Company Name: WCT BHD
| Research House: HLG | Price Call: BUY | Target Price: 2.98 |
What If MYR Weaken Further?
'''' Fight to safety resulted in appreciation of the USD Index against regional currencies, including MYR.''
'''' Greater ST MYR volatility which could decline to RM3.22/USD (3%/yr avg appreciation since MYR de-peg and within lower range of the 3-5%/yr appreciation guided by the Chinese authority).
'''' Flight to safety would likely see foreign funds exiting equity, debt and currency concurrently.
'''' Linear regression study between MYR and FBM KLCI yielded relatively high R2 of 0.81 and high F-Stat reading.
'''' For every RM0.10 depreciation against the US dollar, the FBM KLCI will drop by 86pts.''
'''' At RM3.22/USD the FBM KLCI could hit 1328, equivalent to 11.7x 2012 earnings or 1.2SD below five-year average.
'''' Linear regression of FBM KLCI component stocks - Axiata, CIMB, DiGi, KLK, Public and RHB Cap has high R2 ' 0.80.''
'''' AMMB, Genting, Maxis, Pet Dagang, Pet Gas and UMW have R2 of between 0.70-0.80.
'''' Among the 12, only Pet Dagang and Pet Gas have foreign/free float of ~20%, others ranged from 38%-66%.
'''' Gent Malaysia, Pet Chem, BAT and YTL have R2 < 0.70 but > 60% foreign/free float.
''
WCT (Buy)
KLIA2 IC becomes official
'''' WCT has finally inked the concession agreement for the Integrated Complex (IC) at KLIA2 (see Figure #1). The concession spans for 25 years with an option of additional 10 years, which commences on 1 Aug '11.
'''' The IC is expected to cost RM530.3m and comprises of a transportation hub; commercial NLA of 350k sq ft; and 6,000 car parks.
'''' Following yesterday's briefing, we walked away reassured on the IC's viability and will provide recurring income to WCT by FY13. Based on our estimated IRR of 15.5%, this concession works out to be 12.8 sen/share of WCT's valuation.
'''' Maintain BUY on positive outlook for the sector as we expect more orders to materialise under the ETP given the urgency to mitigate the slowdown in economy.
'''' However, we cut our TP by 16.8% to RM2.98 from RM3.59 based on 14x reduced average FY11 and FY12 earnings.
''
SP Setia (HOLD)
Strong set of Q3 results
'''' 9M FY11 net profit rose 38.5% yoy to RM244.7m, making up 84.7% and 87.0% of HLIB and consensus forecasts.
'''' We attribute the deviation from forecast to our overly conservative margin assumptions for their projects, and have raised our net profit forecast for FY11-13 by 3-12%.
'''' YTD, 10 months' sales clocked in at RM2.3bn, or RM2.8bn on an annualised basis, suggesting that SP Setia could fall slightly short of their stated RM3bn sales target for FY11.
'''' Unbilled sales rose slightly to RM2.3bn (2Q: RM2.2bn), or 1.5x FY10 revenue.
'''' Despite 22% decline in share price during the current sell-down, we see more near-term volatility on share price given its relatively high foreign shareholding amidst flight to the safety of US$. Hence, we are maintaining our HOLD rating on the stock for now.
''
Glomac (Buy)
Analyst briefing notes
'''' From yesterday's briefing, we gather that management's outlook on the property market remains optimistic, as they believe that the Malaysian property market remains domestically driven, and will remain resilient despite the worsening global and domestic economic outlook.
'''' Management has no intention of deferring or delaying any of their scheduled launches, which amount to RM1.2bn over the next 12 months; the most high-profile projects include Mutiara Damansara and the Cyberjaya projects.
'''' We remain positive on Glomac's earnings, and maintain our RM2.57 target price, based on 20% discount to RNAV.'' Maintain BUY.
''
FBM KLCI: Fasten your seatbelts for roller coaster ride ahead
''
'''' Expectations of persistent selling activities to depress the market in the short term, reflected by the rotational fierce selldown on key blue chips and flight to safety of U.S. Treasurys and US$. Further technical supports are 1367 (61.8%) and 1312 (76.4%). Any technical rebound is likely to face tough hurdles near 1400-1433 (10-D SMA) pts. ''
''
Dow Jones ' Downside risks intensify''
'''' The breach of the uptrend line support and a possible violation of the neckline support near 10600 are likely to trigger further selldown towards 10383 (76.4% FR) and 10000 psychological supports. Immediate resistance levels are 11000 and 11287 (mid Bollinger band).
No comments:
Post a Comment