Views & News, Maybank IB (2010-11-03)
Thursday, November 4, 2010
SECTOR UPDATE
Plantations: Neutral
US Dollar takes centre stage
The Fed meets tonight, commodity prices could trend higher. Depending on what transpires at the Fed meeting tonight, further USD weakness is a possibility. This could push devastating rot diseases infected on oil palm trees. ACGT was targeting to come out with a diagnostic tool that could detect early-stage ganoderma infection on oil palm trees by 2015. (Source: The Star).
RESULTS REVIEW
TH Plantations RM1.68: Hold
3Q10: Pricing issue persists Shariah-compliant
Raising earnings. We raise our 2010-11 earnings by 12.1% and 2.2% respectively after incorporating 1) higher ASP's (2010: RM2,300 to RM2,550, 2011: RM2,400 to RM2,600) and 2) higher minority contribution. While THP is attractively valued relative to peers, we believe the discount is merited given the company's almost perennial pricing issues. Maintain Hold with a higher target price of RM1.75.
Technicals
The FBM KLCI dropped slightly by 3.09 points yesterday to end at 1,506.57. Its resistance areas at 1,509 and 1,524 may cap market gains, whilst its support areas are located at 1,490 and 1,506. Due to the firm tone in the USA last night, we may see the FBM KLCI in a strong mode today - with blue chip and mid-cap buying that might be curtailed by some later profit-taking activities.
Daily trading Idea is a SHORT-TERM BUY call on TASCO.
Other Local News
Genting Plantation: Beefing up R&D activities. Genting Plantation's subsidiary, ACGT Sdn Bhd, yesterday announced it had completed the sequencing, assembly and annotation of ganoderma, a white fungus known for its devastating rot diseases infected on oil palm trees. ACGT was targeting to come out with a diagnostic tool that could detect early-stage ganoderma infection on oil palm trees by 2015. (Source: The Star).
Proton: To offer hybrid car priced below RM100,000. Proton Holdings Bhd is looking to offer its first hybrid car at a competitive price of below RM100,000. Proton is said to be developing hybrid as well as electric engines with British company Frazer-Nash Research, South Korea's LG and its Britain based subsidiary Lotus that are expected to launch commercially next year. (Source: The Malaysian Reserve)
TNB: Inks energy purchase deal with KUB-Berjaya. Tenaga Nasional Bhd (TNB) signed an agreement for the purchase of electricity generated by a small renewable energy (RE) power project developed by KUB-Berjaya Energy Sdn BHd (KUBBE) for RM1.84m annually for a period of 21 years. The RE power plant which utilizes landfill gas (methane gas) as fuel, is located in Bukit Tagar, Selangor and will have an export capacity of 1MW to TNB. (Source: The Malaysian Reserve)
Boustead: RM1b bond bid to buy Pharmaniaga. Boustead Holdings Bhd, plans to raise up to RM1b from a bank guaranteed medium term notes (MTN) programme. Proceeds from the seven year MTN would be used mainly to part finance the acquisition of Pharmaniaga Bhd and expand its landbank as well as pare down short-term borrowings. Malaysian Rating Corp Bhd has assigned an indicative long-term rating of AAA for the proposed MTN with a stable outlook. (Source: The Malaysian Reserve)
Communications: MCMC introduces new 11-digit mobile phone number format. The Malaysian Communications and Multimedia Commission (MCMC) will introduce a new mobile phone number format with 11 digits effective Dec 15 this year. The new format would use the 3+8 structure compared to existing 3+7 and all service providers would use a similar "011" prefix, for example, 011 1234 5678. The existing structure that involves 31m numbers are not required to migrate to the new 3+8, as both will co-exist after the roll-out. The new shared prefix "011" could accommodate 900m numbers compared to the 60m numbers with 3+7 structure. (Source: Bernama)
Steel: Association members to invest RM5b. The nine members of the newly formed Malaysia Steel Association (MSA) will invest RM5b in the next three years to boost their cumulative capacity by 3.2m tonnes a year, making Malaysia one of the biggest steel manufacturers in Asean. The nine founding members are Amsteel Mills Sdn Bhd, Ann Joo Steel Bhd, Ann Joo Integrated Steel Sdn Bhd, Antara Steel Mills Sdn Bhd, Kinsteel Bhd, Malaysia Steel Works (KL) Bhd, Megasteel Sdn Bhd, Perfect Channel Sdn Bhd, and Perwaja Holdings Bhd. (Source: The Star)
Plantations: Neutral
US Dollar takes centre stage
The Fed meets tonight, commodity prices could trend higher. Depending on what transpires at the Fed meeting tonight, further USD weakness is a possibility. This could push devastating rot diseases infected on oil palm trees. ACGT was targeting to come out with a diagnostic tool that could detect early-stage ganoderma infection on oil palm trees by 2015. (Source: The Star).
RESULTS REVIEW
TH Plantations RM1.68: Hold
3Q10: Pricing issue persists Shariah-compliant
Raising earnings. We raise our 2010-11 earnings by 12.1% and 2.2% respectively after incorporating 1) higher ASP's (2010: RM2,300 to RM2,550, 2011: RM2,400 to RM2,600) and 2) higher minority contribution. While THP is attractively valued relative to peers, we believe the discount is merited given the company's almost perennial pricing issues. Maintain Hold with a higher target price of RM1.75.
Technicals
The FBM KLCI dropped slightly by 3.09 points yesterday to end at 1,506.57. Its resistance areas at 1,509 and 1,524 may cap market gains, whilst its support areas are located at 1,490 and 1,506. Due to the firm tone in the USA last night, we may see the FBM KLCI in a strong mode today - with blue chip and mid-cap buying that might be curtailed by some later profit-taking activities.
Daily trading Idea is a SHORT-TERM BUY call on TASCO.
Other Local News
Genting Plantation: Beefing up R&D activities. Genting Plantation's subsidiary, ACGT Sdn Bhd, yesterday announced it had completed the sequencing, assembly and annotation of ganoderma, a white fungus known for its devastating rot diseases infected on oil palm trees. ACGT was targeting to come out with a diagnostic tool that could detect early-stage ganoderma infection on oil palm trees by 2015. (Source: The Star).
Proton: To offer hybrid car priced below RM100,000. Proton Holdings Bhd is looking to offer its first hybrid car at a competitive price of below RM100,000. Proton is said to be developing hybrid as well as electric engines with British company Frazer-Nash Research, South Korea's LG and its Britain based subsidiary Lotus that are expected to launch commercially next year. (Source: The Malaysian Reserve)
TNB: Inks energy purchase deal with KUB-Berjaya. Tenaga Nasional Bhd (TNB) signed an agreement for the purchase of electricity generated by a small renewable energy (RE) power project developed by KUB-Berjaya Energy Sdn BHd (KUBBE) for RM1.84m annually for a period of 21 years. The RE power plant which utilizes landfill gas (methane gas) as fuel, is located in Bukit Tagar, Selangor and will have an export capacity of 1MW to TNB. (Source: The Malaysian Reserve)
Boustead: RM1b bond bid to buy Pharmaniaga. Boustead Holdings Bhd, plans to raise up to RM1b from a bank guaranteed medium term notes (MTN) programme. Proceeds from the seven year MTN would be used mainly to part finance the acquisition of Pharmaniaga Bhd and expand its landbank as well as pare down short-term borrowings. Malaysian Rating Corp Bhd has assigned an indicative long-term rating of AAA for the proposed MTN with a stable outlook. (Source: The Malaysian Reserve)
Communications: MCMC introduces new 11-digit mobile phone number format. The Malaysian Communications and Multimedia Commission (MCMC) will introduce a new mobile phone number format with 11 digits effective Dec 15 this year. The new format would use the 3+8 structure compared to existing 3+7 and all service providers would use a similar "011" prefix, for example, 011 1234 5678. The existing structure that involves 31m numbers are not required to migrate to the new 3+8, as both will co-exist after the roll-out. The new shared prefix "011" could accommodate 900m numbers compared to the 60m numbers with 3+7 structure. (Source: Bernama)
Steel: Association members to invest RM5b. The nine members of the newly formed Malaysia Steel Association (MSA) will invest RM5b in the next three years to boost their cumulative capacity by 3.2m tonnes a year, making Malaysia one of the biggest steel manufacturers in Asean. The nine founding members are Amsteel Mills Sdn Bhd, Ann Joo Steel Bhd, Ann Joo Integrated Steel Sdn Bhd, Antara Steel Mills Sdn Bhd, Kinsteel Bhd, Malaysia Steel Works (KL) Bhd, Megasteel Sdn Bhd, Perfect Channel Sdn Bhd, and Perwaja Holdings Bhd. (Source: The Star)
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