Company Name: GENTING MALAYSIA BERHAD
| Research House: HLG | Price Call: BUY | Target Price: 4.07 |
Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP
| Research House: HLG | Price Call: BUY | Target Price: 2.05 |
Stock Name: TRC
Company Name: TRC SYNERGY BHD
| Research House: HLG | Price Call: BUY | Target Price: 0.72 |
Genting Malaysia (BUY, TP: RM4.07)
Last Call, No More Bets Please
'''' There are still plenty of room for GenM to grow, especially after its venture into the international market (RWNY and GenUK). We projected its earnings to grow 17.8% in FY11 and 13.2% in FY12 respectively.
'''' RWG is expected to grow steadily given its resilience towards economic turbulence as 65% of its revenue is derived from mass-market.
'''' License awarded to develop the NEC is expected to neutralize GenUK's earnings volatility and support longer term growth.
'''' We believe RWNY is able to perform better than our conservative assumption of RM300 per VLT per day after its soft opening (estimated to be in late October).
'''' The US$3bn RWM investment would provide additional boost to GenM if the destination resort legislature is approved by Florida's authority. Approval is likely given its current economic situation and high unemployment rate.
'''' Given its defensive feature and monopoly in the industry, initiate BUY on GenM with TP of RM4.07 based on SOP valuation.
''
MRCB (BUY)
Secured coastal engineering project
'''' MRCB has been awarded a RM46.5m project by the Department of Irrigation and Drainage for Phase 2 of the Kuala Sungai Pahang rehabilitation project. The main component of the project is to extend an additional 200m in length to the breakwater constructed during Phase 1. The construction is to be completed by Mar'13.
'''' Overall, the latest contract will boost the overall outstanding external order book to ~RM1.84bn, translating to ~2.2x FY10's construction and environmental revenue.
'''' We maintain our BUY call on MRCB in view of the unique qualities of KL Sentral to support earnings growth and potential in developing strategic land banks, coupled with a healthy property unbilled sales and construction order book. TP of RM2.05 based on SOP valuation.
''
TRC Synergy (BUY)
Maiden Brunei project
'''' TRC Synergy, together with its JV partner Swee S/B, has secured the project for the Modernisation of Brunei International Airport (BIA) from the Brunei Economic Development Board (BEDB). The contract sum is for B$130m (~RM318.9m) and shall be completed within 36 months.
'''' The contract itself is larger than TRC's current market cap of ~RM283m. By assuming a pretax margin of 7% and a Brunei corporate tax rate of 30%, this project will yield TRC ~3.3sen/share annually over the next 3 years.
'''' Overall, the total outstanding order book has been boosted to ~RM1.47bn, translating to ~3.9x FY10's revenue and 5.2x order book-to-market cap ratio.
'''' We maintain our BUY call on TRC in view of its huge order book which provides clear earnings visibility over the next few years and strong balance sheet with net cash of ~25 sen/share. TP of RM0.72 based on 12x FY12 earnings.
''
A profit taking consolidation week
'''' Given that most of the bourses are still trapped in bear market territories as their indices are trading below the 50-d and 200-d SMAs, we continue to advocate investors to sell into strength or trim positions on overbought Stochastic indicator and looming election risk. Weekly resistances are 1454-1479 while supports are 1413-1425.
''
OSK: Profit taking is likely to be well-absorbed''
'''' Medium to long term outlook remain promising amid breakout from the downtrend line, underpinned by bullish indicators. Upside targets are RM1.94-2.33. However, profit taking consolidation will occur amid grossly overbought positions but it is likely to be shallow, supported by the 100-d & 200-d SMAs and potential M&A. Cut loss below RM1.64.
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