Views & News, Maybank IB (2010-10-29)

RESULTS REVIEW

Tenaga RM8.87: Sell
It's going to get even more challenging Shariah-compliant
RM2.5b FY10 net profit ex-forex (+22% YtD) below consensus. 4Q net profit plunged 23% QoQ to RM414m on seasonally high "other costs" and rising coal prices. The final dividend was raised to 20 sen/share, but
the 3% gross full-year yield is still not particularly compelling. We tweak our EPS forecasts on post-result housekeeping and still expect FY11 net profit contraction on higher coal prices.


Nestle (Malaysia) RM43.60: Buy
It's marvellous what Milo can do! Shariah-compliant

Tried and tested recipe. Nestle's 10% share price gain since our upgrade on 30 August was nearly double the main Index's gain during the same period. 9M10 results outperformed. We tentatively raise our earnings a further 6-8% for 2010-12 and DCF-based TP by 3% to RM45 (from RM43.86) as we await its analysts' briefing later today for further details. Buy as we foresee further upside to its earnings and TP.


COMPANY UPDATE

Loh & Loh Corporation RM4.80: Accept offer
Ceasing coverage Shariah-compliant

Stock to be delisted. The mandatory take-over offer by PetroSaudi International and ultimately, Sheikh Tarek Essam Ahmad Obaid for Loh & Loh shares at RM4.85 a piece, has received 96.82% acceptances. The offerer does not intend to maintain the listing status of Loh & Loh. The stock will accordingly be suspended from trading on 8 Nov 2010.


Technicals

The FBM KLCI rose slightly higher by 0.33 points yesterday to end at 1,499.44. Its resistance areas at 1,504 and 1,512 may cap market gains, whilst its support areas are located at 1,483 and 1,499. Due to the mixed tone in the USA last night, we may see the FBM KLCI in a muted mode today - with later blue chip and mid-cap nibbling that may curtail some initial profit-taking activities.

Trading idea for today is a SHORT TERM BUY call on KFC.


Other Local News

MAHB: In Maldives JV. Malaysia Airports Holdings Bhd signed a 23:77 joint-venture agreement with GMR Infrastructure Ltd, to expand and operate the Male International Airport in Maldives. The joint-venture firm will have a paid-up capital of USD30m (RM93m) and based on the construction cost of USD373m (RM1.16b), MAHB's portion of the cost is USD86m (RM267m). (Source: Business Times)

Sunrise: Launching four projects next year. Property developer Sunrise Bhd plans to launch four projects with a total gross development value (GDV) of RM3.2b next year. The immediate project would be the Solaris Tower (GDV: RM480m) launching this year or early next year. Next would be the second phase of Vancouver, Canada project- the Quintet expected to launch in February or March 2011. Following that, Sunrise will unveil its MK20 (GDV: RM1b), with a build-and-sell mixed development project in Mont' Kiara by mid of next year and a premium landed development in Kajang, next to the Mines Resort (GDV: RM500m) by year-end. (Source: The Star)

Plenitude: To launch seven projects in FY11. Property developer Plenitude Bhd plans to launch seven projects in the financial year ending June 30, 2011, which could generate a total gross development value of about RM400m. These projects comprising mix development with a combination of residential and commercial properties are located in Johor, Penang, Sungai Petani and Selangor. (Source: The Star)

Southern Acids: To unlock value of land in Kota Kemuning. Southern Acids (M) Sdn Bhd (SAB) is set to unlock its holding of 644.5 acres of land bordering Kota Kemuning, Shah Alam, although its board of directors are still exploring the options. The land is known as Thangamallay Estate, which is the home to SAB's palm oil plantation. The value of the plot of land is estimated to worth RM20 per sq ft, amounting to RM561m, which is more than SAB’s current market capitalization of RM376.57m. (Source: The Edge Financial Daily)

Property: Mortgage cap decision soon. The media is reporting that the central bank would meet with banks next week to discuss plans for a mortgage cap whereby loans would be limited to a portion of the property value. "The expectation is a cap of about 70-80%. We think a directive will be issued to cap," said two sources with knowledge of the meeting. (Source: Business Times)

REIT: i-REIT from GCC may list next year. Bursa Malaysia Bhd expects an Islamic real estate investment trust (i-REIT) from the Gulf Cooperation Council (GCC) to be listed on the exchange next year, adding to its three existing i-REITS. It did not identify the issuer, but market speculation is that that it may be Qatar-listed property group Ezdan. (Source: Business Times)