Malaysia Stock Picks
Week 17 (23-27 April) Stock Picks Commentary
Hi ! Welcome and thank you for being loyal reader of Malaysia Stock Picks site. Here are the stock picks commentary for Week 17 (23-27 April).
Stock Picks #1
Three A Resources Bhd (3A)
Week high : RM 1.35 (Up 12 sen - 14%)
On 23 April, AmReseach wrote that Three-A Resources Bhd's hydrolyzed vegetable protein plant in China will commence operations this month and is expected to account for 5% earnings in 2012 and 23% in 2013.
To recap, in late 2009, Wilmar International Ltd took up a 15.65% stake in Three-A. The plant is located near Wilmar's existing plant including Qinhuangdao Goldensea Foodstuff Industries Co Ltd, China’s largest soya protein producer.
Hence, it is widely expected that Wilmar will channel Three-A's products through its extensive sales and distribution network in China to food processors, particularly soya sauce producers.
To recap, in late 2009, Wilmar International Ltd took up a 15.65% stake in Three-A. The plant is located near Wilmar's existing plant including Qinhuangdao Goldensea Foodstuff Industries Co Ltd, China’s largest soya protein producer.Hence, it is widely expected that Wilmar will channel Three-A's products through its extensive sales and distribution network in China to food processors, particularly soya sauce producers.
Market took this news positively as the additional capacity and opportunity to leverage on Wilmar's established sales and distribution network in China are both beneficial to Three-A's financial performance from 2012 onwards.
3A stock rose 14% (12 sen) since 23 April to week’s highest RM 1.35 on 25 April and closed at RM 1.23 at the end of this week.
Click Here for all latest posts on Three-A
Click Here for all latest posts on Three-A
Stock Picks #2
DRB-Hicom Bhd (DRBHCOM)
Week high : RM 2.61 (Up 24 sen - 10%)
On 27 April, DRB-Hicom announced that it had received acceptances totaling 98.6% of the total issued and paid up share capital of Proton Holdings Bhd and will proceed to “compulsorily acquire” all outstanding shares.
Proton to be suspended from trading from 4 May 2012 onwards.
Proton to be suspended from trading from 4 May 2012 onwards.
Market took this news as positive this will give DRB-Hicom total control over Proton to carry out their management strategies.
In addition, a market talk on possible sale of Lotus on 25 April (which was denied by DRB later on Friday) and the recent launch of Proton’s flagship car model Preve were expected to be beneficial to DRB-Hicom.
In addition, a market talk on possible sale of Lotus on 25 April (which was denied by DRB later on Friday) and the recent launch of Proton’s flagship car model Preve were expected to be beneficial to DRB-Hicom.
DRBHCOM stock rose 24 sen (10%) since 27 April to week’s highest RM 2.61 on the same day and closed at RM 2.54 at the end of this week.
Click here for all latest posts on DRB-Hicom
Click here for all latest posts on DRB-Hicom
Stock Picks #3
Panasonic Manufacturing Bhd (PANAMY)
Week high : RM 23.50 (Up RM 1.54 - 7%)
On 23 April, MIDF Research initiated coverage on Panasonic and the analyst report highlighted Panasonic Malaysia strong cash position. It also reported that Panasonic has been consistently rewarding its shareholders with steady dividend payouts.
More impressively, the gross dividend payout ratio has exceeded 100% for the past few years, with the most recent payout ratio of 107% for FY11. Even though the company doesn’t have a fixed dividend policy, MIDF Research expects Panasonic Malaysia to continue churning out substantial dividend payouts to its shareholders.
More impressively, the gross dividend payout ratio has exceeded 100% for the past few years, with the most recent payout ratio of 107% for FY11. Even though the company doesn’t have a fixed dividend policy, MIDF Research expects Panasonic Malaysia to continue churning out substantial dividend payouts to its shareholders.
Market took this news as positive as expectation of hefty dividend would be good for shareholders. The stock rose to a high of RM 23.50 already beating MIDF Research's target price of RM 21.62.
PANAMY rose 7% (RM 1.54) since 23 April to the week’s highest RM 23.50 on 26 April and closed at RM 22.50 at the end of this week.
Stock Picks #4
AEON Credit Bhd (AEONCR)
Week high : RM 10.26 (Up 61 sen – 6.3%)
On 23 April, AEON Credit reported that its net profit jumped 43% year-on-year and 10% quarter-on-quarter to RM27.7mil for 4th quarter ended Feb 20, 2012, mainly from credit card and personal financing.
Hwang DBS Vickers Research revised AEON Credit's target price to RM 9.20 on the same day pegging to 8 times PE ratio.
Hwang DBS Vickers Research revised AEON Credit's target price to RM 9.20 on the same day pegging to 8 times PE ratio.
Market took this news as positive on improving market sentiments for the financing business. Furthermore, on 24 April, market talk rumoured that AEON Credit may be mulling for a 1-for-1 bonus issue.
OSK Research indicated that a bonus issue would be a positive move to retail investors as liquidity is one of the concerns of AEON Credit.
AEON Credit rose 61 sen (6.3%) since 24 April to the week’s highest RM 10.26 on 26 April and closed at RM 10.06 at the end of the week.
OSK Research indicated that a bonus issue would be a positive move to retail investors as liquidity is one of the concerns of AEON Credit.
AEON Credit rose 61 sen (6.3%) since 24 April to the week’s highest RM 10.26 on 26 April and closed at RM 10.06 at the end of the week.
Stock Picks #5
TopGlove Corporation Bhd (TOPGLOV)
Week high: RM 4.72 (Up 29 sen – 6.5 %)
On 24 April, Maybank Research in its analyst report upgraded TopGlove Corp from "SELL" to "BUY" raising its target price to RM 5.40.
Maybank Research stated that TopGlove sales volume picked up in its latest quarter to almost back to its H1N1 peak as well as its key production cost (latex cost) has begun its seasonal downtrend.
Maybank Research stated that TopGlove sales volume picked up in its latest quarter to almost back to its H1N1 peak as well as its key production cost (latex cost) has begun its seasonal downtrend.
Market took this news as positive as higher sales and lower production costs is expected to be beneficial to TopGlove's net profits in the coming months.
TOPGLOV stock rose 25 sen (5.6%) since 24 April to week’s highest RM 4.72 on 25 April and closed at RM 4.68 at the end of this week.
On other stocks:-
Ramunia – Initial rumours on the RM 150 mil contract surfaced on news on 26 April but the stock has dropped since by 7.7% to 39 sen to end the week.
However, the stock has already rallied on 24 April (before the rumours was on news), surging an impressive 21% (7 sen) in one day to close at week’s highest 40sen.
Update: Ramunia has officially announced that it has received a letter of intent from Sarawak Shell Bhd on an estimated RM 150 mil contract on 27 April, Friday.
Seg International – Navis Capital announced a general offer on 25 April that it offers RM 1.714 to acquire all SEG shares. It currently has 58% stake in the company.
On 26 April, Kenanga recommended SEG International shareholders to reject the offer.and the market reacted negatively. Kenanga Research has set a target price of RM 2.41 for Seg International. Market has reacted negatively which saw a 5% drop in stock price.
Opening stock price was RM 1.81 on 26 April and dropped 5% to RM 1.72 to close the week.
On 26 April, Kenanga recommended SEG International shareholders to reject the offer.and the market reacted negatively. Kenanga Research has set a target price of RM 2.41 for Seg International. Market has reacted negatively which saw a 5% drop in stock price.
Opening stock price was RM 1.81 on 26 April and dropped 5% to RM 1.72 to close the week.
Sunway Behad – On 24 April, AmResearch commented in its report that Sunway property year to date sales was weaker largely due to the impact of the 70% loan-to-value ruling introduced in November last year.
This is not a surprise as Sunway’s pricing for its products has always been on the high side and 70% of its planned launches are priced at least RM1 million per unit. Amresearch recommends a fair value of RM 2.70.
This is not a surprise as Sunway’s pricing for its products has always been on the high side and 70% of its planned launches are priced at least RM1 million per unit. Amresearch recommends a fair value of RM 2.70.
Tanjung Offshore – On 24 April, Tanjung Offshore announced its proposal to sell its marine business to Ekuinas for RM 220 million and intends to distribute approximately RM130mil out of the total proceeds arising from the proposed disposal to its shareholders
The stock rose to a high of 97 sen on 24 April.
Market was worried about its current valuation despite expecting the special dividend payout of 44 sen per share.
However, on 25 April, AmReseach and OSK Research commented that Tanjung Offshore divestment of the group’s only profitable business raises question on its earning prospects going forward
Market was worried about its current valuation despite expecting the special dividend payout of 44 sen per share.
Tanjung Offshore dramatically dropped 27% since the commentary by the research houses on 25 April and closed at 71 sen for the week.
Eastern and Oriental – On 23 April, Eastern & Oriental Bhd (E&O) announced that it is acquiring a freehold office cum
retail building in central London known as the Princes House for
£20.25mil (RM100.9mil).
However, on 25 April, The Wall Street Journal reported that the UK has slipped into recession after GDP shrank for 2 consecutive quarters. To recap, the U.K. last entered recession at the height of a global banking crisis in 2008, and emerged from it in the third quarter of 2009 after five successive quarters of economic contraction.
Market is cautious about this purchase especially at times when the UK economy is facing uncertainty.
E and O dropped 4.8% since 23 April to close the week at RM 1.38.
However, on 25 April, The Wall Street Journal reported that the UK has slipped into recession after GDP shrank for 2 consecutive quarters. To recap, the U.K. last entered recession at the height of a global banking crisis in 2008, and emerged from it in the third quarter of 2009 after five successive quarters of economic contraction.
Market is cautious about this purchase especially at times when the UK economy is facing uncertainty.
E and O dropped 4.8% since 23 April to close the week at RM 1.38.
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