Technical | Fundamental Analysis Discussion Stocks Listed In Bursa

Saturday, November 20, 2010

FajarBaru, WCT, Xingquan, Kossan

RHB Keeps Fajarbaru At Outperform; MYR1.37 Target

0839 GMT [Dow Jones] STOCK CALL: RHB Research keeps Fajarbaru Builder Group (7047.KU) at Outperform, target at MYR1.37, based on 10X fully-diluted CY11 EPS of 13.7 sen. House says although 1Q net profit came in at only 17% of full-year forecast, expects stronger quarters ahead with new projects attaining their 1st billing milestones. Says firm's 2 key contracts wins recently boosts year-to-date new contracts to MYR99 million, outstanding construction orderbook to MYR496 million. "We are upbeat on construction stocks as we believe they will continue to generally outperform the market from 4Q2010," says RHB. Adds, firm pre-qualified to bid for LRT line extension project as main contractor as well as segmental box girder sub-contractor. Stock down 0.9% at MYR1.11

Affin Keeps WCT At Buy; Target MYR4.04

0731 GMT [Dow Jones] STOCK CALL: Affin Investment maintains Buy rating on WCT (9679.KU), MYR4.04 target. Says, company's 9M net profit within expectations. Lowers FY10 net profit forecast by 2.6% to reflect year-to-date performance of engineering and construction division, but expects "stronger contributions" from both E&C projects, property development. House maintains FY11-FY12 forecast; company's outstanding orderbook at September end was MYR3.2 billion. Adds, company has met guidance of MYR2 billion in new jobs in 2010, property demand should remain strong "with the flush liquidity in the financial system and low interest." Stock last +0.3% at MYR3.03

Hwang-DBS Keeps WCT As Buy; MYR3.60 Target

0837 GMT [Dow Jones] STOCK CALL: Hwang-DBS Vickers Research keeps WCT (9679.KU) as Buy with unchanged MYR3.60 target; construction firm posts 9-month net profit of MYR99.2 million, which equivalent to 65% of house's full-year earnings forecast. "Although the result seems weak, we understand 4Q10 will be a stronger quarter driven by a pick up in both construction and property billings," says Hwang; thus retains net profit forecast of MYR152 million for FY10, MYR178 million for FY11, MYR186 million for FY12. "We continue to like WCT as a cost effective contractor that will benefit from a more open tender system." Adds, given its less diversified earnings base, it is also more leveraged to new contract wins. WCT's current orderbook at MYR3.3 billion. Stock last +0.3% at MYR3.03.

CIMB Trims Xingquan Target To MYR3.04 Vs MYR3.49

0800 GMT [Dow Jones] STOCK CALL: CIMB Research trims Xingquan (5155.KU) target to MYR3.04 from MYR3.49 after scaling back house's FY11-FY13 EPS forecasts for Chinese shoemaker by 8.0%-13% to reflect margin squeeze from sharp rise in raw material prices. This after Xingquan's fiscal 1Q net profit of MYR25.8 million (+20.6% on-year) out of step with house expectations, with annualised core net profit being only 68% of house forecast, mainly due to profit margin erosion. "But Xingquan remains an Outperform as valuations are among the most attractive in the sector. Factors that could give the share price a kick are better-than-expected trade fair orders and a sharp decline in raw material prices," says analyst Nigel Foo. Stock last down 0.6% at MYR1.59

Affin Cuts Kossan Target To MYR4.73; Keeps Buy

0837 GMT [Dow Jones] STOCK CALL: Affin Investment lowers Kossan Rubber Industries (7153.KU) price target to MYR4.73 from MYR5.00 after revising down FY10-12 net earnings forecasts by about 6% due to expected rise in latex prices, stronger MYR vs USD. Maintains Buy rating; says company has "diversified product mix, which buffers its bottomline from higher raw material costs, and high utilization rates." Notes company's 9-month EBIT margin at 15% vs 10.3% a year earlier, driven by robust demand, stronger pricing power, especially in 1H, that allowed company to pass on nearly 100% of escalating latex costs. Stock last +5.6% at MYR3.39.

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