Views & News, Maybank IB (2010-10-27)

COMPANY UPDATE

Hock Seng Lee RM1.82: Buy

Momentum building up Shariah-compliant
Raising target price. Recent news flow involving Sarawak, namely Mubadala's USD7b investment pledge and a good share of the 2011 National Budget allocation, are indications of rising construction job flows. We retain our RM600m 2010 job win target for HSL, but lift our 2011 target to RM720m (+20%). We also raise 2011 net profit forecast by 11% and 2012 by 9%. Our new target price, based on a higher 14x 2011 earnings multiple (previously 13x) is RM2.30 (+21%). Buy.

RESULTS REVIEW

Digi.Com RM24.66: Hold

3Q10: Dividends intact Shariah-compliant
Results in line. 3Q10 net profit of RM289.3m (+3.9% QoQ, +18.5% YoY) brings 9M10 net profit to RM846m (+12.2% YoY), 77% of our full-year forecast and consensus. A third DPS of 50sen (RM1.20 YTD) was declared, and Digi remains on track to pay out more than 100% of its earnings in 2010. While payouts could decline in 2011, we still expect Digi to be the highest yielding among the Malaysian telcos.

Technicals

The FBM KLCI was higher by 5.50 points yesterday to close at 1,496.94 on further positive investor sentiment, led by plantation plays. Its resistance areas at 1,503 and 1,510 may cap market gains, whilst the support areas for the FBM KLCI are located at 1,480 and 1,496.
Trading idea for today is a SHORT TERM BUY call on RSAWIT.

Other Local News

CIMB: CIMB Islamic signs largest-ever term facility with MNC. CIMB Islamic Bank formalized the largest ?ever term financing facility to date when the bank signed a 12 year USD100m facility based on the syariah concept Bai' Al 'Innah with Hewlett-Packet (HP) Multimedia Sdn Bhd. The facility would be used to finance the first phase of HP?s 32-acre Next Generation Data Center (NGDC) in Cyberjaya, which formed part of the company?s 28.3ha integrated campus. (Source: The Star)

Maybank: Anfaal upbeat on prospects in S. Arabia. Maybank Investment Bank Bhd's affiliate company Saudi-based Anfaal Capital is eyeing the sukuk, corporate finance and advisory, fund management and real estate investment markets in Saudi Arabia to build its business. Anfaal chairman Khaled M. Al Aboodi said they have in the pipeline four good opportunities which they are in negotiations and hope will materialize soon. These could result in Anfaal having 3b riyals (RM2.5b) in funds under management. In addition to Maybank Investment Bank's 18% stake, Anfaal's other major shareholders include Islamic Corp for the Development of the Private Sector (ICD) with 37% and Alnmo Real Estate Co, an entity which is controlled by Saudi?s prominent Bin Mahfouz family, with 18%. (Source: The Star)

Banking: One mega Islamic bank this year, first Islamic bank in the Maldives. Bank Negara will announce one mega Islamic bank by this year under its plan to issue up to two mega Islamic banking licences. The universal mega Islamic bank licence requires a minimum paid up capital of USD1b (RM3.09b). Bank Negara plans to allow foreigners to hold 100% stake in the lender or form a joint venture with local partners. Separately, The Islamic Banking and Finance Institute Malaysia (IBFIM) has joined forces with Maldives Islamic bank to set up the first Islamic Bank in Maldives, which aims to be operational next January. The bank hoped to capture up to 25% of its local market share within 3 years. (Source: The Star, The Edge Financial Daily)

Utilities: Talks on Bakun may wrap up mid-2011, ministry addressing nuclear power option. Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui expects negotiations between the Finance Ministry and the Sarawak government on the sale of the Bakun hydropower project to conclude by mid-2011. Chin also reiterated that the Cabinet had approved the setting up of a nuclear power plant and the Economic Council had approved the ministry to go-ahead and start identifying suitable sites. However, he declined to talk about cost and location of the plant. (Source: The Edge Financial Daily)

YTL Comms: To unveil its own mobile phones. YTL Communications Sdn Bhd (YTL Comms), which is gearing up for the launch of its 4G mobile Internet services next month, is expected to unveil its own mobile phones soon. "We are working on our own Android platform phones and its likely to be introduced in 3 months," said executive director Datuk Yeoh Seok Hong. Market talk has it that YTL Comms was working on a number of WIMAX devices and had outsourced the production of its mobile phones to a smartphone manufacturer. (Source: The Star)