14 has been accompanied by spectacular political news and developments, namely: a) the second sodomy charge and jailing of prominent Opposition leader Datuk Seri Anwar Ibrahim, b) revelation of massive corruption in the Ministry of Finance’s unit 1MDB (which gained international notoriety), c) sacking of prominent UMNO leaders who had criticised the 1MDB cover-up (Deputy Prime Minister Tan Sri Muhyiddin Yassin, Vice President Dato’ Seri Shafie Apdal and Kedah chief minister Dato’ Seri Mukhriz Mahathir) along with the country’s attorney general, d) management tussle at Federal Land Development Authority (Felda), and e) controversial reading of Hadi’s Bill (referring to PAS president Tuan Guru Dato' Seri Hadi Awang’s proposal which will empower states to implement Islamic laws). Meanwhile, Sarawak has set up state-owned oil and gas exploration firm Petros as part of its efforts to significantly raise its share of the state’s oil revenue (it currently receives only a 5% royalty).

Base case: BN to maintain a simple majority in parliamentary seats... In our base- case scenario of a three-way fight between BN, Pakatan Harapan and PAS in Peninsular Malaysia, BN should maintain a simple majority of parliamentary seats (of around 60%). However, regaining a two-third control remains an uphill task, given the likelihood of slipping popular votes.

…amid slipping popular votes. While the consensus view is for BN’s popular votes to slip a few percentage points (GE13: 47.4%), BN should maintain above the 40% commonly-thought threshold that would allow it to retain a simple majority in parliament. However, this situation is less certain in various state elections.

Election factor a short-term sway phenomenon. While unexpected election results can be a significant market sway factor in the near term, such market reactions have been short-lived in the past. For example, when BN’s control of parliamentary seats surprisingly slipped below two-thirds during GE12, the FBMKLCI plunged by as much as 9.5% in a day, triggering a trading circuit breaker at the worst level. However, the FBMKLCI recouped most of the losses within a couple of weeks, once investors were assured of the continuity of political stability and business-friendly policies. Both BN and Pakatan Harapan are mindful of maintaining business-friendly policies; Pakatan Harapan has on various occasions highlighted that it will generally uphold the sanctity of government contracts should it win the election. Eventually, equity markets will be dictated by external and domestic economic fundamentals and liquidity considerations.

election effect

Trading plays. GE14 beneficiaries should deliver attractive returns to government-linked companies Felda Global Ventures (FGV), KPJ Healthcare and Affin Bank (which interestingly has delivered good returns in most pre-polling periods). • Defensive BUY-rated stocks should gain prominence post GE14 . They include BUY- rated Berjaya Sports Toto , DiGi.Com, Petronas Dagangan, TM and Tenaga Nasional. FMCG companies continue to appeal as a safe haven, and among these, downtrodden BUY-rated BAT should appeal for its c.8% prospective yield. Likewise downtrodden Astro Malaysia (HOLD).

Opportune time for long-term investors to accumulate selected mid caps. We feel the sell-offs related to global liquidity tightening, US-China trade war and GE fear factors are overdone for many mid caps (although we would generally avoid small caps). Although many of these stocks have still retained their past years’ huge capital returns even after the recent rundown, they continue to promise solid growth prospects through the intermediate term. Conviction stocks in this space continue to be Ann Joo Resources, Inari Amertron, and VS Industry.

source: UOBKayHian – 10/04/2018

Mar 15, 2018

DBS: Underweight On Malaysia

Malaysia (Underweight)
“Earnings growth still intact”, 5 5 March Bernard Ching,
Macro conditions in Malaysia remain encouraging
4Q17 GDP growth of 5.9% was ahead of expectations, which brings full-year growth to 5.9%. Going into 2018, Alliance DBS’s economist has pencilled in a 5.4% growth.
The moderation in economic expansion reflects the high-base effects and a tighter monetary regime, both domestically and globally, which could put a lid on growth. Yet, 1H18 GDP growth should remain robust given the fiscal pump-priming ahead of the 14th general elections. Private consumption recovery as well as robust exports will remain the key drivers
of growth.

Volatility driven by external and domestic factors

Having said that, market volatility will likely remain elevated in the near term on concerns of faster-than-anticipated inflation and monetary tightening in the US. Furthermore, the imposition of anti-dumping tariff by the US administration on the import of steel and aluminium has stoked fears of retaliatory actions by affected major trading partners such as China and Europe.

On the domestic front, we believe risk aversion has picked up towards small- and mid-cap stocks as election noises have ratcheted up in recent weeks. Furthermore, the 4Q17 earnings season had failed to spring any positive earnings surprise particularly for the small- and mid-cap stocks. As a result, the FBM Small Cap and FBM ACE indices, which are gauges of small- and mid-cap stocks in Malaysia, have underperformed blue chip stocks as represented by the benchmark FBMKLCI.

Valuation is undemanding
The valuation of FBMKLCI is undemanding as it is currently trading near its historical mean at CY18 PE of 16.4x based on our forecasts. Relative valuation against regional markets is
also not demanding following its laggard performance in 2017. The KLCI 12-month forward PE premium over MSCI SEA is currently at 1.0x, which is below the historical high of 1.2x.

Rally sustainable
We believe that the market rally can still be sustained by solid macro conditions, both domestically and globally, as well as rebound in earnings growth. We view the current market correction as an opportunity to accumulate on weakness.
Regional markets’ earnings growth and PE valuationsunderweight malaysia
KLCI target raised to 1950
Following the recent earnings revision, we have raised our end- 2018 FBMKLCI target from 1,870 to 1,950 (implied 17.2x PE), which is derived using a bottom-up valuation approach.

Investment themes
Our key investment themes remain unchanged, i.e. (1) cyclical recovery in loan growth and interest-rate hikes, (2) cyclical global oil & gas capex recovery, (3) sustained E&E exports, and (4) tourism benefitting from discretionary spending recovery and an influx of Chinese tourists.

Our top banking picks to ride the cyclical recovery in loan growth and interest-rate hikes are Maybank and CIMB. We are adding Hong Leong Bank to the fray now following its stronger-than-expected quarterly results.

For the oil & gas sector, Hibiscus is the best proxy for crude oil price recovery, given that it is a pure upstream exploration and production player. We also like Wah Seong and Bumi Armada which have a significant overseas footprint to capitalise on the global oil & gas capex recovery.

Our preferred proxy for E&E exports is the electronic manufacturing services sector, given its cheaper valuation and higher growth than the technology sector. SKP Resources remains our pick for this theme. The strengthening of the Ringgit is not a concern for SKP Resources as its revenue is denominated in MYR and it enjoys a full cost-pass through an arrangement with its key customer.

On the tourism theme, Yong Tai is our sole pick, which is poised to benefit from the influx of Chinese tourists once its Encore Melaka theatre opens in May 2018. We have dropped AirAsia as a top pick as its share price has rallied to our target price, leading us to downgrade it to HOLD. We have also dropped MAHB (although it remains a BUY) as we believe regulatory uncertainty will cap its near-term performance.

There is no change to our sector call. We are reiterating our Overweight calls on banks, EMS, healthcare, and oil & gas sectors. We are also reiterating our underweight calls on the
building materials (cement) and glove sectors.

Maintaining Underweight
We are maintaining the market as Underweight as we believe foreign flows may still be lacking in this market over lingering concerns. Sentiments could continue to be positive towards the elections, but any further delay in elections could see more political volatility unravelling.
source: DBS Group Research  – 13/03/2018

Mar 13, 2018

Trading Idea: DAYANG

DAYANG ENTERPRISE HOLDINGS BHD Stock Code 5141

dayang chart

Target Price RM0.890
Last closing price RM0.800
Potential return 11.2%
Support RM0.750
Stop Loss RM0.720

Possible for further upside. DAYANG’s price is recovering from pullback. Improving RSI and MACD indicators currently signal reasonable entry level, with anticipation of continuous improvement in both momentum and trend in near term. Should resistance level of RM0.835 be broken, it may continue to lift price higher to subsequent resistance level of RM0.890.
However, failure to hold onto support level of RM0.750 may indicate weakness in the share price and hence, a cut-loss signal.

source: Public Bank Research – 13/03/2018

Mar 6, 2018

Alpha Picks: Opportunities Arise

Our February alpha picks delivered a simple average return of 2.3%, outperforming the FBMKLCI’s -0.7%. The recent market pullback provides good opportunities to accumulate our March alpha picks (unchanged from February’s picks) of Ann Joo, Bumi Armada, GAQRS, Serba Dinamik, VS Industry and Yong Tai. We continue to expect emerging re-rating catalysts for these stocks by 2Q18.

WHAT’S NEW
Review of February picks. Four out of our six alpha picks outperformed the market in February, delivering a simple average return of 2.3% (FBMKLCI: -0.7%). Leading the list was Ann Joo which saw a 7.4% increase on a low base from last month’s fall and amid recovering steel bar prices (+4.4% mom), followed by Serba Dinamik’s 6.4% increase and Yong Tai’s at 3.3%.
Opportunities amid cautious investment sentiment. While market sentiment has turned cautious earlier than expected, we still expect selective small-mid caps to outperform the market. Key events to watch out for in the coming weeks or months are the dissolution of parliament for the general election (expected in March), the award of mega projects (ECRL, MRT3 and the PDP portion of HSR), and Yong Tai’s opening of the acclaimed Impression Melaka theatre.
Overreaction to US’ proposed tariff on steel imports. Malaysian steel stocks took a beating last Friday, as investors reacted to the US’ intention of slapping a 25% tariff on steel imports (targeted at China imports). Specific concerns are: a) China redirecting surplus production to Asia; and b) an expanded US-China trade war could extend the US dollar’s weakness. Nevertheless, we assess that ASPs in Asia would continue to be firm, and markets will eventually react positively to an expected qoq rise in 1Q18’s profit margins.

ACTION
Retaining our March picks of Ann Joo, Bumi Armada, Gabungan AQRS, Serba Dinamik, VS Industry and Yong Tai (see re-rating catalysts in the table below). While not in the list, other notable BUY rated stocks like Genting Bhd and Inari could offer attractive upside.

ANALYSTS’ TOP ALPHA PICKSanalyst top picks 2018

Ann Joo Resources (Abdul Hadi Manaf)
• Following the strong yoy earnings growth in 2017, we believe that the positive momentum will continue with local steel bar prices having increased further to RM2,750/MT (+4.4% mom) in Jan 18, mainly due to the sharper-than-expected production cuts in China during the heating season.
• The potential US tariff implementation on imported steel may not necessarily be bad news for Malaysian steel producers. This is because Turkey, which is a key steel exporter across Asia, may incur higher scrap metal costs should steel production in the US rise. To note, currently Turkey sources most of its metal scrap from the US.

Share Price Catalyst
• Significant improvement in local steel demand.
• Local steel ASP rising to a multi-year high.

Bumi Armada (Kong Ho Meng)
• 2018 is set to be a turnaround year for the group, with earnings set to pick up from 1Q18 when Bumi Armada potentially receives almost full charter rate recognition from both Olombendo and Kraken (Kraken by 2Q18). The offloadings of Kraken onto three tankers since Jan 18 is positive as it shows Kraken’s production improvement is real and ongoing, which should translate into higher rate recognition in 1Q18. We also see the possibility of a TGT1 extension.

Share Price Catalyst
• Conclusion of final acceptance of Kraken and Olombendo by 1H18.
• Recovery of OMS utilisation and rates.

Gabungan AQRS (Ridhwan Effendy)
• The group is armed with an outstanding orderbook of RM2.8b. For 1H18, expect contract wins of high-profile construction jobs in the East Coast Rail Line (ECRL) and the Sabah portion of the Pan Borneo Highway (PBH). The group’s precast manufacturing division is also poised to benefit from the Sabah PBH as it owns one of the largest precast manufacturing facilities in Sabah together with the Sabah Economic Development Corporation.

Share Price Catalyst
• Positive contract newsflow by 1H18.
• Concrete premix production associate securing a substantial contract.

Serba Dinamik (Kong Ho Meng)
• Earnings growth to trump expectations on yearly new contract wins (RM2.8b target to bring total 2018 orderbook to RM7.2b - close to management's guidance of RM7.5b) and high renewal rate (>80%) of its existing orderbook. We expect Serba to announce more contracts as it embarks on its asset ownership strategies. Our earnings forecasts are above consensus’.

Share Price Catalyst
• Higher-than-expected new orderbook wins and renewals.
• Lower-than-expected costs and quicker profit breakeven achievement from JV income (Muaro Jambi)

VS Industry (Fong Kah Yan)
• In addition to several assembly lines for box-build products that have commenced production since Nov 16, VS Industry began building another three assembly lines in 4Q17. Key catalysts in the medium term will be the gradual capacity fill-up at its new plant (which can accommodate up to 12 assembly lines) upon completion in mid-18 on the back of potential contracts from new customers.

Share Price Catalyst
• Securing new contracts from existing or new customers.
• Securing new contracts for its China operations via 43.5%-owned VS International Group.

Yong Tai (Ridhwan Effendy)
• Tourism-related developer Yong Tai targets to open the critically-acclaimed Impression Series theatre in Melaka by end-April, the first outside of China, which could generate annual net profits of >RM60m in a full year of operations. To further tap on the success of the Impression Melaka show, Yong Tai will develop the land around the theatre. It will also undertake niche developments to diversify earnings growth drivers. We are also optimistic on the viewership for the theatre’s shows, given the success it had in China.

Share Price Catalyst
• Positive construction progress of the Impression Melaka theatre which is set to open in
May 18.

VALUATIONstocks valuation

source: UOBKayHian – 06/03/2018

Feb 20, 2018

KRONO Stock Code: 0176

,
• KRONO rose 7.0 sen (10.0%) to close at RM0.770.
• Yesterday’s move resulted in a downtrend breakout with MACD in bullish divergence, to signal that the share price has bottomed out and now poised for a recovery.
• Key indicators are in supportive of a move higher, with the RSI now venturing close to cross above 50-point mark while MACD has hooked upwards above signal line.
• From here, expect KRONO to punch through its immediate resistance level of RM0.785 (R1) at ease. Should this level be taken out, next resistance levels to target are RM0.880 (R2) and RM0.960 (R3).
• Downside risk, on the other hand, is protected by an immediate support at RM 0.710 (S1) and RM0.630 (S2) next.
krono technical analysis
source: Kenanga Research - 20/02/2018

KRONOLOGI ASIA BERHAD
The Group are principally provides value-added solutions and professional services to install configure and implement EDM infrastructure technology solution that is integrated into their end-user customers’ IT environment to provide backup storage and recovery services of the end-user customers’ digital data.