• Business profile. Berjaya Assets Berhad (BJASSET) is basically engaged in 1) Gaming and related activities (NFO in Sarawak; contributed about 10% to 1HFY15 operating profit); 2) Property development, property investment and commercial leasing (mainly from Berjaya Times Square and Berjaya Waterfront; contributed nearly 90% to 1HFY15 operating profit); and 3) Recreation theme park and car park operator (loss making). In Dec 2013, the Johor Sultan had entered into an agreement to buy a 20% stake in Berjaya Times Square for RM250m cash.
• Trading at substantial discounts to its book value and peers. At the current price of RM0.795, BJASSET had been trading at a huge discount of 58% to its Dec 14 BVPS of RM1.89. However, the discount might be even larger if there is a revaluation on Berjaya Times Square and Menara Berjaya assets, which are still carrying at net book value of RM2.16bn (based on 1994 prices). Meanwhile, BJASSET is also trading at 46% discount against its peers’ P/BV of 0.78x
• Potential resumption of uptrend. BJASSET share prices have been trading in a tight range within RM0.79-0.87 since 2015. Following a breakdown on 13 May, share prices slid to a low of RM0.73 on 14 May before gradually recovered to end at RM0.795 yesterday on technical rebound.
• There could be a mild profit taking along the way after surging 8.9% in two days but we believe the small inverted hammer (15 May) and bullish white Marubozu (18 May) formations could signal reversal of downtrend, supported by bottoming up oscillators. Immediate upside target is RM0.82 (mid Bollinger band and 30-d SMA).
• A decisive breakout above RM0.82 will lift prices higher towards RM0.84 (50% FR) and our long term price objective of RM0.90 (76.4% FR). Key supports are RM0.75 (lower Bollinger band) and RM0.73. Cut loss below RM0.72.

Source: Hong Leong Investment Bank Research - 19 May 2015