• Public utilities conglomerate. Taliworks is a conglomerate involved in water, highway concessions, solid waste collection and public cleansing management in the states of Negeri Sembilan, Melaka and Johor in Malaysia under a 22-year concession agreement with the Federal Government. Besides, Taliworks provides investors exposure to the potential settlement of Selangor’s water restructuring and a potential huge cash pile which can increase earnings per share significantly via M&A.

• Strong relationship with EPF. Taliworks has a strong relationship with EPF and is expected to continue partnering it for future venture into acquisition of concession assets. We opine that Taliworks will enjoy a lower cost of capital by partnering with EPF.

• HLIB has a BUY rating with SOP target price of RM1.85. Taliworks is an appealing investment case given its concession businesses in different sectors which enjoys stable growth profile coupled with reduced vulnerability to idiosyncratic risk. Moreover, its attractive projected FY17 dividend yield of 5.4% should provide a decent support to the share price.

• Ripe for a downtrend line breakout. Following the formation of Tweezers bottoms and bottoming up indicators, the stock is poised for a downtrend resistance breakout (near RM1.50) soon. A decisive breakout above RM1.50 will spur prices higher towards RM1.56 (R1) and RM1.60 (R2) before reaching our LT objective at RM1.71. Key supports are situated near RM1.44 (30 Dec low) and RM1.41 (23 Aug low). Cut loss at RM1.37.

Source: Hong Leong Investment Bank Research - 2 Feb 2017