Analyst calls for June 14
KUALA LUMPUR, June 14 — This is a selection of morning calls by local research houses for the day.
From HwangDBS Vickers
US equity indices declined between 0.6 per cent and 0.7 per cent at the closing bell last night as the market reacted to weaker US retail sales data for the month of May, while higher borrowing costs in Italy and Germany fueled concern about the global economy.
However, we believe that the local bourse could buck the trend today and gradually move towards the immediate resistance level of 1,580 as news emerged that the European leaders may consider relaxing Greece’s austerity measures after the June 17 elections, raising the prospects of the country remaining in the euro currency.
On the backdrop of minimal corporate news flow, we believe there may be added interest in: (a) Starhill REIT, after it announced the acquisition of Marriott hotels in Sydney, Brisbane and Melbourne for RM1.3 billion; and (b) Naim Indah Corp, after it announced that its agreement to acquire the LPG assets from Shell Trading has been terminated.
From RHB Research
Bursa’s share price climbed from a low of RM4.36 in mid-March 2009 to a three year-high of RM9.02 in mid-January 2011 before it ended its bullish streak with a correction below the SMAs mid-Feb. Coupled with a formation of a ‘death cross’, the stock’s price declined to a year-low of RM5.76 in end-September 2011 before it recovered to a high of RM7.72 by mid-Feb. The stock, however, failed to sustain its recovery and resumed its downtrend to a low of RM5.91 by end-May.
The stock’s price subsequently rebounded to above the 10-day SMA over the next two weeks. Yesterday, the stock’s price traded sideways within the region of RM6.06 - 6.15 before ending the day at RM6.09 (from its open of RM6.10), registering a total trading volume of 1.3 million shares. Noticeably, the decline in Bursa share price since early-April saw both the RSI (35.52 pts) and Stochastic indices remain below the crucial 50 pt level, suggesting weak buying momentum.
We expect Bursa’s share price to stage a technical rebound towards the 40-day SMA of RM6.47 and the 76.4 per cent FR level of RM6.53 in the short term. Any further breakout above the RM6.53 barrier would then turn the medium-term outlook positive and this could lead to an extended rally towards the next resistances of RM7.01
(61.8 per cent FR level) and RM7.39 (50 per cent FR level) over the medium term.
In addition, we believe the proximity of the stock’s price to the year-low of RM6.53 (as compared to the year-high of RM8.12 and the three-year high of RM9.02) offers investors a compelling risk to reward ratio to buy within the range of RM6.00-6.20 sen on expectations that the stock’s price would trend higher over the near term.
While we expect good support at the year-low of RM5.76, breaching this could turn the overall outlook negative. Thus, investors should cut loss if the price breaches below RM5.76.
Overall, we see a good risk to reward ratio for investors with an entry price of RM6.10 given that the upside to the 76.4 per cent FR level of RM6.53 and the 61.8 per cent FR level of RM7.01 is 43 sen and 91 sen respectively while the downside to its cut loss level of RM5.76 is capped at 34 sen.
We continue to like QL’s lead in the poultry and marine manufacturing industry, as well as its success in replicating its growth strategy in the Asean region. Case in point was its new marine plant in Surabaya, Indonesia, for which we had the honour of being its first visitors. The plant, which complies with EURO and HACCP standards, is equipped with automated machines to produce surimi and fishmeal. Additional lines for surimi and fishmeal production are slated to be ready by Aug 2012 and early 2013 respectively. Maintain BUY, an unchanged Fair Value of RM3.46.
* 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.