Maybank IB View

COMPANY UPDATE
IJM Corporation RM6.13: Buy
Wins upstream pipeline job Shariah-compliant

Topping up. The upstream Semantan pipeline works is the 3rd contract award relating to upstream works for the Pahang-Selangor raw water transfer project. The addition to IJM's order book is RM161m, lifting outstanding job orders to RM3.75b. We maintain our forecasts having incorporated potential job wins. Share price has climbed 44sen (+8%) since the MRCB-IJML merger announcement on 23 Nov, which will unlock values. IJM remains a Buy with a RM6.40 RNAV-based TP.


RHB Capital RM7.90:Buy
Raising liquidity

Maintain Buy. EPF’s further sale of RHB shares will raise trading liquidity and enable RHB to meet the minimum 25% public shareholding requirement. At an indicative price range of RM7.50-RM7.90, this values RHB at 10.6x-11.1x 2011 PER and 1.6-1.7x P/B (2010E). We believe there is further upside from the current levels as RHB remains the 2nd cheapest bank trading at 11.1x forward earnings. Our 12-month TP is RM9.10, which implies 12.8x 2011 PER.


Telekom Malaysia RM3.45: Buy
A precursor to higher cash returns? Shariah-compliant

Increased scope for capital management. The sale of TM's Axiata stake could reap TM an additional RM908m, or 26sen/share. Together with the Measat sale earlier this year, TM has raised RM1.16b or 33sen/share in 2010. We see a heightened possibility of a special cash distribution. Reiterate Buy, with a price target of RM3.90. Our call on Axiata is also a Buy with a RM5.10 DCF-based target price.


ECONOMICS
Economy - Malaysia
"Tapaus" from Lunch…

We attended a luncheon talk delivered by BNM Governor yesterday entitled "International Currency Movements - Impact on Malaysia & International Trade". "Tapaus" from the luncheon included remarks by the Governor that Malaysia's general economic and financial sector development and liberalisation means the country has higher tolerance to more volatile forex markets and capital flows. BNM will intervene in the forex market whenever necessary to smooth out fluctuations and there are other policy toolkits that the central bank can employ as well. Governor is wary of the effectiveness of unilateral capital controls due to "regulatory arbitrage" and said such a move must be coordinated regionally or globally. She added that Malaysia still need to maintain approriate level of external reserves since the external reserves itself have been volatile over the past few years. In fact, Malaysia and regional economies should look more towards recycling their large cache of external reserves within the region. Ultimately, Malaysia should not rely on exchange rate for economic competitiveness.


RESULTS REVIEW
Glomac RM1.70: Buy
Single digit PER, double-digit growth Shariah-compliant

Above expectations. RM31.4m 1HFY11 net profit (+78% YoY) beat our and street forecasts. Valuations remain attractive with a 8.8x PER and 36% 3-year EPS CAGR. Glomac has lined up launches worth RM1b over the next 12 months. Given current strong property demand, we believe its RM500m FY11 sales target is attainable. We are raising our forecasts by 9-52% and our TP to RM2.15. Maintain Buy.


Technicals
The FBM KLCI closed higher by 17.80 points at 1,503.22 yesterday. Its resistance areas at 1,506 and 1,531 may cap market gains, whilst its firm support areas are located at 1,480 and 1,503.
Trading idea for today is a SHORT TERM BUY call on SEACERA.


Other Local News
PPB: Sells shares in unit to Wilmar for RM378m. PPB Group Bhd will sell RM378m worth of shares in its unit FFM Bhd to Wilmar International Ltd to fund the overseas expansion of its flour business. In addition to the shares issuance, PPB had also inked a memorandum of understanding (MoU) with Wilmar that will allow the former to take up stakes in selected subsidiaries of the latter in China. (Source: The Malaysian Reserve)

Autos: Govt to have dialogue with Proton and Perodua. The government will begin discussions with Proton Holdings Bhd and Perusahaan Otomobil Kedua Sdn Bhd (Perodua) this month once the Prime Minister has approved the consolidation study. Proton Holdings MD said that he strongly felt that there was room to collaborate between two parties. Meanwhile, Perodua said it was too premature to comment at the moment and it was up to the shareholders to decide ultimately. (Source: The Star)

Tech: US-based National Instrument to invest USD80m in Penang. US-based National Instruments (NI) will be investing USD80m (RM252m) to set up a production facility in Penang. NI targets to generate USD1b in revenue from its operations here by 2016. Penang will become NI’s Asia hub as its Asian businesses become increasingly important. By 2015, NI expects its Asia operations to surpass North America by increasing to 50% of its market share. (Source: The Edge Financial Daily)

Construction: Mace Group to invest RM3b in Malaysia. The Mace Group of the United Kingdom will be investing RM3b in Malaysia over 5 years. Mace would collaborate with Corridor Development Corp Bhd (CDC) in construction, real estate and industrial projects in development corridors. In the initial stages, Mace will be focusing on construction related projects, particularly the Sungai Rambai development. (Source: The Star)