Stock ideas -- Astro Malaysia, Genting Malaysia, Protasco, DRB-Hicom

RHB Research Institute Sdn Bhd upgraded its recommendation on Astro Malaysia Holdings Bhd to a "BUY" on June 13 with an unchanged target price of RM3.36.

"Astro kicked off FY14 with upbeat numbers, posting a 14.2 per cent jump in 1QFY14 revenue while its RM114.1 earnings met our estimates...

"We remain positive on the stock, which we upgrade to BUY, with a RM3.36 fair value," said RHB Research in its report on June 13.

The research house said that it expects "better times ahead" for Astro.

"The high expenses involved in rolling out the B.yond STBs may raise investor concerns but we still think this is necessary for the company to retain its market leadership.

"Viewers expect higher-quality content as well as a more rewarding viewing experience as the Pay TV market matures. Hence, it is important for Astro to make the first move and stay ahead of the game," it said.

PublicInvest Research maintained its outperform recommendation and target price on DRB-Hicom Bhd, after news report suggested that it has finalised the details of a tie-up between its unit Proton Holdings Bhd and Honda Motor Co.

"We view the finalisation of the collaboration between Proton and Honda as positive for DRB-Hicom as it will help Proton to increase its capacity utilisation and introduce new models to reverse its declining market share," said the research house in its report on June 14.

According to DRB-Hicom's group managing director in the Starbiz report, he said that the company is unable to disclose any details for now as they are "trade secrets".

"Nevertheless, the market should expect the first variant of the agreement in a couple of months. Industry sources have previously speculated that the new variant would be the Perdana replacement model using the Honda Accord chassis," said PublicInvest Research.

JF Apex Securities Bhd in its "Trading Idea" investment research report has placed a RM1.31 target price on Protasco Bhd -- a road construction company.

"Protasco is an under-researched and low profile small-cap contractor which has not attracted much investor attention. The lack of investor interest on the stock is due to the fact that the Group has not been involved in much construction works especially on the high-profile mega projects which were awarded in the past few years although the Group is consistently rewarding shareholders with decent dividend yield of over 6 per cent.

"However, we reckon that market perception on the stock could be changed as Protasco is riding on the current property boom, banking on its project in Kajang, the next hotspot since MRT was announced, and its maiden venture into Oil & Gas segment," said JF Apex Securities.

Protasco currently has an outstanding order book of over RM1.7 billion, comprising five road maintenance jobs that will last the company until 2016-2019 -- thus guaranteeing recurring income of some RM350 million a year.

"Our fair value for Protasco is RM1.31, pegged at 10.5x FY2014F PE, which is in line with our mid-to-upcycle valuation for small-cap construction stocks under coverage. Our target price indicates an upside of 13 per cent against the closing price of RM1.17, together with the estimated dividend yield of 7 per cent, bringing the potential upside close to 20 per cent.

"We favour the stock for its: 1) strategically located property project in Kajang; 2) attractive dividend yields of close to 7%; 3) consistent recurring income with road maintenance concessions; and 4) further diversification into the burgeoning O&G sector," it said in its report on June 14.

RHB Research Institute Sdn Bhd maintained its Neutral recommendation on Genting Malaysia Bhd, with a target price of RM3.97 per share, even after news report on the gaming company may embark on a RM3 billion facelift project.

"We are of the view that a potential facelift of Genting Highlands would drive earnings growth in the long run. We keep our Neutral stance for now, pending more details from management," said the research house in its report on June 13.

It believes that funding will not be an issue for Genting Malaysia, as the research house is forecasting the casino operator to generate annual operating cash flow of RM2.2-2.4 billion over the next three years.

"This would come in handy to cover the potential RM3 billion capex. Meanwhile, there is also a possibility that the management may take on more borrowings to optimise its capital structure given its net cash position currently," it said.