Maybank IB Views 18 Nov 2010
Thursday, November 18, 2010
COMPANY UPDATE
Sime Darby RM8.80: Buy
Post-provision divestments and law suits Shariah-compliant
Still our pick among the big caps. Two highlights arose from Sime's AGM: 1) the group will pursue legal action on the Energy & Utilities fiasco, and 2) there are no plans to spin off the plantations division yet. We believe that Sime, being a major laggard YTD, will play catch up in a liquidity-induced market rally. Reiterate Buy with a price target of RM10.50.
Gamuda RM3.55: Buy
Responds to stop-work order Shariah-compliant
Maintain Buy with a RNAV-based RM4.38 TP. MMC-Gamuda's swift response to the Penang state government's stop-work order for the electrified double tracking rail project should ease concerns which had affected Gamuda's share price last Friday. Looking beyond this setback, we think there is a larger positive for investors to look forward to - the government's decision on Greater KL's MRT project is likely to favour Gamuda. The stock, which has yet to fully recover from last Friday's drop, offers a good 24% upside to our target
Sapura Crest Petroleum RM2.60: Buy
To grow assets; eyes regional space
Maintain Buy; target price lifted to RM3.05 (+17%). SapCrest now expects stronger earnings from its T-10 rig contract extension, and we raise our FY12 EPS forecast by 5% as a result. There is upside to our 3-year profit CAGR of 12% if asset expansion plans to complement its regional agenda take off. We see opportunities in the rigs and installation of pipeline and facilities (IPF) businesses that SapCrest, with its domestic dominance, track record, regional partnerships and balance sheet, can tap.
RESULTS PREVIEW
Malaysian Airline System RM2.09: Buy
3Q to surprise due to yields, load factor
A promising quarter. MAS will release its 3Q10 results on 25 Nov. 3Q10 is expected to be profitable, buoyed by a high load factor of 79% (+1.9 ppt YoY), capacity growth of 7.8% YoY and a positive outlook on yields. We tweak our earnings forecasts to account for higher yields and fuel prices. Maintain Buy with a target price of RM2.61 based on 13.8x 2011 PER - 15% premium to global airlines - after taking into account its strong profit growth prospects for 2011-12.
RESULTS REVIEW
Media Prima Berhad RM2.22: Buy
Prime performer
Dividend policy raised. RM51m 3Q net profit ex-exceptionals (+60% YoY/+64% QoQ) took 9M to RM111m (+177% YtD). We expect a stronger 4Q as revenue momentum continues and the tax rate normalizes. The company raised its dividend policy and declared an interim 4 sen net DPS. Buy, for market-leading businesses which we expect will drive 15% p.a. EPS growth and support growing dividends.
Technicals
The FBM KLCI rose marginally by 1.98 points to 1,503.54 Tuesday. Its resistance areas at 1,503 and 1,531 will cap market gains, whilst its weaker support areas are located at 1,488 and 1,501.
Trading idea for today is a TAKE PROFIT call on AMMB.
Sime Darby RM8.80: Buy
Post-provision divestments and law suits Shariah-compliant
Still our pick among the big caps. Two highlights arose from Sime's AGM: 1) the group will pursue legal action on the Energy & Utilities fiasco, and 2) there are no plans to spin off the plantations division yet. We believe that Sime, being a major laggard YTD, will play catch up in a liquidity-induced market rally. Reiterate Buy with a price target of RM10.50.
Gamuda RM3.55: Buy
Responds to stop-work order Shariah-compliant
Maintain Buy with a RNAV-based RM4.38 TP. MMC-Gamuda's swift response to the Penang state government's stop-work order for the electrified double tracking rail project should ease concerns which had affected Gamuda's share price last Friday. Looking beyond this setback, we think there is a larger positive for investors to look forward to - the government's decision on Greater KL's MRT project is likely to favour Gamuda. The stock, which has yet to fully recover from last Friday's drop, offers a good 24% upside to our target
Sapura Crest Petroleum RM2.60: Buy
To grow assets; eyes regional space
Maintain Buy; target price lifted to RM3.05 (+17%). SapCrest now expects stronger earnings from its T-10 rig contract extension, and we raise our FY12 EPS forecast by 5% as a result. There is upside to our 3-year profit CAGR of 12% if asset expansion plans to complement its regional agenda take off. We see opportunities in the rigs and installation of pipeline and facilities (IPF) businesses that SapCrest, with its domestic dominance, track record, regional partnerships and balance sheet, can tap.
RESULTS PREVIEW
Malaysian Airline System RM2.09: Buy
3Q to surprise due to yields, load factor
A promising quarter. MAS will release its 3Q10 results on 25 Nov. 3Q10 is expected to be profitable, buoyed by a high load factor of 79% (+1.9 ppt YoY), capacity growth of 7.8% YoY and a positive outlook on yields. We tweak our earnings forecasts to account for higher yields and fuel prices. Maintain Buy with a target price of RM2.61 based on 13.8x 2011 PER - 15% premium to global airlines - after taking into account its strong profit growth prospects for 2011-12.
RESULTS REVIEW
Media Prima Berhad RM2.22: Buy
Prime performer
Dividend policy raised. RM51m 3Q net profit ex-exceptionals (+60% YoY/+64% QoQ) took 9M to RM111m (+177% YtD). We expect a stronger 4Q as revenue momentum continues and the tax rate normalizes. The company raised its dividend policy and declared an interim 4 sen net DPS. Buy, for market-leading businesses which we expect will drive 15% p.a. EPS growth and support growing dividends.
Technicals
The FBM KLCI rose marginally by 1.98 points to 1,503.54 Tuesday. Its resistance areas at 1,503 and 1,531 will cap market gains, whilst its weaker support areas are located at 1,488 and 1,501.
Trading idea for today is a TAKE PROFIT call on AMMB.
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