Apr 27, 2009

KLSE MARKET RESEARCH DAILY 27 April 2009

KLSE Weekly Technical Viewpoint

The KLCI surged and closed at 992.68, gaining 27.51-
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
2.081m last Friday, aided by the liberalization of the 27 sub
sector news.

The key support areas for the KLCI are located at the 954
to 992-zone. This area should be a very secure zone for
bargain-hunting, while the resistance areas of 1,000 and
1,023 may see some profit taking activities. The KLCI had
previously consolidated in a tight range of 801 to 936 from
Oct  ’08  to  Apr  ’09,  breaking  above  its  previous  key
resistance of 936.63 on 10 Apr ’09.

klciMajor Technical Buy Strategic Stock Ideas: Buy key blue
chip stocks like AIRPORT, AXIATA, BURSA, DRBHCOM,
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, BRDB, 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 (near the suggested
target levels for the KLCI above) as we believe that the run
up may not be sustained eventually.

Results Preview 
Hartalega Holdings (RM3.02):

Buy
–  Still expanding. Forecasts and target price raised
 
Further upside in the medium term. We remain bullish on
Hartalega  as  we  expect  strong  4Q  earnings,  and  this
underlying strength, based on operating efficiencies and lower
material costs, is sustainable into FY10-FY11. We have raised
our estimates for the next two years by 8%-9%, and raised our
target  price  by  33%  to  RM3.46,  based  on  DCF.  Buy
recommendation maintained. 

Comment on News
Ramunia Holdings (RM0.54):
Sell
–  Sime Darby the white knight? 
A deal in two weeks?
Sime Darby is leading the race for a
stake in Ramunia, according to The Edge Weekly. UMW
Holdings, Singapore’s Keppel Corp and India’s Larsen &
Tubro are also said to be in the picture.  The Sime Darby
Ramunia
deal may involve a share swap with no cash outlay.
Sime  may  not  acquire  shares  from  Ramunia’s  major
shareholders Lembaga Tabung Haji (29.7%) and Remcorp
(25.7%). An announcement can be expected within the next
two weeks.

Other Local News
   Maybank: Rights issue oversubscribed
   Auto: Government considering an option to scrap the
controversial Approved Permit (AP)
   Unisem:  Higher  demand  for  electronics,  and  higher
utilisation
   Malton: Awarded RM175.0m contract
   MMC: MMC completed its acquisition of Senai Airport
Termianl Services Sdn Bhd (SATS)
   Axiata: Completes payment to TM 
   Axiata: Mulls rights, bonds issue
   Magna Prima: Managing Director, Datuk Steven Lee Kian
Saing believed to have resigned
   YTL-Power: YTL Power International Berhad submitted a
proposal for 450MW Bibiyana power plant in Bangladesh
Outside Malaysia
   IMF: Considers bond issue to raise funds for lending
programs 
   U.S: Fed stress-test methods stop short of signaling U.S.
banks' capital needs
   U.S: Orders for durable goods fall in March
   U.K: Economy contracts 1.9% QoQ in 1Q09
   Spain: Jobless rate rises to 17.4% in 1Q09, twice EU
average
   Singapore: Production Falls 33.9% YoY in March

Weekly Trading Idea 

RESORTS (RM2.54): ACCUMULATE (Technical)

resortsRESORTS made a weekly low at RM1.84 in Mar ’09. Due to
its positive crossover from the chart indicators, we believe
RESORTS is in the beginning stages of a very firm upward
trend which will test the resistance of RM2.63 and RM2.80
and upside targets of RM2.72 and RM2.83 in due course.

ACCUMULATE (TECHNICAL) on dips for RESORTS at the
firm support areas of RM2.30 and RM2.54. Stop-loss is at 
RM2.28.

Daily Trading Idea 

BRDB (RM1.26): FIRM BUY (Technical)

brdb

BRDB made a weekly low at RM0.90 in Oct ’08. Due to its
positive  crossover  from  the  chart  (indicators,  we  believe
BRDB is in the beginning stages of a very firm upward trend
which will test the resistance of RM1.37 and RM1.50 and
upside targets in due course.

FIRM BUY (TECHNICAL) on dips for BRDB at the firm
support areas of RM1.10 and RM1.26, with upside target
areas of RM1.36 and RM1.76. Stop-loss is at RM1.08.

Market Research by Maybank IB