TDM Bhd (Not Rated)

Low valuation with strong balance sheet

'''' TDM is one of the cheapest plantation stocks in Malaysia (current share price of RM2.93/share indicates that investors are valuing TDM at only 6.4x 2012 P/E, at a huge discount of 56% to small-scale plantation players).

'''' We believe that TDM is one of the laggard plays within the plantation sector and it is worth a second look, given:

1.'''' TDM's business strategy is now much clearer, with only two core businesses and management ongoing efforts to divest the remaining non-core businesses;

2.'''' Improving financial performance and financial standing; and

3.'''' TDM has started paying dividends (projected at 6% net), making it an even safer bet within the plantation sector

'''' We are projecting TDM's net profit to rise from RM92.0m in 2010 to RM129.1m, RM105.2m and RM100.2m in 2011, 2012 and 2013 respectively.

'''' We are projecting TDM's net profit to rise from RM92.0m in 2010 to RM129.1mm, RM105.2m and RM100.2m in 2011-2013.

'''' We are valuing TDM at RM3.67/share based on 8x 2012 EPS (at ~30% discount to the average industry), implying a potential upside of 25.7%.

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FBM KLCI - Turbulent times ahead

'''' Technically, critical support is the 1470 pts level. Failing to defend the 1470 pts will spur further downside to 1457 (38.2% FR) and 1413 (50% FR). Any technical rebound due to extremely oversold markets will be capped at 1500 with next resistance levels are 1531, 1547 (100-d SMA), 1550 (38.2% FR) and 1561 (mid Bollinger band).

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Dow Jones - All eyes on Fed

'''' With no signs of divergence signals, the breach of 11000 psychological level and our envisaged 61.8% FR support at 10860 pts are likely to exert more downside pressures for Dow to retest 10500 and 10383 (76.4% FR), despite a heavily oversold market.

'''' Relief rally targets are 11230 (lower Bollinger band) and 11994 (200-d SMA)

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