April 11, 2013

Secured Naga-4 drilling rig contract worth RM478m

Stock Name: UMW
Research House: MIDFPrice Call: HOLDTarget Price: 13.15

Nomura raises target price for Axiata

Stock Name: AXIATA
Research House: NOMURAPrice Call: BUYTarget Price: 7.10

Nomura Equity Research raised its target price on Axiata Group Bhd to RM7.60 from RM7.10 as it expects the telecom company's operations in Indonesia, XL Axiata, to turn around next year.

XL is expected to contribute positively when it completes a US$4 billion network ramp-up, which has raised costs and shrunk profit margins.

Nomura said the investment was "critical" for XL to transition into data, although competition may be more intense with new players coming into the fray.

Nomura maintained a 'buy' call on the Axiata stock, which has gained nearly four per cent in the past month.

The stock was up 0.15 per cent at RM6.67 at 10.27am, while the benchmark index rose 0.37 per cent. -- Reuters

April 10, 2013

Rich Valuation

Stock Name: CRESNDO
Research House: TAPrice Call: SELLTarget Price: 2.23

Alliance maintains 'neutral' on telco sector

Stock Name: DIGI
Company Name: DIGI.COM BHD
Research House: ALLIANCEPrice Call: TRADING BUYTarget Price: 4.95

Alliance Research remains 'neutral' on the telecommunications sector given its valuation is not cheap vis-a-vis regional peers.

In a note today it said for the first quarter of this year, Malaysian telcos have largely underperformed the benckmark FTSE Bursa Malaysia KLCI.

"The share performances for Axiata (+0.2 per cent) and Maxis (-0.6 per cent) were relatively in line with the -0.1 per cent decline in the benchmark index but Digi and TM suffered double-digit decline of 12 per cent and 10.8 per cent,
respectively," it added.

Ahead of the 13th general election, it believes investors would be increasingly more cautious as the polling date draws nearer, making the defensive telco sector a good choice for investors to hide from political risks.

"Nonetheless, we like Digi (Trading Buy, with a target price of RM4.95), as we believe it is defensive during the pre-election period and offers potential upside post-election from the passing on of six per cent service tax and capital management initiatives," it said it a note today.

Meanwhile, Kenanga Research reiterates its 'overweight' call on the telecommunications sector while maintaining the telco companies' financial year 2013-2014 earnings estimates.

It said Maxis yesterday introduced its iPhone 5 4G-long-term evolution (LTE) services that operate at 1.8GHz instead of the official 2.6GHz spectrum band assigned by the Malaysian Communication and Multimedia Commission in December.

"We are positive on this latest industry development given the 1.8GHz spectrum could provide wider LTE coverage as well as better indoor signal strength," it said, adding TM, with a target price (TP) of RM6.25, remains its top pick in the sector.

"We also reiterate our 'outperform' calls on Maxis (TP: RM6.75); Digi (TP: RM5.30) and Redtone (TP: RM0.56) while maintaining our market perform rating on Axiata (TP: RM6.60)," it added.-- Bernama