Analyst calls for May 15
KUALA LUMPUR, May 15 — This is a selection of morning calls by local research houses for the day.
From Ambank Research:
We maintain BUY on Bumi Armada, with an unchanged sum-of-parts-based fair value of RM5.05/share, which implies an FY12F PE of 26x.
We continue to like the stock due to the following re-rating catalysts:- (1) Likelihood of new floating production storage and offloading (FPSO) vessel contracts as oil & gas developments reignite globally, (2) tightening vessel utilisation rates, and (3) premium scarcity for oil & gas stocks with large market capitalisation.
The stock currently trades at an attractive FY12F PE of 21x compared with SapuraCrest Petroleum’s peak of 29x in 2007.
We maintain BUY on AirAsia Bhd (AA) with an unchanged fair value of RM4.20/share, ahead of 1Q12 results announcement on 23 May. Our fair value continues to peg AA at 12x FY12F earnings. From an operating perspective, AA defied industry trends in 1Q12, registering a 12 per cent YoY growth in raw passenger traffic to 4.8mil (Malaysian operations). Traffic in terms of RPK (revenue-passenger kilometre) grew by 9 per cent given shorter average stage length. Loads were maintained at 80.3 per cent (1Q12) versus 80.1 per cent (1Q11).
From a valuation standpoint, AA is cheap at an implied 10x FY12F earnings (ex-associate value of RM0.96/share). LCC peer, RyanAir in comparison trades at 13x forward PE.
From HWANGDBS-Vickers
Axiata Group; Hold; RM5.39
Price Target: RM5.15; AXIATA MK
Axiata Group’s 70 per cent-owned subsidiary Robi Axiata (Bangladesh-based) had on 13 May 2012 lost a court battle with the Bangladesh Telecommunications Regulatory Commission (BTRC) regarding a VAT imposition on telecom operators for license renewal, according to Bangladesh’s The Daily Star. The company is expected to pay its license renewal and spectrum fees without deducting tax at source, as well as VAT on telecom licensing fees, revenue sharing and spectrum assignment fees to the National Board of Revenue.
Axis REIT; Buy; RM2.72
Price Target: RM3.05; AXRB MK
Axis REIT announced that it is planning to dispose of its Kayangan Depot property, which was acquired in Jun 2006, via an open tender. The property has 162,222 sf of NLA with 69 per cent occupancy rate as at 31 Dec 2011. It is currently worth RM22mn at book value, and nets a 6.4 per cent net property income (NPI) yield based on FY11 NPI of RM1.1mn. The Group believes that the property has reached its optimal value and it is timely to realise the capital gain. The objective for the open tender process is to provide a fair and transparent platform for the proposed disposal.
TRC Synergy; Buy; RM0.70
Price Target: RM0.85 (Prev RM0.80); TRC MK
Strong RM1.8bn order book with potential for more new wins. 1Q will be weak, but 2H will be strong as LRT land issues have been resolved. Cheapest construction stock in our universe. Buy with TP nudged up to RM0.85.
From OSK Research:
UMW may trade higher after closing firmer yesterday. Purchases can be made if it closes above the psychological RM8.00 with a close below the 2-week low of RM7.87 as the stop loss. The price target is RM8.40, followed by RM8.75. A failure to break RM8.00 may lead to a correction with a close below RM7.87 as the confirmation. Expect strong support at RM7.45.
Downward pressure is expected to weigh on KNM’s share price as long as it is below RM0.83. Thus, liquidation can be made below this level. Support is expected at the round figure of RM0.70 and RM0.60. At the moment, only a close back above RM0.83 may indicate a return of buying. It also requires a close above the resistance level of RM0.90 to confirm the upward move.
From RHB Research:
We believe the time has come to start trimming holdings of plantation stocks, as we expect CPO prices to fall further on the back of the seasonal peak production period for CPO and improved prospects for the other vegetable oils in 2013.
Although there have been no significant changes to supply/demand dynamics of the vegetable oil industry, we believe a lot of the positive factors are already fully reflected in CPO and share prices. And our average CY12-13 CPO price assumptions of RM3,100 and RM2,900 respectively imply lower prices in 2H2012 and 2013.
We have already been cautioning investors to lock in profits once a decent return has been obtained and to only buy on dips. Given the prospects of weaker CPO prices ahead, we believe it is no longer justifiable for the larger plantation stocks to trade at a significant premium to the market, and we downgrade our valuation targets accordingly.
* 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.
