Business

Analyst calls for January 23

KUALA LUMPUR, Jan 23 — This is a selection of morning calls by local research houses for the day.

HwangDBS Vickers

The swift technical rebound from an oversold position yesterday suggests that the selling momentum on our Malaysian bourse may be easing off for the time being. Still, any further recovery on our local stock market will likely be slow and tentative.

Technically speaking, the key FBM KLCI – which bounced up from a low of 1,602.12 yesterday before closing at 1,628.66 for a two-day cumulative loss of 2.9 per cent - could struggle to cross over its first resistance hurdle of 1,635. On the downside, the immediate support line is seen at 1,600.

In terms of share price actions, we may see potential technical rebound plays today in beaten-down index-linked counters such as UEM Land, DiGi and YTL Power. Separately, SapuraKencana via its consortium is reportedly involved in a tight race to win over USD5b contracts in Brazil to supply pipe-lay flexible support vessels, according to an overseas magazine.

Axis REIT; Buy; RM3.13

Price Target: RM3.35; AXRB MK

Axis REIT 4Q12 briefing highlights

Key takeaways from Axis REIT’s briefing include:

a)    FY12 asset portfolio size enlarged to 31 properties spanning 5.46m sf from 27 properties previously in FY11. The REIT’s office properties are currently still rented competitively at below market rates, implying some upside despite a soft office market as improvements are made (e.g. MSC status etc).

b)    Occupancy rate of Axis REIT’s overall portfolio remained strong at 96 per cent, mainly dragged by vacancy at Axis Business Campus (being emptied out for refurbishment).

c)    Lease expiry profile for FY13-15F is fairly evenly distributed at 17 per cent/30 per cent/14 per cent of total NLA respectively. A majority of the top 10 tenants by rental revenue contributions (account for 49 per cent of total revenue) have long-term tenures.

d)    The ongoing refurbishment of Axis Business Campus is on track, with contracts targets to complete the South and West Wings by Apr 2013 and May 2013 respectively. Expect strong yield accretion upon full completion of the refurbishments from its c.5 per cent yield when Cycle and Carriage tenanted the property.

e)    Strong pipeline of potential asset acquisitions with cumulative value of RM661m, centred mostly in the Klang Valley (Klang, Shah Alam) and Johor (Senai, PTP). Indicative yields hover between 7.5 per cent and 8.5 per cent.

Hai-O Enterprise; Trading Buy; RM2.36

Price target: RM2.95; HAIO MK

Reaping rewards from MLM traction

MLM industry expected to grow rapidly with government’s aid. Past problems have been resolved and company is moving forward at full speed. 4.2 per cent FY12F dividend yield supported by strong balance sheet with net cash position. Fair value of RM2.95, based on 13x FY13F EPS, translating to 25 per cent potential upside.

CapitaMalls Malaysia Trust; Buy; RM1.89

Price target: RM2.20; CMMT MK

Retail still forging ahead

4Q12 in line with expectations; 17 per cent higher revenues y-o-y driven by full contribution from East Coast Mall. 4.24sen DPU declared – FY12 DPU of 8.44sen. Near-term growth to be progressive; low gearing implies capacity for acquisitions. Maintain BUY with RM2.20 DCF-based TP

RHB Equity Research

Pantech

Pantech announced 3QFY13 net profit of RM15.6m (+9.1 per cent qoq, +51.2 per cent yoy) which was within our expectation. Its 9MFY13 cumulative earnings improved 77.9 per cent mainly thanks to its successful investment in the Nautic Steel in UK.

In terms of segmental 9MFY13 profit before tax, its trading division improved 55 per cent yoy mainly due to higher sales demand from oil and gas sector as well as higher profit margin due to better cost control, while its manufacturing arm chartered a growth of 221 per cent and that again, was mainly contributed by Nautic Steel and the improved product mix of carbon steels manufacturing division.

We think Pantech may be able to continue to ride on the O&G boom in FY14 with Nautic Steel the main profit contributor while its trading division can leverage on Nautic Steel’s brand name to expand its business network.

Furthermore, we expect its stainless steel division may possibly start contributing positively to its bottomline in the next financial year thus we may see more upside to earnings.

We continue to like Pantech for its exposure in the booming O&G sector and we think that the recent correction in its share price gives investors an opportunity to accumulate the stock.

We are maintaining our Buy recommendation with an unchanged FV of RM1.00, based on 9x FY14 EPS.

CapitaMalls Malaysia Trust

CMMT’s 4QFY12 realised net profit of RM33.7m (+10.8 per cent yoy; -2.6 per cent qoq) came in line with estimates. A 2.11 sen DPU was declared, bringing total FY12 DPU to 8.44 sen (+7.3 per cent yoy), slightly above our DPU forecast on an annualised basis.

CMMT’s revenue continued its double-digit yoy growth, attributed to: 1) the full-year contributions from its new assets; and 2) positive rental reversions kicking in. CMMT’s portfolio occupancy rate remained steady at 98.5 per cent, and rental reversions remained strong, with FY12 portfolio reversion of 6.4 per cent.

CMMT’s gearing is currently at a comfortable 28.4 per cent level. We believe that new acquisitions could be in the pipeline, given that CMMT has proposed to enlarge its approved fund size by up to 20 per cent (or 353.6m new units) to 2.12bn units from 1.77bn units currently. This would help CMMT to raise about RM636m to meet acquisition or capex purposes.

We revised our FY13 and FY14 marginally (<2 per cent) after updating the FY12 earnings figures. Our DDM-based fair value has now been revised to RM1.85 (from RM1.78), after updating the latest financial numbers and revising our DPU forecasts. Maintain Neutral.

* These recommendations are solely the opinion of the respective research firms and not endorsed by The Malaysian Insider. The Malaysian Insider shall not be liable for any loss arising from any investment based on any recommendation, forecast or other information contained here.

 

 

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