Focus of Day Digi, IJM, TM among stocks to watch after Budget

by **Cals** Mon 28 Oct 2013, 19:29

Focus of Day Digi, IJM, TM among stocks to watch after Budget

Business & Markets 2013

Written by Cynthia Blemin of theedgemalaysia.com

Monday, 28 October 2013 15:59

KUALA LUMPUR (Oct 28): Digi.com Bhd and IJM Corporation Bhd are seen as stocks that will benefit from the Budget 2014 announced last Friday.
According to analysts, Budget 2014 provides some great opportunities for stock-picking.
AmResearch, in a note today, said cellular players may pass down taxes to consumers, given the elimination of the current 6% service tax – which is currently borne by the celcos for prepaid users.
It noted that GST of 6%, to be implemented on April 1, 2015, will replace the sales tax of between 5%-10%.
The research house pointed out that DiGi will be the biggest beneficiary from this potential move given that it has the largest proportion of prepaid revenue compared to Celcom and Maxis.
Alliance Research shares the similar view on Digi.
Hence, AmResearch is upgrading DiGi to a buy call from hold, with a higher fair value of RM5.70/share.
On the rise in real property gains tax (RPGT) to 30%, AmResearch said that some moderation in speculative buying is likely but the impact is not expected to be significant because RPGT is an exit tax.
“We are buyers of Mah Sing, IJM Land and Eastern & Oriental Bhd (E&O). We expect E&O’s net asset value to more than triple to RM4.61/share upon receiving regulatory approvals to commence reclamation works for Seri Tanjung Pinang (STP) II,” it added.
The research house also noted that banks are no longer allowed to provide final funding for projects involved in Developer Interest Buying Scheme (DIBS), but it said this was already widely expected.
“Public Bank is our only buy,” it added.
As the West-Coast Expressway and the Kuantan Port expansion are slated for 2014, IJM Corporation Bhd looks set to leverage on the rollout of these two major infrastructural projects.
“IJM is our top pick in the sector,” stated AmResearch.
In a separate note, Alliance Research said the doubling in government allocation to the tourism sector in conjunction with Visit Malaysian Year 2014 will boost tourist arrivals.
“This will greatly benefit the aviation sector, particularly MAHB (neutral subject to review, TP: RM6.78),” it said.
While airlines will also benefit from this move, yield compression concerns linger, it said.
Alliance Research also singled out Brahim’s as its strong buy. (TP: RM1.94).
Besides aviation, hospitality and consumer sectors will also benefit from higher tourist arrivals, it added.
The research house said the government’s surprise RM3.4 billion allocation for HSBB project will directly benefit Telekom Malaysia Bhd (Neutral, TP: RM5.52).