TDM Bhd (Not Rated)
Low valuation with strong balance sheet
§ TDM is one of the cheapest plantation stocks in Malaysia (current share price of RM2.93/share indicates that investors are valuing TDM at only 6.4x 2012 P/E, at a huge discount of 56% to small-scale plantation players).
§ We believe that TDM is one of the laggard plays within the plantation sector and it is worth a second look, given:
1. TDM's business strategy is now much clearer, with only two core businesses and management ongoing efforts to divest the remaining non-core businesses;
2. Improving financial performance and financial standing; and
3. TDM has started paying dividends (projected at 6% net), making it an even safer bet within the plantation sector
§ We are projecting TDM's net profit to rise from RM92.0m in 2010 to RM129.1m, RM105.2m and RM100.2m in 2011, 2012 and 2013 respectively.
§ We are projecting TDM's net profit to rise from RM92.0m in 2010 to RM129.1mm, RM105.2m and RM100.2m in 2011-2013.
§ We are valuing TDM at RM3.67/share based on 8x 2012 EPS (at ~30% discount to the average industry), implying a potential upside of 25.7%.
FBM KLCI - Turbulent times ahead
§ Technically, critical support is the 1470 pts level. Failing to defend the 1470 pts will spur further downside to 1457 (38.2% FR) and 1413 (50% FR). Any technical rebound due to extremely oversold markets will be capped at 1500 with next resistance levels are 1531, 1547 (100-d SMA), 1550 (38.2% FR) and 1561 (mid Bollinger band).
Dow Jones - All eyes on Fed
§ With no signs of divergence signals, the breach of 11000 psychological level and our envisaged 61.8% FR support at 10860 pts are likely to exert more downside pressures for Dow to retest 10500 and 10383 (76.4% FR), despite a heavily oversold market.
§ Relief rally targets are 11230 (lower Bollinger band) and 11994 (200-d SMA)
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