Views & News, Maybank IB (2010-10-26)

Tuesday, October 26, 2010

Company Update

Lingkaran Trans Kota Holdings RM3.49: Buy

LITRAK's plus-es Shariah-compliant

Up target price. We reiterate our Buy call on LITRAK with a raised RM4.00 DCF-based target price (+5%) after rolling over our valuation period. We expect rising investors' interest on LITRAK for its dividend yield potential (>5% net), providing further upside to its share price (+25% YTD). The asset-liability route for the take-over of PLUS' concessions may be applied to LITRAK's but not immediate, we think. The proposed Kinrara-Damansara link is not an immediate threat.

Glomac RM1.62: Buy

Invests in Suria Stonor condominium Shariah-compliant

Buys investment assets. Glomac's re-purchase of Suria Stonor condominiums from two bulk purchasers is a surprise to us. Despite attractive pricing, we are neutral on the deal given huge new and existing condominium supply around the KLCC area. No change to our forecasts and RM1.84 TP (25% discount to RM2.45/sh). Glomac trades at single digit PERs for over 20% growth in 2011-12. Maintain Buy.

Petronas Gas RM11.26: Buy

Gladstone to meet Malaysia's LNG needs

PETRONAS' regas plant will be ready by end-2012, but LNG import from Glastone LNG will only start from 2014, according to Santos. We are not concerned by this supply mismatch as we foresee PETRONAS using the entire 2013 to test and fine-tune the regas plant's integration with the PGU pipeline network system. Maintain Buy on Petronas Gas (PGas) with a DCF-derived RM12.80 target price.


The FBM KLCI was higher by just 0.80 points yesterday to close at 1,491.44 on some positive investor sentiment. Its resistance areas at 1,493 and 1,508 may cap market gains, whilst the support areas for the FBM KLCI are located at 1,476 and 1,491.

AirAsia: AirAsia X to gain from ministry programme. The Ministry of Transport's (MOT) plan to develop a transparent and liberalised air rights allocation framework could finally see AirAsia X getting the much sought after rights to fly to Seoul and Sydney. Under the Economic Transformation Programme road-map, MOT has been tasked to facilitate the formulation of an air rights allocation framework to further develop the tourism and airline industries. The framework will enable local airlines to plan and launch additional flights to priority cities in a more efficient manner after additional air rights have been negotiated. (Source: Business Times)

Perwaja: To spend RM400m on pelletisation plant in Kemaman. In a bid to venture into upstream activities, Perwaja Holdings Bhd, a subsidiary of Kinsteel Bhd, is investing RM400m in an iron ore concentration and pelletisation plant in Kemaman, Terengganu, to meet its own raw materials demands. In order to gain access to the state's iron ore mines, Perwaja has invited the Terengganu state government to take an equity state in the venture. The new plant is expected to supply 80% to 90% of its internal demands and achieve a minimum production cost savings of 15%. (Source: The Edge Financial Daily)

Public Bank: Cambodian unit sets up securities business. Public Bank Bhd unit Cambodian Public Bank plc (CampuBank) has established a wholly-owned subsidiary, CampuBank Securities plc, in Cambodia. CampuBank Securities had obtained a securities company license from the Securities and Exchange Commission of Cambodia, which would enable it to carry out securities underwriting business, securities dealing business, securities brokerage business and investment advisory business in Cambodia. The issued and paid up capital of CampuBank Securities was equivalent to about RM31.1m. (Source: The Star)

SP Setia: To launch four residential projects. SP Setia Bhd plans to launch 4 new residential projects with an estimated gross sales value of RM546m in Penang beginning this December and next year. The projects comprised the RM175m Setia Greens, RM60.5m Brook Residences, RM170m Setia V Residences, and RM139m Pearl Villas in the Setia Pearl Island scheme. SP Setia property's (North) GM S.Rajoo said Penang would continue to play an important revenue generating role in the group?s property development business. (Source: The Star)

Broadband: Two more companies offer 4G broadband. Two companies have started offering the 4G wireless broadband service on a trial basis, with eventual speed hitting 100Mbps (mega bytes per second) by the first quarter of next year. He declined to name the two companies but mentioned that they are among the nine companies that are offering the new 4G long term evolution (LTE) technology. These companies are currently undertaking trials to test the latest wireless broadband network. (Source: Business Times)


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Current stock in my portfolio:
1) Hupseng
2) Glomac
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4) Supermax
5) Cocoland
6) Xinquan

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