Company Name: SUNWAY BERHAD
| Research House: HLG | Price Call: BUY | Target Price: 3.12 |
Values undiscovered despite merger
'''' Since listing of Sunway, the market cap has tumbled 16% back to its Apr'11 low which was before the surge in share price of SunH-SunC, indicating that investors seeking to take profit have already done so and further selling pressure may have abated.
'''' Despite being one of the largest market cap stock in the property/construction sector, no premium is given to Sunway. Moreover, the company is currently trading at a P/E ratio of 9.4x and close to its NTA/share of RM1.91, representing a 15% premium. The premium (to NTA) is significantly lower than industry peers, which trade at a premium of up to 140%.
'''' In view of trading at a discount to its peers, no premium recognised despite the merger exercise and potential synergy benefits through having an integrated township developer which captures much of the value chain, we initiate with a BUY call on Sunway with a TP of RM3.12 based on SOP valuation.
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FBM KLCI - A sense of calmness to return
'''' A sense of calmness is likely to return following the strong rebound on Wall St and Europe markets overnight.
'''' A strong close above the mid Bollinger band (at 1476 pts) on high volume would spur the index to retest the 1500 psychological level (which also coincides with the 30-day SMA at 1501).'' However, significant resistance levels still remain at 1510 (upper Bollinger band) and 1529 (200-d SMA).
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Stock to watch - Tenaga:'' Technical rebound amid extremely oversold positions''''
'''' Looking at the charts, there is a high possibility that price may find its near term support around RM5.00 or 1x FY11 P/B, which is a 30% discount to Tenaga's 5-year historical average. Daily charts are signaling potential bottoming up in share prices, reflected by the reversals in MACD and RSI whilst the slow stochastics of circa 0.7% indicates limited downside. Potential technical rebound targets are RM5.55 (mid Bollinger band) to RM5.74 (30-d SMA).
'''' Cut loss below RM4.97 (lower Bollinger band)
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