Analyst calls for July 18
UPDATED @ 10:40:00 AM 18-07-2012
KUALA LUMPUR, July 18 — This is a selection of morning calls by local research houses for the day.
From RHB Research Institute
Fitters – “Green” Is Good
Fitters’ new engine of growth, i.e. third-party green palm oil milling, has finally been set in motion with the first two signing in July 2012 with Anglo-Eastern and Tradewinds Plantation respectively, and more to follow in the immediate term.
A third-party green palm oil milling project gives Fitters three bites on the same cherry: (1) One-off profits from the EPC of plant and equipment; (2) A recurring management fee or share of profits; and (3) A recurring off-take spread.
Earnings impact from these third-party green palm oil milling ventures will be felt from FY12/13, and based on our projection, their contributions to group profits will rise from 7 per cent in FY12/13 to 29 per cent in FY12/14 and 41 per cent in FY12/15, making Fitters a “must-have” stock for green/growth funds.
Fair value is RM1.05.
After surging to a high of 1,647 before closing at 1,639 yesterday, the key FBM KLCI would probably continue riding on the positive momentum generated. On the chart, the benchmark index could pull away from its resistance-turned-support line of 1,635, possibly climbing towards the next resistance target of 1,650.
Overseas, sentiment may get a boost after the U.S. Federal Reserve chairman said policymakers are prepared to take stimulus action to boost the economy if needed. In response, leading equity indices on Wall Street rose between 0.5 per cent and 0.7 per cent at the closing bell.
On our home stock exchange today, there could be added interest in: (a) Ingress, after its chairman was quoted as saying that it has received several offers to take the company private although nothing has been decided yet; (b) Silk Holdings, which has been awarded contracts for the provision of supply vessels worth RM35m; and (c) Bursa Malaysia, as it is scheduled to release its latest quarterly results during lunch hours.
From OSK Research
Industry outlook: Plantations (Overweight)
We maintain our Overweight call on the sector. We believe the rupee’s weakness will only cause a temporary slowdown in India’s edible oil import. The rupee has been weakening for past 4 – 5 years against the ringgit and the rupiah but that did not prevent its palm oil import from growing to record levels. An El Nino, should it happen, will severely affect India’s oilseed yield and will result in a sharp increase in its edible oil import, much like in 2009. Other than a decline in palm oil yield, the Indian factor will be the major catalyst for a strong rally in palm oil price.
* 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.