HLIB Research Summary - 31 Oct 2014

Pavilion REIT (BUY çè)

9MFY14 Results

• 9MFY14 net profit of RM175.29m (+10.13% yoy) came in within expectations, accounting for 75.4% and 77.0% of HLIB and consensus full year estimates, respectively.
• Dividend of 2.16 sen was declared during the quarter, bringing the accumulated dividend year to date to 6.00 sen, accounting for 78.0% and 77.9% HLIB and consensus full year DPU expectation, respectively.
• We maintain TP of RM1.44 and HOLD recommendation on the stock. Targeted yield remains at 5.7% based on historical average yield spread of Pavilion REIT and 7-year MGS.

Unisem (BUY çè)

9M14 Results Exceed Expectations

• 9M14 core net profit of RM38.3m surpassed HLIB and street’s full year forecasts by 31% and 29%, respectively if annualized.
• Tax exempt interim dividend of 4% or 2 sen per share (3Q13: none) with an ex-date on 13th Nov.
• Solid 3Q14 earnings chiefly due to strong demand of new smartphone launches as well as proliferation of 4G technology in China .
• Resilient demand in bumping, 8in and 12in wlCSP and flipchip has led to capacity expansions.
• Although demand momentum extended into Oct and Nov, Unisem expect sales to be flat to -5% qoq in 4Q14 to be cautious on Dec in view of year-end inventory adjustments.
• Overall utilization rate improved to 70% although wlCSP / flip-ship product lines were running at more than 80%.
• Reiterate BUY after raising our fair value by 22.4% from RM1.65 to RM2.02 reflecting the upward earnings revision.

Traders Brief

Marching higher towards 1850 amid bullish Dow

§       In the wake of bullish undertone from Wall St and Bursa Malaysia, KLCI could appreciate further to retest 200-d SMA near 1849 and 1857 (upper Bollinger band) in the near term before profit taking activities emerge amid overbought slow stochastics, slightly hawkish FOMC statement, and the start of Nov reporting season next week. Key supports rest with 1825 (30-d SMA), 1816 (20-d SMA), 1806 (38.2% FR) and 1800.

§       Today’s recommendation (FIG4). Momentum Buy on EFORCE (TP RM0.64-0.69; Cut loss RM0.55).

Momentum Idea

Poised for a technical rebound

• Poised to retest 200-d SMA near RM0.69. After ex-bonus issue on 14 Jul 2014, EFORCE’s share price fell to the low of RM0.51, correcting its long-term uptrend. We opine that this healthy correction would present good buying opportunity. Technically, “Inverted Hammer” and “Bullish Harami” patterns on daily and weekly chart respectively signal imminent technical rebound. Key resistances are situated at RM0.64-0.69 whilst supports fall on RM0.56-0.57. Cut loss below RM0.55.