retail insights 20141209

8/10/2019 Retail Insights 20141209

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9 January 2015

Affin Hwang Investment Bank Bhd (14389-U)(Formerly known as HwangDBS Investment Bank Bhd)

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Retail Insights

Todays HighlightsSummary

Stock Pick

Ticker LastPrice*

TargetPrice

WPRTS 3.36 4.00

GTRONICS 4.43 5.00

UNISEM 1.95 2.50

INARI 2.75 3.40

MYEG 4.25 5.00

JOBSTREET 2.92 3.50AIRASIA 2.74 5.30

GAMUDA 5.06 6.20

ELSOFT 1.38 2.50

*As at the date of recommendation.

Todays highlights

Market Analysis

Strategy This Week

FBMKLCIBursa Malaysia Enters MediumTerm Bear Market

Medium Term Outlook Down Trend just confirmed Market Bias: Downward Range: 19001700

Short Term Outlook Down Trend remained Market Bias: Downward

Range: 1860 - 1720

Mounting concerns over theglobal growth. Most globalindices retreat. Ringgit at thelowest since 2008. FBMKLCIcontinues to be oversold.

Mounting concerns over the global growth outlooks provided agloomy backdrop for financial markets. It took some of the shine offglobal data last week ie. very robust USA employment report and EuropePMI manufacturing data.

Technically, most global indices retreat after improved marketsentiment last week. Malaysia is among laggards so do most oilproducers like Brazil, Canada, and Russia. Oil importers like China andJapan hit three and seven year highs respectively.

Most foreign emerging market currencies fell as the USA Dollar hit anew eight-year high. That was due mainly to a big jump in USA ratesfollowing the strong jobs report. The main reason for dollar strength is thegrowing discrepancy by rising U.S. interest rates and low foreign rates.

Ringgit is at the lowest level since 2008 and close below its 2009 and2010 low.The move constitutes a major downside breakdown, completedthe toppish formation and signals the likely start of major downtrend in thelocal currency.

FBMKLCI continues to be oversold and Technology is the weekstrongest sector.It might be worth pointing out, however, that technology

stocks who are mostly exporters are one of those sectors that stand tobenefit from declining ringgit. Looking at the ultra low oscillators level suchas MACD, we reiterate our view that FBMKLCI is oversold and should seesome modest rebound.

FBMKLCI anticipated to do acorrective bounce

Bursa lags but to followregional leadership;

Positive data and dovishECB headlines;

Softer currencies acrossthe board;

Japan and China zoomto multi month high onthe year end bullishness


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9 January 2015


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Market Analysis and Stock Pick

Code/Bloomberg Ticker Bursa Ticker Mkt Cap (RM) Support 1 (RM) Resistance 1 (RM) Last Price* (RM)3-6 Month Target

Price (RM)Expected Return Featured Date

7155 mk equity SKPRES 666.0 0.68 0.76 0.74 1.00 35.1% 2/12/2014

3158 mk equity YNHPROP 883.0 2.00 2.11 2.08 2.50 20.2% 2/12/2014

5231 mk equity PELIKAN 599.3 1.09 1.21 1.18 1.60 35.6% 2/12/2014

7036 mk equity BORNOIL 141.9 0.78 0.91 0.86 1.15 34.5% 2/12/2014

1961 mk equity IOICORP 30696.7 4.70 4.95 4.83 6.00 24.2% 2/12/2014

5657 mk equity PARKSON 2620.5 2.60 2.56 2.39 2.90 21.3% 2/12/2014

5099 mk equity AIRASIA 7759.2 2.45 2.86 2.79 3.30 18.3% 2/12/2014

5398 mk equity GAMUDA 12131.2 4.80 5.30 5.22 6.20 18.8% 26/11/2014

0090 mk equity ELSOFT 282.4 1.15 1.80 1.56 2.50 60.3% 26/11/2014

5246 mk equity WPRTS 10639.2 3.00 3.15 3.12 3.50 12.2% 21/11/2014

7084 mk equity QL 2878.8 3.40 3.50 3.46 4.00 15.6% 21/11/2014

0078 mk equity GDEX 1811.6 2.00 2.25 2.16 2.80 29.6% 21/11/2014

0024 mk equity JAG 207.3 0.20 0.23 0.22 0.35 59.1% 21/11/2014

7160 mk equity PENTA 59.3 0.40 0.47 0.45 0.60 34.8% 21/11/2014

Note: * As at the d ate of recommendation.

Stocks are selected based on technical analysis. Investors are advised to study the underlying fundamentals of each stock to assessand match risks appetite. Stocks listed below are categorized as potentially high risks and may increase in volatility in the near future.

Norhashmilaidi Hashim, MFinVice President, Retail Research+603 2145 [email protected]


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9 January 2015


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FBMKLCI:Bursa Malaysia Enters Medium Term Bear Market1

Long term EMA100w broken. Note that the FBMKLCI has convincingly breached below EMA100w at 1785while EMA20w crossed below EMA50w indicating that Bursa Malaysia has entered into medium term BearMarket. To reverse the bearish view the index has to surge and remain above 1830.

Direction: Sideways with downward bias.Supports:1715, 1660 and 1614. Resistances: 1845, 1858 and 1880.

Bursa Malaysia enters bear market. As at Friday close, the FBMKLCIs EMA100d has crossed belowEMA200d, confirming that stocks in Bursa Malaysia have officially entered a Bear Market based on the dailychart. Technical rebounds are possible but will highly likely to be short-lived as investors may continue lighten uptheir exposure gradually.

Direction: Sideways with downward bias.Supports:1736, 1716 and 1685. Resistances: 1790, 1800 and 1820.


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9 January 2015


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Trading Buy

WESTPORTS BHD (WPRT)

Our medium (3-6 months) term target price for WPRT is RM4.00 hence offers an upside potential ofaround 19% from current level.


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9 January 2015


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Trading Buy

GLOBETRONICS BHD (GTRONIC)

Our medium (3-6 months) term target price for GTRONIC is RM5.00 hence offers an upside potential ofaround 12.8% from current level.


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9 January 2015


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Trading Buy

UNISEM BHD (UNISEM)

Our medium (3-6 months) term target price for UNISEM is RM2.50 hence offers an upside potential ofaround 31.5% from current level.


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9 January 2015


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Trading Buy

INARI BHD (INARI)

Our medium (3-6 months) term target price for INARI is RM3.40 hence offers an upside potential ofaround 19.1% from current level.


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Trading Buy

MYEG BHD (MYEG)

Our medium (3-6 months) term target price for MYEG is RM5.00 hence offers an upside potential ofaround 19.9% from current level.


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Trading Buy

JOBSTREET BHD (JOBST)

Our medium (3-6 months) term target price for JOBST is RM3.50 hence offers an upside potential ofaround 20.3% from current level.


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9 January 2015


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Trading Buy

AIRASIA BHD (AIRASIA)

Our medium (3-6 months) term target price for AIRASIA is RM3.30 hence offers an upside potential ofaround 20.4% from current level.


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Strategy This WeekOVERSOLD SITUATION, UPTICK GLOBAL DATA AND BARGAIN HUNTING OFFER BULLS EARLYEDGE, TECHNICAL REBOUND ON THE CARDS

Following the mild strength of the global stocks, we expect the local index, FBMKLCI to eventually followother Asian markets and stage an oversold rebound (after declining 7.5% over the last four months due tosoftening of ringgit & commodities). We believe the FBMKLCI is likely to have milder upside next week(albeit with a more volatile session), tracking more bargain hunting rebound, growing fiscal stimulus hopes(Europe, Japan and China), positive global economic data and upside swings of Wall Street and Asianregional indices.

Both MSCI All-World and FTSE All-World have showed strong rebound after sitting near its lowest in ayear last month while the USA 10-year bond yields retreated after sitting at their highest levels in morethan two years. Positive global economic data (USD PMI, USD Non-Manufacturing PMI, Europe PMI,Great Britain PMI, Australia Current Account, Australia Retail Sales) and attractive blue chips bargain-hunting interest should give Bursa an opportunity to regain near term control. We believe the coincidentupturn in USA, China and Eurozone manufacturing PMIs (strongest since June 2013 possibly due tocorporate restocking) are encouraging and will provide short term lift to the broad market as investorsdigest that global economic momentum is still robust this year.

While there was a measure of concern over USA Fed rising interest rates, the uptick in manufacturingdata helped temper outflows from Asian markets. The possibility that the USA central bank will startreducing the supply of easy money has spread from equities to commodities and currencies market (fromyield curve steepening and investment outflows, commodities melt down to five year low), particularlythose emerging market nations that are oil and plantation exporters. This is reflected by the MalaysianRinggit, Russian Rouble, Brazilian Real and Indonesian rupiah which weakens to a new multi-year trough.The sustainability of the oversold rebound will depend on further rounds of economic data next week(GDP, Jobless claims, Consumer Confidence and Durable Goods Order) with investors looking for hints toconfirm a trend reversal of downside momentum.

Despite softer currencies, most Asian indices are in green territories with Japan Nikkei and ChinaShanghai Composite pushed into a new high for the move, with support coming from slight improvementin Japan/China service PMI figures and hopes for more stimulus from the People Bank of China.Meanwhile, expectations that the ECB could be closer to pursuing a fresh round of quantitative easingshould provide support. USA equity markets were also bullish in anticipation of positive Novemberemployment report and ISM manufacturing data. The local equity markets however failed to hold above

1750 support level despite hope for a positive December holiday sales period and further improvement inupcoming year end shopping sentiment.

Meanwhile, a decent 7.5% correction in the local index from its record high of 8th July 2015, oversoldtechnical positioning and cheaper market valuations leave the index increasingly vulnerable for a quicktrading accumulation. Further strength above 1770 resistance would open the charts up for a larger rallytoward 1800 while a break down below 1730 will suggest more setbacks towards 1700 levels. On thedomestic front, we note that the local index has rallied to an all time-high of 1896.23 level in July but eversince has been moving downwards until last week when it broke below the psychological threshold of1800 points. Despite the foreign outflow and selloff seen in Bursa and Ringgit (-7.5% & -9.2%), localmarket is still holding up largely due to Bursa defensive appeal, resilient current account surplus, higheryield and its lower vulnerability to foreign investor withdrawals. We expect selling momentum to subsideriding on three factors (1) Bursa resilience and defensive appeal (as it did during the past global

uncertainties) (2) More rotation play towards small cap stocks as can be seen by the outperformance of


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9 January 2015


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FBMSmallCap and FBMFledgling Indices (3) Portfolio rebalancing with institutional funds positioningahead of the year end window dressing activities.

On the news front, there are plenty of business news which will catalyse Bursa market next week whichinclude Petronas delays go-ahead for USD11.0b Canadian LNG project, Kenanga arm sells stake inLabuan bank for a total cash consideration of RM6.7m, Berjaya Land proposes to issue up to RM650.0mdebt notes, Hong Leong Bank redeems RM250 mil notes due in 2019, IOI Properties completes its SouthTower project in Singapore, Censof unit wins Talent Corp job, Malaysia 1MDB plans meetings withinvestors for RM10b energy IPO, Sime disposes of stake in China unit and Hap Seng to unveil RM2bmega property project in Klang Valley and Brahim's ties up with Carpenter Beef to develop halal abattoir in

Australia. On the technical front, despite the breakdown below 1800 psycho level, the FBMKLCI nowremains in a long term monthly uptrend (barring any close below 1700 level). Since hitting a new recordhigh in July (1826.22 points, a yearly gain of 8.9%), the local index has declined 7.5% which is an ideal

healthy correction for the strong uptrend seen since October 2008. Given the oversold market situation,we expect the weakness to be temporarily stretched (Bursa has recorded five straight week of decline).Various momentum studies (MACD, RSI and Stochastics) have been trending lower and remains oversoldwhich support a potential technical rebound near major support levels.

As for strategy next week, we are recommending aggressive investors to short index futures on strength(near 1770 level, positioning for another test lower) while conservative investors should stick with bluechips that possess resilient business models and momentum capacity to rebound on event play (FestiveSeason & Budget 2015) after the recent sell-off. These include the likes of services, banks, technologyand consumers stocks such as Sime, Hapseng, Unisem, Airasia, Axiata, Digi, Tenaga, Maybank, TM,MEGB, MBSB and Nestle.

Dato Dr. Nazri Khan AdamSenior Associate DirectorHead of Retail Research+603 2145 [email protected]


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This report is intended for information purposes only and has been prepared by Affin Hwang Investment Bank Berhad (14389-U) (formerly known as HwangDBS Investment

Bank Berhad) (the Company) based on sources believed to be reliable. However, such sources have not been independently verified by the Company, and as such theCompany does not give any guarantee, representation or warranty (express or implied) as to the adequacy, accuracy, reliability or completeness of the information and/oropinion provided or rendered in this report. Facts, information, views and/or opinion presented in this report have not been reviewed by, may not reflect information known to, andmay present a differing view expressed by other business units within the Company, including investment banking personnel. Reports issued by the Company, are prepared inaccordance with the Companys policies for managing conflicts of interest arising as a result of publication and distribution of investment research reports. Under nocircumstances shall the Company, its associates and/or any person related to it be liable in any manner whatsoever for any consequences (including but are not limited to anydirect, indirect or consequential losses, loss of profit and damages) arising from the use of or reliance on the information and/or opinion provided or rendered in this report. Anyopinions or estimates in this report are that of the Company, as of this date and subject to change without prior notice. Under no circumstances shall this report be construed asan offer to sell or a solicitation of an offer to buy any securities. The Company and/or any of its directors and/or employees may have an interest in the securities mentionedtherein. The Company may also make investment decisions or take proprietary positions that are inconsistent with the recommendations or views in this report.

Comments and recommendations stated here rely on the individual opinions of the ones providing these comments and recommendations. These opinions may not fit to yourfinancial status, risk and return preferences and hence an independent evaluation is essential. Investors are advised to independently evaluate particular investments andstrategies and to seek independent financial, legal and other advice on the information and/or opinion contained in this report before investing or participating in any of thesecurities or investment strategies or transactions discussed in this report.

Simulations or model portfolio are prepared on a hypothetical basis and are for illustrations only.

Third-party data providers make no warranties or representations of any kind relating to the accuracy, completeness, or timeliness of the data they provide and shall not haveliability for any damages of any kind relating to such data.

The Companys research, or any portion thereof may not be reprinted, sold or redistributed without the consent of the Company.

The Company, is a participant of the Capital Market Development Fund-Bursa Research Scheme, and will receive compensation for the participation.

This report is printed and published by:Affin Hwang Investment Bank Berhad (14389-U)(formerly known as HwangDBS Investment Bank Berhad)

A Participating Organisation of Bursa Malaysia Securities BhdChulan Tower Branch,3rd Floor, Chulan Tower,No 3, Jalan Conlay,50450 Kuala Lumpur.

www.affinhwang.comEmail : [email protected] : + 603 2143 8668Fax : + 603 2145 300
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retail insights 20141209

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