Sunway Attractive warrant

Attractive warrant with step-down mechanism

COMMENTS  
■ Sunway issued a circular with more details on the proposed bonus issue and free warrants. To recap, Sunway had proposed 4 bonus issue of shares for every 3 existing shares and 3 free warrants for every 10 existing shares. The above proposals were approved by Bursa on
24 July and EGM will be held on 30 August to secure shareholders’ approval.
■ Compared to ordinary free warrants, we opine that Sunway’s free warrants are attractive as the first-of-its-kind fixed annual step-down mechanism of RM0.07 will enhance the value of warrants.
■ For ordinary warrants, a dividend entitlement on the underlying mother share would reduce the value of the warrants. However, with the step-down mechanism (which is akin to a fixed adjustment of dividend payment to underlying), the value of warrant would be unaffected (if the quantum of step-down is equal to the dividend).
■ In the case of Sunway, given the annual step-down of RM0.07, the estimated value of the free warrant is RM0.62 (post-bonus issue adjustment) based on Binomial Option Pricing Model (see Figure #1), representing a premium of 34%. However, the estimated value of warrants could fetch as high as RM0.73 if based on our TP of RM5.04.

  
■ Note that the step-down of 7 sen is higher than our projected dividends for FY18 and FY19 at 4.6 sen and 4.9 sen (post bonus issue adjustment) per share, respectively.
■ The higher quantum of step-down compared to dividend projection could further enhance valuation of the warrants.
■ We gather that while Sunway has no immediate plan to utilize the proceeds (~RM1.15bn assuming full conversion) from the conversion of warrants. Hence, any proceeds raised will be used for future working capital or deleveraging.

RISKS
■ Prolonged downturn in property market;  
■ Execution risk

FORECASTS
■ Unchanged

RATING
BUY, TP: RM5.04      
■ Sunway remains our Top Pick within the sector as we believe it should be rerated and trade closer to its peers such as IJM and Gamuda (refer to Figure #2) given its diversified income stream and declassification from property sector. At a P/E of 13.9x as compared to peers, we opine that it represents a deep value stock with potential assets unlocking and growing healthcare business which are underappreciated.

VALUATION
Our TP is unchanged at RM5.04 based on SOP derived valuation with a 10% holding discount (see Figure #3).

source: HLIB Research – 31/07/2017

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MRCB – Technical Rebound

Stock Code 1651

MRB Daily Chart:

MRCB has formed a breakout-pullback-continuation pattern above the EMA60 level with high volumes. The MACD Histogram has turned green, while the RSI has risen above 30. Price may rally further, targeting the RM1.55-RM1.68 levels. Support will be set around the RM1.39 level.

Source: Mplus Research – 6/3/2017

MALAYSIAN RESOURCES CORPORATION BERHAD
The Company is principally an investment holding company. The Company also engages in construction related activities environmental engineering property development property investment and provision of management services to its subsidiaries.

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MRCB May Trend Higher

MALAYSIAN RESOURCES CORP Stock Code : 1651

Malaysian  Resources  Corporation  may  trend  higher  after  closing above the MYR1.24 level in its latest session. The stock may have a bullish bias trading above this point, with a target price of MYR1.40 notwithstanding  a  possible  resistance  at  MYR1.36.  On  the  other hand, it may take a breather if it retraces  back below the MYR1.24 mark.  Support  may  be  found  at  MYR1.15,  where  traders  can  exit upon a breach to avoid the risk of a further correction.

source: RHB Research - 22/03/2016

MALAYSIAN RESOURCES CORPORATION BERHAD

The Company is one of the leading and premier property developers; as well as one of the major construction players in Malaysia.

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Malaysia Property - Outlook Still Bleak

We expect the outlook for the property market to remain bleak as affordability and stringent lending policies continue to cloud the sector. Nevertheless, property prices in the key states have been relatively stable with the respective house price indices holding up. Johor and Penang have the highest percentages of incoming supply due to the aggressive property launches made in 2012-13 while supply in the Klang Valley region is stable. Maintain MARKET WEIGHT.

WHAT’S NEW

• Sector outlook to remain bleak in 1H16. Demand continues to be sluggish postimplementation of the GST. We expect this trend to persist as affordability and stringent lending policies continue to dampen the sector outlook. A number of property developers have downsized their launches and sales targets in 2015, further cementing the near- to medium-term outlook for the sector. However, in spite of the persistent negative newsflow, we believe selected hotspots within the Klang Valley that offer affordable and landed developments would continue to be well sought after.

• Stringent lending policies have impacted the property sector. The lacklustre Malaysian property market was due to: a) uncertainties surrounding the implementation of the GST, and b) prudent lending measures imposed on the property market. However, the developers are focusing on the affordable housing market. Recall that during the Budget 2016 announcement, the government introduced a number of schemes to assist first-time buyers for new homes, including extending the loan support scheme and a 50% stamp duty exemption for them.

ACTION

• Maintain MARKET WEIGHT. As expected, property stocks are trading below their longterm mean valuations in light of the slowdown in the sector. While we believe 2016 would continue to be an uncertain year for the property market due to an incoming supply of new products launched 1-2 years ago, we believe developers with landbanks in selected hotspots would continue to deliver decent sales, thereby enhancing their earnings visibility.

• Position for high-yielders. We opine investors position for developers with decent dividend yields, which include Sunway and SP Setia, both of which are expected to deliver dividends of 4-6%. Investors with stronger risk appetite should consider Sunsuria, which is expected to deliver a sharp upward earnings trajectory as we expect its maiden launch of the Sunsuria Serenia township to be well received.

ESSENTIALS

• Affordable houses to continue to be in demand. We believe growth in 2016 would still be supported by demand for affordable homes, mainly fuelled by a rapidly-growing population between the prime age of 25-45, supported by an increasingly affluent middleclass. Also, the increase in the maximum threshold for civil servants’ mortgage loans to RM600,000 (from RM450,000) would further support demand for affordable homes, particularly in the Klang Valley.

ADDITIONAL CHANNEL CHECKS

• Developers have not launched significant developments over the past three months.

• Reception of recent launches of landed developments in the Klang Valley has been positive while high-rise projects continued to see slow response.

• Isolated cases of properties going under the hammer, particularly those that were launched on

the 5% deposit-95% loan schemes with DIBS.

source: UOBKayHian - 15/02/2016

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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.

 
WHAT’S NEW
• 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.

STOCK IMPACT
• 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.

• 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.

EARNINGS REVISION/RISK
• 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.

VALUATION/RECOMMENDATION
• 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.

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

source: UOBKayHian 02/11 15

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Accumalate MRCB?

Malaysian Resources Corporation – stock code 1651

Technical Comments: Investors should look to accumulate MRCB for further rebound potential towards RM1.61 (61.8%FR) and RM1.70 (76.4%FR), with tougher hurdle from RM1.84 (21/5/13 peak). Retracement support from RM1.46 (38.2%FR) is reinforced by the lower Bollinger band (RM1.41).

by TA Securities

Malaysian Resources Corporation Berhad (MRCB) is an investment holding company. The Company is engaged in property development and investment, building services, environmental engineering, infrastructure and engineering and construction related activities. The Company is a developer of residential, commercial and industrial properties in Malaysia. It operates in five segments: engineering and construction, property development, infrastructure and environmental, building services, and investment holding and others. On October 11, 2010, Bitar Enterprises Sdn. Bhd., a wholly owned subsidiary of the Company acquired 70% of the interest in MRCB Land (Australia) Pty. Ltd. On October 29, 2010, the Company acquired the remaining 60% interest in GSB Sentral Sdn. Bhd. On December 30, 2010, the Company acquired additional 18% interest in Cosy Bonanza Sdn. Bhd. (CBSB). With this acquisition, CBSB became a 65.7% subsidiary of the Company.

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UEM Sunrise: Look For Rebound

UEM SUNRISE BERHAD symbol: UEMS  |   stock code: 5148

Technical Comment: UEM Sunrise could stage oversold rebound from current depressed levels with very limited downside risk to RM1.98 (7/2/13 low) matching the lower Bollinger band. Immediate upside hurdles are at RM2.22, RM2.38 (23.6%FR) and RM2.50.

above:UEM Sunrise Daily Chart (click to enlarge)

by: TA Securities

The Company is the flagship company for the real estate investment and development business of UEMG. UEMG is wholly-owned by Khazanah which in turn is the investment holding company of the Government.

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Further Fall On IJM Land Will Be Attractive

Symbol: IJMLAND Stock code: 5215  Price: RM2.42

Technical  Comments:  Given  the  oversold  14-day  RSI,  any  further  fall  on  IJM  Land  will  be  attractive  to  buy  for  oversold  rebound towards  RM2.51  (38.2%FR)  and  RM2.67  (50%FR),  matching  the  upper  Bollinger  band.  Key  retracement  support  is  at  RM2.31 (23.6%FR). 

below: IJM Daily Chart (click to enlarge)

 by TA Securities

The principal activity of the Company is that of investment holding. The principal activities of the subsidiaries are property development, property investment, and hotels and recreation club operations.

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Matrix – Long Term Buy (Technical)

Matrix Concept Holdings Bhd (stock code 5236) RM3.88.

below: Matrix daily chart (click to enlarge)Matrix share price is on the rise and has cleared out of the long-term downtrend line. It has remained above the trendline and made a strong run -up on Monday to test the top of the Fibonacci formation resistance. Its momentum indicators meanwhile, remains toppish with both the RSI and stochastic tracing the upper limit line.

This  still  suggests  strength  over  the  near  term  and  the  RM4.00  could  be  breached. Consequently,  we  recommend  a  trading  buy  on  breakout  if  the  Fibonacci  formation  is cleared. If it is not cleared, then the outlook turns neutral. The other resistance is at RM4.00. The support, meanwhile, is at RM3.81.

by Mercury Securities

The principal activities of Matrix consist of general trading and commission agent for the Special Cash Sweep Number Forecast Lotteries, provision of lottery consultancy and related services and investment holding.

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Short-term Buy On Menang

Weekly Trading Idea By Maybank 
MENANG – MYR0.58    SHORT-TERM BUY (TECHNICAL)
(Stock Code: 1694)  (Bloomberg Code: MEN MK Equity)

MENANG made a major weekly Wave 2 low of MYR0.19 (Nov 2011) with grossly oversold and bullish signals. All its  positive  signals  above  suggest  a  strong  daily Wave  3  and  5-uptrend.  It is  likely to  break into  higher territory, as it breached its key resistance areas in a clear upward Wave 3 and 5-move. Short-term on dips for MENANG, with very firm supports and clear upward target areas of MYR0.61, MYR0.81 and MYR1.06.

MENANG announced its 4QFY6/13 results in August but no comparative numbers were presented due to the change of financial year from 31 Dec 2011 to 30 Jun 2012. Looking at MENANG’s segmental reporting,  we notice that a large proportion of revenue (about 94%) was derived from the construction sector. For the 12 months ended 30 Jun  2013,  the group recorded revenue of MYR238.2m and a profit after tax of MYR32.1m which  was  mainly  contributed  from  the  ongoing  Private  Finance  Initiative  (PFI)  project  of  the  University Teknologi  MARA  Campus  in  Seremban  3  township  and  Universiti  Teknologi  MARA  Campus  Satelit  C  at Puncak Alam, Selangor. A check  of  Bloomberg consensus reveals that only  one  research house  covers the stock,  on which it  has a HOLD  call. The stock is currently trading  at a low  historical PER of 8.9x and a P/BV of 1.0x. MENANG has no indicated dividend yield

Menang Corporation (M) Berhad (MENANG) develops property, provides leasing and hire purchase services and undertakes landscaping projects. It also operates money-lending services

by Maybank Investment Bank

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Malaysia Pacific Corp – Stock To Watch

Malaysia Pacific Corp Bhd (stock code 6548) MPCorp – RM0.44.

MPCorp Daily Chart (click to enlarge):Chart wise:
MPCorp’s candles have pierced its downtrend line, but they only rose strongly two days ago and tested the RM0.475 level. The level has yet to be breached, leading to its overbought indicators  to  slip  slightly,  but  still  above  their  respective  upper  limit  line.  Meanwhile,  the outlook has turned weaker as a consequence and for now, we are neutral on the stock.

If  the  RM0.475  level  is  penetrated,  however,  then  there  are  renewed  trading  buy opportunities. Above RM0.475, the other resistance is located at RM0.495. The support on the other hand is at RM0.40.

by Mercury Securities

MPCorp is principally in the business of letting of investment properties and investment holding whilst the principal activities of the subsidiary companies are Construction, projects and property management, engineering and trading.

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SUNWAY – MYR2.79 SHORT-TERM BUY (TECHNICAL)

Sunway MYR2.79 Stock code 5211

below: Sunway daily chart (click to enlarge):

SUNWAY made a major weekly Wave 2 low of MYR2.25 (Jan 2013) with grossly oversold and bullish signals. Its positive indicators above suggest a strong upside  move. It is likely break into higher territory, as it breached its key resistance areas recently in a firm Wave 3 and Wave 5 move.

SHORT-TERM BUY (TECHNICAL) on dips for SUNWAY, with firmer support areas at MYR2.57 and MYR2.79. The upside target areas for the stock are at MYR2.93, MYR3.31 and MYR3.80. Stop-loss is at MYR2.55.

Sunway Berhad (SUNWAY) is a property development and construction company. Its other business divisions include quarrying and building materials trading and manufacturing, hospitality, leisure and healthcare.

by Maybak IB

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Malaysia Property Stocks Focus

SP Setia   : Sector leader - largest residential property developer by market cap and sales. Turning into a global player with projects in
London, Melbourne, Singapore and Vietnam.

UEM Land   : Master developer of Nusajaya and largest landowner in Iskandar Malaysia. Also largest landowner in Mont Kiara. 

Eastern & Oriental  : Largest niche high-end developer with exposure to prime landbank in Penang, KL & Iskandar Malaysia. 

Sunway    : Property and construction group with interests in quarrying, building materials manufacturing and trading

below: Large landowners in Iskandar Malaysia

by HDBSVickers

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Stock watch: UEM Land Holdings Bhd

UEM Land Holdings Bhd (stock code 5148) Properties – RM2.24

above: UEMLAND daily chart (click to enlarge) 

Chart wise:
UEM Land’s candles have remained above the long-term uptrend line. However, it has not veered much from its short-term range of between RM2.13 and RM2.32. Still, its momentum indicators continue to rise with both the stochastic and RSI tipping upwards.

The MACD is also rising after it crossed the trigger line and could still push the candles above the short-term top of RM2.32. If so, here are trading buy opportunities, but failure to penetrate leaves a neutral outlook. Above RM 2.32, the resistance is at RM2.35 and RM2.45. The support, meanwhile, is at RM2.12.

by Mercury Securities

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Watch for Trading Opportunities – Naim

Naim Holdings Bhd (stock code 5073) Properties – RM1.99.

above: Naim daily chart (click to enlarge)

Chart wise:
Naim’s candles are on the mend after nearing the RM1.73 three weeks ago. The recovery has allowed the candles to take out both the downtrend line and the RM1.95 level. Meanwhile, its momentum indicators have topped above their respectively upper limit lines and continuing to strengthen.

Therefore, the upside bias on the stock is still present and there are Trading buy opportunities if the candles stay above the RM1.95 level. . On the upside, the resistance is at RM2.05. The other support, meanwhile, is at RM1.68.

by Mercury Securities

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Technical Buy - Land & General

Chart wise: Land & General Bhd (stock code 3174) Properties – RM0.505.

Tracking an up-trend, Land & General (L&G) share price had bucked the general market volatility to maintain its northbound journey. The company is engaged in investment hol ding and leasing of assets.

below: L&G daily chart (click to enlarge)

We expect the uptrend channel to continue as its technical indicators are not showing any signs of stress yet. The previous high at RM0.51 will be the next resistance, while the support is at RM0.435. Backed by a promising outlook, L&G is expected to continue rising. Buy.

by Mercury Securities

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Trading buy – UOADEV

CUOA Development Bhd (stock code 5200) Properties – RM1.82

below: UOADEV daily technical chart (click to enlarge)

Chart wise: 

UOA Development’s candles sprung up last week. This saw the candles breaking its recent high of RM1.66 last Friday. For now, there continues to be strength for further upsides despite the momentum indicators springing up above their respective upper limit lines.

The lagging MACD has also crossed the trigger line on the upside, providing another positive signal. Therefore, UOA Development’s share is a Trading buy and remains so long as it stays above RM1.65. The resistance is at RM1.90. The other support is at RM1.40-RM1.42 level.

by Mercury Securities

UOA Development Bhd has made it to the Forbes Asia’s 200 Best Under A Billion list, which is made up of small and medium enterprises in the Asia-Pacific region. The property developer was one among 200 companies from 15 countries that made it to the list. Forbes said these companies grew an average 48% last year and generated US$47bil in revenue while employing over 370,000 people. The company, with a market value of US$548mil in the period under review, posted net income of US$121mil on US$194mil in sales. (Star)

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Malaysia Construction Sector 3Q12 Outlook

More than RM20b infrastructure jobs to be awarded

•  We believe there will be more contract awards flowing in 2H12, especially from transport infrastructure-related and mixed property development projects.
•  Contracts that will be closely-watched include the remaining packages of MRT1 Sungai Buloh – Kajang Line, West Coast Expressway and Gemas-JB Electrified Double Tracking Project.
•  We estimate that these contracts award, if materialized in 2H12, could be worth as much as RM21.4b,
•  Moreover, mixed development projects namely, KL International Financial
District, as well as Sungai Buloh Rubber Research Institute (RRI) also augur well for construction players. We gather that the initial phase of the KLIFD worth of RM1.0–RM1.5b is expected to kick off in July 2012.
•  Election risk has been over-imputed in the 2Q12, which sent the KL Construction Index down by -0.53%ytd against KLCI Index of +4.81%ytd. Hence, we view this as an opportunity for investors to accumulate.

by MIDF

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UMLAND – MYR2.18 SHORT-TERM BUY (TECHNICAL)

UMLAND Stock Code: 4561

United Malayan Land Berhad (UMLAND)  is an investment holding company. The company, through its subsidiaries, operates in property investment and development. It  also provides services in  trading, project management, recreational clubs, and other related activities.

below: UMLand daily chart (click to enlarge)

Recommendation
UMLAND  made a minor daily Wave 4 low at MYR1.50 (on 5 Apr 2012) with grossly oversold and bullish signals.  Due to its positive chart signals, the indicators are pointing firmly upwards to a move towards its resistance and upside target areas in the short to medium term.

SHORT-TERM BUY (TECHNICAL)  on dips for  UMLAND,  with very firm support areas at MYR1.90 and MYR2.18. The upside target areas are at MYR2.40 and MYR2.52, with stop loss at MYR1.88.

by Maybank IB

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KLCCP – Short-term Buy (technical)

KLCCP– MYR3.71    (Stock Code: 5089)

above: KLCCP daily chart (click to enlarge)

Recommendation
KLCCP  made a major daily Wave 4 low of MYR3.19 (on 19 Mar 2012) with grossly oversold and bullish signals. All its chart indicators are firmly supportive of further upside. This stock will break into higher territory in due course as it breached its key resistance areas recently.

SHORT-TERM BUY (TECHNICAL)  on dips for  KLCCP,  with very firm support areas at MYR3.37 and MYR3.71. The upside target areas are at MYR4.08 and MYR4.67. Stop-loss is at MYR3.35.

KLCC Property Holdings Berhad (KLCCP)  is an investment holding company. The company, through its subsidiaries, operates in property investment, facility management, car park operation  management, and hotels.

by Maybank IB

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