Maybank IB Views

AirAsia RM2.55: Buy
Shocking, but in a good way Shariah-compliant

Jetting up. AirAsia reported the highest 3Q operating profit in its history: net profit of RM271m (+1,022% YoY). We raise our forecasts to reflect a stronger yield environment and the rebound of associates' performances. AirAsia is the cheapest low cost carrier (LCC) globally, after adjusting for normalised accounting practices. Buy with a higher RM3.36 target price. We now peg the stock to 9.0x 2011 PER (previously 10.1x).

Malaysian Airline System RM2.06: Buy
It's coming together

Above expectations, cost reduction driven. 3Q10 recurring net profit of RM147m - reversal from losses, is the first sign that MAS is graduating to sustainable profits going forward. Yields were ahead - albeit at a lower pace than peers, but unit cost has improved significantly due to efficiency gains and higher utilization rate. We raise our earnings forecasts with slightly higher RM2.64 TP, based on 12.4x 2011 PER, 10% premium to peers for its higher growth prospects.


Proton Holdings RM4.73: Buy
Inspira to inspire

Results yielded no surprises, with 1H net profit meeting 54% of our full-year forecast. As Proton seeks to unlock value through strategic partnership(s) and explore opportunities overseas, valuations are inexpensive (0.5x book and 9-10x forward PERs). It also has a sizeable war chest of RM1.2b (RM2.12/sh cash), which could be upstream for higher dividends. Proton also trades at a lower 6x PER ex-cash. We remain Buyers of Proton with a RM5.90 target price (11x FY12 EPS).


Hock Seng Lee RM1.92: Buy
Share bonus cheer Shariah-compliant

Results in line; Buy. RM52m 9M10 net profit (+34% YoY) is 72% of our 2010 forecast and 73% of consensus. A surprise 1-for-50 treasury shares distribution translates into 3.8sen (net) return to shareholders based on the last close share price. We are still positive on HSL delivering double-digit earnings growth into 2011 and benefiting from job flows under SCORE. Our TP pegs the stock at 14x 2011 PER.


Technicals
The FBM KLCI rebounded 7.95 points to 1,496.49 yesterday. Its resistance areas at 1,498 and 1,515 will cap market gains, whilst its obvious support areas are located at 1,477 and 1,496.
Trading idea for today is a TAKE PROFIT call on TENAGA.


Other Local News
MMHE: Eyes RM1b profit. Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE), is targeting a RM1b net profit within five years. Prime Minister Datuk Seri Najib Razak said the target should be regarded as the company's key performance indicator (KPI). (Source: The Star)

O&G: Petronas to invest in Johor O&G hub, PM to announce new projects next week. Petroliam Nasional Bhd (Petronas) will play a major role in the development of Teluk Ramunia and Pengerang in Johor into an oil and gas (O&G) hub. Separately, prime minister Datuk Seri Najib Tun Razak is expected to announce new development and entry point projects in the oil, gas and energy sector on Tuesday. (Source: The Star)

O&G: Technip boosts presence in Malaysia. France-based Technip Group launched its flexible pipe manufacturing facility located in Tanjung Langsat, Johor. Costing EUR140m, the new plant will allow Technip to make further inroads in Asia-Pacific and Middle East subsea oil and gas markets. Technip has already established a long-term strategic collaboration with MISC Bhd, Malaysia Marine and Heavy Engineering Holdings Bhd and two other subsidiaries of Petronas. (Source: Business Times)

MRCB: Construction on Penang Sentral starts next month. Construction works on the RM2.7b Penang Sentral Integrated Transport Hub in Butterworth is expected to begin next month. The project will be undertaken by a joint venture between MRCB and Pelaburan Hartanah Bumiputra Bhd. The first phase comprises an integrated transportation hub with a retail component could start next month and is scheduled for completion by Dec 2013. The second and third phases are commercial components, comprising a commercial hub, including office towers, serviced apartments, a hotel and waterfront amenities, is scheduled for completion 10 years from now. (Source: The Malaysian Reserve)

Transportation: Study on bullet train ready by mid-2011. The feasibility study on the KL-Singapore bullet train project is due to start in January and would be completed by mid-2011 before Malaysia proceeds to approach Singapore. The bullet train (which travels at an average speed of 350-450km/hour) could lower traveling time between the two cities to under two hours. (Source: Business Times)

Transportation: LRT extension jobs to be awarded soon. The government is expected to award the long-awaited light rail transit (LRT) extension project soon, and successful bidders have been short-listed. It is learnt that Bina Puri Holdings Bhd is in the forefront to win the LRT extension job for the Ampang line worth about RM600m. Meanwhile, TRC Synergies Bhd is tipped to bag the main contract for the Kelana Jaya line extension, estimated to be worth between RM900m and RM1b. (Source: The Edge Financial Daily)