Stocks to watch: Gamuda, Boustead, GDex, TDM

KUALA LUMPUR (Dec 17): Regional markets including Bursa Malaysia are expected to see cautious trade in the week ahead, starting Dec 19 with volume continuing to thin during the holiday season while investors’ sentiment is expected to be dampened by the eurozone debt crisis.

On Wall Street, a rally in stocks fizzled, leaving major indexes with modest gains on Friday, as Wall Street was torn between hope that U.S. economic data signals better times ahead and fear Europe's debt crisis will engulf world economies, Reuters reported.

The Dow Jones industrial average fell 2.42 points, or 0.02%, at 11,866.39. The Standard & Poor's 500 Index was up 3.91 points, or 0.32%, at 1,219.66. The Nasdaq Composite Index was up 14.32 points, or 0.56%, at 2,555.33.

Meanwhile, credit rating agency Fitch told euro zone countries it believed a comprehensive solution to their debt crisis was beyond reach, putting six euro zone economies including Italy on watch for potential downgrades in the near future,

At Bursa Malaysia, stocks to watch include GAMUDA BHD [], BOUSTEAD HOLDINGS BHD [], GD EXPRESS CARRIER BHD [] (GDex), TDM BHD [] and Top Glove Corp Bhd.

Gamuda is upbeat about the outlook for its prospects for the remaining financial year after its earnings climbed 49.5% to RM132.32 million in the first quarter ended Oct 31, 2011, from RM88.53 million a year ago due to higher contributions from all divisions.

The infrastructure-based company expected a stronger performance this year supported by its ongoing CONSTRUCTION [] projects, continued strong property sales and steady earnings from the water and expressway divisions.

Boustead’s subsidiary Boustead Naval Shipyard Sdn. Bhd has received the letter of award from the Ministry of Defence (Mindef) to supply six patrol vessels with a contract ceiling of RM9 billion.

The Edge weekly reported in its latest issue that GDex is bolstering its position to fight competition. The local express delivery provider is drawing up strategic plans on multiple fronts to deal with the increasing competition and gloomy economic outlook for 2012.

The Edge also reported that the rehabilitation of estates is paying off for TDM. It has been an exceptional year for the PLANTATION [] company as its net profit for the first nine months of FY2011 already exceeds that of any full year in the past.

Top Glove’s earnings fell 12.81% to RM31.43 million in the first quarter ended Nov 30, 2011 from the RM6.05 million a year ago impacted by higher raw material prices and the oversupply in the industry

However, the world’s largest glove maker performed better when compared with the preceding quarter in terms of revenue and earnings. It revenue rose 2.4% to RM554.84 million from RM541.84 million in the preceding quarter, while net profit increased 21.5% to RM32.46 million from RM26.82 million.

Commenting on the results, CIMB Equities Research said Top Glove’s 20.5% on -quarter rise in net profit, though strong, was expected.

“It came primarily from cost deflation as demand remained weak and industry overcapacity is still an issue. At 23.2% of our forecast and 20.2% of consensus, 1Q results were broadly in line as we expect stronger quarters ahead. We maintain our Underperform rating and target price, still based on 13.05 times price-to-earnings,” it said.

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Stocks to watch: Coastal Contracts , Sanichi, Dialog, JCY

KUALA LUMPUR (Dec 16): Regional markets including Bursa Malaysia could trade on a cautious note on Friday as investors’ risk appetite for equities would be restrained by worries about the global economy and Europe's debt crisis.

Reuters reported major Southeast Asian stock markets fell on Thursday, extending the decline for the third day, led by banks and commodities as a decline in Chinese factory output added to worries about the global economy and Europe's debt crisis.

Concern over the situation in the euro zone rose after Fitch Ratings downgraded five big European banks on Wednesday.

At Bursa Malaysia, stocks which could see trading interest include COASTAL CONTRACTS BHD [], SANICHI TECHNOLOGY [] BHD [], DIALOG GROUP BHD [] and hard-disk drive manufacturer JCY International Bhd.

Coastal Contracts’s year-to-date order wins rose to RM690 million after the company secured new contracts worth RM233 million for the sale of three offshore support vessels, two landing crafts and two barges.

“With this latest batch of contracts, the value of Coastal Group’s secured vessel sales orders currently stood at about RM610 million, with deliveries through 2012,” it said.

Sanichi, whose shares inched up in very active trade on Thursday, could see continued trading action. It received a letter of intent from China’s Guangxi Huayin to purchase 150,000 tonnes of steam coal per month, totaling 1.80 million tonnes for a one-year period.

Sanichi said Guangxi Huayin is one of the largest and most advanced aluminium producers in China and the shareholders include the Aluminium Corporation of China with a 33% stake.

Meanwhile Dialog Group Bhd, which is undertaking a cash call to raise funds for more investments in the upstream oil and gas opportunities, has fixed the rights shares at RM1.20 each and the exercise price of the warrants at RM2.40 each.

The issue price would be a discount of about 46% to the theoretical ex-rights price of RM2.23 per share, based on the five-day volume-weighted average market price (VWAMP)up to Dec 14 of RM2.43.

As for the warrants, it said the exercise price was 8% above the theoretical ex-rights price of RM2.23 per share, based on the five-day VWAMP up to Dec 14 of RM2.43.

JCY could see continued trading interest as it was not impacted by the severe floods in Thailand unlike other hard-disk drive manufacturers which had major operations in Thailand.

CIMB Equities Research said believed a full restoration to pre-flood production was at least six to nine months away, but suppliers with strong balance sheets to invest could benefit from greater allocations in the near term.

“Improvements in average selling prices (ASP) for drive makers should also be positive for the industry,” it said. It advised investors to be selective as it believed volume would remain hindered by component shortages.

“Buy JCY as we expect strong near-term earnings on higher ASPs and allocations,” it said.

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Stocks to watch: S P Setia, Kencana, Boustead, Benalec

KUALA LUMPUR (Dec 9): The FBM KLCI could trade in a tight range on Friday, as the focus turns on the economic data from China over the next two days as well as the crucial summit of European policymakers.

Global markets, however, could edge upwards as the European Central Bank cut interest rates by a quarter of a point on Thursday to counter the twin threats of recession and deflation in the euro zone.

The ECB is also expected to unveil fresh measures to help banks hurt by the bloc's debt crisis, according to Reuters.

At Bursa Malaysia, the market could be given a boost from the slew of fresh corporate announcements.

Among the stocks are S P Setia Bhd, KENCANA PETROLEUM BHD [], BOUSTEAD HOLDINGS BHD [], Benalec Holdings, Bumi Armada Bhd and MELEWAR INDUSTRIAL GROUP BHD [].

S P Setia Bhd set a set a new full-year sales record in FY 2011 of RM3.29 billion, or a 42% increase from the previous record of RM2.31 billion set in FY 2010. The company has also set a target to achieve total new sales of RM4 billion in FY 2012.

For the financial year ended Oct 31, S P Setia’s net profit rose 30.2% to RM327.97 million from RM251.81 million, on the back of an increase in revenue to RM2.23 billion from RM1.75 billion in 2010.

However, the offer price cap set by Permodalan Nasional Bhd (PNB) in its takeover bid could restrain any upside. PNB offered RM3.90 per share and 91 sen per warrant.

Kencana’s unit, Kencana HL Sdn Bhd, secured a RM1 billion contract from Bechtel International Inc to fabricate and assemble a liquefied natural gas (LNG) processing plant in Australia.

The contract includes fabrication to loading of process equipment modules for Wheatstone Project LNG plant at Ashburton North, Western Australia.

Boustead subsidiary, Boustead Naval Shipyard Sdn Bhd secured a RM62 million job from the government to supply spare parts, maintenance, integrated logistic support and training for the 17th patrol vessel squadron of the Malaysian navy.

Benalec inked a MoU with Singapore-based Rotary Engineering Ltd to jointly develop an independent deepwater storage terminal for oil products in Tanjung Piai, Johor. The MoU would enable it to become a strategic business partner with Rotary in the equity ownership and development of the terminal in Tanjung Piai.

Bumi Armada's subsidiary Armada TGT Ltd has inked a US$341.1 million (RM 1.08 billion) loan with seven financial institutions to fund the conversion and installation of the FPSO Armada TGT 1 to be used in the Te Giac Tran Field, offshore Vietnam.

Its chief financial officer Shaharul Rezza Hassan said the facility was for seven years and represented about 80% of its capex value.

Meanwhile, Melewar’s unit Melewar Integrated Engineering Sdn Bhd (MIE) has inked an MoU with KAZMY Steel Company wherein MIE would be the contractor to design and build the MycroSmelt plant in Almaty, Kazakhstan.

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Stocks to watch: Glomac, Mah Sing, Tan Chong, Fibon

KUALA LUMPUR (Dec 3): The FBM KLCI may trend higher and again test the psychologically important 1,500 level in the week ahead, starting Monday, Dec 5 on more global liquidity and economic optimism.

On Friday, Dec 2, the FBM KLCI closed in positive territory as some key regional markets reversed their earlier losses, but gains at the local market remained muted as investor sentiment stayed cautious.

Week-on-week, the KLCI was up 57.45 points to end at 1,489 with the market capitalisation up RM39.59 billion to RM1,269.59 billion.

Affin Investment Bank head of retail research Dr Nazri Khan said the sentiment could be propped by the coordinated move by central banks including China and Brazil to ease monetary policies.

Another positive factor is the rising expectation of an aggressive cut in the ECB interest rate and stronger EU deal to resolve the debt crisis.

“However, despite the gains spotted worldwide, we recommended caution since the liquidity move is yet to address the core problems that Europe faces which is to provide a long-term sustainable funding solution to the troubled European banking community,” he said.

Dr Nazri expected the broad market to trend higher slowly as they digest more clarity on the EU plan to deal the problems (possibly disclosed in the upcoming Dec 9, EU summit).

“These may includes details on how to enforce budget balancing for troubled countries, how to implement tough austerity measures especially for Portugal, Italy, Ireland, Greece and Spain, how to leverage the rescue funds and how to strengthen the ECB to backstop future crisis,” he pointed out.

Among the stocks which could see trading interest are GLOMAC BHD [], MAH SING GROUP BHD [], TAN CHONG MOTOR HOLDINGS BHD [] and Fibon Bhd.

Glomac's net profit for the second quarter ended Oct 31, 2011 rose 50pct to RM23.78 million from RM15.88 million a year ago, underpinned by on-going projects particularly Glomac Damansara, Glomac Cyberjaya, Saujana Rawang and Bandar Saujana Utama.

Its revenue for the quarter however declined 4.3pct to RM134.83 million from RM140.89 million, due to completion of two projects namely Glomac Tower and Glomac Galleria.

Mah Sing's proposed joint development of 4.08 acres of prime land along Jalan Tun Razak-Jalan Pahang faced a setback after the conditions were not met.

However, Mah Sing said it would explore options to move ahead on this. The project is a niche development – M Sentral -- with an estimated gross development value of RM900 million and it is part of the RM9-billion 58 acre riverside urban regeneration project.

The Edge weekly reports that Tan Chong Motor Holdings Bhd, which invested nearly US$45 million in Nissan Vietnam Co Ltd since acquiring a controlling stake in the company last year, is optimistic that it will reach break-even earlier than anticipated.

Meanwhile, Fibon – a chemical compounds producer -- is poised to enter a new phase of growth with the upcoming launch of its new switchboard Fibon LogiCube.

Anther company which could see trading interest are sports shoe sole manufacturer Xingquan International Sports Holdings Ltd. Its chief executive officer Wu Qingquan is confident that it can maintain its double digit growth in revenue for the financial year ending June 2012, said. The compound annual growth rate from 2006 to 2011 was 39%.

Last Friday, MMC CORPORATION BHD []'s Tanjung Bin Energy Sdn Bhd has sealed a power purchase agreement with TENAGA NASIONAL BHD [] to supply electricity over 25 years. However, the price of electricity which Tanjung Bin would sell to Tenaga was not disclosed in the statement to Bursa Malaysia.

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Stocks to watch: Maxis, Axiata, E&O, Tanjung, PJI

KUALA LUMPUR (Dec 1): After the flurry of corporate results for the quarter ended Sept 30, 2011, stocks which could see trading interest on Thursday include Maxis Bhd, Axiata Group Bhd and Eastern & Oriental Bhd (E&O).

Other companies which could also come under focus following fresh contracts are PJI HOLDINGS BHD [], TANJUNG OFFSHORE BHD [] and MALAYSIAN RESOURCES CORP []oration Bhd (MRCB).

Maxis’ earnings fell 10.6% to RM537 million in the third quarter ended Sept 30 from RM610 million a year ago on higher administrative expenses and network operation costs. Revenue was 1.3% higher at RM2.244 billion from RM2.216 billion a year ago, while earnings per share were 7.2 sen compared with 8.0 sen. It declared a third interim single-tier tax exempt dividend of 8.0 sen per share.

Meanwhile, Axiata’s earnings fell 7.7% to RM589.62 million in the third quarter ended Sept 30, 2011 from RM639.12 million a year ago on foreign exchange translation losses and higher costs. Net foreign exchange losses surged to RM43.91 million compared with gains on financing activities of RM71.96 million a year ago.

E&O saw its earnings surge 172% to RM13.83 million from RM5.08 million a year ago. Its revenue increased by 25.5% to RM82.60 million from RM65.81 million while earnings per share were 1.27 sen compared with 0.48 sen.

Tanjung Offshore’s subsidiary, Tanjung Maintenance Services Sdn Bhd has secured a RM43 million contract from Petronas Carigali Sdn Bhd. The contract was to provide maintenance services for mechanical rotating equipment at all offshore platforms operated by Petronas Carigali in the Sarawak operations region .

PJI Holdings Bhd’s unit has secured two contracts worth RM59.64 million at the KLIA2 involving the low voltage system for several locations at the KLIA2.

Its unit P.J. Indah Sdn Bhd had accepted the letter of award from BINA PURI HOLDINGS BHD [] to formalise the sub-contract valued at RM25.16 million.

P.J. Indah had also accepted a RM34.64 million contract from UEM CONSTRUCTION [] Sdn Bhd for the design, supply and maintenance of the low voltage system, uninterruptible power supply and lightning protection system at KLIA2.

MRCB has secured a RM40.3 million contract to carry out coastal protection works at the Sungai Perai river mouth. MRCB said it had received the letter of award from the Department of Irrigation and Drainage for the third phase of the project.

FABER GROUP BHD [] posted net losses of RM26.87 million in the third quarter ended Sept 30, 2011 compared with net profit of RM29.01 million a year ago. The losses were mainly due to the recognition of costs amounting to RM44.5 million for works completed for the projects in the United Arab Emirates (UAE) where the corresponding revenue was not recognised as it could not be measured reliably.

KUB MALAYSIA BHD [] posted net loss of RM12.86 million in the third quarter ended Sept 30, a vast contrast from the net profit of RM2.49 million a year ago. KUB had undertaken impairment assessments on its assets of underperforming subsidiaries and decided to provide impairment losses of RM14.70 million.

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RHBInvest Research

Notion Vtec: Hopes for quick recovery Underperform

Briefing Note

¨ Notion guided that 1Q12 revenue will decline 40-45% qoq and may fall into the red. This is mainly due to: 1) declining sales as the floods have affected two of its major customers and orders have stopped since Oct; and 2) provisioning of around RM5m for finished goods that were damaged and insurance shortfall for equipment in its Thailand plant.



TM: Pleasant uplift surprise in margins Trading Buy

3QFY11 Results / Briefing Note

¨ 3QFY11 core net profit of RM137m (+8.8% yoy; +1.6% qoq) was above our but below consensus expectations. The key variance in 3Q was better-than-expected ETBIDA margin due to lower other operating costs, as well as lower effective tax rates.

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Stocks to watch: IOI Corp, MEGB, Affin, Benalec, Texchem

KUALA LUMPUR (Nov 19): Sentiment is expected to stay cautious in the week ahead as investors worry about whether the governments in Europe and the US could resolve the growing debt problems.

Reuters said a major question has been whether the European Central Bank will find a way to act as a lender of last resort in the manner of the U.S. Federal Reserve. Speculation has grown the ECB could lend money to the International Monetary Fund to bail out some euro zone members.

The Dow Jones industrial average gained 25.43 points, or 0.22%, to 11,796.16. The S&P 500 dipped 0.48 point, or 0.04%, to 1,215.65. The Nasdaq Composite lost 15.49 points, or 0.60%, to 2,572.50. However, for the week, the Dow fell 2.9%, the S&P dropped 3.8% and the Nasdaq lost 4%.

As for Malaysia, while third quarter GDP expanded at a stronger pace of 5.8% on-year from a revised 4.3% in the second quarter, there were gnawing concerns about the headwinds in the fourth quarter and 2012.

RHB Research Institute said it tweaked its real GDP growth estimate for 2011 upwards to 5% from 4.5%.

“However, we are keeping our 2012 forecast unchanged and expect the economic growth to weaken to 3.6%, given that Eurozone’s sovereign debt crisis is still lingering and risk of it worsening remains high, and on the back of a slow US economic growth,” it said.

Stocks to watch on Monday include IOI CORPORATION BHD [], Masterskill Education Group Bhd (MEGB), AFFIN HOLDINGS BHD [], Benalec Holdings Bhd and TEXCHEM RESOURCES BHD [].

IOI’s net profit for the first quarter ended Sept 30, 2011 fell 48.2% to RM258.09 million from RM498.13 million a year ago, due mainly to unrealised translation loss on foreign currency denominated borrowings of RM271.7million. The loss was higher than analysts’ estimates. The PLANTATION [] company’s revenue for the quarter rose 17.9% to RM4.15 billion from RM3.52 billion a year ago.

Meanwhile, MEGB’s net profit for the third quarter ended Sept 30, 2011 fell 78.8% to RM5.55 million from RM26.18 million a year ago. It attributed the poorer financial performance mainly to lower student enrolment and higher overheads. MEGB’s revenue for the quarter fell to RM61.19 million from RM80.68 million in 2010.

For the nine months ended Sept 30, MEGB’s net profit fell 47.2% to RM39.72 million from RM75.29 million in 2010, while its revenue fell 14.5% to RM200.67 million from RM234.83 million.

However, Affin reported an improvement in its earnings, which rose 17.5% to RM135.19 million in the third quarter ended Sept 30, 2011 from RM115.01 million a year ago, boosted by higher write-backs and higher Islamic banking income.

Its revenue increased 13.7% to RM680.12 million from RM597.82 million a year ago while earnings per share were 9.05 sen compared with 7.70 sen. It declared an interim dividend of 12 sen a share.

The Edge weekly reported that Benalec’s recent foray into land reclamation works at the oil and gas hub in Johor has raised some eyebrows. But if all goes well, the project will boost the total outstanding gross development value of its projects from about RM1.5 billion to over RM15 billion, said the report.

Another company to watch is Texchem on expectations it may unlocking value of some of its assets.

RAM Rating Services Bhd said the corporate exercise by Texchem would generate significant net cash inflows that will help to considerably strengthen its balance sheet and liquidity position.

However, the ratings agency was also concerned about its financial health. It downgraded the long-term rating of Texchem’s RM100 million debt notes from A3 to BBB1 with a negative outlook on rising concerns about the company's weakening financial performance.

RAM Ratings said the downgrading of Texchem’s long-term rating was based on its weakened business and financial performance.

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RHBInvest Research

Sector Call



Rubber Gloves: Falling Latex Prices = Improving Sentiment Towards Glove Manufacturers Neutral

Sector Update:

¨ Since hitting a peak of RM10.93/kg back in Apr ’11, latex prices have broadly been on a down trend and more recently, saw a significant decline from RM7.55/kg to around RM6.77/kg currently in over two weeks which we believe was due to: 1) concerns over slower global economic growth ahead, which could hamper demand for commodities; 2) the flooding in Thailand could lead to potential disruptions to automotive manufacturers’ operations there, leading to lower demand for rubber; and 3) easing concerns on latex supply issues over in Thailand given that the major tract of the country’s rubber plantation is located in the south.



Malaysia Corporate Highlights



Tan Chong Motor: A Disaster Hit 2011 Market Perform

3Q11 Results

¨ Tan Chong’s 3Q11 results were below our and consensus estimates.

¨ Net profit for the quarter of RM54.6m (-3.4% qoq and +10.6% yoy) brought cumulative 9M11 earnings to RM185.1m (+4.2% yoy) that reached 70.3% of our previous 2011 forecast.

¨ The main reasons for the weaker-than-expected earnings include start-up costs at Nissan Vietnam and othe costs incurred for regional expansion and upgrade of existing facilities.

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Stocks to watch: Dialog, Malton, Tanjung Offshore, AMMB

KUALA LUMPUR (Nov 17): Stocks which could see trading interest on Thursday include DIALOG GROUP BHD [], MALTON BHD [], TANJUNG OFFSHORE BHD [], AMMB HOLDINGS BHD [], Amway (Malaysia) Holdings Bhd and ALLIANCE FINANCIAL GROUP BHD [] (AFG) following the release of their financial results for the quarter ended Sept 30.

Dialog posted net profit of RM44.54 million in the first quarter ended Sept 30, 2011, an increase of 34.6% from the RM33.09 million a year, underpinned by a strong increase in revenue, mainly from its New Zealand operations. Its revenue rose 35% to RM355.24 million from RM263.81 million while earnings per share were 2.26 sen compared with 1.69 sen.

Malton’s earnings jumped 118% to RM12.11 million in the first quarter ended Sept 30 from RM5.54 million a year ago, boosted by an improvement in the property development division from a year ago.

Revenue rose 44.3% to RM99.27 million from RM68.78 million while earnings per share were 2.90 sen versus 1.59 sen. Malton said pre-tax profit improved by 111.4% to RM16.7 million from RM7.9 million.

However, Malton's financial performance was slightly weaker compared with the immediate preceding quarter. Revenue declined from the preceding quarter’s RM167.9 million.

Tanjung Offshore Bhd swung into the red with net losses of RM429,000 in the third quarter ended Sept 30, 2011 compared with net profit of RM807,000 a year ago. Its revenue fell 14.3% to RM117.64 million from RM137.25 million a year ago. Loss per share was 0.15 sen compared with earnings per share of 0.29 sen.

For the nine months ended Sept 30, its net profit fell 51.9% to RM3.42 million from RM7.12 million a year ago while revenue was marginally lower at RM401.33 million compared with RM401.95 million. Tanjung Offshore had borrowings totaling RM560.53 million.

AMMB Holdings Bhd’s earnings rose 10.9% to RM369.47 million in the second quarter ended Sept 30,2011 from RM332.87 million a year ago, boosted by the group’s retail banking operations. Its revenue increased by 20.5% to RM2.138 billion from RM1.773 billion while earnings per share were 12.35 sen versus 11.08 sen. It declared a single tier dividend of 6.6% per share.

For the first half, its earnings increased by 15.6% to RM810.99 million while its revenue increased 17.6% to RM4.092 billion from RM3.477 billion.

Amway’s net profit rose 19.8% to RM25.77 million in the third quarter ended Sept 30, 2011 from RM21.51 million a year ago as it benefited from higher sales and improved gross margins due to the favourable foreign exchange impact. Its revenue rose at a slower pace of 5.4% to RM211.52 million from RM191.50 million while earnings per share were 15.68 sen compared with 13.08 sen.

Amway declared a third interim single tier dividend of 9.0 sen net per share and special interim single tier dividend of 30.0 sen net per share for the financial year ending Dec 31, 2011.

AFG reported a strong set of financial results for the second quarter ended Sept 30, 2011, with earnings up 18.2% to RM120.95 million from RM102.27 million a year ago. Revenue increased by 5.9% to RM314.60 million from RM296.98 million. Earnings per share were 7.9 sen compared with 6.7 sen.

For the first half, AFG's earnings rose 8.2% to RM250.51 million from RM213 million while its revenue increased 8.9% to RM624.37 million from RM573.20 million.

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Stocks to watch: Harvest Court, CIMB, BHIC, Wah Seong

KUALA LUMPUR (Nov 15): HARVEST COURT INDUSTRIES BHD [] could be in focus on Wednesday, Nov 16 when it resumes trading after Bursa Malaysia Securities declared the securities as designated counters until further notice.

This was the sternest warning to speculators who had chased up the stock in recent weeks as the regulator also issued unusual market activity queries to other penny stocks.

Bursa Securities’ decision to designate the securities of Harvest and the warrants due to excessive speculation observed in the trading of both securities and has been taken in the interest of ensuring a fair and orderly market.

In a separate statement, Harvest Court told Bursa Malaysia that its unit will enter into a related party transaction with 1Green Enviro Sdn Bhd for a RM70 million contract to build a pulp and paper plant in Jempol, Negeri Sembilan.

Other stocks to watch are CIMB Group Holdings Bhd, BOUSTEAD HEAVY INDUSTRIES CORP []oration Bhd (BHIC), WAH SEONG CORPORATION BHD [], Prestariang Bhd, Dutch Lady Milk Industries Bhd, OSK HOLDINGS BHD [] and SOUTHERN STEEL BHD [].

CIMB Group’s net profit rose 10.5pct year-on-year to RM1.012 billion in the third quarter ended Sept 30 from RM916 million a year ago. The net profit for the nine months ended Sept 30, 2011 rose 9.6% year-on-year to a record RM2.898 billion.

Its group chief executive Datuk Seri Nazir Razak said the 3Q earnings were underpinned by the continued improvement at its Malaysian consumer banking operations and rebound in treasury and investments.

Wah Seong Corporation Bhd net profit for the third quarter ended Sept 30, 2011 surged to RM21.29 million from RM12.49 million a year earlier, due mainly to a higher contribution from the oil and gas division.

Its revenue for the quarter rose to RM478.84 million from RM346.76 million in 2010. Earnings per share rose to 2.80 sen from 1.64 sen, while net assets per share was RM1.31.

For the nine months ended Sept 30, Wah Seong’s net profit jumped to RM90.85 million from RM31.21 million in 2010, on the back of revenue RM1.37 billion.

Boustead Heavy Industries Corporation Bhd posted net loss RM2.43 million for the third quarter ended Sept 30, 2011 compared to net profit RM26.9 million a year earlier, due mainly to cost overruns in certain commercial shipbuilding projects.

Its revenue for the quarter fell to RM150.02 million from RM227.71 million in 2010. Loss per share was 0.98 sen compared to earnings per share 10.83 sen a year ago.

For the nine months ended Sept 30, BHIC’s net profit fell to RM9.04 million from RM58.37 million, on the back of revenue RM387.47 million.

Prestariang Bhd posted net profit of RM10.07 million in the third quarter ended Sept 30, 2011, underpinned by its information and communications TECHNOLOGY [] (ICT) training and certification schemes.

Its revenue was RM33.13 million and earnings per share 4.69 sen. It declared an interim single-tier dividend of 4.0 sen per share

Dutch Lady Milk Industries Bhd’s earnings rose 77% to RM23.60 million from RM13.32 million a year ago boosted by lower operating costs, higher sales and favourable sales mix.

It said on Tuesday revenue increased by 9.85% to RM201.71 million from RM183.62 million while earnings per share were 36.87 sen compared with 20.82 sen. It declared a dividend of 35 sen per share.

OSK Holdings Bhd reported a 14.2% decline in net profit to RM28.81 million for the third quarter ended Sept 30, 2011 from RM33.60 million a year ago as it included RM5.63 million allowance for impairment losses on investments.

Its revenue rose 13.1% to RM288.78 million from RM255.35 million and earnings per share were 3.07 sen compared with 3.58 sen.

Southern Steel Bhd posted net profit of RM16.05 million for the first quarter ended Sept 30, 2011 on the back of RM734 million in revenue and expected a satisfactory performance in the current financial year.

Pre-tax profit was RM17.30 million while earnings per share were 3.8 sen and it declared an interim dividend of 5.0 sen per share

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Stocks to watch: Maybank, Malton, SYF, DPS, Flonic

KUALA LUMPUR (Nov 15): The FBM KLCI may come under some pressure to sustain its gains on Tuesday as the uncertainties in Europe pulled European shares lower in early trade.

The appointments of technocratic leaders in euro zone debt hot spots Italy and Greece failed to assuage fears about the euro zone crisis on Monday, sending stocks and the euro lower, according to Reuters.

Strategists at The Royal Bank of Scotland in a note Monday, Nov 14 said the outlook for the Euro-zone still remained bleak, amid increased signs that periphery troubles were spreading to the core, as evidenced by rising French yields.

“Little progress has also been made in implementing the measures announced at the recent EU summit, while the growth outlook continues to deteriorate. French, Austrian and Belgian sovereign yields are likely to begin to warrant increased attention,” they said.

On Bursa Malaysia, stocks with fresh corporate developments and could be in focus include MALAYAN BANKING BHD [], MALTON BHD [] and SYF Resources.

Maybank’s net profit for the three months ended Sept 30, 2011 rose 25.1% to RM1.286 billion from RM1.028 billion a year earlier, while its revenue for the quarter rose to RM6.07 billion from RM5 billion in 2010. Earnings per share were 17.20 sen compared to 14.53 sen in 2010, while net asset per share was RM4.41.

On its outlook, Maybank said the loans growth in Malaysia was expected to be mainly driven by the rollout of the Economic Transformation Programme projects and domestic consumption.

Meanwhile, Malton is acquiring 56.05 acres in Ulu Kelang for RM105 million for a residential project with an estimated gross development value of RM500 million.

Malton’s unit Gapadu Harta Sdn Bhd had entered into a sale and purchase agreement with Ukay Spring Development Sdn Bhd to acquire the land. The proposed development would comprise residential bungalows, semi-detached houses, medium cost apartments, low medium cost apartments and low cost apartments.

SYF Resources is in the final stage of negotiation to develop PROPERTIES [] on a joint venture (JV) basis, which it said may have accounted for the unusual market activity (UMA) involving its securities on Monday. The company had in a reply to an UMA query from Bursa Malaysia Securities Bhd said the landowners it was in talks with were mainly related parties.

It said on Nov 14 that details of the JV would be released immediately upon conclusion of the negotiations and the execution of the JV agreement.

Other stocks that could be in focus include DPS RESOURCES BHD [] and FLONIC HI-TEC BHD [] that were also queried by Bursa Malaysia over the sharp price increase in the companies’ respective shares and high trading volume.

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Stocks to watch Dijaya, Ivory, Kimlun, KPJ, oil and gas-related counters

KUALA LUMPUR (Nov 12): The FBM KLCI is expected to trend moderately higher on Monday, Nov 14 in line with the positive close at Wall Street last Friday.

Also, the statement by Prime Minister Datuk Seri Najib Tun Razak on Nov 11 that the general election would not be held this year put an end to weeks of speculation, and created what some analysts have described as offering some clarity to a nervy local market.

US stocks rose on Friday, ending higher for the week after the Italian Senate's approval of economic reforms gave investors some relief from worries about the euro zone's debt crisis.

The Dow Jones industrial average was up 2.19% to 12,153.68; the Standard & Poor's 500 Index rose 1.95% to 1,263.85, while the Nasdaq Composite Index added 2.04% to 2,678.75.

Affin Investment Bank Bhd head of retail research Dr Mohd Nazri Khan said Najib’s statement was to be taken as positive for the market, as it provides for more clarity and less volatility.

“Sometimes election can heighten market fluctuation as was seen in the run-up to the Sarawak state election in April this year,” he said.

Meanwhile, MIDF Research head Zulkifli Hamzah said the market was expected to remain edgy next week, on developments in Europe, especially pertaining to the Italian government’s bond auction on Monday.

Volatility had spiked up recently and the consensus was that global equity markets remain vulnerable to sharp selloff, he said.

He said Malaysia’s 3Q11 GDP growth, which was slated to be unveiled on Nov 18 was not expected to be a game-changing announcement.

“Our house view is that growth may hit 5% year-on-year, which would be keeping pace with regional economies,” he said.

Zulkifli said the local equity market was currently in a period of uneasy equilibrium, but added that foreign investors appear to be keeping faith in the Malaysian market and had been gradually accumulating since early October.

“There were net buyers again this week. Yet, local investors are circumspect of the fact that remains a large overhang of foreign liquidity in the system that can decide to eject overnight,” he said.

Among the stocks that could be in focus on Monday are DIJAYA CORPORATION BHD [], Ivory PROPERTIES [] Group Bhd, Kimlun Corporation Bhd, KPJ HEALTHCARE BHD [] and oil and gas-related counters.

Dijaya and Ivory inked a joint venture agreement to develop mixed residential and commercial properties in Penang with a gross development value of RM10 billion.

The two companies said the development will be completed over the next eight years and would comprise of residential, shopping mall, hotel, office suites, office towers, retail spaces and an open mall with a boulevard.

CONSTRUCTION [] of the first phase is scheduled to begin next year, they said last Friday.

Kimlun secured a contract worth RM68 million to build a service apartment in Iskandar Malaysia in Johor.

It said last week that its wholly-owned subsidiary Kimlun Sdn Bhd had accepted the letter of award for the contract from Grand Action Sdn Bhd.

KPJ is buying four plots of land in the district of Klang, Selangor for RM23.76 million cash as part of its plans to build a specialist hospital.

KPJ on Friday said the four plots of land were situated within a mixed development undertaken by Sazean known as “Sazean Business Park”, and that Sazean would make an application to convert the category of the lands it was buying from agricultural to building/commercial.

Meanwhile, Petroliam Nasional Bhd and Shell Malaysia last week inked heads of agreement (HOA) for new enhanced oil recovery projects offshore Sabah and Sarawak, a development which may boost the oil and gas support services-related counters.

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RHBInvest Research

Top Story: Kencana – No signs of slowing down Market Perform

Visit Note

¨ For the EPCC division, the company is actively looking to beef up its fabrication capacity by increasing its overseas revenue contribution from countries like India and Australia as it is currently only operating at 50% utilisation. For its drilling division, the KM-2 and KM-3 rigs, which cost a cumulative US$290m (around RM870m), are expected to be completed by Mar 2013, and Jun/Jul 2013 respectively. The AME acquisition is also likely to exceed the RM40m profit guarantee.



Corporate Highlights



MBSB: Diversifying the loan book but high NIMs sustainable Outperform

Briefing Note

¨ MBSB plans to diversify the loan book mix to roughly equal contribution from personal finance, mortgage and corporate/wholesale segments over the next 12-18 months.



Hartalega: Core net profit up 1.7% qoq Market Perform

2QFY12 Results

¨ 2QFY03/12 core net profit of RM54.8m (+24.8% yoy; +1.7% qoq) came in within expectations with 6M net profit of RM107.9m (+24.0% yoy) accounting for 49.3% of our and consensus estimates respectively.



MPI: 1QFY06/12 falls into losses Underperform

1QFY12 Results

¨ MPI’s reported a 1Q net loss of RM9.6m, way below our full-year net profit forecasts of RM39.8m and consensus full-year net profit of RM54.5m. We believe this was mainly due to lower EBITDA margins as a result of lower utilisation rates and lower contribution from higher margin packages.

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Stocks to watch: Hartalega, Sanichi, Cypark, GuocoLand

KUALA LUMPUR (Nov 8): Stocks which could see trading interest on Wednesday, Oct 9 include Harlatega Holdings Bhd, SANICHI TECHNOLOGY [] BHD [], CypARK RESOURCES BHD [] and GUOCOLAND (MALAYSIA) BHD [] (GLM).

Harlatega reported its earnings fell 2% to RM46.13 million in the second quarter ended Sept 30, 2011 from RM47.01 million a year ago as it was impacted by high raw material prices.

However, it is cautious about the outlook following the sharp increase in nitrile material price and recent high volatility of US dollar.

Its revenue rose 24.5% to RM229.54 million from RM184.31 million. At the profit before tax level, it dipped 2.4% to RM59.55 million from RM61.02 million. Earnings per share were 12.68 sen compared with 12.96 sen. It declared an interim dividend of 6.0 sen per share.

Sanichi resumes trading on Wednesday after it announced that German-based Projektarbelt Technische Beratung Venretung International (Protev) has completed its first phase of due diligence of the company and the second phase in early 2012.

However, as there were no significant updates, interest could decline in the company. The company was earlier queried by Bursa Malaysia Securities over the unusual market activity in the trading of its shares.

In Cypark, executive vice chairman Siow Kwang Khee disposed of 3.97 million shares on Nov 3.

Following the disposal of the shares, his direct stake was reduced to 10.50 million shares or 7.24%.

GuocoLand has proposed to acquire PJ City Development Sdn Bhd for a cash consideration of RM29.78 million from GuoLine Asset Sdn Bhd.

PJ City’s core business is property development and property investment activities. Based on its audited financial statements for FY ended June 30, 2011, PJ City recorded profit after tax of RM4.75 million while its net assets were RM38.61 million.

PJ City also owns two parcels of land in Section 32 in Petaling, Selangor. GLM said after the completion of the proposed acquisition, it intends to develop commercial office buildings and corporate factories on the land.

COMPLETE LOGISTIC SERVICES BHD [] (CLSB) has proposed to acquire the remaining 40% stake in its subsidiary Guper Integrated Logistics Sdn Bhd for RM13.60 million cash.

Read more...

Maybank IB Views

RESULTS PREVIEW
Hartalega Holdings RM5.41: Buy
A potent combination Shariah-compliant

Earnings outperformance to continue. 2QFY12 results (due this evening) are likely to meet expectations with commendable operating numbers, though likely partially mitigated by some mark-to-market forex loss. We see long-term value in the stock on the nitrile glove growth story and its compelling CY12 PER valuation of just 8.6x. Moreover, the stock offers a potent combination of both growth (3-year net profit CAGR of 15%) and yield (2012 net dividend yield of 5.3%). Hartalega remains our top pick in the glove sector with a TP of RM6.80.

RESULTS REVIEW
Fraser & Neave Holdings RM17.14: Sell
A challenging year ahead

FY11 results within expectation. F&N’s full-year recurring net profit of RM337m (+10% YoY) was within our forecast of RM341m. We retain our Sell call on F&N, expecting a step-down in FY12 profit on expiry of the Coca-Cola contract and the disruption to its dairy business due to massive floods in Thailand and other parts of Indochina. Valuations are pricey at 19.2 x 2012 PER. We roll forward valuations (16x FY13 PER plus cash of RM0.39 as at end-FY11) to derive our new TP of RM16.00

Nestle (Malaysia) RM50.00: Sell
Decent revenue growth as expected

Results in line. 9M11 net profit of RM369m (+4.9% YoY) was within our expectation, made up 83% and 81% of our and consensus estimates. We are maintaining our forecasts of RM441m and expecting a lower 4Q. In the last 4 years, 4Q in average contributed 17% to its full year net profit. Maintain Sell on expensive valuations.

ECONOMICS
External Trade, September 2011
"Base jumping"

Both export and import growth quickened YoY in Sep '11 to +16.6% (Aug '11: +10.9% YoY) and +12.9% (Aug '11: +6.9% YoY). Trade surplus widened to RM9.6b (Aug '11: +RM10.9b). MoM, exports was up marginally by +0.2% (Aug '11: -1.2%) while imports gained by +3.1% (Aug '11: -4.4%). YTD, exports and imports rose by +8.3% (Jan-Sep 2011:+20.2%) and +8.9% (Jan-Sep 2011: +26.2%) respectively with RM89.2b trade surplus (Jan-Sep 2011: +RM84.5b). In 3Q11, exports picked up to +11.4% YoY (2Q11: +8.8% YoY) while imports were steady at +7.4% YoY (2Q11: +7.4% YoY), giving a larger trade surplus of RM30.1b (2Q11: +RM27.4b). Our full-year export growth, import growth and trade surplus forecasts are +6.5%, +9.1% and RM103.9b for 2011 and +5.9%, +6.4% and RM99.1b for 2012.

Technicals
The FBM KLCI fell 4.31-points and closed at 1,477.51 last Friday. The local market remained benign as news flow from Europe was fickle as the EURO leaders endorsed an enlarged EFSF only to be thwarted by the Greek PM calling for a referendum on the said fund.The obvious support areas for the FBM KLCI are in the 1,429 to 1,477-zone. The next resistance levels of 1,480 and 1,515 will see heavy liquidation activities.

Trading Idea is a Take Profit call on CIMB.

Other Local News
Genting Bhd: Indonesia approves Genting Oil’s NW Natuna project. Indonesia has approved an USD800m (RM2.49b) oil and gas development project on Northwest Natuna block run by Genting Oil Natuna, a subsidiary of Genting Bhd. The company plans to start production at the Ande-Ande Lumut field by the end of 2014 at a production rate of 5,000bpd. (Source: The Edge Financial Daily)

Kossan: Expands into non-rubber products. Kossan Rubber is embarking on a multi-pronged strategy for its next phase of growth which involves the expansion of its glove manufacturing business to a 17b piece-capacity in two years and diversification into non-rubber products via M&A to create synergy. (Source: The Edge Financial Daily)

Power: Rapid complex may include power plant. Petronas planned RM60b refinery and petrochemical integrated development (Rapid) petrochemical complex in Pengerang, southern Johor, will likely include a power plant that will support the petrochemical industry there on its own or through a joint venture. (Source: The Star)

Melati Ehsan: Back in the news after winning RM297m housing contract. Low profile turnkey contractor Melati Ehsan Holdings Bhd is in the limelight again for bagging a RM297m contract to design and build residential flats for the Housing and Local Government Ministry's People's Housing Programme (PPR). (Source: The Star)

Plantation: FGV looking for joint ventures with multinational companies. Felda Global Ventures (FGV) en route to a listing on Bursa Malaysia Main Board by mid-2012 was looking to forge joint ventures with leading multinationals in the downstream business as a long-term strategy. (Source: The Star)

Rubber: Exports poised to jump 30% this year. Malaysia's rubber exports are set to jump 30% to RM32b this year on relatively bouyant pricings of natural latex and the synthetic variant. In the first 8 months of this year, total rubber export already amounted to RM21.6b, increased 28% compared to the first 8 months of last year. (Source: Business Times)

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RHBInvest Research

Hektar REIT: No surprises Outperform

3QFY11 Results

¨ 3Q11 realised net profit (-1.2% yoy; +2.3% qoq) came within our and consensus estimates. Gross revenue grew 5.9% yoy and 3.3% qoq due to the improved rental contribution from its assets arising from the opening of earnings-accretive new retail space as well as the rental increase after asset refurbishment works. However, the higher interest expense incurred during the period has offset the higher revenue, causing the realised net profit margin in 3Q11 to contract slightly. A DPU of 2.5 sen was declared during the period, bringing total 9M11 DPU to 7.5 sen, on track to meet our forecast.



CSC Steel: 9MFY12/11 net profit declines by 49% yoy Underperform

3QFY11 Results

¨ 9MFY11 net profit came in below expectations. We believe the variance vs. our forecast largely came from worse-than-expected margin contraction in 3QFY11 as a result of lower selling prices of its steel products.

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Stocks to watch: Melati Ehsan , F&N, MSC, Nestle

KUALA LUMPUR (Nov 6): Malaysian stocks will have to take their cue from regional and Wall Street when trading resumes on Tuesday, Oct 8.

Investors will have to prepare for the crisis as the chaos in Europe is far from over. Greek Prime Minister George Papandreou won a parliamentary confidence vote early Saturday, which helped the cash-strapped country avoid snap elections that would have destroyed its bailout deal and turned up the flames on the euro zone's economic crisis.

Stocks to watch on Tuesday include MELATI EHSAN HOLDINGS BHD [], Fraser & Neave Holdings Bhd (FNHB), MALAYSIA SMELTING CORPORATION [] Bhd and Nestle (Malaysia) Bhd following the corporate results last Friday.

Melati Ehsan unit Pembinaan Kery Sdn Bhd has accepted two contracts from the Housing and Local Government to undertake two housing projects worth RM298 million in Kuala Lumpur.

Fraser & Neave posted net profit of RM66.21 million in the fourth quarter ended Sept 30, 2011, down 85.7% from the RM462.31 million a year ago where there was a gain of RM382.03 million after selling its glass container business.

It proposed a final single tier dividend of 47 sen per share together with a special single tier dividend of 15 sen.

For the financial year ended Sept 30, its net profit was RM383.13 million, down 44.8% from RM695.29 million a year ago including the RM382 million gain on divestment of the glass business. Its revenue rose 7.6% to RM3.915 billion from RM3.637 billion.

MSC posted net profit of RM41.81 million in the third quarter ended Sept 30, 2011 compared with net loss of RM37.05 million a year ago where there was an impairment provision for goodwill of RM73.63 million.

Revenue increased by 25.9% to RM907.04 million from RM719.96 million. Earnings per share were 41.80 sen compared with loss per share of 49.40 sen.

Nestle posted net profit of RM110 million in the third quarter ended Sept 30, 2011 marginally lower from the RM113.18 million a year ago as profit margins were affected by higher prices of key raw materials.

Its operating profit was RM143.16 million, up 3.8% from RM137.83 million. Revenue rose 18.2% to RM1.171 billion from RM991.07 million, boosted by strong domestic and exports sales.

For the nine-month period, its earnings rose 4.8% to RM369.23 million from RM352.14 million. Its revenue increased by 14.6% to RM3.51 billion from RM3.06 billion driven by both domestic and export sales.

Meanwhile, The Edge weekly said there is little to indicate how Proton Holdings' recent MoU with Hawtai Motor Group will impact the national carmaker, especially since the outcome of its 2007 tie-up with Youngman Automobile Group remains uncertain.

As for GHL SYSTEMS BHD [], the group is looking to turn around its fortunes by banking on its strategic solutions business to drive future growth.

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RHBInvest Research

Sector Call



Semiconductor: Moving to P/BV valuation methodology Underweight

Sector Update

Unisem: New fair value of RM0.92 Underperform

MPI: New fair value of RM2.19 Underperform

¨ With the poor earnings visibility on the back of weak guidance by major players in the industry, the outlook for 2012 remains in doubt amidst the bearish outlook in the global economy. Furthermore, post Unisem’s analyst briefing recently, there was lack of conviction as to whether the guided 4Q2011 revenue decline would be short-term, with a quick a recovery in 2012, although management appeared optimistic on such a scenario.

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RHBInvest Research

Top Story : AirAsia – 9MFY12/11 results to trail consensus Underperform (down from MP)

Results Preview

- We expect AirAsia's 9MFY12/11 results to meet our forecast but trail the market expectations.





Corporate Highlights



Unisem : Weak 4Q ahead Underperform

Briefing Note

- Unisem expects revenue to decline 8-10% amidst the softening demand for electronics stemming from the slowdown in global economy. Nevertheless, despite the anticipation of a drop in revenue, Unisem still expects 4Q earnings to improve from the previous quarter on the back of cost-cutting measures.





Mah Sing : Adding a “Thai” flavour into Icon City Market Perform (up from UP)

News Update

- Mah Sing entered into a MOU with Central Pattana Public Company Ltd to study the potential investment of developing and managing a shopping mall in Icon City through a JV and/or partnership. The MOU takes effect on 2 Nov and is valid until formal agreements are entered into within six months time with an automatic extension of three months.

Read more...

Maybank IB Views

COMPANY UPDATE
Lafarge Malayan Cement RM6.85: Buy
A strong proxy to construction sector

Maintain Buy. As the largest cement producer in the country, LMC is undoubtedly a proxy to, and a major beneficiary of, the high growth construction sector, which in itself, should see robust activity, once projects under Economic Transformation Programme (ETP) take off. Additionally, we expect its share price to be supported by its decent net dividend yield of 5%. Maintain Buy with a marginally lower TP of RM7.60 (RM7.85 previously) on 17x 2013 PER as we roll forward valuations after trimming earnings forecasts by 11% p.a..

UMW Holdings RM6.60: Hold
Bareboat charters Hakuryu-5 to PCSB

Maintain Hold. UMW's USD72m bareboat charter contract of Hakuryu-5 to PCSB, which yields low margin, is earnings neutral to Group earnings (<1%). As such, we are keeping our forecasts and RM6.60 target price unchanged, based on 11x 2012 EPS.

ECONOMICS
ETP Update
One year after

The latest ETP briefing (1 Nov 2011) by PEMANDU provided three key updates. First, of the 70 EPPs and 27 initiatives announced so far, 31% are fully operational, 50% have commenced implementation, and 17% are still work-in-progress. Second, of the RM171b investment announced to date, 9% or RM15b is implemented in 2011, including RM10b actualised in 1H 2011. Third, private investment in 1H 2011 was RM51.2b, meaning 19.5% of it came from ETP.

ETP Progress Updates 1-7
Implementation Update

Provided by PEMANDU on the official website.

RESULTS REVIEW
Sunway REIT RM1.14: Buy
Sequentially stronger

On track. SunREIT's RM44.2m 1QFY12 net profit tracked our and market expectations. Longer-term view is positive supported by Sunway Putra Place's (SPP) attractive est. 9% property yield. We maintain our earnings forecasts, RM1.18 DCF-based TP and Buy call, the latter premised on a 12-month total return of 10% based on our target price and forecast dividends.

Technicals
The FBM KLCI fell 16.25-points to close at 1,475.64 yesterday. Its resistance areas of 1,475 and 1,494 will cap market gains, whilst the weaker support areas may be located at 1,446 and 1,470. Due to the US markets’ much lower tone last night; we may see an initial drop for the index. Some later miniscule local bargain hunting activities cushion the local markets’ plungein the afternoon session. We expect a very volatile trading day.

Trading Idea is a take profit call on CBIP.

Other Local News
SapuraCrest: Wins RM4.4b Brazilian oil and gas job. SapuraCrest gas clinched a contract from Petroleo Brasileiro SA worth about USD1.4b (RM4.4b) to charter and operate three deepwater flexible pipe-laying supports vessels (PLSVs).Revenue from the award was expected to be generated by the fourth quarter of 2014. (Source: Bursa Malaysia)

Supermax: Declares 1 for 1 bonus. Supermax Corp has proposed a one-for-one bonus issue involving 340.1m new shares and a share buyback of up to 10% of its issued share capital. Both proposals are expected to be completed by the first quarter of 2012. (Source:Bursa Malaysia)

DiGi: Capital Management Initiative. DiGi is expected to distribute about RM509m to its shareholders by the first half of 2012 under the proposed capital distribution upon its redemption of the redeemable preference shares of about RM509m. (Source: Bursa Malaysia)

TNB: Gas shortage for 2-3 months more. TNB will have to deal with losses caused by having to substitute costly fuel oil for power generation as the government decides that electricity prices will remain unchanged. TNB has been buying fuel oil to replace natural gas for electricity generation, which will cost the company an additional RM2.1b for the second half of 2011. (Source: Business Times)

Telekom: Tough procurement policy saves RM1b. The massive RM11.3b high-speed broadband (HSBB) project may eventually cost Telekom Malaysia Bhd (TM) at least RM1b less in expenditure than its original costing because it has implemented a tough procurement policy. (Source: The Star)

Aviation: SIA targets mid-2012 Scoot takeoff. SIA new long-haul budget carrier will be renamed “Scoot” with takeoff set for mid-2012. The new carrier will fly to cities in China and Australia, operating a fleet of 200 second-hand Boeing 777 jets and charging up to 40% less than full-service airlines. (Source:The Edge Financial Daily)

Read more...

Stocks to watch: MBSB, Ireka, Maybank, Chin Teck, Jerneh Asia

KUALA LUMPUR (Oct 31): The string of positive corporate news is expected to underpin market sentiment on Tuesday, Nov 1 after the FBM KLCI ended October on a strong note.

Among the stocks to watch are MALAYSIA BUILDING SOCIETY BHD [] (MBSB), IREKA CORPORATION BHD [], CHIN TECK PLANTATION []S BHD [], MALAYAN BANKING BHD [], JERNEH ASIA BHD [] and AutoV Corporation Bhd

MBSB posted a 134% increase in its earnings to RM95.08 million for the third quarter ended Sept 30, 2011 from RM40.51 million a year ago.

Its revenue increased by 72% to RM372.67 million from RM215.77 million while earnings per share were 10.88 sen compared with 5.79 sen.

Ireka’s unit has secured a RM85.14 million contract for the proposed City International Hospital project in Ho Chi Minh City, Vietnam from Hoa Lam-Shangri-La 1 Ltd Liability Company.

Chin Teck Plantations Bhd’s earnings surged 90.8% to RM21.84 million in the fourth quarter ended Aug 31, 2011 from RM11.45 million a year ago, boosted by the increase in average selling prices of fresh fruit bunches (FFB), crude palm (CPO) and palm kernel despite lower production.

Its revenue rose 31.4% to RM38.37 million from RM29.20 million a year ago while earnings per share were 23.91 sen compared with 12.53 sen.

For the financial year ended Aug 31, its earnings rose 62.1% to RM76.01 million from RM46.88 million. Revenue rose at a slower pace of 28.6% to RM143.34 million from RM111.44 million.

Malayan Banking Bhd’s PT Bank Internasional Indonesia Tbk (BII) reported consolidated net profit of Rp555 billion (RM193.04 million) for the January-September period, up 34% from Rp415 billion a year ago.

BII said “the increase was achieved on the back of solid growth across the Bank’s core businesses as well as from its overall operational improvements”.

It recorded a 22% consolidated loan growth from Rp50.8 trillion in September 2010 to Rp61.9 trillion in September 2011, underpinned by small and medium enterprises (SME) and commercial loans.

Jerneh Asia Bhd has received a notice of voluntary conditional take-over offer from Kuok Brothers Sdn Bhd to acquire the remaining 58.19% stake which it does not own for cash consideration of RM1.45 per share and 45 sen per warrant.

Kuok Brothers and the parties acting in concert directly hold 102.02 million shares or 41.81% of Jerneh Asia.

At RM1.45, this is nine sen above Monday’s close of RM1.36 while the warrants ended at 40 sen.

Automotive components manufacturer AutoV Corporation expects its turnover to increase by 60% next year with the acquisition of Proreka (M) Sdn Bhd.

Bernama reported executive chairman Bernard Kong as saying the company was also in the midst of merging with two other listed companies to form a bigger group. “Financially we will be much stronger to support our businesses. We also can support our clients better," he said.

Kong said the merger with AIC CORPORATION BHD [] and Jotech Holdings, expected to be completed "sometime in March next year", would transform the company into an integrated manufacturing group dealing in automotive as well as electronics products.

Read more...

RHBInvest Research

Top Story: Media–Softer adex in Sep Underweight

Sector Update

¨ As expected, Sep’s gross adex for TV and print media combined showed a sequential monthly contraction of 18.1%, following the bumper Aug adex (due to Hari Raya and Merdeka festivities), according to Nielsen Media Research (NMR). On yoy basis, adex growth moderated to 5.1% in Sep (Aug: +9.7% yoy).

Corporate Highlights

Axiata: XL shows sequential improvement Market Perform

Company Update

- 67%-subsidiary, XL Axiata (XL), posted 9MFY11 core net profit of Rp2.14bn (+1.3% yoy), representing only 67% and 62% of our and consensus full-year estimates respectively.

- The key variance was a one-off severance payment amounting to Rp213bn in 3Q for outsourcing of XL’s managed network services. Excluding this one-off provision, XL would have recorded 9MFY11 net profit of Rp2.35bn (+11% yoy). This would have been in line with our but still lower than consensus expectations.

Read more...

Stocks to watch: Tenaga, Envair, SILK, MFM

KUALA LUMPUR: TENAGA NASIONAL BHD [] could be in focus on Monday, Oct 31 after it announced fourth quarter net loss of RM453.90 million, the second consecutive quarter of losses, last Friday, and expected the current financial year to be very challenging.

At the operating level, the power company reported operating losses of RM248.80 million due to higher fuel costs of coal and utilisation of oil and distillates after the gas curtailment by Petroliam Nasional Bhd.

Though investors anticipated Tenaga to reported losses, their concerns were whether it could work out the gas supply issue and a definite compensation from Petronas.

However, the lack of assurance from Petronas could weigh on the share price, especially after Tenaga president and chief executive officer Datuk Seri Che Khalib Mohamad Noh said on Friday no decision had been reached as yet.

OSK Research said barring a write-back of compensation from Petronas due to its failure to supply sufficient gas to Tenaga, the power company should still post losses over the next two quarters.

“A continued gas shortage coupled with outages in coal plants during 4QFY11 should have necessitated Tenaga to continue to generate substantial power from expensive oil and distillates. In addition, the weakening ringgit would give rise to translation losses,” it said.

OSK Research cautioned that Tenaga might be hopeful for compensation from Petronas amounting to 33% to 67% of its additional fuel bill.

“Investors may also hold out hopes of Tenaga securing a fuel cost pass through after the anticipated General Elections, which may be held soon. In any case, we still believe it would be risky to invest in Tenaga beyond current levels given such speculation,” it added.

However, the broader market could extend their gains, underpinned by the recent strong performance on Wall Street where stocks closed out a fourth week of gains in quiet fashion on Friday, edging higher as the market took a breather after rallying 3% on Europe's deal to stem its debt crisis.

Reuters reported though investors still have questions about implementing the deal, they appeared satisfied by Europe's progress as stocks ended their longest weekly winning streak of the year.

The Dow Jones industrial average gained 22.56 points, or 0.18%, to 12,231.11. The Standard & Poor's 500 Index added 0.49 point, or 0.04%, to 1,285.08. The Nasdaq Composite Index shed 1.48 points, or 0.05 percent, to 2,737.15.

As for the FBM KLCI, it is up 114.3 points from Oct 3’s 1,367.52 to end 1,481.82 last Friday. For last week, the KLCI was up 30.9 pts or 2.19%.

Affin Investment Bank head of retail research Dr Nazri Khan believes the KLCI is likely to trend higher next week on stronger global risk appetite following twin Europe-US catalysts last week.

The factors were the long awaited plan to resolve the European debt crisis and the stronger than expected US 3rd quarter economic growth (registering the fastest quarterly GDP in a year).

“Going forward next week, we expect investors to price in stronger US/European economy as well as the reduced banking crisis risk in both continents, pushing KLCI to a possible 1,524 level (which is the KLCI high made in 2008 before the subprime crisis),” said Nazri.

Other stocks to watch are Envair Holdings Bhd, SILK Holdings Bhd and MALAYAN FLOUR MILLS BHD [] (MFM). Also in focus could be TASEK CORPORATION BHD [] and Cycle & Carriage Bhd.

Envair has received a letter of intent from Zai Corporate Finance Ltd (ZAICF), an investment banking firm based in London, to subscribe for up to 30% of its new ordinary shares of 10 sen each at the market issue price.

The ACE Market listed company said the board would deliberate on this matter and announce its decision on the private placement.

SILK chairman Datuk Mohd Azlan Hashim has said he was confident the company would be able to return to profitability in a couple of years as traffic volume picks up for its tolled highway operations and an improvement in the marine support services.

"We expect with the continued increase in traffic flow in that area, these losses will eventually be wiped out and there will be a turnaround in profitability," he said.

Malayan Flour Mills could be getting ready for the next stage of growth, having announced a series of corporate exercises in May and signing an agreement in October that would see it step into the Indonesian market, according to The Edge weekly.

Tasek's earnings fell 32.9% to RM22.10 million in the third quarter ended Sept 30, 2011 (3QFY11) from RM32.90 million a year ago, due to lower sales. Its revenue fell 7.5% to RM132.99 million from RM143.78 million. Earnings per share were 17.82 sen compared with 20.63 sen.

Cycle & Carriage Bhd’s earnings for third quarter ended Sept 30, 2011 fell 38.37% to RM5.93 million from RM9.62 million a year ago, due to lower margins and reduced non-recurring income. Revenue rose 20.6% to RM188.21 million from RM156.03 million. EPS were 5.89 sen compared to 9.55 sen the previous year.

Read more...

Stocks to watch: DiGi, IOI, Supermax, YTL

KUALA LUMPUR: Stocks on Bursa Malaysia could extend their gains in light trade on Tuesday, Oct 25, in line with the firmer markets as investors pinned their hopes for a resolution to the euro debt crisis.

However, with the Deepavali holidays on Wednesday, there could be some profit taking later in the day.

The markets would also be seeking more clarity from the summit on Wednesday as the EU meeting over the weekend yielded no firm decisions, although the structure of the policy response has now begun to take shape.

A report from The Royal Bank of Scotland research said EU Finance Ministers agreed over the weekend that European banks could need to find 108 billion euros in fresh capital over the next six to nine months with an announcement reportedly set for Wednesday.

“However, this falls somewhat short of the IMF's 200 billion euros estimate. It was also confirmed that the ECB will not be utilised to increase the fire-power of the Euro-zone bailout fund.

“Instead, a special fund may be set up to attract global investors, possibly including the IMF, which would then buy bonds of struggling Euro-zone countries. This could run in parallel with another fund insuring against losses of up to 20% by bondholders,” it said.

Among the stocks to watch are DIGI.COM BHD [], IOI Corp Bhd, Supermax Corp Bhd and YTL Group.

DiGi.com’s earnings rose just a marginal 1.08% to RM292.44 million in the third quarter ended Sept 30, 2011 from RM289.31 million a year ago. The telco said the flat earnings were due to higher depreciation and amortisation while average revenue per user (ARPU) dipped.

An increase in data revenue pushed turnover up by 12.6% to RM1.52 billion from RM1.35 billion. Earnings per share were 37.6 sen compared with 37.20 sen a year ago.

DiGi declared an interim single-tier tax exempt dividend of 37 sen per share for financial year ending Dec 31, 2011 on Dec 8. Depreciation and amortisation was RM306.08 million in 3QFY11 compared with RM196.69 million a year ago.

IOI Corp expects its financial performance for the current financial year ending June 30, 2012 (FY2012) to be better than FY2011. The optimism was based on the improved profitability in its resources based manufacturing division, underpinned by lower crude palm oil prices.

The PLANTATION [] giant also expected crude palm oil (CPO) prices to rise above RM3,000 per tonne in the next three months due to the drop in production amid increasing overseas demand.

IOI chairman Tan Sri Lee Shin Cheng said the rainy season coupled with a labour shortage is expected to derail production of fresh fruit bunches in the next six months, despite increasing demand from China, India and Pakistan.

Supermax’s net profit fell 18.9% to RM30.91 million in the third quarter ended Sept 30, 2011 from RM38.11 million a year ago, affected by the higher natural rubber and nitrile latex prices.

However, it said although profitability is lower than last year, it is seeing positive signs for a rebound after recording a second consecutive quarter of core profit growth. Supermax’s revenue was however higher at RM271.42 million, up 15.4% from RM235.10 million.

For the nine-month period, earnings fell 42.5% to RM77.86 million from RM135.44 million. Revenue rose 8.7% to RM750.71 million from RM690.58 million.

YTL Communications Sdn Bhd (YTL Comms) has submitted its business plan to Malaysian Communications and Multimedia Commission (MCMC) to secure spectrum licences to roll out its Yes 4G mobile internet-with-voice service in Sabah and Sarawak.

Its chief executive officer, Wing K. Lee, said the company was currently awaiting feedback from MCMC. "MCMC will review the plan and give us the feedback," he added.

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Stocks to watch: Tenaga, Maxis, Tanjung, Daibochi

KUALA LUMPUR: Investors will sitting on their hands over the weekend as they focus on the summit of European leaders to resolve Europe’s debt crisis. A decisive framework to reach basic agreements over the weekend would bolster investor confidence.

On Wall Street, the S&P 500 posted its third straight week of gains on Friday Oct 21, lifted by optimism before this weekend's summit and strong earnings from blue-chip stocks.

The Dow Jones industrial average was up 267.01 points, or 2.31%, at 11,808.79. The Standard & Poor's 500 Index was up 22.86 points, or 1.88%, at 1,238.25. The Nasdaq Composite Index was up 38.84 points, or 1.49%, at 2,637.46.

Reuters reported important differences still separate major players France and Germany in solving Europe's debt crisis, but with two summits scheduled for next week, investors took an optimistic view that a resolution will soon be reached. Buying was also motivated by fear of missing a sharp move if basic agreements are reached over the weekend.

At Bursa Malaysia, stocks to watch are TENAGA NASIONAL BHD [], Maxis Bhd, TANJUNG OFFSHORE BHD [], Daibochi Plastic and Packaging Industry Bhd and SILK Holdings Bhd.

Tenaga will announce its financial results for the fourth quarter ended Aug 31, 2011 but analysts expect it to record another quarter of losses due to the shortage of gas supply from Petroliam Nasional Bhd, forcing it to burn the more expensive oil and distillate.

RHB Research Institute had maintained its Underperform call on the power company with an unchanged indicative fair value of RM4.74 based on unchanged target CY12 price-to-earnings ratio of 12 times.

“Due to ongoing gas shortage from maintenance at Petronas’ liquefied natural gas plants and delays for the Bekok C bypass, Tenaga will likely record a loss in 4Q, possibly close to that seen in 3Q (net loss RM460 million),” it said.

Tenaga, meanwhile, has proposed to issue RM5 billion in Islamic debt notes to finance the development of the 1,010 MW coal fired power plant in Manjung, Perak. The tenure is 28 years.

Meanwhile, Maxis expects significant gains from the provision of its 3G radio access network to U Mobile Sdn Bhd under the country’s first landmark network sharing and alliance agreement for an initial period of 10 years.

This arrangement also included long-term evolution (LTE) sharing, depending on the availability of the spectrum and TECHNOLOGY []. The collaboration was a milestone in the local telecommunications industry in the sharing of active telco systems and operating frequency spectrum.

Tanjung Offshore Bhd was awarded a RM27 million contract by Petronas Carigali Sdn Bhd to provide three offshore support vessels (OSVs) for up to two primary years.

Tanjung said its unit Offshore Services Sdn Bhd had been awarded the contract on Oct 20.

Daibochi Plastic and Packaging Industry Bhd’s net profit fell 5.8% to RM4.54 million in the third quarter ended Sept 30, 2011 from RM4.82 million a year ago mainly due to a lower contribution from the property segment.

Its revenue declined 5.2% to RM67.66 million from RM71.42 million mainly due to the reduction in the sales in the packaging segment. Earnings per share were lower at 6.04 sen compared with 6.40 sen. It declared an interim dividend of 3.0 sen per share.

SILK’s unit Jasa Merin (Malaysia) Sdn Bhd has been awarded a contract extension worth RM23.5 million by Petronas Carigali Sdn Bhd to provide one anchor handling tug supply vessel.

SILK said the primary three-year contract had been extended for another 12 months, which started on Oct 4. It expected the extension to contribute positively to its earnings for the financial year ending July 31, 2012.

PROTON HOLDINGS BHD [] plans to collaborate with China’s Hawtai Motor Group to set up a joint venture (JV) company there as part of Proton’s strategy to make China as one of its major manufacturing hub, especially for left-hand-drive vehicles.

MELEWAR INDUSTRIAL GROUP BHD [] has proposed a two-call rights issue of up to 151.17 million rights shares to raise RM27.46 million. The rights issue would be at an indicative issue price of RM1 per rights share on the basis of two rights shares for every three existing shares held on an entitlement date to be determined later.

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RHBInvest Research

Top Story: TNB – May have hit rock bottom in 4Q Underperform

Results Preview

¨ Due to gas shortage from maintenance at Petronas’ LNG plants and delays in the Bekok C bypass, TNB will likely record a 4Q loss, possibly close to that seen in 3Q (-RM460m). This is a result of TNB receiving only an average of 950 mmscfd of gas in 4Q, marginally higher than the average 940 mmscfd in 3Q.



Corporate Highlights



BAT: 3QFY11 TIV grew 1.6% yoy Underperform

3QFY11 Results / Briefing Note

¨ BAT’s 9MFY11 net profit of RM539m (-1.7% yoy) was above ours but within consensus estimates, accounting for 79% and 75% of full-year forecasts respectively. The main variance to our forecasts were the stronger-than-expected 3QFY11 TIV 3% yoy.



TH Plantations: Bumper profit year continues Outperform

3QFY11 Results

¨ 9MFY11 net profit was in line with both our and consensus expectations, coming in at 73-77% of our and consensus FY11 forecasts.



WCT: Acquiring 432-acre land in Serendah for RM38.4m Market Perform

News Update

¨ WCT is acquiring 431.7 acres of freehold agricultural land in Serendah, Selangor, for RM38.4m cash.



DRB-Hicom: Three CBU Volkswagen models launched Market Perform

News Update

¨ Volkswagen Malaysia (VWM) yesterday launched three new completely built-up (CBU) fully-imported models into the local market, the culmination of an intensive two-week newspaper advertising campaign. The three models are the Passat 1.8, Jetta 1.4 TSI and Cross Touran 1.4 TSI. The introduction of these new CBU models is a prelude to the launch of DRB-assembled CKD VWs by end-2011.

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Stocks to watch: TH Plantations, AirAsia, MAS, Kumpulan H&L

KUALA LUMPUR: Stocks on Bursa Malaysia could advance on Friday, Oct 21, following fresh positive economic data from the US while interest could continue to be focused on glove makers and selected stocks.

But overall market sentiment would be cautious, as sentiment always hinges on the volatile European and US economic data.

On Wall Street, stocks ended with modest gains on Thursday, shifting back and forth on incremental developments in Europe where leaders sought to reassure investors that a solution to the debt crisis would come soon.

Germany and France released a statement on Thursday saying leaders would now hold two summits to discuss the debt crisis, with a solution in place by Wednesday's second meeting.

The Dow Jones industrial average ended up 37.16 points, or 0.32 percent, at 11,541.78. The Standard & Poor's 500 Index was up 5.51 points, or 0.46 percent, at 1,215.39. The Nasdaq Composite Index was down 5.42 points, or 0.21 percent, at 2,598.62.

At Bursa Malaysia, among the stocks to watch are TH PLANTATION []s Bhd, AIRASIA BHD [] and MALAYSIAN AIRLINE SYSTEM BHD [] (MAS)and Kumpulan H&L High-Tech Bhd.

TH Plantations’ earnings rose 53.8% to RM33.12 million in the third quarter ended Sept 30, 2011 from RM21.53 million a year ago as it benefited from higher prices for crude palm oil, palm kernel and fresh fruit bunches. Its revenue increased 37.7% to RM115.97 million from RM84.22 million. Earnings per share were 6.51 sen compared with 4.41 sen.

For the nine-month period, its earnings jumped 85.6% to RM87.12 million from RM46.93 million while revenue increased by 27.9% to RM303.73 million from RM237.44 million.

AirAsia and MAS have appointed their own independent advisers to advise the non-interested directors and the non-interested shareholders of each airline on the proposed warrants exchange.

Kumpulan H&L High-Tech’s 70% owned subsidiary in Thailand has temporarily ceased its operations there due to the severe floods.

H&L High-Tech Mould (Thailand) Co. Ltd. (H&LM) located at Bangpa-In Industrial Estate, Ayutthaya had halted its operations. H&LM manufactures metal parts for electronic and metal surface treatment.

BRITISH AMERICAN TOBACCO (M) [] Bhd’s earnings rose 3.3% to RM176.27 million in the third quarter ended Sept 30 from RM179.65 million. Its revenue increased by to RM1.104 billion from RM993.59 million, earnings per share were 61.70 sen compared with 59.80 sen. It declared an interim dividend tax exempt of 60 sen a share compared with 64 sen a year ago.

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Stocks to watch: Kencana, Bursa, Hua Yang, Hai-O, Bonia

KUALA LUMPUR: Trading on Bursa Malaysia on Thursday, Oct 20 could see some downside pressure after stocks on Wall Street fell overnight on worries that Europe remains far from a solution to its debt crisis.

The Dow Jones industrial average shed 75.49 points, or 0.65 percent, at 11,501.56. The Standard & Poor's 500 Index fell 15.63 points, or 1.28 percent, at 1,209.75. The Nasdaq Composite Index was down 54.41 points, or 2.05 percent, at 2,603.02.

On Wednesday, several Asian markets slipped into the red yesterday after Hong Kong's government said it expects economic growth in the territory to be affected by weaker exports, with gross domestic product anticipated to grow at lower end of its own forecast range.

On Bursa Malaysia, among the stocks that could be in focus are KENCANA PETROLEUM BHD [], JCY International Bhd, BURSA MALAYSIA BHD [], HUA YANG BHD [], HAI-O ENTERPRISE BHD [], BONIA CORPORATION BHD [] and AT SYSTEMATIZATION BHD [].

The Edge FinancialDaily reports Kencana is in talks to acquire more than 130 acres (52ha) of land adjacent to its fabrication yard in Lumut, Perak, sources said.

It also reported Malaysia’s country's largest listed hard disk drive component maker by market capitalisation, JCY International Bhd, chalked up impressive gains on Bursa Malaysia yesterday with its share price rising 12.5 sen or 27.5% to close at 58 sen.

Bursa Malaysia’s net profit for the third quarter ended Sept 30, 2011 rose 39.37% to RM38.61 million from RM27.71 million a year earlier, driven mainly by higher revenue, but it was cautious on the outlook on concerns of further downside risk.

Revenue for the quarter increased by 23.68% to RM107.31 million from RM86.76 million in 2010. Earnings per share were 7.30 sen compared to 5.20 sen in 2010, while net assets per share was RM1.56.

For the nine months ended Sept 30, Bursa’s net profit rose to RM114.82 million from RM83.26 million in 2010, on the back of a 25% increase in revenue to RM324.47 million from RM259.14 million a year earlier.

Hua Yang’s net profit for the second quarter ended Sept 30, 2011 surged to RM13.89 million from RM4.31 million a year earlier, due mainly to steady CONSTRUCTION [] progress and better sales.

Its revenue for the quarter more than doubled to RM76.13 million from RM35.63 million in 2010.

Reviewing its performance, Hua Yang said the sales achieved during the quarter under revised was 119% higher year-on-year with total unbilled sales of RM395.24 million, giving it improved earnings visibility in the remaining period of FY2012.

Meanwhile, Hai-O Enterprise is expecting to see higher profits for FY2012, on the back of improving sales for its consumable products, said its co-founder and group managing director Tan Kai Hee.

He said the multi-level marketing (MLM) group was now focusing on marketing its consumable products such as health supplements and herbs which had higher margins and ensure repeated sales for recurring income.

He said Hai-O’s profit for FY2011 ended April 30 had fallen 60% due to the implementation of the new Direct Sales Act by the government in April 2010.

Bonia is acquiring PROPERTIES [] in Cheras for RM44.29 million for its expansion plans and to reduce rental expense.

Its unit Luxury Parade Sdn Bhd had entered into 15 sale and purchase agreements with Platinum Starhill Sdn Bhd to acquire freehold units in two blocks in Cheras.

ACE Market-listed AT Systematization became the latest casualty of Thailand’s flood casualty, after its wholly-owned subsidiary, Automation TECHNOLOGY [] Systematization Industries Limited (ATSi) temporarily closed its operations there.

ATSi procures design and assembles automatic machines according to purchase orders.

AT Systematization said ATSi had shut down the manufacturing operations from Oct 13 due to the unexpected severe floods in Thailand.

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Maybank IB Views

COMPANY UPDATE
Malaysia Marine and Heavy Engineering Holdings RM5.95: Buy
Bags Telok Gas job, more to follow Shariah-compliant

A direct proxy play to PETRONAS' domestic capex programmes. We are positive on MMHE's latest Telok Gas project job win. We expect more contract wins to follow, foreseeing strong orderbook visibility extending beyond 2013. The FLNG, TLP and RAPID projects are among the high-ticket items that would propel orders and earnings growth. MMHE is among our top picks in the sector. Maintain Buy with a RM8.00 target price, based on 20x 2013 EPS.

RHB Capital RM7.20: Hold
The alternative scenario

Hold maintained. Our RHB Cap-OSK analysis thus far has assumed a merger scenario involving a share exchange at the listed entity levels of RHB Cap and OSK Holdings. If RHB Cap exchanges shares for OSK Investment Bank (OSK IB) instead, the overall cost is theoretically lower, by our estimates, subject to final pricing. Our Hold call on RHB Cap is maintained, with an unchanged RM7.60 TP (2012 P/BV target of 1.3x, ROE: 13.3%). At this juncture, we do not foresee an immediate upward re-rating of the enlarged RHB Cap if the merger goes through.

ECONOMICS
China: 3Q 2011 GDP
Soft landing so far...

3Q 2011 real GDP marked the third consecutive quarter of mild moderation in growth… China's economy continued to grow YoY by more than +9% in 3Q 2011, but the pace slowed to +9.1% from +9.5% in 2Q 2011. Consensus estimate was +9.2%. QoQ growth remained at 2% or more so far this year i.e. 3Q 2011: +2.3%; 2Q 2011: +2.4%; 1Q 2011: +2%; 4Q 2010: +2.4%. YTD, the economy expanded by +9.4% (Jan-Sep 2010: +10.6%; 2010: +10.4%).

Technicals
The FBM KLCI plunged 25.41-points to close at 1,439.94 yesterday. Its resistance areas of 1,439 and 1,465 will cap market gains, whilst the obvious support areas are located at 1,403 and 1,433.

Trading Idea is ENG

Other Local News
Proton: Looks to commercialise electric vehicles by 2013. Proton Holdings Bhd is looking to commercialise its electric vehicles in 2013. The Proton Saga EV is expected to be priced at RM70,000 and Proton Exora Range Extender at about RM100,000. Proton and government are also working on a mechanism to build the infrastructure for electric vehicle charging centres. (Source: The Edge Financial Daily)

MAS: Takes over Firefly's jet services. Malaysian Airline Systems Bhd (MAS) has embarked on a network rationalization programme in which its subsidiary, Fly Firefly Sdn Bhd, will concentrate on serving short-haul turboprop operations and Malaysia Airlines focus on enhancing its premium full-service offering. The takeover of Firefly's jet services on Dec 4 is part of the service separation plans under the business realignment exercise which addresses the continuing heavy losses being incurred by Firefly's jet operations. (Source: The Edge Financial Daily)

UEM: To build hospital? UEM Group Bhd and its joint venture partner Najcom Sdn Bhd are understood to have bagged the contract to build a women and children's hospital in Kuala Lumpur costing between RM700m and RM900m. (Source: The Edge Financial Daily)

Top Glove: To spend RM100m on plant upgrades. Top Glove Corp Bhd has allocated RM100m to upgrade and expand its factories at Sadao in Thailand. It is also looking at making more value-added variants at its Banting and Ipoh facilities. Currently, Top Glove has 21 factories and 395 production lines with a total production capacity of 35.3b pairs of gloves per annum. By May 2012, Top Glove targets to produce 41.6b pieces of gloves per annum.

Healthcare: Parkway Pantai's international push. Parkway Pantai Ltd aims to triple the revenue contribution from its international operations to 33% by expanding in Asia. It is already one of the region's biggest healthcare groups, operating more than 3,000 beds under 16 hospitals currently, and is in the process of adding another 2,300 beds in eight new hospitals from 2013 onwards. Apart from three new hospitals in Malaysia, Parkway Pantai is also building five other hospitals in Singapore, Vietnam, China, India and the United Arab Emirates. (Source: Business Times)

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Stocks to watch: MMHE, Boustead, CIMB, Pharmaniaga

KUALA LUMPUR: The selldown on Bursa Malaysia on Tuesday, Oct 18, in line with the regional markets, saw RM21.9 billion erased from the Malaysian stock market capitalisation, according to the stock market data.

The sharp pullback was expected to push investors to the sidelines on Wednesday, unless there was strong economic data from the US or Europe to restore confidence.

Analysts expect trading to be volatile on Wednesday with more downside pressure, if Wall Street extends its losses on Tuesday.

At Bursa Malaysia, the FBM KLCI fell 1.73% or 25.41 points to 1,439.94, weighed by losses including at PLANTATION []s and blue chip stocks. Losers hammered gainers 705 to 145 while volume was 1.36 billion shares valued at RM1.37 billion.

Sime Darby’s 25 sen decline to RM8.65, dragged the 30-stock index down by 3.47 points while CIMB’s loss of 18 sen to RM7.19 erased 3.10 points from the index. Tenaga fell 22 sen to RM5.35, giving up most of Monday’s gains, reduced the index by another 2.75 points.

On the regional front, Hong Kong’s Hang Seng Index tumbled 4.23% to 18,076.46, the Shanghai Composite Index lost 2.33% to 2,383.49, Singapore’s Straits Times Index fell 1.95% to 2,724.69, Japan’s Nikkei 225 was down 1.55% to 8,741.91, South Korea’s Kospi lost 1.41% to 1,838.90 and Taiwan’s Taiex shed 1.36% to 7,359.48.

At Bursa, stocks to watch on Wednesday are BOUSTEAD HOLDINGS BHD [], Pharmaniaga, Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) and CIMB Group Holdings Bhd.

Boustead Holdings Bhd is seeking RM20.80 million in compensation after the Penang government decided not to approve the reclamation plans.

Boustead said the compensation amount was verified by independent consultants and it “is still in negotiation with the Penang Chief Minister and state government on the form of compensation to be paid to Boustead Holdings”.

In a separate announcement, Boustead reduced the offer price for PHARMANIAGA BHD [] shares by 5% from RM5.75 to RM5.46 under the restricted offer due to the prevailing market conditions.

It said the price of RM5.46 per Pharmaniaga share represented an attractive entry level cost into Pharmaniaga.

Boustead cited the relatively stable income stream for Pharmaniaga from the concession held by Pharmaniaga for the distribution of selected medical products to government owned hospitals and the growth prospects of the pharmaceutical industry in Malaysia.

MMHE’s unit has secured a contract for the Teluk gas development project by ExxonMobil Exploration and Production Malaysia Inc.

It saidthe scope of work included the CONSTRUCTION [] to commissioning of two top sides and two jackets to support the platforms.

CIMB Group Holdings Bhd’s subsidiary CIMB Thai posted net profit of 856.1 million baht (RM87.26 million) in the nine-months ended Sept 30, 2011, down 4.2% from 893.6 million baht in the previous corresponding period.

CIMB Thai, a 93.15% of CIMB Bank Bhd, reported on Tuesday, Oct 18 this was mainly due to one-off gains from the disposal of Sathorn building and certain subsidiaries in the corresponding period in 2010. “Should these items be excluded, the profit would have increased 149.2% year-on-year,” it said.

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Maybank IB Views

ECONOMICS
Singapore: Trade, Sep 2011
Bumpy ride...

Worse-than-expected... Singapore's non-oil domestic exports (NODX) fell by -4.5% YoY as opposed to the expected +3.5% YoY gain. At the same time, Aug 2011's growth was revised downward to +3.9% YoY (previous: +5.1% YoY). YoY figures have been swinging between growth and contraction in the past seven months, resulting in sluggish 2011 YTD growth of +3.9% (Jan-Sep 2010: +24.8%; 2011: +22.8%). Next year's NODX growth is expected to remain equally sluggish at 3.8%, according to the forecast by Maybank FX Research.

RESULTS REVIEW
Public Bank RM12.50: Hold
Decent growth but priced in

Hold maintained. 3Q11 RM899m net profit, while up a commendable 15% YoY, is broadly within expectations, with 9M11 RM2.61b net profit (+18% YoY) at 77% of our full-year forecast and consensus. Positive surprises on margins were offset by lower-than-expected non-interest income (NII). Our forecasts are maintained along with our TP of RM12.30 (2012 P/BV of 2.5x, ROE: 21.8%).

Axis REIT RM2.45: Buy
On track; better 4Q ahead

Maintain Buy. AXRB's RM48m 9M11 core net profit (+32% YoY) came in as expected. The proposed acquisition of warehouses in Seberang Perai is expected to be completed by end-11, lifting AXRB’s total assets to RM1.32b (+4.8%; from RM1.26b). AXRB aims to grow its total asset size to RM2.0b by 2012. We maintain our earnings forecasts and RM2.70 DCF-based TP. The trust's proven track record in growing its asset portfolio and dividend income will remain the pull factors.

SECTOR UPDATE
Automotive: Underweight
Cool down in September sales

Post raya and Merdeka sales dampen September TIV. The MoM contraction in Sep's vehicle sales was widely anticipated following the rush of deliveries in Aug and shorter working month. Overall, we expect a seasonally softer sales trend in 4Q from 3Q TIV sales of 153,041 units and continue to be bearish on the sector, on softer consumer spending in light of a potential global economic slowdown. The sector remains an Underweight and we retain our Hold calls on UMW and MBM while Proton and TCM remain as Sells.

Technicals
The FBM KLCI surged 22.92-points to close at 1,465.35 yesterday. Its resistance areas of 1,467 and 1,487 may cap market gains, whilst the obvious support areas are located at 1,445 and 1,465.

Trading Idea is MFLOUR

Other Local News
Mah Sing Group: RM2.5b sales target next year. In order to achieve its sales target of RM2.5b, Mah Sing Group plans to adjust their product mix in line with today's sentiment and needs. Mah Sing Group will focus on lower-priced and smaller units of serviced apartments in the next two years to cater to demand of the young population. (Source: The Star)

PacificMas: OCBC bids RM450m for PacificMas units. OCBC Capital Malaysia planned to acquire 100% of Pac Lease Bhd, PB Pacific Sdn Bhd, PacificMas Fidelity Sdn Bhd and PacificMas Capital Sdn Bhd as well as an 85% stake in Pacific Mutual Fund Bhd with aggregate purchase consideration of RM450m. (Source: Bursa Malaysia)

Leader Universal: Controlling shareholders offer buyout. The controlling shareholders of Leader Universal Holdings Bhd, through HNG Capital Sdn Bhd (HNGC), have made a RM480.1m offer to acquire the entire assets and liabilities of the company for RM1.10 per share. The purchase shall be satisfied via RM410.9m in cash and RM69.2m as an amount remaining due and owing by HNGC as a debt due to Leader. (Source: The Star)

Proton: Offers lifetime warranty on power windows. Proton has once and for all moved to erase any doubt over defective power windows by offering a lifetime warranty for all new Proton models registered from Sept 1, 2011 and vehicles that are still under the manufacturer’s warranty as at Sept 1. (Source: The Star)

Construction: Second Penang Bridge ahead of schedule. Construction of the second Penang bridge is likely to be completed two months ahead of its projected November 2013 schedule. It is likely that work on the new bridge will achieve 70% progress by the end of this year. (Source: Business Times)

Transportation: Better KTM Komuter service by Jan 2012. KTM Komuter users can look forward to better commuting experience this January when the first of the 38 six-car electrical multiple unit (EMU) is put into service. To complement the new trains, an automatic fare collection system was being implemented and full refund will be given for trips that are delayed by more than 30 minutes. (Source: The Sun, The Star)

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