HLIB Research 29 March 2011 (Pos Malaysia; Traders Brief) - Source: Cheah Bee Ling (HLB)

Pos Malaysia (BUY, TP = RM3.80)


No longer a boring stock

§ Investors’ perception on the stock is about to improve, as:

1. There’s little downside risk to Pos Malaysia’s share price from decent dividend yield and strong earnings growth;

2. The launch of new services/products (shared banking and advertising mail) that will boost Pos Malaysia’s earnings in the near term;

3. The booming e-commerce will boost Pos Malaysia’s logistic revenue;

4. Last but not least, the Postal Bill Act as well as the emergence of new strategic shareholder would potentially serve as the immediate upward re-rating catalyst to Pos Malaysia’s share price; and

5. P/E at 18% discount to Singapore Post despite much stronger projected growth.

§ At RM3.32, Pos Malaysia is trading at 2012 P/E of 11.4x, at 18% discount to Singapore Post. We are initiating coverage on Pos Malaysia with a BUY recommendation and a target price of RM3.80, based on 13x 2012 EPS of 29.2 sen.


FBM KLCI: Strong resistance at 1515-1525 pts

§ With the formation of Doji candlesticks over the last three days, the market is likely to continue its sideways consolidation until fresh catalysts emerge ahead of the upcoming 12 April Invest Malaysia event and the 16 April Sarawak state election.

§ Immediate supports are situated at 1500-1510.


Stock to watch - Masteel: Building for another upleg

§ As investors await more details from the RM1.35bn JV with KUB to bid for a RM1.35bn project to build and operate a 106.5km inter-city rail transit system in Iskandar Malaysia and Woodlands, Singapore, Masteel tumbled to as low as RM1.09 on 15 Mar before ending at RM1.17 yesterday.

§ Masteel is poised for further upside if prices can surpass the upper Bollinger band (now at RM1.20). Accumulate now but cut loss if the RM1.09 level is breached.

§ For cheaper entry, investors can also consider Masteel-WA (expires in Oct 2015), which is trading at slight premium of 7.7% and has a decent gearing of 2x (refer page 4payroll and ISM (1 April).