Company Name: TENAGA NASIONAL BHD
| Research House: HLG | Price Call: HOLD | Target Price: 6.00 |
Stock Name: GLOMAC
Company Name: GLOMAC BHD
| Research House: HLG | Price Call: BUY | Target Price: 0.87 |
CY3Q11 Report Card
Disappointing But Revision Ratio Improved
'''' 'disappointed again but HLIB's revision ratio improved. ''Earnings risk persists but expectations toned down to levels less susceptible to shocks.
'''' Sectors that disappointed were Building Materials, Conglos, Construction, Property, Technology and Transportation.''
'''' Only the Gaming and Plantation sectors were ahead, Plantation continued to exceed expectations.
'''' Axiata, Genting Ml, Notion, TM and TSH cut to Hold while KLK is now a Sell.'' Only upgrade was JCY to Hold.
'''' HLIB's revision ratio improved to 1.3x (i.e. for every earnings upgrade, there were 1.3 downgrades) vs. 2.4x.''
'''' 2011 EPS growth forecasts cut to 6.3% vs. 6.8% but due to lower base, 2012 EPS growth is higher at 10.6% vs. 10%.
'''' Sentiment improved after major central banks provided liquidity support, VIX now below 30.
'''' However, progress towards resolving the EU debt woes are expected to be slow and with hiccups along the course.''
'''' With minor changes to our EPS growth, we maintain our end 2011 and 2012 FBM KLCI targets (unchanged 13x 1-year forward P/E) at 1,440 and 1,555 respectively.
'''' Although the market could overshoot in the short-term, we are keeping our defensive stance at this juncture and our preferred defensive picks are AFG, Boustead, BToto, Genting Mal, Maybank, MRCB, Sunway and TM.''
''
Tenaga (HOLD)
Official PPA between TNB and Tanjung Bin
'''' Tenaga has officially signed (PPA) Power Purchase Agreement with Tanjung Bin Energy (100% owned by Malakoff), for the 1,000MW coal power plant, for 25 years starting from the commercial operational date. The expected date is 1 March 2016.
'''' Similar to other power plants, the coal fuel will be supplied by TNB.
'''' We are positive on the news, for Tenaga will need to secure adequate power generation capacity to meet the annual 4-5% growing power demand in Peninsular Malaysia.
'''' Furthermore, coal energy could be the cheapest fuel energy to produce power by 2016, which is only ~14.5sen/kWh (assuming coal price at USD115/mt or RM345/mt) for natural gas price for power industry, is expected to rise gradually from current level of RM13.70/mmbtu to RM40.70/mmbtu by end 2015. Thus, natural gas energy will eventually cost ~40sen/kWh, more expensive than coal energy, but still cheaper than alternative energy costing 50-60sen/kWh.
'''' Maintain TP at RM6.00 (based on unchanged DCFE) and our Hold recommendation.
''
Glomac (BUY)
Rolling Out Heavy Projects In Petaling Jaya
'''' 1H FY12 net profit of RM41.6m was in-line with both HLIB and consensus estimates (51% of full -year forecast).
'''' 2Q net profit rose 33% qoq and 49.7% yoy thanks to a one-off RM8.6m disposal gain arising the sale of their 49% stake in their Thailand associate (WHA Glomac Alliance Company Limited).
'''' Glomac is current undergoing a soft patch in earnings following the completion of Glomac Tower, and now relies on Glomac Damansara Residences as its main earnings contributor.
'''' Next two key projects are in Bandar Utama and Mutiara Damansara, slated to launched in early 2012, with combined GDV of ~RM800m.
'''' Maintain our forecast, TP (RM0.87, 50% discount to RNAV), and BUY call, but we put our numbers under review.''
''
KLCI: More sideways trading after surging 4% wow
'''' The KLCI's strong weekly gains of 4% has overcome resistances of mid Bollinger band & 30-d SMA (now at 1464 pts), 50-d SMA (at 1437) and 100-day SMA (1473 pts), signalling a shift in market momentum. Nevertheless, the sighting of Doji stars on daily chart could indicate high possibility for a short-term peak coinciding with the key and strong 200-day SMA (1503 pts) resistance.'' This could see the index pull back and cover last Thursday's gap of 1472-1502 pts before more buying interest returns.
UOADEV: Getting oversold
'''' Based on daily chart, we reckon that UOADEV is likely to find a short term bottom near RM1.38 (38.2% FR). Stronger support is RM1.30 (23.6% FR). After a brief consolidation, the next upswing is expected to push prices towards its mid Bollinger band (RM1.50) and 30-d SMA (RM1.54). Stronger resistance is seen at RM1.65 (upper Bollinger band). ''
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