Analyst calls for May 16
KUALA LUMPUR, May 16 — This is a selection of morning calls by local research houses for the day.
From HWANGDBS-Vickers:
Southern Steel
3QFY12/9MFY12 losses were below our and consensus’ expectations. Cut FY12/13F earnings after imputing higher raw material prices. Downgrade to Hold; cut TP to RM1.95.
Boustead Heavy Industries Corp
1Q12 result below expectations. Drag from commercial projects operating losses. Expect stronger 2H with offshore patrol vessel contract. Maintain Buy with revised TP of RM3.40.
Kinsteel
1Q12 net profit of RM10.3m was in line, lifted by better spreads and higher utilisation. Earnings recovery is sustainable. Maintain Buy and RM0.70 TP; potential upside from mining rights and demand from ETP projects.
From OSK Research:
The index should be trading lower, now that the 1½ -month downtrend is confirmed after violation of the 1,560 support level yesterday. The negative bias was highlighted by yesterday’s “Long Black Day”, which was preceded by a gap. A new series of lower highs is now established, at 1,606 and 1,585 pts, which ends the series of higher lows since Sept 2011. The index remains below the 50-day MAV line too. Nonetheless, the index is well above the rising 200-day MAV line which indicates that the longer-term trend is still up. This is also boosted by the longer-term positive indication of a “Golden Cross” that occurred back in February.
Thus, the index has to convincingly close below 1,550 support level – the 50 per cent retracement of the Feb-April rally – to keep the current downward move going. Further support lies at the 62 per cent retracement level of 1,540 and 1,530 pts, the high of January and also the 38 per cent retracement of the Nov 2011-April 2012 rally. But again, a return of buying cannot be altogether discounted given the most oversold daily RSI in 9 months. Nonetheless, only a close back above yesterday’s high of 1,565pts will signal a convincing return of buying. Minor resistance can be expected too at yesterday’s afternoon high of 1,560 pts, and the recent lows of 1,570 and 1,777 pts.
From RHB Research:
Maybank
Maybank is expected to announce its 1Q12 results on 24 May. Typically, 1QCY12 tends to be a seasonally slower quarter for banks. We expect 1Q12 net profit to be lower by around 7.5 per cent qoq but up 5 per cent yoy. Nevertheless, from our meeting last month, management was not too alarmed by the slow start and expects a better 2H.
We expect NIM compression of around 3bps yoy and 12bps qoq with the sharper qoq contraction due to 2QFP11’s NIM being boosted from the unwinding of interest. Overheads are expected to be broadly stable qoq but our 40bps credit cost assumption for 2012 implies higher loan impairment allowances (+280 per cent yoy; +19.5 per cent qoq), putting a dent on bottomline.
Maintain forecasts, fair value of RM10.11 (15x CY12 EPS) and Outperform call.
Perwaja
1QFY12/12 net profit blew away our full-year net loss forecast of RM60.5m and full-year consensus estimate of RM23.5m. The variance against our forecasts came largely from lower-than-expected raw material costs.
We now project Perwaja to make RM39.4m net profit in FY12 (vis-à-vis RM60.5 net loss previously). We are also raising FY12-14 net profit forecast by 15-15.6 per cent p.a.. The changes are to largely reflect lower input costs. After the recent heavy sell down, we upgrade Perwaja to Market Perform with fair value of RM0.61 based on 0.53x tangible book value of RM1.15, in line with its historical average during downcycles.
* 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.
