KNM Group (KNMG MK) Technical BUY on breakout with +21% potential upside

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1 MARKET NEWS The FBMKLCI rebounded sharply by 27.42pt (+1.6%) to close at 1, yesterday on bargain hunting activities. Asian stocks fell, with the region s benchmark index dropping to a six-week low as Japan s Topix slid after the yen strengthened on a global-haven demand. The MSCI Asia Pacific Index sank 1.1% to The top gainers were Axiata (+4.5%), Petgas (+4.5%) and Sime (+4.4%) while losers were led by RHBCap (- 1.9%), Skpetro (-1.2%) and Astro Malaysia (-0.3%). Gainers outpaced losers 501 to 282 in the broader market, with 299 counters unchanged. Turnover was 1.21b shares valued at RM1.61b. Based on the hourly chart, the FBMKLCI managed to make a rebound towards the immediate resistance level at 1,766 on yesterday s trading activities. This was reinforced by all indicators showing a positive signal to support the current index rebound movement. However, the long-term view on the FBMKLCI is still on the bearish side as our index is still below the long-term downtrend line despite the bigger time frame. We maintain our support and resistance levels as follows: Support: 1,727, 1,718 Resistance: 1,766, 1,789 US markets fell on Wednesday as a renewed slump in oil prices slammed energy companies. The S&P 500 retreated 1.6%, to 2, while the DJIA dropped 1.5%, to 17, Oil slumped further on Wednesday on data showing a surprise increase in US supplies. WTI crude oil prices for January delivery settled 4.5% down at $60.94, while January Brent futures, on Wednesday, ended at a fresh five-year low. In corporate moves, Goodrich Petroleum Corp. shares slumped 8.8%, after the company said it is exploring sale of its shale asset. Costco Wholesale Corp. shares fell 2% as the retailer missed expectations on revenues, even as profit rose in November WHAT S IN THE PACK Regional Plantation (Maintained MARKET WEIGHT) Nov 14: High inventory level despite lower CPO production due to weaker exports and domestic demand as well as higher palm oil imports for domestic refining operations. Malayan Banking (MAY MK/BUY/RM8.90/Target: RM10.30) We like Maybank for its undemanding valuation (implied 11.5x 2014F PE), strong CET1 buffer of more than 10% and highest dividend yield of 6.1% in the sector. KNM Group (KNMG MK) Technical BUY on breakout with +21% potential upside BUY on breakout with a target price of RM0.555 and stop-loss at RM0.44 Currently, KNM just passed the consolidation phase and tried to penetrate the sideway trend to break higher. Dialog Group (DLG MK) Technical BUY with +13.6% potential return BUY with a target price of RM1.59 and stop-loss at RM1.32. The Dialog chart shows that the upside movement will remain intact if the price can penetrate the RM1.42 level. Perduren (M) (PRDU MK) Technical BUY with +11.7% potential return Buy with a target price of RM2.29 and a stop-loss below RM1.82. A buying signal has been given as the price is, and has been trading above the cloud. F B M K L C I C H ART Source: BursaStation KEY INDICES Prev Close Chg (%) YTD (%) DJIA 17, (1.51) 5.77 S&P 500 2, (1.64) 9.62 FTSE 100 6, (0.45) (3.69) CSI 300 3, FSSTI 3, HSCEI 11, HSI 23, JCI 5, KLCI 1, (5.43) KOSPI 1, (1.29) (3.27) Nikkei , (2.25) 6.88 SET 1, (1.01) TWSE 9, (1.06) 4.88 BDI (2.36) (59.99) CPO (RM/mt) 2, (18.20) Nymex Crude (US$/bbl) (33.32) Source: Bloomberg TOP VOLUME Stock Price (RM) Chg (%) Vol ( 000) Sapurakencana 2.42 (1.22) 32,125 Jobstreet Corp Bhd 0.29 (90.14) 22,761 Sumatec Resources ,228 Tiger Synergy Bhd ,607 Perisai Petroleum ,454 TOP GAINERS Stock Price (RM) Chg (%) Vol ( 000) Advance Information Flonic Hi-Tec Bhd ,480 Ygl Convergence ,474 Theta Edge Bhd Scan Associates TOP LOSERS Stock Price (RM) Chg (%) Vol ( 000) Ta Win Holdings 0.36 (33.33) 47.0 Quality Concrete 1.34 (16.25) 3.0 Ibraco Bhd 1.44 (15.29) 6.2 Lebtech Bhd 1.22 (14.69) 0.5 M3 Technologies 0.21 (10.64) 50.0 Source: Bloomberg w w w. u t r a d e. c o m. m y 1

2 TRADERS CORNER KNM Group (KNMG MK) Technical BUY on breakout with +21.0% potential upside Last price : RM0.46 Target Price : RM0.515, RM0.555 Support : RM0.445 Stop-loss : RM0.44 BUY on a breakout with a target price of RM0.555 and stop-loss at RM0.44. Currently, KNM just passed the consolidation phase and tried to penetrate the sideway trend to break higher. The uptick in the RSI together with the increasing trading volume, suggests that the buying momentum is set to continue in the near term. We expect the stock to continue trending upwards towards the immediate resistance of RM0.52 along with the current upleg. A breakout above this level would extend the uptrend towards the previous high of RM Expected Timeframe: 2 weeks to 2 months Dialog Group (DLG MK) Technical BUY with +13.6% potential return Last price : RM1.40 Target Price : RM1.49, RM1.59 Support : RM1.33 Stop-loss : RM1.32 BUY with a target price of RM1.59 and stop-loss at RM1.32. Based on the hourly chart, we can see that Dialog formed an Ascending Triangle Pattern which is a bullish continuation pattern. Dialog s chart shows that the upside movement will remain intact if the price can penetrate the RM1.42 level. Currently both the MACD and DMI indicators show a positive crossover supporting the upward momentum. Expected Timeframe: 2 weeks to 2 months w w w. u t r a d e. c o m. m y 2

3 TRADERS CORNER Perduren (M) (PRDU MK) Technical BUY with +11.7% potential upside Last price: RM2.05 Target price : RM2.19, RM2.29 Support : RM1.83 Stop-loss : RM1.82 Buy with a target price of RM2.29 and a stop-loss below RM1.82. A buying signal has been given as the price is, and has been trading above the cloud. The Heat Wave indicators, Tenkan-sen line, Kinjunsen line and the Chikao span line show bullish signals. The uptick in the RSI together with the high trading volume, suggests that the buying momentum is set to continue in the near term. We expect the stock to continue trending upwards towards the immediate resistance of RM2.10 along with the current upleg. A breakout above this level would extend the uptrend towards the previous high of RM2.20 and RM2.30. Expected Timeframe: 2 weeks to 2 months w w w. u t r a d e. c o m. m y 3

4 CORPORATE NEWS Eco World: Targets RM7b sales. Co World Development Group posted earnings of RM7.18m in the 13 months ended 31 Oct 2014 as the company remained upbeat about its prospects with four new projects. Announcing its results on Wednesday, the property development company targets to achieve RM7b sales over FY2015 & FY2016 with the current and new projects. For the upcoming financial year, the Group intends to launch four new projects these are Eco Sanctuary in Shah Alam, Eco Terraces in Penang, Eco Tropics and Eco Business Park III in Iskandar Malaysia. Along with its existing projects in the Klang Valley and Iskandar Malaysia, the group targets to achieve RM7b sales over FY2015 & FY2016, it said. (Source: The Star) Green Packet: Expects US$90m revenue for Mobile broadband and networking solutions provider Green Packet expects its revenue to touch US$90m for the financial year ending 30 Jun Its new CEO Tan Kay Yen said the solutions segment is expected to contribute about US$40m and communications US$50m. "Our topline activities (solutions and communications) are expected to record lower double-digit growth. We anticipate it to be above 10%. "However, due to our 31% stake in Packet One Networks (M) Sdn Bhd, the overall company's growth is yet to be determined," Tan told reporters after the AGM. Green Packet's 18-month cumulative losses from January 2013 until June 2014 stood at RM118.03m. Tan attributed the losses to the broadband (P1) segment, whose contribution will not be reported in the company's financial statement going forward. (Source: The Star) Kulim: To acqure Indonesian O&G company. Kulim (M) Bhd is proposing to acquire Indonesian oil and gas (O&G) outfit PT Citra Sarana Energi (CSE) for US$133.55m (RM462.68m). The company told Bursa Malaysia yesterday that its wholly-owned subsidiary Kulim Energy Nusantara Sdn Bhd had entered into a conditional subscription and share purchase agreement (CSSPA) with CSE and its existing shareholders, PT Wisesa Inspirasi Sumatera and PT Inti Energi Sejahtera, for a 60% equity stake in CSE. Kulim said the proposed acquisition was consistent with its long-term business plan to diversify its business activities to other sectors apart from oil palm plantations. The company said the purpose of the diversification was to cushion any earnings fluctuations as a result of fluctuations in palm product prices, especially with the imminent divestment of the group s plantation business in Papua New Guinea and the Solomon Islands via the disposal of Kulim s entire stake in its 48.97%-subsidiary New Britain Palm Oil Ltd (NBPOL). (Source: The Star) CIMB-RHB-MBSB: Bursa dismisses EPF s appeal to vote in planned bank merger. Bursa Malaysia has upheld its decision to disallow the Employees Provident Fund (EPF) from voting in the proposed mega-banking merger. In rejecting the EPF s appeal, Bursa noted that there were no adequate justifications that the potential conflict of interest involving the EPF had been eliminated or sufficiently mitigated despite oral representation from the pension fund. The dismissal of the EPF s appeal to vote was announced by RHB Capital Bhd (RHB Cap) and Malaysia Building Society Bhd (MBSB). RHB Cap told the stock exchange yesterday that Bursa Securities had, vide its letter, informed that after due deliberation and having considered all the facts and circumstances of the matter, including oral representation from RHB Cap and the EPF, the Appeals Committee decided that the matters raised and the grounds of appeal put forth by RHB Cap and the EPF did not justify a departure from the decision of the Listing Committee. (Source: The Star) QL: Fails in takeover bid of Lay Hong. Agrifood giant QL resources Bhd has failed in its conditional takeover offer of poultry producer Lay Hong Bhd, as it had not received more than 50% of acceptances at the closing date of the offer at 5pm yesterday. In a filing with Bursa Malaysia, QL said it would return all Lay Hong shares to respective holders who have accepted the offer within 14 days from yesterday. (Source: The Star) w w w. u t r a d e. c o m. m y 4

5 SMRT: Gets extension for MEGB due diligence. SMRT Holdings Bhd has obtained an extension of 15 days until Dec 24 for it to carry out a due diligence on Masterskill Education Group Bhd (MEGB). MEGB said on Wednesday it had agreed to the request from ACE Market-listed SMRT and the holding company Strategic Ambience Sdn Bhd for a further extension of 15 days to conduct due diligence. To recap, on Nov 10, MEGB major shareholder Siva Kumar a/l M Jeyapalan has committed to sell his entire stake, comprising of million shares or 32.9% stake to SMRT Holdings Bhd. The offer made by Siva Kumar, who is also MEGB executive director, would be at 60 sen a share subject to a due diligence by its unit Strategic Ambience Sdn Bhd. (Source: The Star) w w w. u t r a d e. c o m. m y 5

6 FROM THE REGIONAL MORNING NOTES... Regional Plantation: Malaysia s Inventory Hits A 21- month High (Maintained MARKET WEIGHT) Malaysia s Nov 14 inventory level hit a 21-month high on weak exports and domestic demand as well as high palm oil imports for domestic refining operations despite lowerthan-expected CPO production. Although we expect CPO production to stay weak in Dec 14, 2014 CPO production is likely to be slightly ahead of our forecast of 19.4m tonnes. Indonesia s inventory is likely to be higher mom in Nov 14 due to higher production and weaker exports. Maintain MARKET WEIGHT. Malayan Banking : Favourable Risk-Reward Scenario (MAY MK/BUY/RM8.90/Target: RM10.30) Given a slowdown in industry growth, we believe Maybank, with its more balanced and diversified portfolio coupled with its relatively attractive dividend yield in excess of 6%, could serve as a safe haven in the current challenging market environment. Re-iterate BUY with a RM10.30 target price, based on 1.7x 2014F P/B (ROE: 13.4% and implied 2014F PE of 13.6x). For more reports, please log in to or open an account now to gain access. Explore our trading tools designed to assist you in your trading ShareXplorer, ChartGenie, TechAnalyzer, Stock Alerts! Broaden your knowledge through our educational events. Contact us now at to find out more about our ongoing promotions (get FREE* live feed on foreign markets). *T&C apply. w w w. u t r a d e. c o m. m y 6

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