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RHB Equity 360° - 8 June 2010 (Gamuda, Banks; Technical: Faber)

RHB Equity 360° - 8 June 2010 (Gamuda, Banks; Technical: Faber)

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Published by Rhb Invest
Visit Note
- We can confirm that the areas surrounding the site of the Tan Thang project are densely populated. This dense 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 need extensive ground treatment other than some filling to raise the elevation. Most importantly, the land is 100% cleared of squatters.
Visit Note
- We can confirm that the areas surrounding the site of the Tan Thang project are densely populated. This dense 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 need extensive ground treatment other than some filling to raise the elevation. Most importantly, the land is 100% cleared of squatters.

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Published by: Rhb Invest on Jun 08, 2010
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05/12/2014

 
 
Market Dateline
   
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”
Underperform
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
Overweight
 Sector News Update
Affin :
Fair value of RM3.58
Trading Buy
 
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
 
- Support: IS = RM2.60 S1 = RM2.29 S2 = RM1.98- Resistance: IR = RM2.80 R1 = RM3.04 R2 = RM3.40
Bulletin Board
Co/Sector News Impact Recom
Power Minister of Energy, Green Technology and Water revealed yesterday that the rough estimate of aproposed nuclear plant is between US$2.5-4bn(1,000MW plant). However, while the startingcost was high, operating cost was lower.
(Financial Daily)
 The cost estimate is broadly consistent with whatTNB had mentioned previously, i.e. US$3-4m/MW. We believe nuclear is only one of theoptions to address long-term concerns on power generation capacity and the country’s over-reliance on gas and coal for fuel, and especiallygiven the cancellation of the Bakun underseacables project. The other options are: 1)renewable energy (which underscores theimportance of the proposed Renewable EnergyAct which appears to have been delayed to 2011for tabling to parliament); and 2) electricitydemand management.OWGamingB-TotoPM stated that the Government has yet to issuea sports betting licence to Ascot Sports asdiscussions on the licensing terms and conditionsare being finalised with the company. TheGovernment is also getting feedback and viewsfrom various quarters on the proposal.
(Star)
 While this may be perceived as negative for Berjaya Corp which is proposing to buy 70% of Ascot Sports, we believe the Government hasnot shut the door yet on the re-issue of the sportsbetting licence. In any case, this news is neutralfor B-Toto as we estimate the sports bettinglicence would have minimal impact to net profitsof +1.4% for FY04/11 and +1.9% for FY04/12.OWB-Toto:OP, FV =RM4.95O&G Exxon Mobil is reportedly expecting to spendaround US$1bn for the enhanced oil recoveryproject in Tapis field beginning 2013. Recall thatPetronas signed a Production Sharing Contract(PSC) in June 2009 between its wholly-ownedPetronas Carigali and ExxonMobil Explorationand Production Inc. (Exxon) to further developseven oil fields offshore Peninsular Malaysia.The Tapis oil field, discovered in 1969, is locatedin the South China Sea- 209 km off the eastcoast of peninsular Malaysia in water depths of 64 metres.
(Starbiz)
 Long-term positive. Although crude oil price of US$70-80 appears to be a comfortable level for investment in shallow-water exploration project,we highlight that Petronas and PSCs are stillcautious on pushing ahead with unprovengreenfield development projects in a major waygiven still-high exploration and developmentcosts. While Petronas’ 1HFY10 E&P spendingincreased by 9.8% yoy to RM13.7bn, this wasmainly driven by reservoir management as wellas enhanced oil recovery (EOR) activities for thecurrent brownfield blocks i.e. to boost currentoutput level.OWCIMB CIMB’s plan to list on the Stock Exchange of Thailand will be delayed for a few months fromJun due to the current environment there as wellas the requirement for more time to study legalissues.
(StarBiz)
Neutral. Management had previously highlightedin its 1QFY10 analyst briefing the possibility of adelay given the current situation there.OP, FV =RM8.12Digi.Com Digi, which embarked on a cost-saving initiativeto withstand challenges in the competitiveindustry, is on track to achieve RM100m savingsthis year. (Starbiz)Neutral, as we expect its ongoing cost-savingmeasures would help cushion the impact of   higher handset subsidies and price pressures,keeping FY10 EBITDA margin flat. However,these measures could be positive for margins if the cost savings turn out to be higher-than-expected.OP, FV =RM25.70KPJ The Health Director General said that theGovernment will review the fees charged byprivate hospitals and clinics.
(Financial Daily)
 Neutral. Only consultants’ fees are regulated bythe Government, while other hospital charges arenot. In addition, KPJ only shares 5-10% of consultants’ fees. Nevertheless, we believe theOP, FV =RM3.50

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