HLIB Research 20 October 2011 (Mah Sing; Tenaga; Traders Brief)

Mah Sing (BUY)

2011 sales target achieved

§  Mah Sing has sold out the retail portion of M City (RM117m GDV, 24 units) within two weeks of launching, and will now proceed to launch Block 2 of the residential portion, which we estimate to have GDV of ~RM494m.  Pricing likely to be north of RM1,000 psf. 

§  Assuming 30% takeup for Residential Tower 1 this year and 70% takeup by next year, this would lift our FY12-13 earnings by forecast by 3-10%.

§  Mah Sing have now achieved their RM2bn sales target for 2011. We expect a high likelihood of more land acquisitions before year-end, in the Klang Valley outskirts with affordable housing concept similar to M Residence @ Rawang.

§  We adjust our PT slightly from RM2.14 to RM2.16 (unchanged 20% discount to RNAV), as we tweak our numbers for M City.  Maintain BUY.

 

Tenaga (HOLD)

TNB to report Loss in FY12?

§  TNB CEO warned that TNB may report a loss in FY12 if the natural gas supply shortage situation is not resolved.

§  Datuk Khalib also stressed "TNB is getting only 900mmscfd, lower than the agreed allocation of 1,350mmscfd from Petronas".

§  TNB has to incur additional cost of RM400m a month for using alternative fuels (oils and distillate).

§  Furthermore, there is high risk of government delaying the tariff review, which is scheduled on Dec 2011, as the government is set to ease the burden of Malaysian high living cost.

§  However, we do expect natural gas supplies to improve in FY12 from the current level.

§  Maintain Hold with target price of RM5.10 (based on DCFE). To be reviewed pending result announcement on 28 Oct 2011.

 

KLCI: Range bound trade ahead of EU Summit

§  Global markets will remain volatile ahead of the crucial 23 Oct EU Summit as well as 3-4 Nov, when the G20 nations gather to consider additional steps to stabilize the global financial system.

§  We continue to advocate risk-averse investors to sell into strength or trim positions.  Stiff resistance zones are at 1470-1490 pts. Support levels are 1413-1434 levels.

ULICORP: Poised for a technical rebound  

§  As technical readings are on the mend from its grossly oversold positions, ULICORP is poised to retest RM0.85 (50% FR) before heading further towards stiff resistance at RM0.90 (200-d SMA) with the next upside target is RM0.99 (50-d SMA).

§  Immediate support levels are RM0.725 and crucial head & shoulder neckline near RM0.66. Cut loss below RM0.66.