Analyst calls for June 26
KUALA LUMPUR, June 26 — This is a selection of morning calls by local research houses for the day.
From RHB Research
Masterskill
Management has introduced initiatives to to counter declining student enrolment. These include: 1) reducing the fees for diploma programmes to RM40k for a three-year course (from RM50k) from Apr onwards.; and 2) more aggressive marketing for its degree courses to increase the proportion of degree students (1QFY12: 7.2 per cent of total students).
Note that, 2QFY12 is expected to remain in the red as Masterskill’s major student intakes are in the 2H. 2Q earnings are expected to be similar to 1Q, given minimal changes in student numbers and the cost base remaining high, due to: 1) high depreciation costs; and 2) high staff cost.
We have revised our FY12-14 forecasts after reviewing our student growth assumptions for FY13-14 to 10 per cent p.a. (from 3 per cent p.a.) and after fine-tuning our cost assumptions. We now estimate a smaller net loss of RM0.7m for FY12 (from RM5.5m) and net profit of RM4.7m and RM10.4m for FY13 and FY14 respectively (from net loss of RM1.0m and net profit of RM0.3m).
We upgrade our call on Masterskill to Market Perform (from underperform), as: 1) we believe that much of the bad news is already in the price; and 2) we believe there is limited downside going forward given that the share price is close to its all-time low of RM0.87. Our fair value estimate for Masterskill is raised to RM0.88 (from RM0.85), after rolling-over our valuation basis to a target P/B of 0.7x on FY13 BVPS of RM1.27 (from 0.7x FY12 BV of RM1.25).
From HwangDBSVickers
After hitting a new all-time high of 1,611.50 yesterday, the FBM KLCI could face a test of resilience today. Essentially, Malaysian equities may come under renewed selling pressures as negative external vibes threaten to push the benchmark index to slip below the psychological mark of 1,600 ahead.
This follows an overnight beating on Wall Street. Key U.S. stock indices dropped between 1.1 per cent and 1.9 per cent at the closing bell amid growing concerns that the policy makers would not be announcing any decisive plans to resolve the eurozone debt crisis at the European Council summit (to be held on Thursday and Friday).
Back home, investors will probably be selective by focusing on stocks with positive corporate developments. The list includes companies that have just secured individual contracts such as: (a) Minetech Resources, after being awarded sub-contract works for the construction of a MRT station worth RM29m; (b) Favelle Favco, with purchase orders to supply cranes for a combined value of RM72m; and (c) Handal Resources, which has bagged the provision of integrated crane services contract worth RM150m.
From OSK Research
Aviation sector update
Jet fuel price has been on a downtrend since early May, plunging by 20 per cent to an 18-month low of USD106.5/barrel this week. As jet fuel is the biggest cost component at up to 70 per cent of total costs, an airline with the least hedging exposure and a low earnings base will see the most meaningful impact on earnings. THAI and SIA will have the highest earnings sensitivity to receding crude oil prices due to their slim margins and conservative hedging position respectively. The share prices of the airline stocks under our coverage are currently at an attractive below mid-cycle valuations. We maintain our overweight call on the sector, with AirAsia (FV: RM4.57) and Thai Airways (THB35.4) as our top buys.
* 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.
