DRB-Hicom (BUY, TP: RM2.97)

The Next Big, Shining Jewels

'''' Existing rare cash jewels: combinations of strong cash cow contributing to stable earnings.

'''' Extra jewels harvesting: with multiple sources of new earnings growth from VW contract, Deftech contract, Pos Malaysia acquisition, implementation of regulations amendments and accelerating property developments.

'''' Pos Malaysia to add synergistic benefits to DRH-Hicom's existing units. Potential Amendments to Postal Bill Act will allow Pos Malaysia to carry out non-postal related services.

'''' Fits into our overall house strategy on consumption play.

'''' 3-year EPS CAGR of 21.3% pa with potential upside from realizing the synergistic benefits from Pos Malaysia.

'''' Initiate BUY on DRB-Hicom with TP of RM2.97 based on SOP and forecasted net dividend yield of 2.0% for FYE3/12.

''

FBM KLCI - All eyes on U.S. debt deal''

'''' Negotiations (on US debt ceiling) are continuing with the world watching.''

'''' Unless KLCI is able to maintain above last week's low of 1552.7 pts, there's a risk of further downside towards 1542 pts (100-d SMA) and 1536 (50% FR from 1474-1597) pts. Upside resistance levels are 1570 (30-d SMA), 1576 (mid Bollinger band) and all time high of 1597 pts.

Stock to watch - TENAGA: Potential technical rebound''

'''' There could be more selling pressures on Tenaga amid declining weekly RSI towards stronger support zones around RM6.00-6.13. However, given technical oversold in the hourly and daily charts, the stock may stage a technical rebound.

'''' Technical rebound targets are RM6.42 (lower Bollinger band), RM6.50 (200-d SMA) and RM6.65 (50-d SMA). Stop loss below RM6.00.