Maybank IB View
Monday, December 6, 2010
COMPANY UPDATE
Gamuda RM3.75: Buy
On the right track Shariah-compliant
Maintain Buy. 1QFY11 results, to be announced in mid-Dec, should be on track to meet our revised RM355m FY11 net profit forecast (+2%). Property sales have surpassed expectations with RM350m locked-in in 1Q versus RM880m full-year target. The government's decision on the Klang Valley MRT project may continue to favour Gamuda-MMC. These positive news-flows would support a higher share price level. Retain Buy with a raised RM4.45 (+2%) RNAV-based target price.
RCE Capital RM0.565:Sell
Lacks clarity, downgrade to Sell
Lacks clarity. We downgrade our call on RCE to Sell, expecting further downside to its share price on concerns over its longer-term prospects. The cessation of new loans will negatively impact our FY11 net profit forecast by 5%, and future earnings will contract if unresolved. Clarity is lacking on whether the matter will impact its business model. Our new TP pegs the stock on 0.7x P/B (end-2010E) as we switch over our valuation basis to asset-based under current uncertain circumstances.
ECONOMICS
External Trade October 2010
V for Volatile...
Export growth slumped to +1.3% YoY in Oct '10 (Sep '10: +6.9% YoY; Maybank IB: +0.1% YoY, Consensus: -1.4% YoY). MoM, exports rebounded +8.9% after two months of sequential declines (Sep ‘10: -4.5% MoM; Aug '10: -4.7% MoM). Imports performed better at +12.5% YoY (Sep '10: +14.6% YoY; Maybank IB: +3.8% YoY, Consensus: +5.3% YoY) and +10.7% MoM (Sep '10: -8% MoM; Aug '10: -2.4% MoM). Consequently, trade surplus narrowed to RM 6.9b (Sep '10: +RM 7.0b).
Subsidy Rationalisation
Round two for fuel and sugar...
The Government announced another round of increases in fuel and sugar prices. Subsidy rationalisation is progressing gradually in comparison to PEMANDU's proposal. Therefore, we maintain our forecast of gradual rise in inflation rate to 2.5% next year from 1.7% this year.
Technicals
The FBM KLCI rose 8.93-points and closed at 1,500.98 last week as some local bargain hunting activities emerged after the previous week’s fall.The obvious support areas for the FBM KLCI are located in the 1,474 to 1,500-zone. The key resistance areas of 1,503 and 1,531 may cap any rebound activity.
Trading Idea for the week is an ACCUMULATE call on GAB.
Other Local News
Petra Energy: Unit wins RM400m Petronas Carigali job. Petra Energy Bhd's wholly-owned subsidiary Petra Resources Sdn Bhd has secured a contract from Petronas Carigali Sdn Bhd worth RM400m. The letter of award was for the provision of hook-up and commissioning of Petronas Carigali's offshore facilities. (Source: The Star)
DiGi: U Mobile accord terminated. DiGi.Com Bhd announced that the domestic roaming agreement between its wholly-owned unit DiGi Telecomunications Sdn Bhd and U Mobile Sdn Bhd has been terminated. The agreement was in relation to provide U Mobile access to DiGi Telecomunications' 2G GSM network for the provision of public telecommunications services in Malaysia. (Source: The Star)
PacificMas: Signs deal to sell PIB stake for RM201m. PacificMas Bhd has sold its entire equity interest in The Pacific Insurance Bhd (PIB) to Fairfax Asia Ltd. The stake will be sold for RM201m in cash plus PIB's incremental net tangible assets (NTA) from Dec 31, 2008 to the month end immediately after the date the agreement becomes unconditional or another date as the parties may agree. (Source: The Star)
Maybank: Extension for Maybank's sell down. Malayan Banking Bhd (Maybank) has been granted an extension of time for it to fulfill its sell-down requirement and complete the exercise by June 1, 2011 in respect of its stake in PT Bank Internasional Indonesia (BII). Maybank may request for further extension if the sell-down exercise would result in it incurring a potential loss in excess of 10% of its original value of BII acquisition, preferably two weeks before June 1, 2011. (Source: The Star)
Proton: Lotus to boost presence in Malaysia with 5 new models. A subsidiary of Proton, Lotus is bringing 5 models to Malaysia by 2014, to increase its market presence and sales to 100 cars a year from 30 to 40 cars a year now. Production would be increased by three-fold to 8000 units a year. (Source: Business Times)
Utilities: Selangor hands over water memorandum to Istana Negara. A memorandum in the issue of restricting the Selangor water supply industry was handed over by Selangor Menteri Besar to Istana Negara. Among the contents of the memorandum was to request the king to order the rights over water resources, now handled by Syabas, to be returned to the Selangor state government. Also, the Water Services Industry Act 2006 is to be revised to understand the need to restructure the industry in a holistic manner. (Source: The Edge Financial Daily)
Gamuda RM3.75: Buy
On the right track Shariah-compliant
Maintain Buy. 1QFY11 results, to be announced in mid-Dec, should be on track to meet our revised RM355m FY11 net profit forecast (+2%). Property sales have surpassed expectations with RM350m locked-in in 1Q versus RM880m full-year target. The government's decision on the Klang Valley MRT project may continue to favour Gamuda-MMC. These positive news-flows would support a higher share price level. Retain Buy with a raised RM4.45 (+2%) RNAV-based target price.
RCE Capital RM0.565:Sell
Lacks clarity, downgrade to Sell
Lacks clarity. We downgrade our call on RCE to Sell, expecting further downside to its share price on concerns over its longer-term prospects. The cessation of new loans will negatively impact our FY11 net profit forecast by 5%, and future earnings will contract if unresolved. Clarity is lacking on whether the matter will impact its business model. Our new TP pegs the stock on 0.7x P/B (end-2010E) as we switch over our valuation basis to asset-based under current uncertain circumstances.
ECONOMICS
External Trade October 2010
V for Volatile...
Export growth slumped to +1.3% YoY in Oct '10 (Sep '10: +6.9% YoY; Maybank IB: +0.1% YoY, Consensus: -1.4% YoY). MoM, exports rebounded +8.9% after two months of sequential declines (Sep ‘10: -4.5% MoM; Aug '10: -4.7% MoM). Imports performed better at +12.5% YoY (Sep '10: +14.6% YoY; Maybank IB: +3.8% YoY, Consensus: +5.3% YoY) and +10.7% MoM (Sep '10: -8% MoM; Aug '10: -2.4% MoM). Consequently, trade surplus narrowed to RM 6.9b (Sep '10: +RM 7.0b).
Subsidy Rationalisation
Round two for fuel and sugar...
The Government announced another round of increases in fuel and sugar prices. Subsidy rationalisation is progressing gradually in comparison to PEMANDU's proposal. Therefore, we maintain our forecast of gradual rise in inflation rate to 2.5% next year from 1.7% this year.
Technicals
The FBM KLCI rose 8.93-points and closed at 1,500.98 last week as some local bargain hunting activities emerged after the previous week’s fall.The obvious support areas for the FBM KLCI are located in the 1,474 to 1,500-zone. The key resistance areas of 1,503 and 1,531 may cap any rebound activity.
Trading Idea for the week is an ACCUMULATE call on GAB.
Other Local News
Petra Energy: Unit wins RM400m Petronas Carigali job. Petra Energy Bhd's wholly-owned subsidiary Petra Resources Sdn Bhd has secured a contract from Petronas Carigali Sdn Bhd worth RM400m. The letter of award was for the provision of hook-up and commissioning of Petronas Carigali's offshore facilities. (Source: The Star)
DiGi: U Mobile accord terminated. DiGi.Com Bhd announced that the domestic roaming agreement between its wholly-owned unit DiGi Telecomunications Sdn Bhd and U Mobile Sdn Bhd has been terminated. The agreement was in relation to provide U Mobile access to DiGi Telecomunications' 2G GSM network for the provision of public telecommunications services in Malaysia. (Source: The Star)
PacificMas: Signs deal to sell PIB stake for RM201m. PacificMas Bhd has sold its entire equity interest in The Pacific Insurance Bhd (PIB) to Fairfax Asia Ltd. The stake will be sold for RM201m in cash plus PIB's incremental net tangible assets (NTA) from Dec 31, 2008 to the month end immediately after the date the agreement becomes unconditional or another date as the parties may agree. (Source: The Star)
Maybank: Extension for Maybank's sell down. Malayan Banking Bhd (Maybank) has been granted an extension of time for it to fulfill its sell-down requirement and complete the exercise by June 1, 2011 in respect of its stake in PT Bank Internasional Indonesia (BII). Maybank may request for further extension if the sell-down exercise would result in it incurring a potential loss in excess of 10% of its original value of BII acquisition, preferably two weeks before June 1, 2011. (Source: The Star)
Proton: Lotus to boost presence in Malaysia with 5 new models. A subsidiary of Proton, Lotus is bringing 5 models to Malaysia by 2014, to increase its market presence and sales to 100 cars a year from 30 to 40 cars a year now. Production would be increased by three-fold to 8000 units a year. (Source: Business Times)
Utilities: Selangor hands over water memorandum to Istana Negara. A memorandum in the issue of restricting the Selangor water supply industry was handed over by Selangor Menteri Besar to Istana Negara. Among the contents of the memorandum was to request the king to order the rights over water resources, now handled by Syabas, to be returned to the Selangor state government. Also, the Water Services Industry Act 2006 is to be revised to understand the need to restructure the industry in a holistic manner. (Source: The Edge Financial Daily)
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