Analyst calls for July 25
KUALA LUMPUR, July 25 — This is a selection of morning calls by local research houses for the day.
Today’s Market Preview
Regional equities could face more selling pressures today after Wall Street ended in the red last night. As government bond yields in Spain and Italy hit new highs – a reflection of the deepening Eurozone sovereign debt crisis – leading US stock indices slid between 0.8 per cent and 1.2 per cent at the closing bell.
At home, the key FBM KLCI is expected to pull back further from the support-turned-resistance level of 1,635. The benchmark index, nevertheless, may show a sense of resilience to limit its downside risk in the near term.
This comes as the limelight of the day will be on the simultaneous debut listing of IHH Healthcare in Malaysia and Singapore this morning. Other counters that may be of interest too include TH Plantations (which would be acquiring new plantation businesses from its parent company for RM536m) and Autoair Holdings (after receiving a conditional takeover offer at RM0.23 per share in cash).
TRC : No Compromise On Margins
TRC has not yet secured any viaduct package of the Sg Buloh – Kajang (SBK) Line of the Klang Valley MRT project as it is adhering very strictly to its stance of not unduly compromising on margins.
Recently secured Samalaju Port and Brunei Airport jobs put TRC in a strong position to bag more work packages from these two projects.
Riding on its recent success on Ukay Tropika property project, TRC is eyeing Prasarana land pockets near main LRT stations to be developed on a JV basis.
FY12/12 net profit forecast is cut by 39 per cent largely to reflect the less-than-robust billings from key contracts in 1HFY12/12 coupled with the resulting poorer overhead absorption. FY12/13-14 net profit forecasts are reduced by 6-10 per cent, having moderated our assumption on margins slightly.
Fair value is reduced to RM0.84 from RM0.96. Maintain Outperform.
The decline that started on Monday continues; the index closed with another black candle yesterday in the face of determined sellers. It even registered a close below last week’s low of 1,630 pts, and a continued close below this level should see a correction starting earnestly. Nonetheless, the weakness is within the backdrop of a two-month rally. The index is comfortably above both the 50-day MAV line and the rising 200-day MAV line, supported by the longer-term positive “Golden Cross” that emerged in February.
The index is likely to trade lower today. Firm selling pressure should not see the index closing back above 1,630 pts.
Supports are at 12 July’s low of 1,623 pts, 9 July’s low of 1,614 pts and 5 July’s low of 1,610 pts. Stronger support remains just above the 1,600-pt psychological level, at the three-week low of 1,602.50 pts. However, a close back above 1,630 pts possibly see the return of buying. Resistance is at yesterday’s high of 1,638 and followed by 1,645 pts, just above Monday’s high. A violation of both levels will confirm the return of buying. Again, a break of the psychological 1,650 pts, which was tested last Thursday and Friday, is needed for the index to continue its climb. Further selling can then be reasonably expected at every 10-pt interval.
*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.