Company Name: TSH RESOURCES BHD
| Research House: HLG | Price Call: BUY | Target Price: 3.52 |
TSH Resources (BUY; NEW)
Strong FFB growth to underpin earnings
'''' TSH Resources is involved mainly in the oil palm plantation and milling business in Malaysia and Indonesia, which contributed approximately 83% and 96% of its revenue and operating profit in 2010 respectively.
'''' The bases of our investment case for TSH include:
1.'''' Its young tree profile, suggesting strong FFB growth and earnings ahead;
2.'''' The introduction of WAKUBA ramet (which would be used in TSH's new planting activities from 2012), will sustain TSH's high FFB output growth over the longer term; and
3.'''' The favourable long term prospects of the oil palm plantation sector.
'''' We are initiating coverage on TSH with a BUY recommendation and TP of RM3.52 (based on sum-of-parts valuation).
''
KLCI: Focus on EU Summit
'''' Markets are likely to remain volatile and confused in the immediate term, depending on the outcome from the upcoming EU discussions from 23-26 Oct and a later one by G20 on 3-4 Nov.
'''' Moreover, with the FBM KLCI broken below the uptrend line (formed since late Sep 11), we continue to advocate risk-averse investors to sell into strength or trim positions with resistance zones at 1470-1495 while supports for pullbacks are 1432 (10-d SMA), 1411 (30-d SMA) and 1400 psychological levels.
''
KURASIA: Poised for a technical rebound''
'''' Although trading could remain choppy in the near term, KURASIA has been consolidating well along the uptrend line support which is positive. Once the upper Bollinger band (now at RM0.505) is taken out, prices should re-rate towards RM0.57 (38.2% FR) and RM0.66 (23.6% FR). Further resistance targets are RM0.75-0.80. Supports are RM0.46 (lower Bollinger band) and RM0.42 (61.8% FR). Cut loss below RM0.42
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