Views & News, Maybank IB (2010-10-21)

WCT RM3.11: Buy

Lands RM1.5b contracts Shariah-compliant

A much anticipated wait. Two newly secured jobs have lifted job wins for 2010-YTD to almost RM2.2b, and outstanding order book to RM4.3b, we estimate. The RM1.36b job in Qatar , one of the two wins, has been much anticipated. We retain our earnings forecasts for now, having imputed RM2b job wins for 2010. We remain positive on WCT benefiting further from major domestic infrastructure / construction spend. The stock remains our top pick in the construction sector.

Axis REIT RM2.18: Buy

Targets RM1.5b asset size by 2011 Shariah-compliant

Still a Buy. Axis REIT's (AXRB) 9M10 results were within expectations. Total asset size will increase to c.RM1.3b (+50% YoY) after 6 asset injections and revaluation gains. AXRB targets to hit a RM1.5b asset size by end-2011, which could enhance its earnings by 11%. We are raising our earnings forecasts by 6-32% to factor in the new assets worth RM260m. DCF-based TP is raised to RM2.60/sh.

The FBM KLCI was lower marginally by 1.87 points yesterday. Its resistance areas at 1,490 and 1,503 will cap market gains, whilst the support areas for the FBM KLCI are located at 1,469 and 1,486.

Local News

Construction: Contractors for LRT project to be shortlisted next month. Contractors shortlisted for the first phase of the RM7b light rail transit (LRT) extension will be announced by early next month said an industry source. The first phase of the extension or package A for both Kelana Jaya and Ampang Lines involved 9.2km and 7.39km of construction length respective. Syarikat Prasarana Negara Bhd held a pre-bid briefing with the pre-qualified contractors for package A on June 22. The contractors were requested to submit their tenders in August. It is understood the briefing was attended by 15 construction companies that included Sunway Construction Sdn Bhd, IJM Construction Sdn Bhd, Muhibbah Engineering Sdn Bhd, Gamuda Bhd, Bina Puri Holdings Bhd, Loh & Loh Corp Bhd and MRCB Engineering Sdn Bhd. (Source: The Star)

YTL Corp: Proposes gas-saving power technology. Power-giant YTL Corp Bhd hopes to submit a proposal to the Malaysian government to use a new technology which will save up to 20% of the gas used to generate power. MD Tan Sri Francis Yeoh said the use of the co-generation combined cycle technology at power plants would save government millions of ringgit spent on gas. "We have tried and tested this technology at our plant in Singapore and are more than willing to share this knowledge with Malaysia as well." "This 20% savings can translate to about RM400m in savings annually". (Source: The Star)

Property: PNB defends Warisan Merdeka project. Permodalan Nasional Bhd's (PNB) RM5b plan to redevelop the tract of land near Stadium Merdeka, which includes a 100-storey office block, is a move to diversify the investment group's asset portfolio, said its group CEO Tan Sri Hamad Kama Piah. He said PNB expects an annual return of 8% to 10% from the project, which he stressed was a well-thought investment decision. He also reiterated that PNB could finance the mega project solely from its profits. "We are not taking the government?s money (for the project)," he said. The new tower will cost RM2.5b to RM3b and is expected to be completed by 2015. (Source: The Edge Financial Daily)

Berjaya Corp: Granted vehicle manufacturing plant license. Berjaya Corp Bhd (BCorp) has been granted a manufacturing plant license by the International Trade and Industry Ministry (Miti) for the assembly of commercial vehicles, hybrid cars, electric cars and luxury passenger vehicles in Malaysia . The 100-acre plant would be based at Bukit Tagar, Selangor, the company told Bursa Malaysia yesterday. BCorp chairman and CEO Tan Sri Vincent Tan said in a statement that the manufacturing licence would provide the company with the opportunity to assemble commercial and passenger vehicles locally, giving it more flexibility and control in terms of quality and pricing of its vehicles. (Source: The Star)