02 December 2011
Proton: Daihatsu reiterates rejection of Proton-Perodua merger. Daihatsu Motor Co Ltd of Japan, a key shareholder of Perodua, is standing firm against the idea of a merger between Perodua and Proton. Daihatsu president Koichi Ina states that both companies have very different cultures and product lines and it's better to keep the individuality. (Source: The Edge Financial Daily)
SP Setia: 3rd shot at UK job for SP Setia Lenders plan to run open-market auction. The Telegraph reported Irish company Real Estate Opportunities (REO), which has a 54% stake in a vehicle that owns Battersea Power Station, as saying lenders Lloyds Banking Group and Ireland's National Asset Management Agency (NAMA) had applied to have administrators appointed to certain subsidiaries. Upon appointment, Lloyds and NAMA planned to run an open-market auction process to off-load the power station, giving SP Setia a chance to put in a bid. (Source: The Star)
Oil and Gas: Petronas mulls building third LNG terminal in Lumut. Petronas is considering building a third re-gasification plant or liquified natural gas (LNG) terminal in Lumut, Perak, to address the shortage of supply requirement in the power sector and industry users in Peninsular Malaysia. Petronas is also constructing an LNG terminal in Lahad Datu, Sabah, which will be connected to the power plant which is jointly built by the group and Tenaga Nasional Bhd. (Source: Business Times)
Healthcare: Khazanah hires banks for unit's RM4.7b IPO. Khazanah Nasional Bhd has hired Bank of America-Merrill Lynch, Deutsche and CIMB as joint global coordinators for the listing of its healthcare unit that could raise about USD1.5b (RM4.71b), three sources told Reuters. The deal could be the country's fourth-biggest IPO ever and its second major deal in 2012. (Source: The Sun)
(Information from MBB)
Friday, 2 December 2011
Today Trading idea is an Accumulate call on TDM
2 December 2011
TDM Berhad (TDM) trades palm oil and related products and operates fast-food restaurants and also provides consultancy and management services to specialist medical centres, operates in property development and develops computer systems. It trades machinery, equipment and manufactures fibreboard.
TDM made a major daily Wave 4 low of RM2.60 in October 2011, with oversold and bullish signals. Furthermore, the positive indicators of the CCI, DMI, MACD, Stochastic and Oscillator indicators are supportive of further upside. We feel that TDM will trend higher in the period mentioned above.
ACCUMULATE (TECHNICAL) on dips for TDM with its firm support areas of RM3.19 and RM3.62. The potential upside target areas are RM4.06, RM4.31 and RM5.38. Stop-loss is at RM3.17.
FBM KLCI: Key Points
Some trading stocks that we like are: AEONCR, AFG,
CARLSBG, HLBANK, LATEXX, MBFHLDG, MPHB,
SUPERMX, TAANN, TDM, TOPGLOV, TWS and TWSPLNT.
(Information from MBB)
TDM Berhad (TDM) trades palm oil and related products and operates fast-food restaurants and also provides consultancy and management services to specialist medical centres, operates in property development and develops computer systems. It trades machinery, equipment and manufactures fibreboard.
TDM made a major daily Wave 4 low of RM2.60 in October 2011, with oversold and bullish signals. Furthermore, the positive indicators of the CCI, DMI, MACD, Stochastic and Oscillator indicators are supportive of further upside. We feel that TDM will trend higher in the period mentioned above.
ACCUMULATE (TECHNICAL) on dips for TDM with its firm support areas of RM3.19 and RM3.62. The potential upside target areas are RM4.06, RM4.31 and RM5.38. Stop-loss is at RM3.17.
FBM KLCI: Key Points
- TDM – On a strong Wave 5 rise
- FBMKLCI – Mind that “gap-up”
- Obvious supports of 1,452 & 1,480
- 1,485 & 1,511 will cap the rebounds
Some trading stocks that we like are: AEONCR, AFG,
CARLSBG, HLBANK, LATEXX, MBFHLDG, MPHB,
SUPERMX, TAANN, TDM, TOPGLOV, TWS and TWSPLNT.
(Information from MBB)
Tenaga Nasional RM5.68: Buy
Results Review
Share price: RM5.68
Target price: RM6.90
Fuel cost sharing mechanism worth RM2b
Coming together; upgrade to Buy. Tenaga received confirmation for
a fuel sharing mechanism with the government and PETRONAS. Each
party will equally split the additional cost incurred of RM3.1b for burning
pricey oil and distillates which means Tenaga will get a RM2b cheque
soon. The investment proposition for Tenaga has improved; a tariff
revision is very much in the bag. We upgrade the stock to BUY based
on higher earnings outlook and better balance sheet health, with a new
target price of RM6.90 (+17%) pegged to 13x FY12 PER.
The details. This fuel cost sharing mechanism is in response to the
extra cost incurred by Tenaga for burning alternative fuels due to gas
supply shortages from PETRONAS. This covers the period of 1 Jan
until 31 Oct 2011 (10 months) amounting to approximately RM3.069b.
No detail was divulged on when the actual payment will be made, but
we can safely assume that it will be within Tenaga’s FY12 period.
Balance sheet resuscitation, but do not expect dividends yet. This
news is a game changer as Tenaga needs some form of balance sheet
resuscitation as it only have RM4.0b of cash as at end-FY11; it incurred
a cash burn rate of RM4.4b in FY11. This resolution will improve on
Tenaga’s debt outlook and its sacred AAA rating should be intact.
1QFY12 not so pretty yet. We caution however that there will still be
challenges as gas supply is low, in the 1,050 mmscfd level versus the
normal level of 1,250 mmscfd. This means Tenaga will still incur hefty
alternative fuel cost bill in 1QFY12 for the supply shortfall. Nonetheless,
the fuel cost sharing mechanism will compensate two months of 1Q
FY12 (Sep & Oct) and therefore we expect Tenaga to, at least, breakeven
(versus our initial expectation for a loss). The RM2b cost sharing
from PETRONAS and the government does provide comfort for further
compensation in the event of an extended gas supply shortage.
Tenaga regains its blue chip stock status. Tenaga’s outlook has
improved materially on both accounts of profitability and balance sheet.
Furthermore, there is a possible tariff hike in Dec/Jan, and coal prices
have receded by 8% in the last 3 months alone. We have raised our
FY12-14 earnings by 17.4%, 7.3% and 2.7% respectively thanks to
lower fuel cost bill. We have not imputed any tariff hike in our model.
(Information from MBB)
Share price: RM5.68
Target price: RM6.90
Fuel cost sharing mechanism worth RM2b
Coming together; upgrade to Buy. Tenaga received confirmation for
a fuel sharing mechanism with the government and PETRONAS. Each
party will equally split the additional cost incurred of RM3.1b for burning
pricey oil and distillates which means Tenaga will get a RM2b cheque
soon. The investment proposition for Tenaga has improved; a tariff
revision is very much in the bag. We upgrade the stock to BUY based
on higher earnings outlook and better balance sheet health, with a new
target price of RM6.90 (+17%) pegged to 13x FY12 PER.
The details. This fuel cost sharing mechanism is in response to the
extra cost incurred by Tenaga for burning alternative fuels due to gas
supply shortages from PETRONAS. This covers the period of 1 Jan
until 31 Oct 2011 (10 months) amounting to approximately RM3.069b.
No detail was divulged on when the actual payment will be made, but
we can safely assume that it will be within Tenaga’s FY12 period.
Balance sheet resuscitation, but do not expect dividends yet. This
news is a game changer as Tenaga needs some form of balance sheet
resuscitation as it only have RM4.0b of cash as at end-FY11; it incurred
a cash burn rate of RM4.4b in FY11. This resolution will improve on
Tenaga’s debt outlook and its sacred AAA rating should be intact.
1QFY12 not so pretty yet. We caution however that there will still be
challenges as gas supply is low, in the 1,050 mmscfd level versus the
normal level of 1,250 mmscfd. This means Tenaga will still incur hefty
alternative fuel cost bill in 1QFY12 for the supply shortfall. Nonetheless,
the fuel cost sharing mechanism will compensate two months of 1Q
FY12 (Sep & Oct) and therefore we expect Tenaga to, at least, breakeven
(versus our initial expectation for a loss). The RM2b cost sharing
from PETRONAS and the government does provide comfort for further
compensation in the event of an extended gas supply shortage.
Tenaga regains its blue chip stock status. Tenaga’s outlook has
improved materially on both accounts of profitability and balance sheet.
Furthermore, there is a possible tariff hike in Dec/Jan, and coal prices
have receded by 8% in the last 3 months alone. We have raised our
FY12-14 earnings by 17.4%, 7.3% and 2.7% respectively thanks to
lower fuel cost bill. We have not imputed any tariff hike in our model.
(Information from MBB)
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