Buy USD generating companies.. with MYR cost:hehe:

What is your proposed entry price for Homer?

What stocks to look out for?
As most of the heavily bashed down stocks i.e. Oil & Gas stocks (see Figure 11 for details), have turned technically oversold, we believe this could offer good bottom-fishing opportunity. While we are fully aware of the underlying sluggish crude oil price trends will: (i) slow down capex decisions – i.e. Petronas could take its time on upcoming projects that are capex-intensive (like platforms fabrications and whole chemical enhanced oil recovery ones –as they are very costly and also new field development), and (ii) see heightened Petronas’ Opex plans as they maximize old fields (i.e. brown-field solutions; maintenance of old platforms; hook-up and commissioning); we still favour companies that are in the maintenance or production enhancement space. As such, we like (i) DAYANG (OP, TP: RM3.40) which is involved in maintenance and hook-up and commissioning, (ii) UZMA (MP, TP: RM2.70) as it is in the production enhancement and well intervention space, (iii) BARAKAH (OP, TP: RM1.62) as it is involved in pipeline replacement), and (iv) PERDANA (OP, TP:RM1.61) as its vessels cater mainly to the brown-field space).

On the contrary, we concerned over Fabrication players i.e. MMHE (UP, TP: RM1.84) as new structures are considered capex, and the competition has intensified given ‘costs’ concerns are on the forefront of oil and gas majors. Besides, jack-up rig companies such as COASTAL (OP, TP: RM4.67), PERISAI (MP, TP: RM1.08) and UMWOG (NOT RATED) are relatively higher in operating and earnings risks as exploration-related works are more sensitive to crude oil price fluctuations. As for OSV sub-sector players, i.e. ALAM (MP, TP: RM0.84), ICON (NOT RATED), PERDANA (OP, TP: RM1.61), we believe there are still opportunities despite intensified competition with new modern fleet being introduced in domestic waters. For FPSO players such as YINSON (UP, TP: RM2.31) and ARMADA (NOT RATED), market participants may be concerned over this sub-sector’s growth prospect due to less potential new jobs. However, their short-term earnings risk should be low as the existing contracts are relatively longer term in nature. The real concern would be the hike of U.S. interest rate as these companies are relatively highly-geared, especially in U.S. dollar debts. Other non-FPSO transportation and logistics players like MISC (UP, TP: RM7.49) and DIALOG (OP, TP: RM1.73) may also see relatively higher volatility in earnings (i.e. slower demand in storage, volatile in tanker rate, etc).

Investors may also consider resilient sectors such as Telco, Power and Water Utilities. GST beneficiaries or sectors/stocks that are less affected by GST such as export-driven sectors, i.e. Semicon players, OEM and Gloves manufacturers. We also believe these export-oriented manufacturers should continue to benefit from weaker Ringgit as well. Airline players could act as hedging investment instrument against oil price weakness. At the same time, we also believe Construction (including Building Material) sector should act as an alternative growth engine to the country as we are likely to experience two consecutive slow quarters in private consumption based on other countries’ experience. Recall that Budget 2015 will focus on transportation infrastructure and affordable housing. Hence, we expect the government to announce ETP projects such as: (i) KVMRT2, (ii) urban highways, (iii) TRX, and (iv) PR1MA housing. Our OUTPERFORM calls on the above-mentioned sectors are as follows. (i)Airlines –AIRASIA (TP: RM2.80). (ii) Building Material – ANNJOO (TP: RM1.47), MASTEEL (TP: RM1.20) & PMETAL (TP: RM4.99). (iii) Construction – BENALEC (TP: RM1.25), GAMUDA (TP: RM5.52), IJM (TP: RM7.55), MUHIBBAH (TP: RM3.63), HSL (TP: RM2.20) & NAIM (TP: RM4.18). (iv) Export-Oriented Players – KOSSAN (TP: RM5.23), HARTA (TP: RM7.36), SUPERMX (TP: RM3.23), HARBOUR (TP: RM2.20), MAYBULK (TP: RM2.50), SURIA (TP: RM3.41), BIPORT (TP: RM8.08), MPI (TP: RM6.80) & UNISEM (TP: RM2.00). (v) Utilities sector –PESTECH (TP: RM4.36), TENAGA (TP: RM14.65), YTLPOWR (TP: RM1.70) & PUNCAK (TP:RM3.99)