Maybank IB Views

RESULTS REVIEW
Top Glove Corporation RM5.45: Sell
Weathering the perfect storm Shariah-compliant

Below expectations. 1QFY11 net profit of RM36m (-45% YoY, -20% QoQ) made up 15% of our and street's full-year estimates. We cut our FY11 forecast by 13%, expecting high latex prices to persist into 1HCY11. The stock is bereft of catalysts and M&A targets may not be attractively priced presently. Maintain Sell with a lower DCF-derived TP of RM4.70 (-4%), implying 12x CY12 PER.


Technicals
The FBM KLCI declined 1.48 points to 1,509.10 yesterday. Its resistance areas at 1,510 and 1,531 may cap market gains, whilst its firm support areas are located at 1,495 and 1,508.

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


Other Local News
DiGi, Axiata: Celcom & Digi may ink tie-up next month. DiGi.Com Bhd's CEO Henrik Clausen believes the company will be able to ink a definitive agreement on network collaboration with Celcom Axiata Bhd next month and this tie-up will help each company save over RM150m annually. (Source: The Star)

MRCB, IJM Land: Extend validity of MoU. Malaysian Resources Corp Bhd (MRCB) and IJM Land Bhd have extended the validity of their memorandum of understanding from Dec 14 previously to Dec 29. Both parties are still in the midst of finalising the terms and conditions for the proposed merger. (Source: The Star)

RHB: Inks MoU with Sumitomo Mitsui. RHB Capital's subsidiary, RHB Bank has signed a memorandum of understanding (MoU) with Japan's Sumitomo Mitsui Banking Corp (SMBC) to establish the basic framework for future cooperation. (Source: The Edge Financial Daily)

TNB's capital expenditure may rise to RM6.5b. Tenaga Nasional Bhd's (TNB) capital expenditure (capex) for fiscal years ending Aug 31, 2011 and 2012 will remain between RM4.2b and RM4.5b but could rise to RM6.5b in 2013 as additional funds will be needed to complete its three new power plants. The plants include the Manjung coal-fired plant and two hydro plants in Hulu Terengganu and Ulu Jelai in Pahang. (Source: The Star)

AmBank: AmIslamic Bank to expand into two Asian countries. AmIslamic Bank Bhd plans to set up operations in two Asian countries next year as part of its overseas business expansion plan. The bank aims to increase its customer base by an additional 200,000. (Source: Bernama)

Proton: Two more concept cars to hit production line. Another two of Proton Holdings Bhd's five "Pahlawan" concept and customised cars could turn into production models and enter the market next year. They are the Tuah (to replace the existing Persona) and the Lekiu crossover (a mini SUV).
Currently, two of the Pahlawan series are already existing production models namely Kasturi (facelifted Saga) and Jebat (Inspira). (Source: Business Times)

Renewable Energy: Tariff system mooted. A special tariff system to speed up the generation of renewable energy will be implemented under the Renewable Energy Bill 2010. Also, a feed-in tariff system that supplies line connection points for the distribution of renewable energy would be established. (Source: The Star)

Autos: Plan on electric vehicles to go to Cabinet. A completed study on the rollout plan for the Electric Vehicle Infrastructure Roadmap will be sent to the Cabinet for approval by end of January. This is to make Malaysia an attractive destination for electric vehicle makers. (Source: The Star)