PP 7767/09/2010(025354)RHB Research Institute
RHB Equity 360
8 June 2010 (Gamuda, Banks; Technical: Faber)Top Story: Gamuda –
Field report: Tan Thang looking to sell like “hot pho”
Visit Note- We can confirm that the areas surrounding the site of the Tan Thang project are densely populated. Thisdense population base translates to ready buyers for the Tan Thang project.- Previously farm land, the land is flat and just a little lower than the road level that means it does not needextensive ground treatment other than some filling to raise the elevation. Most importantly, the land is100% cleared of squatters.- Our conversation with consultants from the HCMC office of an international property consulting firm gaveus the comfort that Gamuda’s RM10bn Yenso Park in Hanoi should do well too.- Fair value raised from RM2.05 to RM2.74, having imputed in for the first time a value of RM1,231m toGamuda’s two property projects in Vietnam. Underperform remains as upside in share price has alreadybeen exhausted.
Sector CallBanks :
BNM “rejects” Affin’s application to commence negotiations with EON Cap
Sector News Update
Fair value of RM3.58
EON Cap :
Fair value of RM8.07, downgrade call after outperformance
Market Perform (down from OP)
- Affin announced yesterday that BNM was unable to consider Affin’s application to commence negotiationwith EON Cap and its major shareholders. No further details were mentioned.- Possibly, a spanner to the proposal was whether Affin’s financials would have been able to digest theacquisition, in our view.- Despite this “setback”, fundamentally, our view on Affin is unchanged. Valuations appear cheap despite therecent 1Q results that beat our and consensus expectations. Furthermore, asset quality appears intactnotwithstanding the implementation of FRS139. Pending Affin’s analyst briefing later today, our fair value of RM3.58 (13x FY10 EPS) and Trading Buy recommendation remain unchanged.- With the latest development, focus would now turn back to EON Cap’s EGM, which is reportedly set to takeplace sometime next month. That aside, EON Cap’s 1QFY10 results have helped to reinforce our view thatits fundamentals are improving.- Our fair value of RM8.07 (15x FY10 EPS) is unchanged. However, EON Cap’s share price performancehas done rather well of late which means that the stock now offers a potential return that is roughly in linewith our expected market return. Thus, we downgraded our call to Market Perform from outperform.
Technical HighlightsDaily Trading Strategy :
Index’s direction is expected to stay negative…- Despite bouncing from an early sell off, the FBM KLCI registered a candlestick pattern that still points to avolatile trading day ahead.- In fact, the market is still overwhelmed by the poor trading sentiment from the recent fallout.- Given further weakness on the short-term momentum indicators, the index’s trading direction is expected tostay negative.- The poor level of participation yesterday was also in line with our expectation that investors at currentstage, would prefer to stay sideline ahead of Thursday’s FIFA 2010 World Cup kick-off.- Immediate level is at the 10-day SMA of 1.276. Losing it will refresh selling activities, hence retest the1,250 support level and the recent low of 1,243.86.- We maintain a medium-term retracement target at between the 23.6% Fibonacci Retracement (FR) level at1,229 and the 38.2% FR level at 1,154.
Daily Technical Watch: Faber Group
– Continuous buying momentum if it sustains at above RM2.60…- 10-day SMA: RM2.371- 40-day SMA: RM2.305