Outperform Rating On General Electric Company (GE)

Bernstein Research Maintains Outperform Rating On General Electric Company (GE)

Analysts Steven E. Winoker and David Abrameto at Bernstein Research have released an update on General Electric Company (NYSE: GE).

GE will report its first-quarter earnings on April 16. Analysts expect the company to report EPS of $0.17 in its first-quarter. Industrial gross margin is expected to be at 25%-26%, while operating margin is expected to be at 10%-11%. Analysts expect GE to report consolidated revenue of $36.7 billion in the quarter.

Analysts at Bernstein Research have maintained their Outperform rating and $20 price target for General Electric Company.

The GE call warrant listed on KLSE, GE-C1, has jumped around 50% since February 2010. With GE-C1's discount status (discount around 3%) and positive rating of GE, GE-C1 would be considered as a good yet safe trading bet. Even if GE were to move side way, GE-C1 should provide us with a profit of 10% (3% discount x 3.3 gearing). Currently, GE-C1 is priced at RM0.145. The fair value would be RM0.16 if GE is to move side way.


Ok, good luck.

GOon

Gamuda 2Q net profit up 38% to RM68m

GAMUDA BHD's earnings rose 38% to RM68.03 million in the second quarter ended Jan 31, 2010 from RM49.05 million a year ago, boosted by the strong performances in all its divisions.

It said on Thursday, March 25 the revenue was RM603.24 million compared with RM591.73 million. Earnings per share were 3.37 sen versus 2.45 sen.

For the first half, net profit was RM131.05 million versus RM104.09 million in the previous corresponding period. Revenue was RM1.22 billion compared with RM1.20 billion.

"With the existing CONSTRUCTION [] projects progressing on schedule and the recovery of the property market, the Group's performance is expected to perform well in the remaining quarters of the current financial year," it said.

On the electrified double track project, it said work progress haf improved and to-date 93% of the land has been handed over to the project company. The work progress is expected to accelerate in the next two quarters.

As for the new Doha International Airport project in Qatar, it said the project is progressing on schedule with 80% of the works completed. Progress payments from the Qatar Government continue to be on time.

On the Yenso Park and sewage treatment plant projects in Vietnam, it said they were progressing well. The recent devaluations of the Vietnamese Dong had no significant near term impact on the group.

As for the group's property division, it added that it continued to benefit from improved market sentiments, with semi-detached houses and bungalow homes in gated and guarded parcels in great demand.

"The property division's performance is expected to improve further in the remaining quarters of the financial year," it said.

This good financial result should support Gamuda to move upward amid rising world stock markets. There are a few Gamuda call warrants listed on KLSE, namely Gamuda-ch, Gamuda-ci, Gamuda-cj and Gamuda-ck. Among these 4 call warrants, i would pick Gamuda-ch as my favourite due to its low premium of 2% amd gearing 3x. The maturity day is 24/9/2010.  The other 3 Gamuda call warrants have ridiculously high premium of between 10%-25%.

Ok, good luck.

GOon

IJM-WB up 14%

Macquarie Equities Research reiterated its buy call on IJM and raised the target price to RM6.00 from RM5.50 following a review of the company's prospects. 


IJM is one of the broker's top picks in Malaysia, saying that the firm will be a key beneficiary of infrastructure spending, both domestically and in international markets such as India and the Middle East.

Potential catalyst to IJM's share price could be the award of the Besraya extension job in fourth quarter this financial year, new construction wins and successful property launches.

"We see IJM as a beneficiary of India's aggressive road spending plans, given its track record. Recent press reports indicate the Indian government's plans for US$50 billion (US$1 = RM3.41) worth of road projects over the next two years.

"Any potential wins in India are positive for the company and would add to IJM's existing orderbook of RM4.4 billion. In total, we have assumed RM1 billion worth of new jobs in financial year 2010 and RM2 billion in financial year 2011," Macquarie said in a January 22 report.

In addition to potentially clinching key domestic projects via its construction division, IJM's building materials division, ICP (Industrial Concrete Product), may also benefit from the increased construction activity, it noted. 

IJM-WB (warrant) up 14% since I last talked about it last Saturday. What makes it more interesting is IJM-WB still comes with a discount of 3.6%. It is trading at RM1.17. With a gearing of 4.06, it should moves up another 14% (3.6% X 4.06) or RM0.16 to RM1.33 to eat up all the discount. It still has another 148 days before it expires. Sooner or later, the discount has to be realized.

GOon

GE-C1 comes with disount of 5.6%

General Electric Company (NYSE:GE) is a mammoth company and can often provide a good gauge for the overall market. That is, when GE goes higher, the overall market often follows suit. GE has been making some recent highs and that bodes well for investors, and may be marking the end of the concerns about loan losses.

Rising Dividend Investing had these comments to add about GE:

"GE has recently broken above a several-month trading range on high volume. GE has many qualities that make it something of a microcosm of the US economy. Thus, its price breakout suggests that worries about its loan losses and perhaps loan losses for financial companies in general might be peaking.

GE has been in the middle of the financial crisis, and for it to power to a new post-crash high is big news. We've watched price graphs long enough to know that some very big money has just made some very big bets that the news for GE is going to get better over the coming months.

Additionally, because GE's business is so multi-faceted, there is reason to believe that good news for GE is probably good news for the whole economy and stocks.

Interestingly, GE had a couple of big days right after their CFO announced that the company was considering a dividend hike in 2011. In this regard, their message is similar to the one we suggested in last week's post about the banks. That is, companies, even companies in the financial services sector, appear to feel comfortable with their current levels of capital reserves. When GE starts talking about dividend hikes, it sends a clear message: they don't have any dilutive equity capital underwritings in the works. That is good news, but even more importantly, if they are talking dividend hikes, it follows that they must see an end to their loan losses. That's even better news."

Currently, there is a GE call warrant (GE-C1) listed on KLSE. In my humble opinion, it is one of the best and most attractive call warrants available in KLSE. The main reason i am saying this is because of its discount. Currently, GE-C1 comes with a discount of 5.6% and gearing 3.9. GE-C1 is trading at RM0.13. To erase all the discount, GE-C1 should move forward 22% (5.6 x 3.9) or RM0.03 (RM0.13 x 22%) to RM0.16. There are still another 2 months before it expires, soon or later the discount has to be realized. Since GE-C1 is a European style call warrant, we cant convert it now, not until its maturity date. GE's recent gain is supported by its fundamental, i think it still has the strength and momentum to move forward further.

GOon