Analyst calls for July 5
KUALA LUMPUR, July 5 — This is a selection of morning calls by local research houses for the day.
From RHB Research
Oil and Gas
On 22 Jun, Petronas announced that it signed three contracts with US independent Hess for the implementation of the RM15 billion North Malay Basin project. The project is expected to yield first gas by 1Q2013 of 100 mmscfd through an early production system which will mainly focus on the Kamelia field. The Full Field Development phase involves a 300km gas pipeline from the field to processing facilities onshore, and a new onshore slug catcher in Kerteh.
We expect domestic offshore marine activities to pick up in 2H2012 as more jobs regarding the North Malay Basin project are awarded. We believe this would further drive up charter day rates, while we expect more long-term charters to be awarded to secure vessel services given the expected uptick in offshore support activities as other offshore projects gradually come onstream.
Despite the various domestic projects in the pipeline, we highlight that valuations for the sector are already fairly stretched, trading at 15-16 CY13 EPS (vs. our sector benchmark of 14x CY13 EPS), which implies that investors have already priced in the robust domestic O&G activities. Furthermore, we believe the soft outlook for crude oil price would continue to dampen investor sentiment on the sector. As such, we reiterate our Neutral stance on the sector.
After breaking past the first resistance level of 1,610 yesterday, the FBM KLCI would be looking to hold on to its recent gains ahead. The benchmark index – hovering at a new record high currently – is expected to range-bound with a slight positive bias today.
This comes amid an absence of overnight external leads (as Wall Street was on holiday). Meanwhile, Bank Negara Malaysia’s monetary policy committee will probably decide to leave the overnight policy rate unchanged at a scheduled meeting later in the evening.
On the corporate front, investors may find interest in: (a) TRC Synergy, following news report that it has been appointed by MRT Corp to be the main contractor for Sg Buloh depot contract worth RM460m; and (b) MMC Corporation, which could defer the listing of its power unit Malakoff from 4Q12 to 1Q13 according to one media source.
From OSK Research
We are positive on Catcha Media (CHM)’s disposal of its 50 per cent stake in Auto Discounts SB (ADSB) in return for a 75 per cent stake in iCar Asia Ltd. iCar Asia would eventually seek a listing on the Australian Stock Exchange (ASX), latest by 30 June 2013. Similar to sister company, iProperty, we see iCar becoming a leading regional online advertising business serving the booming used car trading industry. We are optimistic on the portal’s long-term growth prospects, which we see it replicating the success of iProperty. Hence, we maintain our BUY call on CHM, with our FV unchanged at RM1.03, based on a 12x FY12 PER.
* 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.