KSL (BUY '')

Warrants to start trading on Friday

'' Recall that on 21 Mar 2011, KSL announced a renounceable rights issue of up to 97.6m new warrants on a 1 for 4 basis

'''' The rights for the KSL warrants will begin trading from July 29th until Aug 5th, and the warrants will be listed on Aug 26th.

'''' We estimate the fair value of the warrants to be RM0.56, and we believe that any trading price below RM0.36 for the rights will be a good opportunity for investors to buy the rights.

'''' While we estimate as much as 17% dilution to EPS upon full conversion of the warrants, this does not affect our positive earnings outlook for KSL, especially given that their flagship project in Klang remains on-track.''

'''' No change to our target price of RM2.16 (based on 30% discount to FD RNAV) or our earnings forecasts.''''

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FBM KLCI - Wild swings ahead

'''' In the wake of overnight Dow's plunge and the violation of 10-d (1565), 30-d (1571) and 50-d (1562) SMAs, there is greater pressure now that KLCI may retest last week's low of 1552 pts, and exert more selling force towards 1543 pts and 1536 (50% FR from 1474-1597) pts. Upside resistance levels are the 1565-1575 levels.

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Dow Jones: - Crucial uptrend line support near 12100 pts

'''' The Dow already lost 3.3% or 422 pts in four consecutive sessions, as investors were grappled with a tug of war between the headline risk of the debt ceiling issue and better-than-expected 2Q11 earnings.

'''' As technical indicators are trending lower, we could witness more selldown towards 12100 pts, a major uptrend line support since Jul 2011. Further support is 11966 (200-d SMA).

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