Research House Analysts Stock Calls

13 July 2011 >>> This is a selection of morning calls by local research houses for the day.

From OSK Research
MMHE
Downgrading our call to Neutral Our downgrade is purely on the grounds of the stock’s rich valuation We continue to like MMHE’s market leadership in Malaysia in all its three core businesses its strong orderbook and tenderbook amounting to RM3 1 billion and RM5 0 billion respectively as well as its large annual fabrication capacity which the company recently increased to 129 700 tonnes after acquiring Sime Darby Engineering’s Pasir Gudang fabrication yard Finally we also like the fact that company has the backing of Petronas which we believe would soon embark on a spending spree on marginal oilfields and deepwater activities which will ultimately spur demand for fabrication works.

MBSB
Initiate with BUY We initiate coverage on MBSB with a BUY call and a fair value of RM2 35 Our valuation is based on a 2 6x FY11 book value of RM0 90 by applying a 4 per cent growth rate COE of 11 per cent and ROE of 22 8 per cent With earnings on the uptrend strong growth in civil servants personal loans and better risk management we are confident that MBSB would be able to scale new heights.

From HwangDBS Vickers
Perdana Petroleum
We retain our forecast given the little impact on our projected earnings Hence maintain our Hold call and RM0 95 TP based on 1x adjusted FY12F BVPS Potential catalyst would be fasterthan-expected execution of the deepwater field developments from Petronas which would then benefit offshore service providers like Perdana Petroleum.

Alliance Financial Group
Maintain Buy raised TP to RM4 30 after rolling forward valuation base to CY12 We retained our GGM assumptions of 15 per cent ROE 5 per cent long term growth and 10 5 per cent cost of equity We like AFG for its scalable domestic franchise and non-interest income traction which will boost sustainable earnings and ultimately ROE AFG is the cheapest stock in our bank universe currently trading at 1 6x BV vs sector average of 2 3x Our RM4 30 TP implies 1 8x CY12 BV Its attractive valuation coupled with strong earnings visibility going forward makes AFG stand out as a gem in the next round of bank consolidation.

DISCLAIMER

The information contained herein was obtained from sources believed to be reliable. However, we do not guarantee the accuracy and completeness of the report. Opinions expressed herein are subject to change without notice. This report is for information purposes only and should not be construed as an invitation, offer or solicitation to purchase or sell any futures product referred to herein. The Author may from time to time has an interest or position in the futures products or stocks mentioned. There is a risk of loss in trading stocks,futures & derivatives like products.

GOODLUCK