KLK (BUY)

Planting target to normalize in FY12

'''' Management expects CPO prices to trend down to RM2,800-2,900/tonne in the next few months on the back of the production recovery

'''' Its slower-than expected planting progress was due mainly to uncertainties arising from planting moratorium in Indonesia. For the full year, management feels that it could plant only at most 8,000ha.

'''' Planting target beyond FY09/11 will normalize back to 10,000-15,000ha p.a.

'''' Achieved a 90% take-up for the recently launched 342 units of two-storey link houses in Bandar Sri Coalfields and it is targeting for another three new launches over the next few months.

'''' Management expects retail division to remain profitable albeit slightly weaker than FY09/10.

'''' TP maintained at RM24.91 based on unchanged 18.5x CY2012 EPS of 134.7 sen. Upgrade from Hold to Buy as upside is now more than 10% since our downgrade on 12 Jul 2011.

''''''''''''''

Mah Sing (Buy)

Transforming Pekeliling

'''' Mah Sing has announced a 60:40 JV with Asie Sdn Bhd to develop 4.08 acres of leasehold land along Jalan Tun Razak-Jalan Pahang into M Sentral, a mixed development with GDV of RM900m.

'''' Land cost is RM106.6m, via 60% cash (RM64m) and 40% stake of the JV company.'' The RM599.8 psf cost is not demanding and is only 11.8% of GDV.''

'''' With this deal, Mah Sing becomes the front runner to develop the rest of the Pekeliling land, which spans 58 acres and shall be renamed as the Riverside Garden City Mega Project with a potential GDV of RM9bn.''

'''' Should this come true, it would spark another round of multi-year re-rating for Mah Sing's earnings.

'''' Pending more concrete details for M Sentral, we maintain our numbers for now.'' No change to our RNAV-based target price of RM2.93 or our BUY call.

''

FBM KLCI - DJIA plunged 2.2%, panic selling likely to drive KLCI to retest 200-d SMA

'''' As the external market sentiment has deteriorated recently, we have toned down our near term positive market outlook to neutral. Taking cue from the wild swings in the external markets and discouraging economic reports, the KLCI is likely to retest lower downside supports of 1545 (100-d SMA), 1536 (50% FR) and 1530 (200-d SMA) this week. Immediate resistance are 1558 (10-d SMA), 1563 (50-d SMA) and 1570 (30-d SMA) pts

''

Dow Jones: Bearish sentiment return following the breakdown of major supports''

'''' Following the overnight Dow's selldown, near term Wall St outlook has turned bearish.

'''' The breakdown of the Head & Shoulder, 200-d SMA (11987) and uptrend line (12100) supports are likely to drive Dow to retest recent low supports of 11822 (16 June) and 11548 (16 Mar), despite oversold position. Immediate resistance levels are 11987 to 12100.