Maybank IB Views

RESULTS REVIEW
SP Setia RM5.58: Buy
Stronger ahead; upgrade to Buy Shariah-compliant

Upgrade to Buy. RM187.8m FY10 normalised net profit (+24% YoY) was within our expectations, but 12% below consensus. We upgrade forecasts by 12-40% and raise TP to RM6.90 (+41%) on unchanged 10% premium to RNAV. Despite three major property mergers recently, the premium justifies, due to SPSB's strong track record and hands-on management. We are increasingly positive, expecting SPSB to gain further traction in government land development kick-starting next year. With size being significant, it could also be on a corporate prowl next.


COMPANY UPDATE
Gamuda RM3.79: Buy
Rail, and more rail Shariah-compliant

Maintain Buy. Qatar MRT, which Gamuda is eyeing, will be 4x the size of the Greater KL MRT which Gamuda-MMC JV is vying for a chariot master role, and in the tunneling works. Besides rail, we believe that Gamuda stands a good chance in securing other infrastructure works in Qatar leading to the 2022 FIFA World Cup. Its chariot master role in the KL MRT project looks positive. Our RM4.45 RNAV-based TP has imputed a 50sen per share potential from the KL MRT project.


ECONOMICS
Malaysia: Balance of Payments (BoP)
Eyes on capital flows...

Trends in capital flows are the main highlights. Inward FDI rebounded this year after last year's plunge, although net FDI flows is set for the fourth consecutive year of outflows due to larger outward FDI, while net portfolio funds recorded its fifth consecutive quarter of inflows. However, "Errors and Ommissions" ballooned year-to-date, raising the issue of "disintermediation" in capital flows via informal channels instead of the formal financial/banking system. Overall, "hot money" remain at manageable level in view of the RM41.4b net inflows in 2010 YTD compared with RM83.9b net outflows in 2008-2009.


Industrial Production October '10
Going through volatile growth trend...

Industrial production growth of +3.0% YoY in Oct '10 was between our expectations and consensus estimates (Aug: +5.6% YoY; Maybank IB estimate: +3.5% YoY; Consensus: +2.1% YoY). MoM, output was up +3.4% after contracting in the previous two months, a trend that mirrored exports and imports. As highlighted in our report of Oct '10 external trade data on 6 Nov '10 ("V for Volatile"), the string of festivities that kicked off with Ramadan and Eid in Aug-Sep played a major part in the volatility of production and external trade growth trends, which is continuing in 4Q10 with the Christmas and year-end holidays and in 1Q11 with the Chinese New Year.


Technicals
The FBM KLCI advanced by 11.23 points to 1,521.29 yesterday. Its resistance areas at 1,523 and 1,531 may cap market gains, whilst its firm support areas are located at 1,503 and 1,521.

Trading idea for today is a SHORT TERM BUY call on SPSETIA.


Other Local News
Maybank: Must sell down 20% in subsidiary. The chairman of Indonesia’s capital market regulator Ahmad Fuad Rahmany commented that Maybank is required to sell down its stake in PT Bank International Indonesia (BII) within six months. However, Maybank has stated that it will still proceed to apply for further extension if the sell down would result in potential losses. (Source: The Malaysian Reserve)

MAS: Firefly to make Senai next hub? Firefly is planning to make Johor's Senai Airport its second hub and is eyeing regional destinations like Jakarta and Bandung in Indonesia. Firefly has leased two Boeing 737-400 planes to be based in Senai Airport. (Source: Business Times)

Perodua: Eyes bigger slice of car market in Nepal. Perusahaan Otomobil Kedua Sdn Bhd (Perodua) aims to grow its market share in Nepal. It sold 300 units last year and aims to sell 400 units next year. The Nepalese automotive market is largely dominated by Indian and Japanese makers. (Source:The Star)

TNB: Wants government to review gas tariff to ease burden of higher coal prices. Tenaga Nasional Bhd (TNB) will request the government to review the tariff for natural gas if coal prices were to rise significantly and become a financial burden. (Source: Bernama)

Gamuda: Gamuda Land Targets RM5b property sales over next 2 years. Gamuda Land is targeting RM5b worth of sales over the next 2 years, RM2b of which is generated from various local projects while the remaining RM3b would be from its two major developments to be launched in 2011 in Hanoi and Ho Chi Minh City of Vietnam. The gross development value are USD9b (RM28.3b) and RM5.5b respectively over the next 9 years. (Source: The Edge Financial Daily)

Genting: Unit seeks SGD4.2b refinancing. Genting Bhd’s unit, Genting Singapore Ltd is seeking to borrow around SGD4.2b (SGD1 = RM2.39) to pay off an existing loan. The refinancing comprises a S$3.5 billion seven-year amortising term loan and a revolving credit facility. Bank of Tokyo-Mitsubishi UFJ, DBS, HSBC, Oversea-Chinese Banking Corp and Sumitomo Mitsui Banking are lead arrangers and joint bookrunners for the loan. (Source: Business Times)

DRB-HICOM: Unaware of privatizing plans. DRB-HICOM clarified that it is not aware of any privatisation proposals and has not received any notice from its holding company, Etika Strategi Sdn Bhd. (Source: Bursa Announcement)

Conglomerate: JCorp appoints Kamaruzzaman CEO. Johor Corp (JCorp) has appointed its acting CEO Kamaruzzaman Abu Kassim as the new CEO. The decision was a surprise as the initial plan was to bring in fresh talent. (Source: The Star)