• Still awaiting the renegotiation contract. Since March, BRAHIMS’ s hare prices are trading range bound within RM0.81-0.95 range, as market is still awaiting the signing of new catering agreement between the company and MAS after the lapse 30 Apr cut-off date. Despite the delay, we remain optimistic that there could be another extension agreement for both parties to negotiate and conclude the new catering agreement with a common goal to expedite the signing.
• Undemanding valuation. At RM0.90, BRAHIMS is trading at 0.87x P/B, 19% below its 10-year historical average P/B of 1.07x and 66% below its closest peer’s SATS P/B of 2.55x. We think s uch s teep dis counts would have provided a sufficient margin of safety and cushion further share price decline.
• Accumulate as values emerge. BRAHIMS is grossly oversold after recent slump in share price from all time high of RM2.71 (7 Mar 2014) to a low of RM0.81 on 5 Mar. Currently, BRAHIMS is building its base along 30-d SMA near RM0.875 and daily lower Bollinger band near RM0.86. Immediate resistance levels are RM0.95 (23.6% FR). A decisive breakout above RM0.95 will spur prices higher towards RM1.04 (38.2% FR and latest book value/share) and our long term objective of RM1.11 (50% FR). Cut loss below RM0.81.

Source: Hong Leong Investment Bank Research - 7 May 2015