Maybank IB Views

COMPANY UPDATE
AirAsia RM2.67: Buy
AirAsia Philippines: It is ON Shariah-compliant

Confirmation of JV. AirAsia has signed its latest JV agreement to replicate its business in the Philippines as early as Sep 2011. This news comes as no surprise; we highlighted it in our report dated 9 Dec (AirAsia Philippines: Tony meets Tony). We are upbeat on the long-term prospects of this JV, but are neutral short-term as it will incur start-up losses and require 2-3 years to turn profitable. Maintain Buy with a RM3.36 TP based on 9.0x 2011 PER, 20% discount to peers.


TH Plantations RM1.83: Buy
The end of pricing woes Shariah-compliant

Upgrade to Buy. Having finally addressed its pricing issues, THP is poised to deliver substantial earnings growth in the coming quarters. Our revised earnings forecasts suggest a 26% 3-year net profit CAGR. Valuations are attractive at 9.4x 2011 PER, with the stock trading at 1sd below mean on forward PER. We raise our target price to RM2.15 (+23%) based on 11x 2011 earnings, representing the 2-year average of THP's forward PER. We expect share price to re-rate up upon the delivery of substantial earnings growth in the coming quarters.


Technicals
The FBM KLCI tumbled 11.58 points to 1,497.52 yesterday. Its resistance areas at 1,497 and 1,515 will cap market gains, whilst its weaker support areas are located at 1,476 and 1,493.

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


Other Local News
TNB: Awards RM991.8m contracts for hydro plant. Tenaga Nasional Bhd (TNB) has awarded jobs worth RM991.8m for the Hulu Terengganu hydroproject to various companies. The Project will involve the construction of two dams and the installation of two hydro turbines and generators in an underground power station with a total installed capacity of 250MW. The Project is located on the upper reaches of Sg. Terengganu upstream of Kenyir Lake. The Project is expected to be completed by October 2015. (Source: Bursa Announcements)

TM: Forge strategic tie-up with Multinet. Telekom Malaysia Bhd (TM) has teamed up with Multinet Pakistan Pte Ltd to offer Internet protocol virtual private network services to their corporate customers. (Source: The Star)

Mulpha: Sells Hilton Melbourne for RM327m. Mulpha International Bhd is selling its Hilton Melbourne Airport Hotel in Australia to Singapore-listed Pan Pacific Hotel Group Ltd for AUD108.9m (RM337.9m) cash. Mulpha will use the proceeds from the sale to repay its debt. The proceeds, if used to repay debts, could bring down the group's debt levels from RM1.5b to RM1.18b. (Source: The Star)

Proton, AutoV: Three companies to develop window regulator for Persona replacement model. AutoV Corp Bhd, an auto parts maker primarily for Proton vehicles, has tied up with US-based ArvinMeritor Inc and Germany-based Continental AG to develop a window regulator with an anti-pinch function for the Proton Persona replacement model, which will be launched in 2012. The collaboration was in line with Proton's strategy to improve the quality of its products and provide customers with value-added cars. (Source: The Star)

Regulations: Securities Commission amends takeover code. The Securities Commission (SC) has introduced a revision to the Malaysian Takeovers and Mergers Code, requiring higher level of disclosure. Main changes include notification to the SC if material changes occur after the dispatch of documents, prohibition of offerors, advisers and the boards of offerees from undertaking actions that could frustrate an offer, shorter settlement periods as well as enhanced timely disclosures in offer documents and independent advice circulars. Also, a voluntary offer to takeover a company is allowed to be carried out at a higher threshold (up to 90%). However, the changes do not address the issue of takeovers or privatisation of companies via the asset and liability (A&L) route, which is under the Companies Act's jurisdiction. (Source: The Star and The Edge Financial Daily)