Apr 20, 2009

KLSE Market Research 20 April 09

Bursa Malaysia(RM6.20): Sell
- Severely impacted by the slow market
1Q09 net profit declined 63% YoY due to slower market activities, as equities ADV plunged 66% YoY. Present high trading level unlikely to sustain; no change to our forecasts as we continue to expect net profit to contract 19% in 2009. Valuations remain stretched relative to peers; Sell into strength with an unchanged TP of RM3.76.

AEON Credit Service (M) (RM2.74): Buy
Potentially a double-bagger!
FY09 net profit of RM48.8m (+46% YoY) was in line with our expectations but 8% above the market’s. A proposed final dividend of 11.34sen/sh (+52% YoY) exceeded both our and street forecasts. Maintain forecasts for 14-16% net profit growth in FY10-12, with upside potential on successful J Card credit card launch in 2HFY10. Maintain Buy and RM3.15 TP based on an unchanged 6x CY10 PER, supported by a DDM-valuation of RM3.27.

Other Local News
Chief’s pay cheque to halved last year
EPIC: Plans to expand Kemamam Port
Petronas: Signs natural gas deal with Oman
MAHB: Set to provide longer leases at aerospace centre
Mah Sing: Overseas expansion still on, but it will plan cautiously
Hartalega: Hartalega and others are  being sued for RM2.6m

Outside Malaysia
U.S: Consumer sentiment rises in March
U.S: Bernanke says collapse of lending will likely cause `long-lasting' damage
U.S: Treasury may retain grip on U.S. banks with warrants after share buybacks
E.U: Exports to its main trading partners drop the most in nine years in January
E.U: Trichet says ECB must do everything to restore confidence
Japan: Consumer confidence rises to five-month high in March

Weekly Technicals
Buy during profit-taking phases in this “bull” trend
Buy at the KLCI’s major support areas of 936 to 965.
Buy when the market corrects downwards.
CPO Futures – Stalled at RM2,540. Downside volatility may emerge.
DRBHCOM – A great KLCI component and rebound buy.

The KLCI surged and closed at 965.17, gaining 23.79- points (+2.53%) on a WoW basis, led by a broad-based recovery on most key blue-chip stocks. Mid-cap and penny stocks also began to move, and volumes rose to a peak of 1.965m last Thursday. The key support areas for the KLCI are located at the 936 to 965-zone, while the resistance areas of 969 and 993 may see some profit taking activities.

Major Buy Strategic Stock Ideas: Buy key blue chip stocks like AIRPORT, AXIATA, BURSA, DRBHCOM, GAMUDA, GENTING, MAS, PROTON, RESORTS, TM and TENAGA for a 2-month buy and hold period. Use their respective recent lows as the stop-loss levels. Lower-liner and mid-cap stocks like ANCOM, ASTRO, CBIP, E&O, HARTA, KENCANA, KSL, LIONDIV, PANTECH, SUPERMX, SUNRISE, SURIA, UCHITEC, WASEONG, WTK and ZELAN, are also likely to perform well to the upside (in tandem with the bigger blue chips). The local market looks to rebound strongly for the next few months, but be prepared to take positions off the table as we believe that the run-up may not be sustained eventually.

2009-04-20 klse index 

DRBHCOM made a weekly Wave 5 low at RM0.65 in Mar ’09 with grossly oversold and bullish divergent signals. Due to its positive crossover from the chart indicators, we believe DRBHCOM is in the beginning stages of a very firm upward trend which will test the stipulated resistance and upside targets in due course. FIRM BUY (TECHNICAL) on dips for DRBHCOM at the firm support areas of RM0.73 and RM0.855, with upside target areas of RM0.99 and RM1.16. Stop-loss is at RM0.71.

2009-04-20 drb hicom

By : Maybank Investment Bank 20 April 09