Maybank IB Views

COMPANY UPDATE
Gamuda RM3.83: Buy
NO to Selangor's water offer Shariah-compliant

As expected. SPLASH's rejection of the Selangor Government's latest offer was expected, for the offer values SPLASH at just 0.63x book, we estimate. We had anticipated the action by SPLASH's shareholders, including Gamuda which holds a 40% stake. We foresee the water consolidation exercise in Selangor to be another long drawn affair. No change to our earnings forecasts and target price for Gamuda.


S P Setia RM6.42: Buy
Strengthening its foothold in JB Shariah-compliant

New Tebrau land boosts EPS by 2.4%. We are positive on the recent land purchase in Tebrau given its fair pricing. The land is expected to enhance our FY13 earnings by 2.4%, whilst leaving negligible impact to our RM6.50 RNAV. We continue to like SP Setia (SPSB) and see the recent correction in the share price as an excellent opportunity to accumulate the shares. No change to earnings forecasts and RM7.15 TP (10% premium to RNAV). Reiterate Buy.


RESULTS REVIEW
CIMB Group Holdings RM8.45: Buy
Pipeline remains healthy

Pipeline healthy, regional operations contributing well. CIMB's pre-results briefing last Friday (2010 results will be announced 23rd Feb) largely steered clear of specifics. The overall tone nevertheless remains upbeat into 2011, for CIMB enters the year with a healthy business pipeline and strong growth in regional operations. No change to our earnings forecasts. Buy maintained with an unchanged DDM-based target price of RM10.30.


Digi.Com RM25.30: Hold
Results above, dividends below Shariah-compliant

Mixed surprises. RM1.18b 2010 net profit (+18% YoY) was above our expectation at 108% as ongoing operational efficiency initiatives continue to bring results. We upgrade our 2011-12 earnings forecasts by 6-7% p.a., and DCF based target price to RM26.70 (+7%), which implies 16.6x 2011 PER. A fourth 43sen single-tier DPS brings 2010 DPS to 163sen, representing 107% net profit payout (2009: 138%), below our 130% forecast. No change to our 105% payout forecast for 2011 which implies 6.7% net yield at current levels. Maintain Hold.


Guinness Anchor RM9.63: Hold
The second part of a perfect pint pour

Above expectations. RM103m 1HFY11 net profit (+46.5% YoY) made up 61% of our full-year forecast due to unexpected cost write-back. We maintain our earnings forecasts, pending details on the write-back which should be a one-off. No change to our RM10.60 DCF-based target price which implies 16x 2011 PER. Guinness remains a Hold.


SECTOR UPDATE
Banking: Overweight
Dec '10 statistics: Loans Up 12.8% YoY

2011 loan growth of 10-11%. The positive of 2010 is that household and corporate loan demand kept pace to support economic momentum, with growth rates of 13.2% and 12.3% respectively. Overall system loans ended the year up 12.8% YoY, marginally above our full-year forecast of 12%. We look to lending momentum of 10%-11% for 2011 and maintain an Overweight on the banking sector.


Technicals
The FBM KLCI plunged 25.54-points and closed at 1,521.89 last week as some further heavy profit-taking and liquidation activities caused the market’s large fall for the second consecutive week. The weaker support areas for the FBM KLCI are located in the 1,474 to 1,505-zone. The key resistance zone of 1,521 and 1,576 will offer major selling and liquidation activities.

Weekly trading idea is an ACCUMUALTE call on SAPCRES


Other Local News
Alam Maritim: Bidding for RM400m jobs. Alam Maritim Resources Bhd is bidding for RM400m worth of jobs this year to ride on the recovering sector which was subdued last year due to the global economic crisis. The offshore marine transportation service provider will submit bids in Indonesia, Brunei and Sabah as part of the group's long-term growth plan. (Source: Business Times)

Gaming: Genting said to be keen on Pan Malaysian Pools. The Genting group is making a bid for Pan Malaysian Pools Sdn Bhd (PMP), the number forecast operator (NFO) owned by Tanjong plc. Its bid is in the higher end among bids that have been submitted. The other bids are believed to be between RM1.8b to RM2.5b. (Source: The Edge Financial Daily)

Infrastructure: No rates hike on two highways. The Prime Minister announced that the toll rates for the Kuala Lumpur-Karak Expressway and East Coast Expressway Phase One would not be increased for the next five years. The decision was made following a review of transportation costs, including restructuring of the toll charges and to ease the people's burden. Furthermore, no compensation would be paid to the concessionaires of the two highways. (Source: The Star)

Infrastructure: All eyes and ears on second MRT line. The second mass rapid transit (MRT) line, which circles the Kuala Lumpur city centre (KLCC) orbital and known as the "circle line", is already in the final planning stage. The details are expected to be announced in March. The circle line is expected to cover the hotspots surrounding the KLCC, Jalan Bukit Bintang, the new Kuala Lumpur International Financial District in Dataran Perdana, KL Ecocity, Pusat Bandar Damansara and Sentul, among others. (Source: The Star)

Regulations: Changes in takeover rules. The Securities Commission (SC) and Bursa Malaysia raised the minimum shareholder approval threshold for takeovers via asset and liabilities route to 75% from the previous simple majority minimum. Other significant changes include the need for companies undergoing privatisation to obtain independent advice to ascertain if the offer is fair and reasonable and to ensure high net-worth investors are well informed of any structured products being offered to them. (Source: The Star)

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RHBInvest Research

Banks:
Dec ’10 system data – Ending on a strong note.
No change to our Overweight rating on the sector.
For an exposure to large cap banking stocks, our top pick is CIMB while Affin is our top pick within the small-mid cap space.

Corporate Highlights

Digi:
Ends on a high.
Fair value raise to RM29.10 from RM26.35. Maintain Outperform.

SP Setia:
Buying more land in Johor.
Maintain Outperform and fair value of RM7.39

Hiap Teck:
Proposes rights issue and convertible bond issue.
Fair value is maintained at RM1.18. Underperform.

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Maybank IB Research

In this edition of Weekly Equity Information Flyer, we highlight two companies for you all.

1. Hirotako Holdings Berhad, the key player in the automotive components making industry in Malaysia and Asean with strategic technical and equity partners inclusive of Toyota, Proton, Ford, Perodua, Honda and Volvo.


Price RM1.93


Target Price RM2.38

2. Mah Sing Group Berhad, the leading developer at the forefront of building quality homes and projects in strategic locations spread throughout Malaysia's economic nexus and property hotspots namely Kuala Lumpur and Klang Valley, Johor Bahru (Iskandar Malaysia) and Penang Island (North Corridor Economic Region).

Price RM2.26

Target Price RM2.88


Happy reading and Happy Chinese New Year!!

Thank you.

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RHBInvest Research

Petronas Chemicals:
New Coverage
The New Chemical Player In Town
Initiate with Outperform call and fair value of RM7.25/share


Corporate Highlights


CI Holdings:
Briefing Note
Bitter Days Ahead Surprise Sugar Bomb Dropped
Fair value is reduced to RM3.88 (from RM4.90 previously).
We downgrade our call on the stock to Market Perform.


Adventa:
Company Update
Share Price to Remain Buoyant On Talks of Takeover.
Our fair value have been raised to RM3.00 (from RM2.21).
We reiterate our Outperform call on the stock.


Fajarbaru:

2QFY11 Results
Slow 1HFY06/11 but stronger 2H ahead
Fair value is RM1.37. Maintain Outperform.

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RHBInvest Research

Dayang: Outperform
Maintaining the edge
Our new fair value is RM3.54/share (from RM3.36/share).
We thus maintain our Outperform call on the stock.


Commodity Corner


Crude Oil:
WTI crude oil price fell to US$87.70/barrel
Dialog (OP, FV = RM2.82) remains our top pick for the sector


Corporate Highlights


Glomac:
Buying 90-acre land in Puchong
Our indicative fair value is hence revised up to RM2.19 from RM2.15.
Maintain Outperform.

Read more...

Maybank IB Views

ECONOMICS
Economic Transformation Programme (ETP)
From "message" to "passage"...

On the progress of Economic Transformation Programme (ETP), 37 EPPs and at least RM80.6b of investment has been announced so far, accounting for 28.2% of the total 131 EPPs identified in ETP and 10.1% of the targeted investment value of RM794.5b. These confirmed EPPs are also "active" as they are in various implementation stages, and benefited from fast-tracking of approvals as well as targeted and specific tax and non-tax incentives. The progress in ETP jives with our view on Malaysia's 2011 economic outlook where business spendig upcycle is the key story.


RESULTS REVIEW
CapitaMalls Malaysia Trust
Rides on strong retail growth

Maintain Buy. CapitaMalls Malaysia Trust's (CMMT) RM45.9m 2010 distributable income (which reflected 5½ months of earnings since listing on 16 July) was within expectations. We expect a stronger 2011 supported by better rental and occupancy rates driven by strong retail growth. The recent proposed acquisition of Gurney Plaza Extension (GPE) could boost DPU by another 3-5% (post-placement). Currently, CMMT offers 7.1% yield compared to 7.8% for M-REIT and 6.7% for SunREIT. Maintain forecasts and RM1.20 DDM-based TP.


Quill Capita Trust
Challenging outlook

No surprises. Quill Capita (QCT) RM32.6m 2010 normalised net profit was within expectations. In our view, QCT needs a appealing story to regain investors' interest given its below average 7.1% yield (vs. 7.8% average M-REIT) on a back of over-supply outlook for the industry. We fine-tune our forecasts by +0.1-0.2% for a higher 95% payout (previously 92%) and change in balance sheet assumptions. Our DCF-based TP is raised to RM1.20 (+2 sen).


SECTOR UPDATE
Automotive
Caught in Neutral

No near-term catalyst. We expect 2011 TIV growth to slow to 2-3% as domestic demand drives towards saturation. Corporate earnings growth remains challenging. Margins will come under pressure on rising A&P expenses. The currency impact which aided 2010 earnings is unlikely to repeat. We are Neutral on the sector with Buys on Proton and MBM on undemanding valuations. We upgrade Tan Chong to Hold following a 15% correction in the share price since our Sell call on 23 Sept 2010. UMW remains a Hold.


Technicals
The FBM KLCI plunged 22.46-points and closed at 1,547.43 last week as some heavy profit-taking and liquidation activities caused the market’s large fall after the Thaipusam holiday on 20 January. The weaker support areas for the FBM KLCI are located in the 1,497 to 1,537-zone. The key resistance zone of 1,547 and 1,576 will offer major selling and liquidation activities.


Other Local News
Axiata: M1 gains traction. M1 recently announced a special dividend payout of 3.5cents per share, brings the total dividend per share for FY10 to 17.5 cents per share which translates into a dividend income of SGD46.6m (RM110.9m) to the Malaysian telco. (Source: The Edge Financial Daily)

F&N: Sells Fraser Business Park Phase II development project. F&NHB has accepted the call option notice from Tenggara Muhibbah Sdn Bhd to acquire the entire interest in Brampton for a total cash consideration of RM63m and realising a gain of RM29.6m in the process. (Source: Bursa Malaysia).

GUH: Seeks more land for property projects. While GUH Holdings Bhd continues to look at its printed circuit board (PCB) division as the primary driver of growth this year and in years to come, the firm continues to expand its landbank for other activities. GUH's Taman Bukit Kepayang development in Seremban, has so far seen development of 120 ha and there was a balance of about 108 ha left to be developed over the next six to seven years. (Source: Business Times)

MISC: Bidding for Brass LNG job. MISC Bhd is believed to have submitted a technical bid early this month to provide up to 14 vessels for Brass Liquefied Natural Gas (LNG) in West Africa. The vessels are required to have a carrying capacity of about 145,000 cu m each. However, details of the tender, which has attracted nine bids, have yet to surface. (Source: The Edge Weekly)

Malaysia Smelting: Singapore IPO shares priced at SGD1.75. Malaysia Smelting Corp Bhd's (MSC) public offering shares for a secondary listing on the Singapore Exchange Securities Trading Ltd (SGX) has been fixed at SGD1.75 or RM4.17 a share. MSC said it expected to raise about SGD40.1m (RM96m) from the public offer, with about SGD8.3m (RM20m) to be used for the expansion of mining and smelting operations through the acquisitions of plant and machinery. (Source: The Star)

Utilities: No change in Selangor water consolidation matrix. The consolidation of the water sector in Selangor seems unlikely to take place even with the latest offer from the state government to acquire all the four concessionaires- Puncak Niaga (M) Sdn Bhd (PNSB), Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Konsortium Abass Sdn Bhd and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH) for RM9b. (Source: The Edge Weekly)

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Maybank IB Views

1. Mitrajaya Holdings Berhad, a major player in helping Malaysia become a nation with modern infrastructure as well as providing quality living and working environment by playing a significant role in national projects such as the KLIA, KL's Light Rail Transit System, the Cyberjaya Flagship Zone etc.


Target Price - RM2.39

52 Week High - RM2.09

52 Week Low - RM0.59

ROE - 17.0%

2. Jerneh Asia Berhad, the Company that underwrites general insurance with over 1,500 agents and 19 branches strategically located in the country.

Target Price - RM3.52

52 Week High - RM3.52

52 Week Low - RM1.96

ROE - 6.9%

Happy reading!

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RHBInvest Research

WTK:

• Off to a good start
• We revised our fair value to RM1.56 (from RM1.44 previously).
• Outperform call

Corporate Highlights


Quill Capita:

• Below expectations again
• We revise our indicative fair value to RM1.20 (from RM1.23).
• We downgrade QC to Market Perform.

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RHBInvest Research

Top Story

Media

• FY20 print And TV Ad spend up 16.4% YoY
• Media Prima (FV=RM3.20) remains our preferred pick
• We maintain our Outperform call on Media Chinese (FV=RM1.20) and Star (FV=RM4.01).
• No change to our Overweight call on the sector.

Sector Update


Motor
APM:

• Fair value at RM6.16
• Outperform

MBM:

• Fair value at RM4.96
• Outperform

UMW:

• Fair value at RM7.51 (Upgraded from RM7.47)
• Market Perform

Proton:

• Fair value at RM5.60
• Market Perform

Tan Chong:

• Fair value at RM6.08 (Downgraded from RM6.16)
• Market Perform
• Ending the year high and within expectations.
• We maintain our Market Perform call on both stocks our fair value for Tan Chong is now RM6.08/share (from RM6.16/share previously) and for UMW it is RM7.51/share (from RM7.47/share previously).
• We expect the growth trajectory to be slower moving into FY11-12, as such, we maintain our Neutral call on the sector.

Corporate Highlights


Media Prima:

• Raising Ad rates for TV and Print
• Our fair value has been raised to RM3.20 (from RM2.82).
• We reiterate our Outperform call on stock.

TNB:

• A nice hop in 2011 but caution ahead
• Expect earnings ahead to suffer from higher coal cost.
• We have revised our indicative fair value to RM6.90 (from RM7.50). Market perform.

Read more...

Maybank IB Views

SECTOR UPDATE
Property: Overweight
Buoyant outlook

Maintain Overweight. The Malaysian Property Summit 2011 on 18 January reinforced our bullish stance on the sector. We reiterate that the upcoming MRT project is a catalyst for a structural change in the Greater KL / Klang Valley property scene, resulting in a positive re-rating of property/land values. Glomac and Mah Sing offer higher upside to our target prices after strong share price performance by SP Setia, our top pick for 2011. For REITs exposure, we like SunREIT.


RESULTS REVIEW
Tenaga RM6.49: Sell
Still waiting for the silver bullet Shariah-compliant

Strong topline underpinned by commercial and domestic users. 1QFY11 revenue of RM7.7b (5.3% YoY, -1.8% QoQ) was better than our expectation driven by strong power demand. Reduced excess capacity payment of RM200m partially offsets the impact of higher coal price (+RM168.8m YoY). However, Tenaga is facing severe headwinds from rising coal prices, dwindling gas supply and its silver bullet solution (tariff increase) is opaque at best. No change to our earnings forecasts and DCF-based target price for now. Maintain Sell.


ECONOMICS
CPI, Dec 2010
Inflation rate creeping up...

Consumer price index (CPI) rose by 2.2% YoY in Dec '10 (Nov '10: +2.0% YoY), the fastest pace in 18 months, mainly reflecting the impact of another round of fuel and food (sugar) subsidy reduction. MoM, it gained for the third consecutive month (Dec '10: +0.4%; Nov '10: +0.3%; Oct '10 +0.3%). For the whole of 2010, inflation rate was 1.7%. No change to our 2011 inflation rate forecast of 2.5%, and we still expect the Overnight Policy Rate (OPR) to be hiked by 50bps to 3.25% in 2H2011.


Technicals
The FBM KLCI closed lower by 3.53 points at 1,566.51 yesterday. Its resistance areas of 1,566 and 1,576 may cap market gains, whilst the obvious support areas are located at 1,545 and 1,561.
Trading idea for today is a TAKE PROFIT call on FABER.


Other Local News
AirAsia: Weighs listing in US or HK, spurred by demand for its shares from foreign investors. Earlier reports stated the low-cost carrier was looking at Thailand as an option for a secondary listing, in an effort to become a full-fledged Asean airline. Now, however, the company has set its sights on more mature markets, considering the strong buying interest in AirAsia's shares from investors in the US and Europe. (Source: Business Times)

Auto: TIV to hit record high this year. New motor vehicle sales are expected to grow by a modest 2.1% this year as car ownership in the country is already high even by developed-country standards, said the Malaysian Automotive Association (MAA). (Source: The Sun)

Aviation: Algae have potential as biofuel for aviation industry. Professor Dr Nor Aieni Mokhtar, the national oceanography directorate at the Ministry of Science, Technology and Innovation said unlike other biofuels such as bioethanol from corn and biodiesel from soyabean, the lipids from micro-algae can be transformed into jet fuel. (Source: Business Times)

EPF: Buys RM720m building on London's Fleet Street. The Employees Provident Fund (EPF) acquired a third office building of 225,000 sq ft on Fleet Street for £148m (RM717.8m). The building has housed law firm Freshfields Bruckhaus Deringer since 1989 and has over 10 years left on its lease. (Source: The Edge Financial Daily)

F&N: Targets Brunei, Thailand expansion. Fraser & Neave Holdings Bhd (F&N) is seeking to become a regional food and beverage (F&B) giant and has secured rights to market, distribute and sell its products in Thailand and Brunei. (Source: Malaysian Reserve, Business Times)

MTD: Road blocks in privatization. The bid by joint offerors (holding a stake of more than 50% in MTD Capital Bhd) to take over the remaining shares in the group at RM9.50 per share may not materialize now that the stock has closed above the offer price. (Source: The Edge Financial Daily)

Pasdec: To launch RM252m projects. Kuantan-based property developer Pasdec Holdings Bhd plans to launch at least RM252m worth of properties in Pahang this year. These include integrated developments Pasdec Persona, Pasdec Perdana and Pasdec Idaman as well as upscale mixed commercial developments Pasdec Mahkota and Pasdec Avenue. (Source: The Edge Financial Daily)

Steel: Vale project may cost up to RM14b. Brazilian mining giant Vale International SA's construction costs in its iron-ore transshipment project will be between RM9b and RM14b over a five-year period, and the project will likely start in July or August this year. Perak government has no equity participation in the project while local companies will be subcontracted to participate in the trickle-down activities. They will include Malaysian companies involved in iron ore, steel, fabrication, shipbuilding, canning and tin. (Source: The Star)

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Stocks to watch: Tenaga, Puncak, F&N, Masteel

KUALA LUMPUR: Stocks on Bursa Malaysia may see some downside pressure on Friday, Jan 21 after China key stocks index fell 2.9% on Thursday on concerns of more monetary tightening.

At Bursa, the FBM KLCI fell on Wednesday, weighed down by losses in CIMB but the losses were relatively limited across the broader market, despite the firmer regional markets.

Companies with fresh corporate news including TENAGA NASIONAL BHD [], Fraser & Neave Holdings Bhd, Malaysia Steel Works (KL) Bhd (Masteel) and KUB MALAYSIA BHD (KUB) and PUNCAK NIAGA HOLDINGS BHD could see trading interest.

TNB’s board of directors expects the group's prospects to be very challenging for the current financial year due to the rising coal prices in the absence of a tariff review.

It reported earnings of RM712.9 million in the first quarter ended Nov 30, 2010, just a marginal 1% increase from the RM706.3 million a year ago as it was impacted by higher coal prices. The power giant said on Wednesday, Jan 19 there was an increase in forex translation loss of RM104.8 million as compared to RM45.4 million a year ago due to the strengthening of the yen and US dollar against the ringgit.

Puncak Niaga could see some selling pressure after the company and its joint venture partner have failed in their tenders for the two water supply and drainage projects in India. Puncak said that its partner P&C CONSTRUCTION s (P) Ltd had dissolved the joint venture agreements following the unsuccessful bids.

Fraser & Neave will allocate up to RM500 million as it seeks to take on a more regional and full fledged group from its current form as a tightly controlled food and beverage firm into a more regional and full fledged group.

It has also received the approval to market its isotonic drink 100PLUS and carbonated soft drinks in Thailand and Brunei, a move which will enhance its beverages business in Thailand especially.

Masteel and KUB have proposed to build and operate a 100km inter-city rail transit system in Iskandar Malaysia, which will connect to the MRT line from Singapore. The companies said the project could cost over RM1 billion, and consists of up to 25 commuter stations in major towns in the Iskandar Malaysia region in the initial stage.

Other stocks in the news would be OSK HOLDINGS BHD after its investment bank, which is seeking opportunities to expand into Thailand, has received the go-ahead from the potential securities company for a due diligence to be carried out.

In UMW HOLDINGS BHD, the automotive and oil and gas player is allocating about RM800 million for expansion, of which RM500 million would to be expand its local operations including the automotive business.

Read more...

TNB sees marginal net profit growth

KUALA LUMPUR: Tenaga Nasional Bhd's (TNB) net profit for the first quarter ended Nov 30, 2010 increased marginally to RM712.9mil from RM706.3mil a year earlier while revenue grew 5.3% to RM7.73bil from RM7.34bil during the same period.

The company's performance reflected a 6.1% increase in operating expenses to RM6.56bil from RM6.18bil previously, mainly attributed to the higher cost of electricity generation from the increase in demand and coal prices.

As a result of the higher operating expenses incurred, TNB reported a lower earnings before interest, tax, depreciation and amortisation (EBITDA) margin of 28.5% compared to 29.5% recorded in the previous corresponding quarter.

Speaking about the group's electricity demand growth at a press conference yesterday, TNB chairman Tan Sri Leo Moggie said the growth was driven principally by the commercial and domestic sectors that recorded demand growth of 7.7% and 9% respectively.
Tan Sri Leo Moggie points to a report detailing the company’s financial performance while Datuk Seri Che Khalib Mohamad Noh (left) and chief financial officer Mohamed Rafique Merican look on.

Commenting on the impact of higher coal prices on TNB, president and chief executive officer Datuk Seri Che Khalib Mohamad Noh said that with generation from coal-fired power plants increasing to 40.2% to meet increasing demand, the higher coal price had increased total operating costs.

With current coal prices continuing to rise, it is now critical that the fuel cost pass-through mechanism be considered to ensure TNB's rising costs are adequately compensated, he said.

Under the current tariff, TNB's coal cost is only covered up to US$85 per tonne. Che Khalib said that for every US$10 per tonne increase in coal prices, TNB's earnings would deteriorate by about 18% in terms of profitability.

“We are projecting coal prices to average at about US$110 for the whole year. However, considering that the ringgit has appreciated against the US dollar, we think coal prices will affect us by about 20% for the whole financial year,” he said.

Going forward, Che Khalib said that TNB's bottomline for its second quarter ending Feb 28, 2011 would be the most affected as coal prices had increased in the past couple of months.

“Order (for coal) for the second quarter is made in the first quarter, so our (earnings in the) second quarter will be hardest hit. It will be affected, definitely.

“Whatever we purchase now will only be delivered two or three months from the date we fixed the order. Coal is not something that you buy today, it gets delivered tomorrow,” he said.

Che Khalib said coal prices had gone up “quite a substantial amount” over the past two months due to shortage of coal as a result of the Queensland (Australia) flooding and also because the demand for coal had increased during the period.

“We hope the price will ease after February, after the winter period, and then we will be able to determine what will be a more realistic coal price for the full year. But based on the trend in the last two months, we believe it will be over US$100.”

On another note, Che Khalib said the higher coal prices would not have an impact on the development of TNB's three new power plant projects located in Ulu Jelai, Pahang, Hulu Terengganu, Terengganu and Jana Manjung in Perak.

“Not really, because over the next two years, we can still fund our projects via internally generated funds. For the Jana Manjung project, that will be undertaken through an SPV (special purpose vehicle), which will raise its own capital via loans or the issuance of bonds.

“(As for) the existing two, Ulu Jelai and Hulu Terengganu, even though it's about RM3bil, it's over a period of six years. That's about half a billion a year. We should be able to finance these projects through our internally generated funds. It's not like we need that RM3bil immediately.”

Asked about a potential tariff hike, Che Khalib said: “We have not done anything.”

Meanwhile, updating on the renegotiation between the Government and independent power producers (IPPs), he said the Government was still in discussion with the IPPs.

“We need to respect the agreement that was signed. Ultimately, what is important is to ensure that IPP renegotiation will benefit the people,” Che Khalib said, adding that TNB hoped the talks between the IPPs and the Government would be concluded this year.

On another note, Moggie said nuclear power would be a viable alternative source of fuel for power generation in the future.

“The experience from many countries that use nuclear power has been that it has a much more stable pricing over the long term. They have been using nuclear power and have been able to maintain a reasonably stable tariff over a long period of time.”

Read more...

Maybank IB Views

COMPANY UPDATE
Hartalega Holdings RM5.44: Buy
The nitrile wave keeps rolling Shariah-compliant

Upgrade to Buy with a RM6.80 DCF-based TP. Hartalega is set to profit from the structural demand switch to nitrile gloves, at the expense of latex gloves. Demand for nitrile gloves will continue to encroach into the latex gloves market as nitrile gloves ASP discount to latex widens (atypical in the past). Top Glove's M&A search for nitrile glove-makers and latex gloves' declining earnings are some of the recent developments that support our Buy call for Hartalega.


Technicals
The FBM KLCI closed lower by 4.45 points at 1,570.04 yesterday. Its resistance areas of 1,570 & 1,576 may cap market gains, whilst its firmer support areas are located at 1,558 and 1,568.

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


Other Local News
Axiata, DiGi: To save RM2.2b with network deal. Celcom Axiata Bhd and DiGi Telecommunication Sdn Bhd have signed a Network Collaboration Agreement. The scope of the tie-up will initially focus on the sharing of telecommunication sites, access transmission (microwave links), aggregation transmission and trunk fibre transmission. Full realization of cash savings is estimated to be about RM2.2b over 10 years. They expect to see incremental savings as early as 2012 and gradually ramping up to an average annual savings of RM150m to RM250m after 2015. (Source: Bursa Malaysia)

Pos: Khazanah to invite bids for Pos stake. Khazanah Nasional Bhd will invite bids this week through its advisor CIMB Investment Bank Bhd for the divestment of its 32.2% stake in Pos Malaysia Bhd. Pos Malaysia's stake divestment would be a two-stage process, with the first stage addressing regulatory aspects such as the increase in postage tariff rates and rise in salaries and allowances for most of Pos Malaysia's staff. While stage one has not been fully completed as other regulatory aspects such as the Postal Bill have yet to be addressed, Khazanah will proceed with stage two, where it will draw up a bidding and evaluation process to select a new shareholder for Pos Malaysia. (Source: The Star)

Proton: Seeks RM2.35b funding to revive Lotus. Proton Holdings Bhd is in talks with CIMB Bank and several others to secure loans and investments totaling GBP480m (RM2.35b) needed to turn around Group Lotus. The funds will mainly come from loans and the rest will be from Proton's additional investments and revenue from Group Lotus. (Source: The Star)

KPJ: To acquire two medical centres. KPJ Healthcare Bhd’s wholly owned subsidiary, Kumpulan Perubatan (Johor) Sdn Bhd (KPJSB) is buying a 100% stake in Sibu Medical Centre Corp Sdn Bhd (SMCC) and Sibu Geriatric Health & Nursing Centre Sdn Bhd (SGHNC). KPJSB will pay RM26.9m for SMCC and RM1.24m for SGHNC. (Source: Bursa Malaysia)

Jetson: Buys lands in Penang for Rm14m. Kumpulan Jetson Berhad's 51% owned subsidiary, Jetson Development Sdn Bhd has acquired 48,290 sq ft of lands in Penang for RM14m from Malaysian Building Society Bhd (MBSB). The three pieces of land are located in Georgetown. (Source: Bursa Malaysia)

Property: Transactions may hit RM100b. A total of 342,179 property transactions worth RM96.8b were recorded between January and November last year, which means the full year's transactions could reach the RM100b mark. This is the first time transactions value has reached this figure. (Source: The Star)

Manufacturing: To attract over RM50b. Malaysia expects investments in the manufacturing sector to surge to more than RM50b this year. The manufacturing sector, which was the fastest growing sector last year, attracted RM47.2b in approved investments in 910 projects, a 44.8% jump compared with RM32.6b received in 2009. The US was the largest source with investments totaling RM11.7b, mainly in electrical and electronics (E&E), machinery and equipment and scientific and measuring equipment. Other top investors were Japan, Hong Kong, Singapore and Germany. (Source: Business Times)

Khazanah: Portfolio at record RM75b. Khazanah Nasional Bhd saw the net worth of its portfolio rise 39.4%, or RM21.2b, to a record RM75b as at Dec 31, 2010 from RM53.8b in 2009. Total shareholders' return on Khazanah's portfolio of listed companies in 2010 stood at 33.4%, outperforming the FTSE Bursa Malaysia KL Composite Index's total return of 23.3% over the same period. (Source: The Star)

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Ranhill

Based on the daily chart we can see that volume at this counter start increasing starting end of last year which is related to world oil price increased. Current support is at RM0.83 and current resistance is at RM0.92.

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RHBInvest Research

Sector Call


Telecom:

• DiGi-Celcom collaboration to yield big cash savings

• Estimate potential upside of 96 sen (+3.6%) and 9 sen (+1.6%) to DiGi’s and Axiata’s fair value respectively

Corporate Highlights

Axis REIT:

• More acquisitions in the pipeline
• Post the completion of the acquisition of Axis Eureka and PTP D8 before 1Q2011 as well as the disposal of Axis North Port LC1
• Six potential assets in the pipeline, worth about RM400m
• Maintain Outperform with indicative fair value at RM2.71

KPJ:

• Expanding its foothold to Sibu, Sarawak
• New acquisition would be able to contribute RM3m to its total earnings in FY11
• Outperform with fair value of RM4.39

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Maybank IB Views Stock Recommendation

This week, we have 4 recommendations of counter for your reading material.


1. Padiberas Nasional Berhad, the company that maintains national rice stockpile and manages the "guaranteed minimum price" of paddy on behalf of the Government.
( Target Price: RM3.50 )

2. Handal Resources Berhad, the only company in Malaysia to provide fully integrated offshore crane services to the oil and gas industry. ( Target Price: RM1.47 )

3. Eksons Corporation Berhad, one of the largest manufacturer of tropical thin plywood in the Asia Pacific region with over 90% of its products are earmarked for the export market.
( Target Price: RM1.36 )

4. Ramunia Holdings Berhad, the company that fabricates offshore oil and gas related structures with clients ranging from, among others, Petronas Carigali Sdn Bhd, Exxonmobil, Sarawak Shell Berhad, Sabah Shell Petroleum Co., Keppel FELS, Samsung Heavy Industries Co, Ltd etc.

( Target Price: RM0.79 )

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Maybank IB Views

SECTOR UPDATE
Oil & Gas: Overweight
Marginal field-driven consortium project? Shariah-compliant

The much anticipated marginal field projects could lead to the setting up of several oil consortiums as operators. This may involve the participation of several local service providers. We identify Dialog, Kencana and SapCrest as leading candidates to participate in this set-up, based on their balance sheet strength, skill sets, operating track records and overseas exposures. If our views on their potential participation are proven to be correct, we foresee a re-rating as these players re-model their businesses to be the 'hybrid operators'.


COMPANY UPDATE
S P Setia RM6.70: Buy
Lands Bangsar land; Fund raising for a better future Shariah-compliant

Maintain Buy. We are positive on the 40.2-acre land in Bangsar (+22 sen to RNAV), while the proposed private placement could dilute our FY11-13 EPS by 4.8-13% and RNAV by 1 sen to RM6.49. We however think that the money raised should support further land acquisitions and faster the pace of launch for the Bangsar land. Maintain our earnings forecasts but raise RNAV to RM6.50 (+22 sen) and TP to RM7.15 (10% premium to RNAV).


RESULTS REVIEW
Axis REIT RM2.38: Buy
Results in line; sells Axis North Port LC1 Shariah-compliant

Higher dividends for 2011. Axis REIT (AXRB)’s RM52.6m 2010 realised net profit (+23% YoY) was within expectations. Its disposal of Axis North Port LC1 (ANP) for RM14.5m will result in an additional 0.2 sen DPU for 2011. We reduce our 2011-13 earnings forecasts by 1.8-5.1% and DCF-based TP by 3 sen to RM2.60 for post-ANP sale. Reiterate Buy on AXRB.


Technicals
The FBM KLCI rose 4.60 points to 1,574.49 yesterday. Its resistance areas of 1,576 may cap market gains, whilst its firmer support areas are located at 1,560 and 1,574.
Trading ideas for today are two BUY calls on Bstead and Masteel.


Other Local News
QL: Places out 20.8m new shares at RM5.60 each. QL Resources Bhd has completed the book building exercise for the offering of 20.8m new shares pursuant to its private placement exercise, which is estimated to raise RM116.6m. The private placement was oversubscribed with healthy demand from foreign institutional investors. The issue price has been fixed at RM5.60 per placement share which represents a discount of 5.50% to the five-day volume weighted average market price of QL's shares. OSK Investment Bank Berhad acted as sole placement agent for the private placement. (Source: Bursa Malaysia)

AirAsia: Introduces fly-thru service. AirAsia introduces "Fly-Thru" service for its guests on multiple-flight travel from Thailand to perform a single check-in for their original and connecting flights right through to their final airport of destination. Fly-Thru is available to guests traveling on selected AirAsia (short-haul) and all AirAsia X (long-haul) flights transiting through Kuala Lumpur. Guest could connect to their next flight to their intended destination without the need for immigration clearance or a transit visa in Malaysia. (Source: Bernama)

Malaysian Smelting: Expects SGX listing soon. Malaysia Smelting Corp Bhd (MSC) expects its proposed secondary listing on the Singapore Exchange (SGX) main board to take place before the end of this month. This will make MSC dual-listed on both Bursa Malaysia and SGX. The size of the IPO is between 12.5m and 25m new MSC shares, with an expected gross proceeds of RM100m. (Source: The Star)

LTAT: Declares 14% dividend and bonus. The Armed Forces Fund Board (LTAT) has declared a 14% dividend and bonus for 2010 with a total payout of RM616.3m, 7.2% higher than the RM575.2m paid in 2009. LTAT registered a total income of RM747.5m in 2010, which was not only the highest recorded since the fund's establishment 38 years ago, but was also 34.7% higher than 2009's income of RM554.7m. (Source: The Edge Financial Daily)

O&G: Petronas' multi-billion ringgit job award likely by end of the month. Petroliam Nasional Bhd (Petronas) is expected to award multi-billion ringgit contracts for the development of marginal oil fields by the end of this month to several consortia comprising local and foreign companies. Petronas will unveil a new business model on the development of the marginal oil fields and possibly, more incentives for the industry. (Source: The Star)

Plantation: Local refiners snap up cheaper Indonesian palm oil. Malaysian refiners are snapping up more Indonesian crude palm oil, taking advantage of its widening discount to local production. Indonesian crude palm oil for February delivery was trading at RM3,690 per tonne, some RM60 lower than in Malaysia despite dealers pricing in a possible Indonesian government move to raise export taxes next month. Indonesia is likely to raise export taxes to 25% in February from 20% currently. (Source: The Edge Financial Daily)

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RHBInvest Research

Top Story

TNB – Bracing for higher coal prices
Expected to release its 1QFY11 results on 19 Jan at around RM700-800m
Assuming Nov ‘10 electricity unit sales was sustained yoy, estimate 1QFY11 electricity unit sales to grow 3% yoy
Expect 1QFY11 total operating cost to remain stable
Market Perform with FV of RM7.50


Corporate Highlights


ViTrox:
Acquire US-based Agilent and has been able to improve the performance of the equipment and cut per unit costs
Forecast FY10-13 net profit to grow 1,103.4%, 40.5% and 34.9% p.a. respectively
Derived an indicative fair value of RM1.72/share



SP Setia:
Proposed placement and bonus issue
On a proforma basis, SP Setia’s outstanding shares and shareholders’ fund could be enlarged to 2.08bn and RM4.12bn
FY11-13 EPS is adjusted lower due to larger share base
Outperform with fairvalue of RM7.39


Freight:
Acquiring a warehouse for RM14.5m
The acquisition will raise FM’s net debt and net gearing
Maintain Outperform with fair value of RM1.57


Axis REIT:
4Q10 realised net profit was in line with our expectation and consensus estimates
Announced its proposed disposal of Axis North Port LC1 in Klang for RM14.5m cash
Maintain Outperform with fair value of RM2.71

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RHBInvest Research

Top Story: Public Bank – Expect a solid finish to FY10
Announcing its 4QFY10 results later this month with full-year net profit estimate of RM3bn.

• With 9M annualised gross loan growth at 13.7%
• Non-interest income to remain at healthy
• Expect a second interim gross DPS of 35 sen
• Maintain Outperform with FV of RM15.40

Construction: BLT to roll out RM3bn jobs this year

• Believed that the RM3bn police quarter/station contracts largely went to privately owned Class-A Bumiputera contractors.
• Expect the winners of the RM3bn jobs to sub-contract out part of their jobs that will translate orderbooks to other players in the industry.
• Downgrading IJM to Underperform from Market Perform as valuations are now ahead of fundamentals.
• Maintain Overweight. Top "tactical" pick is Gamuda (FV=RM4.51) and top "value" pick is Fajarbaru (FV=RM1.37)

SP Setia:

• Swapping of IMR Land in Bangsar for a new integrated complex construction at Setia Alam
• Bangsar IMR Land to be developed into an integrated complex of residential and high-rise office buildings
• Maintain Outperform with an unchanged fair value of RM8.05

VS Industry:
Orders from for Dyson vacuum cleaners have already exceeded internal expectations
Recently secured a contract to produce components for an international leading water management solution company based in Australia
Raised our FY11-13 revenue assumptions by 1.6%, 3.6% and 0.1% respectively
Upgrade to Outperform with fair value of RM2.44

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Kuala Lumpur Tin Market expected to see a mild upside this week

KUALA LUMPUR: The Kuala Lumpur Tin Market (KLTM) is expected to see a mild upside bias this week, bolstered by fresh demand globally.

Dealers said the local tin is expected to trade above US$27,000 per tonne this week with active participation of overseas traders, especially from Europe.

Demand is picking up, while sellers are holding back, as they wait for prices to further increase.

“Apart from this factor, the KLTM from time to time will also look at the movement on the London Metal Exchange (LME) for direction,” the dealer added.

At the week's close, higher demand and a strong performance of the metal on the LME saw the local tin price, close as high as US$26,900 per tonne last Friday from the US$26,500 previous week.

Local, Japanese and European traders were present in the market, throughout the week.

On the LME, the tin price rose to US$26,850 per tonne last Friday as against US26,250 per tonne at the end of previous week.

Turnover for the week advanced to 255 tonnes from the 200 tonnes previous week.

The premium, based on a formula that includes freight, insurance and other financial costs, fell to US$470 per tonne last Friday compared with US$670 per tonne at the end of previous week. Bernama

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Maybank IB Views

COMPANY UPDATE
S P Setia RM6.70: Buy
Swap for prime Bangsar land Shariah-compliant

Maintain Buy. We are positive on the potential 40-acre land in Bangsar under a land swap agreement with the government. The development could boost our RNAV/sh estimate for S P Setia (SPSB) by 19sen to RM6.47. We retain our RM6.28 RNAV estimate and RM6.90 TP (10% premium to RNAV) for now, which have upside potential. During peak times, SPSB had traded up to a 20% premium to its RNAV which implies RM7.54 potential target based on our existing RNAV estimate.


Malaysia Marine and Heavy Engineering Holdings RM6.37: Buy
New year, new head, new direction Shariah-compliant

We are positive. Dominique's appointment as MHB's MD signals the Group's commitment to: (i) enhance and internationalise its franchise values, (ii) improve collaborations between MHB and Technip, and (iii) capitalise on Technip's strength in subsea structures, offshore platforms and onshore mega complexes areas.


Technicals
The FBM KLCI lost 2.32-points and closed at 1,569.89 last week as some profit-taking activities caused the market’s small decline after the previous week’s surge. The firm support areas for the FBM KLCI are located in the 1,531 to 1,569-zone. The key resistance zone of 1,571 and 1,576 may offer some token selling only.

Weekly trading idea is a technical ACCUMULATE call for AIRASIA.


Other Local News
TNB: Considers additional capex of RM300m. Tenaga Nasional Bhd (TNB) is considering an additional capital expenditure (capex) of RM300m over the next two years, aimed at improving supply reliability in the Iskandar region of Johor. Under a special project called "Iskandar 10", TNB aims to reduce the level of interruption in the critical area to 10 minutes within the next three years. (Source: The Star).

DiGi: Unit applies for spectrum. DiGi Telecommunications Sdn Bhd, a wholly-owned subsidiary of DiGi.Com Bhd, has submitted its application to the Malaysian Communications and Multimedia Commission (SKMM) for spectrum in the 2600MHz band. This is pursuant to SKMM's offer to award 20MHz of this spectrum via apparatus assignment subject to DiGi submitting a suitable business plan. (Source: Bursa Malaysia)

MUI: More parties eye MUI insurance unit. Malayan United Industries Bhd (MUI) has received Bank Negara Malaysia's approval to commence preliminary negotiations with Liberty International Holding Inc to sell its entire 52.2% equity stake in MUI Continental Insurance Bhd. Liberty is a unit of Boston-based Liberty Mutual Group, the sixth largest property and casualty insurer in the US. (Source: The Edge Financial Daily)

Finance: Government's RM10b strategy to build police quarters, facilities. The Minister of Finance Inc's 99.99%-owned Pembinaan BLT Sdn Bhd (PBLT) will raise up to RM10b to finance the construction of 74 police quarters and facilities. CIMB Investment Bank Bhd is the principal adviser and lead arranger for the Islamic medium term notes (IMTN) programme whereas Bank Islam Malaysia Bhd is the syariah adviser and the consultant to PBLT would be Prokhas Sdn Bhd. The joint lead managers are AmInvestment Bank Bhd, Bank Islam, CIMB, Maybank Investment Bank Bhd and RHB Investment Bank Bhd. (Source: The Edge)

E&U: First power line from Bakun to Bintulu completed. The first line to transmit power from Bakun dam to Similajau, Bintulu, has been completed while Sarawak Energy Bhd's (SEB) Similajau power sub-station in Bintulu is expected to be ready by March. Works are now underway to construct a power sub-station within the proposed Samalaju Industrial Park to supply electricity to energy-intensive industries such as the aluminium smelting and solar panel plants. (Source: The Star)

Construction: MRT may cost over RM36.6b. The cost of building the mass rapid transit (MRT) transport system, which is scheduled to begin construction in six months, may swell beyond the projected RM36.6b as developers and residents have begun lobbying on the proposed locations and types of stations. Business leaders want the MRT stations to be located close to the centre of commercial activity, in some cases where they have projects or plan to build one, but residents living near or adjacent to the proposed lines have voiced objection against the MRT tracks being built above ground and want the lines and stations to be underground so as to avoid congestion and noise pollution issues. (Source: The Star)

Plantation: Severe labour shortage in Sarawak estates. Sarawak oil palm companies want the state government to allow the recruitment of foreign workers other than Indonesians to address the worsening labour shortage issue. They have also asked the authorities to extend work permits to 10 years from the present six years for selected skilled foreign workers. (Source: The Star)

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Eye On Stocks

TEBRAU Teguh Bhd shares climbed to a 19-month high of 99 sen on follow-through buying momentum in early business before reversing to settle at 90 sen, down 4.5 sen, with weakness in the primary market dampening investors' enthusiasm yesterday.

Based on the daily bar chart, this counter has the potential to overcome the heavy barrier of RM1 going forward despite yesterday's pullback, as interest remains high. If successful, it will bring about a strong buy signal, thus propelling the bulls to a higher ground in the near term.

Apparently, the daily slow-stochastic momentum index was on the uptrend. After pulling back from the 92% level to a low of 68%, the oscillator per cent K reversed up and crossed above the oscillator per cent D to trigger a short-term buy on Jan 13.

Meanwhile, the 14-day relative strength index remained in bullish territory, ending at 89 points yesterday.

Elsewhere, the daily moving average convergence/divergence histogram expanded sharply against the daily signal line to stay bullish. It flashed a buy on Dec 9 last year.

Technically, indicators are painting a positive landscape. Combined with robust trading volumes, it looks like a major breakout may be in the pipeline, clearing the way for prices to challenge the stiff overhead resistance of RM2 in the medium-term, which is the previous rally peak established on April 10, 2007.

Current support is envisaged at the 86.5-sen level.

source: thestar

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Market sentiment remains concrete

REVIEW: Shares on Bursa Malaysia started the second week of the new year on a steadier note, with the FBM Kuala Lumpur Composite Index (FBM KLCI) advancing 2.43 points to 1,574.64.

However, the positive momentum was short-lived, as a lack of fresh leads from abroad prompted investors to sell into strength after the recent strong rally and, soon, the local bourse tripped into correction.

Apparently, overnight US stocks sagged 22.55 points to 11,674.76 the previous Friday, as a court ruling in a key foreclosure case combined with disappointing jobs report triggered a bout of liquidation.

Over on the New York Mercantile Exchange, world crude oil futures fell 35 cents to US$88.03 a barrel, tracking the declines in equities.

Elsewhere, frail key regional exchanges prompted institutional players to stay on the sidelines, adopting a “wait-and-see” attitude.

Tracking the dismal global trend, the key index drifted lower in lacklustre trade amid losses in quality stocks to settle down 8.69 points to 1,563.52 on Monday.

Wall Street suffered another fall in overnight session, but a push in late trade on optimism for a solid corporate earnings season helped equities to bounce off lows and settle slightly easier.

Unlike stocks, crude oil reversed trend, spiking a huge US$1.22 a barrel to US$89.25 on worries about shortage after the Trans Alaska crude pipeline was shut following a leak but Asian stocks had a muted response as renewed worries about European fiscal problems and Portugal needing a bailout dampened sentiment.

In the wake of uncertainty in the euro-zone, blue chips extended the correction process, but in stark contrast, second and lower liners attracted significant interest on greater retail participation, betting on immediate gains ahead of the Lunar New Year.

And that somewhat helped cushion the downside. At the end of Tuesday's session, the key index only shed a small 0.58 of a point to 1.562.94 in mixed mode, with winners and losers almost equal.

After a short breather, market sentiment changed for the better on bargain-hunting interest, spurred by an announcement by the Government on the 19 Entry Point Projects valued at RM67bil under the Economic Transformation Programme.

Other factors, such as Wall Street's snapping the three-day losing streak, another rally in crude oil prices and the steadier regional markets also aided the local bourse.

The FBM KLCI posted a minor gain of 3.55 points to 1,566.49 as the local boys were reluctant to chase stocks, simply because Bursa Malaysia was still in consolidation mode in mid-week.

Thereafter, Bursa Malaysia notched up an extra 5.07 points to 1.571.56 amid follow-through interest on Thursday before reverting to correction mode from profit-taking activity, with the key index shedding 1.67 points to 1,569.89 yesterday, undermined by overseas weakness.

Statistics: For the week, the principal index eased 2.32 points, or 0.1% to 1,569.89 yesterday, versus 1.572.21 on Jan 7.

Weekly turnover stood at 12.254 billion units worth RM13,678bil, against 10.707 billion shares valued at RM15.261bil traded previously.

Technical indicators: After pulling back from the top to the 56% level in mid-week, the oscillator per cent K drifted sideways-to-marginally higher before climbing over the oscillator per cent D of the daily slow-stochastic momentum index to trigger a weak buy signal yesterday.

Throughout the week, the 14-day relative strength index was trapped between the 86-point and 73-point band.

Meanwhile, the daily moving average convergence/divergence (MACD) histogram retained the buy, trending above the daily signal line.

Elsewhere, weekly indicators continued to improve, with the weekly slow-stochastic momentum index firming and the weekly MACD issuing a buy call.

Outlook: Bursa Malaysia was range-bound the past week, with the key index fluctuating within a moderate band, undergoing correction after peaking out temporarily at an all-time high of 1,576.95 on Jan 6, as investors took the excuse of the indecisive offshore performance and overbought reason to book profits. Other contributing factor was the uncertainty in the Euro zone.

Based on the daily bar chart, the ongoing correction process so far was healthy and even though the bulls had paused for air, trading volumes remained brisk. This may indicate that the underlying tone of the market still is solid and under such condition, the bulls usually will resume their rally, once the overbought position is fully neutralised. Perhaps, investors can consider accumulating more.

Technically, indicators are positive, suggesting an uptrend continuation may come about soon.

A successful clearance of the recent peak is likely to see the key index testing the 1,600-point psychological level. The next upper resistance can be expected at the 1,620-1,630 points, followed by the 1,650 points.

Support floors are expected at the 14-day simple moving average (SMA) of 1,550 points, 21-day SMA of 1,535 points and the 50-day SMA of 1,517.

source: thestar

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Maybank IB Views

MARKET STRATEGY
Market Strategy
Chasing liquidity

KLCI the best performer todate. KLCI 30 gained 52.6 pts in the first 10 trading days of 2011, making up 27.6% of our 191 pts target climb for the whole of 2011. KLCI's YTD gain (+3.5%) was above that of the other major ASEAN markets: STI +2.1%, SET +0.2% and JCI -3.7%. Positive sentiment in the Malaysian equity market eminating from the government's Economic Transformation Programme and expectations of an early 13th General Elections supported the KLCI uptrend.


COMPANY UPDATE
IPO: Benalec Holdings RM1.00
Small-cap Construction feature Shariah-compliant

One-stop marine construction solutions provider. Benalec, listing on the Main Market on 17 January, offers marine construction services (land reclamation, dredging) and vessel chartering which contributed 79:21 to FY10 (June) gross profit. We forecast 56% net profit growth in FY11 and 24% in FY12. Industry outlook is bright and Benalec is in a good position to secure major works. We fairly value the stock at RM1.95 based on sum-of-parts, implying 12.5x FY12 PER.


Technicals
The FBM KLCI rose 5.07 points to 1,571.56 yesterday. Its resistance areas of 1,573 and 1,576 may cap market gains, whilst its firmer support areas are located at 1,558 and 1,571.

Trading Idea for today is a technical Firm Buy call on TONGHER and an Accumulate call on SPSETIA.


Other Local News
Maybank: Ringgit loans for British properties. Malayan Banking Bhd (Maybank) expects its Overseas Mortgage Loan Scheme, the bank's first ringgit-denominated mortgage facility for property purchase in Britain, to boost its home financing division. With the new product, the division is expected to grow more than 13% in its current financial year ending June 30, 2011. The mortgage was designed for high net worth customers interested in buying properties in Britain due to the favourable currency exchange rate. (Source: The Star)

Sime: Plans 15 property launches by June. The Sime Darby group is preparing for at least 15 property launches for the next six months ending June when the group's financial year comes to an end. The properties include The Glades in Putra Heights, Subang Jaya, Denai Alam in Shah Alam, Bandar Bukit Raja, USJ Heights, Casa Rimba and Quartza in Melawati. (Source: The Star)

Suria Capital: Unit and partners bag RM1b job. Suria Capital Holdings Bhd's wholly owned subsidiary SCHB Engineering Services Sdn Bhd and its consortium partners have been awarded a RM1b engineering, procurement, construction and commissioning (EPCC) contract for a power plant project in Sabah. The contract from Kimanis Power Sdn Bhd involves the construction of a 300MW combined-cycle gas turbine gas-fired power plant project in Kimanis, Sabah. The construction period will be around 3 years. (Source: Bursa Malaysia)

Property: Good outlook despite soft rental market for property. The overall property sector is expected to enjoy an uptrend this year, buoyed by the various economic transformation programmes despite a soft market in the rental of high-end condominiums. Average prices in the secondary high-end condominium market fell by 29% between the second quarter of 2008 and the second quarter of 2009 but this sub-segment of the residential market had been on the uptrend since the third quarter of 2010, increasing by 13%. (Source: The Star)

Airlines: Airfares may go up, low cost carrier terminal in Perak. Local airlines may increase air fares or fuel surcharges should their regional peers do so as jet fuel prices continue to trend upwards. As crude oil prices continued to trade above USD90 per barrel, aviation jet fuel price for this week was quoted at USD106.3 per barrel, based on the International Air Transport Association's website. Separately, a low-cost carrier terminal (LCCT) may be built in Perak to fuel its economic growth and development of the Northern Corridor Economic Region (NCER). (Source: The Star, The Edge Financial Daily)

O&G: Santos-Petronas USD16b GLNG project gets nod. The Gladstone Liquefied Natural Gas (GLNG), a joint venture between Petroliam Nasional Bhd (Petronas), Santos, Total SA and Kogas have approved the development of the USD16b (RM48.8b) project in Queensland. Santos owns 30% of GLNG, while Petroliam Nasional Bhd (Petronas) and Total SA own 27.5% respectively and Korean Gas Corp (Kogas) owns 15%. Major works would begin for upstream field development, pipeline and LNG plant facilities. (Source: The Edge Financial Daily)

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RHBInvest Research

TM:

• Looking forward to higher UniFi take-up
• We maintain our Trading Buy call on TM for the high likelihood of 50 sen/share in special dividends. In total, dividend yields in 2011 could potentially reach 19%.
• We raise our fair value to RM4.05.

Corporate Highlights


SP Setia: Outperform

• Valuing from a quantitative perspective
• We raise our indicative to RM8.05 (from RM6.95). Maintain Outperform.

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Maybank IB Views

INITIATING COVERAGE
Petronas Chemicals RM6.02: Buy
The new Big Show

Golden opportunity not to be missed. PCG is an opportunity to participate in: (i) the world's most consistently profitable petrochemical company; just after its earnings trough, with (ii) huge earnings growth prospects, (iii) low indebtedness profile and (iv) generates significant free cash flow. PCG is the world's 22nd largest chemical company by market value, and it will inevitably be included into major chemical indices - a strong pull factor to international investors. Valuations are attractive compared to global peers' forward PERs and EV/EBITDAs.


Technicals
The FBM KLCI rose 3.55 points to 1,566.49 yesterday. Its resistance areas of 1,569 and 1,576 may cap market gains, whilst its firmer support areas are located at 1,552 and 1,566.

Trading Idea for today is a Firm Buy call for BERNAS and a Short-Term Buy call for DELEUM.


Other Local News
TNB: Awards RM2.15b jobs for Ulu Jelai project. Tenaga Nasional Berhad (TNB) has awarded the Ulu Jelai Hydroelectric Project construction jobs worth RM2.15b to two consortiums. The Project will involve the construction of one dam and the installation of two hydro turbines and generators in an underground power station with a total installed capacity of 372MW. The Project is expected to be completed and operational by July 2016. (Source: Bursa Malaysia)

SP Setia: Leads race for PICC deal. SP Setia Bhd has emerged as the leading contender to build the Penang International Convention Centre (PICC) on the grounds of the Penang International Sports Arena (Pisa) that is likely to cost over RM200m. SP Setia is likely to get a 30-year concession to build and operate the convention centre, which will include other components like a hotel and retail outlets. (Source: Business Times)

CIMB: Not in talks with Affin. CIMB Group has clarified that it is not involved in any discussions relating to a possible acquisition or merger with Affin Bank or any of its related companies. (Source: Business Times)

Mah Sing: Sets 2011 sales target of over RM2b, PNB ceases to be major shareholder. Mah Sing Group Bhd has set an ambitious sales target of RM2b to RM2.5b for the current financial year ending Dec 31 (FY11), which will be a 70% increase over the RM1.5b recorded in FY10. Separately, Permodalan Nasional Bhd (PNB) has ceased to be a substantial shareholder after it disposed 1.5m shares in the company, reducing its interest to less than 5%. (Source: The Star)

Perodua: Allocates RM614m capex. Perodua has set aside RM614.2m for capital expenditure (capex) this year. An amount between RM250m and RM300m of the capex will be utilised for the development of a new model, which is expected to further boost overall sales. (Source: The Star)

Green Packet: Capex at RM250m this year. Green Packet Bhd expects to spend up to RM250m in capital expenditure (capex) this year to expand the number of sites to 1,600 from 1,000 at present. Consequently, coverage would be increased to 52% (from 45%) of Peninsular Malaysia's population by end of 2011. P1 will focus on expansion this year by providing wider coverage, enhancing capacity and quality. (Source: The Edge Financial Daily)

Plantation: Suppliers expect 4%-20% increase in fertiliser prices. Fertiliser, which represents about 40% of production cost for local oil palm planters, are likely to trend higher by 4 to 20% this year. For murate of potash (MOP), the most popular fertiliser among local planters, fertiliser companies are expecting a price increase of about 5.8% to RM1,500 per tonne this year from RM1,417 per tonne last year. (Source: The Star)

Market: 15-20 foreign will be listing on Bursa this year. 15-20 foreign companies are expected to be listed on Bursa Malaysia this year from three last year as an initiative to develop an international board to list foreign securities by Bursa Malaysia. The guidelines to facilitate the implementation of the separate board for listing international companies would be finalized soon. (Source: The Edge Financial Daily)

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RHBInvest Research

Top Story

• Time to take some bold steps?
• Target price of RM11.10, upgrade to Outperform (from market perform).

Sector Call


Property:

• The “re-pricing” wave is coming to Johor.
• Maintain Overweight on the sector. Our picks are: SP Setia (OP, FV = RM6.95), and IJMLD (OP, FV = RM3.50) for big caps; and KSL (OP, FV = RM2.78) and Mah Sing (OP, FV = RM2.50) for small-mid caps. For Johor exposure, KSL is our fundamental pick.

Corporate Highlights

Faber:

• Non-renewal for two of its UAE contracts
• Fair value has been cut to RM2.35/share (from RM3.77 previously).
• We downgrade our call on the stock to Underperform, from outperform.

CIMB: Outperform

• CIMB Niaga loan growth to stay healthy
• No change to forecasts. Fair value of RM9.80 and Outperform call maintained.

IOI: Outperform

• Exchange of land
• The reason for the land exchange is that IOI has embarked on a redevelopment of a portion of the golf course land owned by Resort Villa into a shopping complex as part of its IOI Resort City development.
• Forecasts are unchanged.
  
• We maintain our target price of RM7.65 and our Outperform call on the stock

TNB: Market Perform

• TNB yesterday signed two agreements for the Ulu Jelai Hydroelectric project.
• We maintain our indicative fair value of RM7.50.

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Maybank IB Views

SECTOR UPDATE
Oil & Gas: Overweight
ETP Part 3: Oil majors spending to rise; Pengerang project to kick-off

Underscores our bullish stance. 3 entry point projects (EPP) relating to oil and gas (O&G) under the Economic Transformation Programme (ETP) unveiled by PM Najib yesterday solidify our view of a robust year ahead. The specific projects mentioned denote growth and opportunities for local service providers. MHB, Dialog, KNM and Kencana are the key beneficiaries. News flow will remain strong over the near term. We foresee a re-rating in valuations on some stocks when the marginal field projects are announced next. We are Buyers of Dialog, KNM, Kencana MHB, PGas and SapCrest.


COMPANY UPDATE
Sunway Holdings RM2.37: Buy
5th property development in Singapore Shariah-compliant

Maintain Buy. Sunway's 5th property project in Singapore strengthens its presence in the island state. It has won a tender for another piece of land at Jurong together with its "old" partner Hoi Hup for SGD131.6m. We estimate SGD328m GDV and RM28m net profit contribution. There is no change to our earnings forecasts as we await details. Sunway is a Buy with a RM2.85 price target (11x 2011 PER). Its merger with SunCity at RM2.60 per Sunway share is long-term positive.


JT International RM6.08: Buy
Bet on this cigarette

Time to inhale. JTI's share price rose 28% over 2010 to close at RM6.05 at the year-end. Whilst this was commendable, we believe that 2011 could outperform 2010 for two simple reasons. First, local crop failures will result in cost savings for JTI. Second, JTI's build-up of cash reserves suggests that valuations ex-cash will lag market valuations once more. Our updated DCF-valuation rises to RM8.10 (+34%) although we have left earnings forecasts unchanged.


Technicals
The FBM KLCI fell 0.58 points to 1,562.94 yesterday. Its resistance area of 1,562 and 1,576 will cap market gains, whilst its weaker support areas are located at 1,537 and 1,558.
Trading ideas for today are two BUY calls on THPLANT and SPCRES.


Other Local News
Affin: Unaware of CIMB bid. Affin Holdings Bhd deputy chairman Tan Sri Lodin Wok Kamaruddin said yesterday he was not aware of rumours that Affin Bank is being eyed for a takeover by CIMB Bank. Sources close to CIMB Group said the rumour completely goes against the group's ambition to become a major regional financial player and they also think that it is not true. (Source: Business Times)

Dialog: To start RM5b terminal project in April. Dialog Group Bhd plans to begin development work on its proposed RM5b Pengerang deep water terminal project in April. This is one of the 19 entry point projects (EPPs) under the Economic Transformation Programme (ETP) announced yesterday. (Source: Malaysian Reserve)

Economic: ETP goes into overdrive. The Economic Transformation Programme (ETP) switched into overdrive in the new year, with an additional 19 entry-point projects (EPP) and developments that are expected to contribute almost RM67b in investments, RM36b in gross national income (GNI) and create 35,000 new jobs. (The Edge Financial Daily)

AP Land:Low Yat to acquire for RM305m. Low Chuan Holdings, the investment vehicle of Low Yat group has offered to purchase Asia Pacific Land (AP Land), to which Low Yat group holds 33.98% stake, for RM305.2m or 45 sen per share. The purchase consideration will be settled by way of RM201.5m cash while RM103.7m will be treated as amount owed to AP Land. (Source: The Edge Financial Daily)

O&G: Gas Malaysia eyes Bursa listing this year. Gas Malaysia Sdn Bhd, a company that distributes natural gas to households and industries, is said to be eyeing a listing on Bursa Malaysia this year but that idea has not yet received the full backing of all of its shareholders. The company's controlling shareholder is MMC Bhd that owns 41.8% and other shareholders of the company are Petronas Gas Bhd, Shapadu Group and Tokyo Gas-Mitsui & Co. (Source: The Star)

Top Glove: To invest RM160m in Cambodian rubber plantation. Top Glove Corp Bhd is investing RM160m in Cambodia to plant rubber trees to reduce its dependency on latex, which is bought at market prices. The company is targeting to obtain 20% of its latex requirement from the plantation over time. (Source: The Star)

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RHBInvest Research

Top Story

Government Measures – More ETP projects.
We believe the ETP beneficiaries will continue to find support, although the outperformers may take a breather.


Corporate Highlights


Top Glove:
Near-term outlook remains challenging
Our fair value is maintained at RM4.10
No change to our Underperform call on the stock.


LPI Capital:
4QFY10 Results In line with expectations.
LPI recorded 4QFY12/10 net profit of RM36.9m (+2% qoq) bringing its full-year FY10 earnings to RM137.9m (+9.4% yoy).
Fair value is RM12.37 .Maintain Underperform.

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Maybank IB Views

ACQUISITIONS / DISPOSAL
PLUS Expressways RM4.69: Hold
The loner in UEM-EPF Shariah-compliant

Nothing at offer close. MMC Corp did not throw in a new bid for PLUS as speculated. Jelas Ulung did not put in a RM50m cash deposit which means that it is out of the race. All eyes will now be back on UEM-EPF, which is the lone "bidder". The offer implies RM4.60 per PLUS share. PLUS is now officially a Hold; our call has been put under review since its share price started trending close to the UEM-EPF offer price. UEM-EPF's offer is fair, close to our RM4.70-DCF derived target price.


COMPANY UPDATE
Gamuda RM4.21: Buy
New water offer significantly undervalues Shariah-compliant

Another long drawn affair. The Selangor Government's latest offer for SPLASH values its equity value at RM297.5m, we estimate. Gamuda's short announcement yesterday only quoted the offer price on a per share basis, but not the total amount. If our calculation is right, the offer prices SPLASH at just 0.63x book. We think that the offer will be rejected by SPLASH's three shareholders, including Gamuda. Water consolidation in Selangor seems like another long drawn affair.


Sunrise RM3.12
Ceasing coverage Shariah-compliant

Stock to be delisted. The take-over offer by UEM Land at RM2.80 a piece has received 96.4% acceptances. UEM Land does not intend to maintain the listing status of Sunrise, which has been suspended since 31 Dec 2010. We are ceasing research coverage of Sunrise. Investors should no longer depend on our financial forecasts of Sunrise in making investment decisions, nor infer an adverse opinion as a result of our decision to cease coverage.


ECONOMICS
Industrial Production Index Nov '10
Stabilising after slowdown

Industrial production in Nov '10 picked up to +5.1% YoY (Oct '10: +3.1% YoY). However, on MoM basis, output fell across the board by 3.7%. YTD, the industrial production index (IPI) was up +7.8%. For Oct-Nov '10, it increased by +4.1% YoY (3Q10: +4.3% YoY; 2Q10: +10.8% YoY, 1Q10: +11.1% YoY). Using this to estimate real GDP, we came to a figure of around +5.0% YoY for 4Q10 (3Q10: +5.3% YoY; 2Q10: +8.9% YoY; 1Q10: +10.1% YoY). Our 2010 economic growth estimate of +7% reflects a 4% YoY expansion in the final three months.


Technicals
The FBM KLCI fell 8.69 points to 1,563.52 yesterday. Its resistance area of 1,563 and 1,576 will cap market gains, whilst its weaker support areas are located at 1,535 and 1,560.


Other Local News
Proton: In talks with to assemble vehicles in India. Proton Holdings Bhd could be in talks with Indian automobile manufacturer, Hindustan Motors to assemble its vehicles for the Indian market. Proton is in favour of using Hindustan Motors' Chennai plant, set up for assembling the Mitsubishi Lancer, to locally produce its Exora multi-purpose vehicle. (Source: The Star)

SapuraCrest: Gets RM750m loan. SapuraCrest Petroleum Bhd's wholly-owned subsidiary, Aurabayu Sdn Bhd was granted a syndicated Islamic financing facilities of up to RM750m comprising ringgit Malaysia and US dollar denominated tranches from Maybank Investment Bank Bhd. Maybank Investment acted as the mandated lead arranger and bookrunner. (Source: The Star)

Transmile: Sells four aircraft to FedEx for RM209m. Transmile Group Bhd has sold four MD-11F aircraft to Federal Express Corp (FedEx) for RM208.8m. The funds raised from the disposal would be used to partially settle the outstanding debt of the company, which amounted to RM528.9m as at Sept 30, 2010. (Source: The Star)

Integrax: Perak allows Vale of Brazil to build its jetty in Lumut. Vale International SA has been allowed by the Perak state government to construct its own jetty in Lumut to accommodate its proposed iron ore transshipment project. Vale was originally supposed to use Integrax Bhd's Lekir Bulk Terminal (LBT), but the facility upgrade has been on hold since 2009 due to the feud between two brothers who hold a combined 37% stake in Integrax through Halim Rasip Holdings. (Source: The Star)

Property: Tambun Indah IPO oversubscribed by 14.9x. Property developer Tambun Indah Land Bhd's initial public offering (IPO) of 11.1m shares was oversubscribed by 14.9 times where 10,751 applications for 175.7m shares with a total value of RM123m were received. (Source: The Edge Financial Daily)

Construction: Benalec oversubscribed by 4.9times. Benalec Holdings Bhd, which will be listed on the Main Market of Bursa Malaysia, has received an oversubscription rate of 4.92 times for the 36.5m shares made available for public subscription. (Source: The Edge Financial Daily)

Plantation: Planters appeal to abolish windfall profit levy. Malaysian oil palm planters will appeal collectively to Prime Minister Datuk Seri Najib Tun Razak to abolish the windfall profit levy on crude palm oil (CPO) after their requests were turned down by the Finance Ministry recently. The joint appeal is expected to be made by the Malaysian Palm Oil Association (MPOA), Malaysian Estate Owners' Association (MEOA), East Malaysia Planters' Association (EMPA) and Sarawak Oil Palm Plantation Owners' Association (SOPPOA). (Source: The Star)

Conglo: JCorp's directors may not attend EGMs. Johor Corp (JCorp) directors representing the Johor and Federal governments are unlikely to attend the EGM's of Johor Corp's three public listed companies (Kulim, Damansara Realty, KPJ Healthcare) this month to remove Tan Sri Muhammad Ali Hashim as their respective chairman. (Source: The Star)

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RHBInvest Research

Top Story

• The spike in volume and value of trades indicates that there is still ample liquidity in the market.
• Expect continued anticipation in terms of news flow for new projects, contracts, M&A. However, focus will shift more to actual award of contracts or projects, as well as to delivery and execution, potentially causing disappointment.
• The news flow for some sectors (in particular the oil & gas sector) appears to be going strong, and will continue to be the catalyst in the near term.
• In our view, the market will remain a trading market as we believe share prices cannot veer too far from fundamental valuations.

Sector Call


Plantation:

• 2010 production a disappointment, what of 2011?
  
• Should there be another disappointment in production in 2011, CPO prices could potentially remain at high levels of above RM3,500/tonne for the entire year.
• We maintain our CPO price assumptions at RM3,100/tonne for 2011 and RM2,900/tonne for 2012.
• No change to our Overweight rating on the sector

Oil & Gas:

Dialog:

• Fair value raised to RM2.82
• Outperform

Sapuracrest:

• Fair value maintained at RM3.86 Outperform

KNM:

• Fair value maintained at RM3.78 Outperform

Dayang:

• Fair value maintained at RM3.36 Outperform

Petronas Gas:

• Fair value maintained at RM13.51 Outperform

Kencana:

• Fair value raised slightly to RM2.89
• Market Perform (Down from OP)

Petra Perdana:

• Fair value raised to RM1.29 using P/NTA methodology
• Market Perform (Up from UP)

Wah Seong:

• Fair value maintained at RM2.02
• Market Perform

We are reiterating out Overweight call on the sector.


Corporate Highlights

PLUS: Underperform (down from TB)

• It all ends with a whimper.
• With the latest news, it is now very likely that UEM-EPF will stick to their existing RM4.60 offer. With no firm competing bids, UEM-EPF has no compelling reason to raise their offer.
• PLUS yesterday confirmed only UEM-EPF remitted the RM50m cash deposit.
• We downgrade PLUS from Trading Buy to Underperform with a fair value of RM4.60 (previously RM5.20) to reflect the offer price by UEM-EPF.

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Maybank IB Views

Dear All,

This week, we would like to highlight four companies.

1. CB Industrial Product Holdings Berhad, the Company that has been equipping palm oil mills in Malaysia and around the world with high quality processing equipment and replacement parts since 1979. (Target price : RM5.18)

2. DRB-Hicom Berhad, the Company that assembles foreign cars from Mercedes Benz and Honda. (Target price : RM2.64)

3. Kumpulan Fima Berhad, manufacturer of among others, sardines, canned fruits, packed fruits, cordials, cheque books and stamps. (Target price : RM2.17)

4. Guan Chong Berhad, one of the largest cocoa processor in Asia , having agencies and partnership in most of the countries that require importing cocoa product. (Target price : 3.25)

Happy reading!

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Pelikan in uptrend mode?

Pelikan Weekly Chart

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RHBInvest Research

Prinsiptek:
Building blocks for earnings recovery put in place
Fair value is RM0.58


Corporate Highlights


MRCB:
To clinch RM8bn Klang River clean-up job?
Fair value is raised from RM2.48 to RM2.65.
Maintain Trading Buy.


PLUS:
Potential bidding war on the horizon
Maintain our Trading Buy call on PLUS with an unchanged fair value of RM5.20

Read more...

Maybank IB Views

ACQUISITIONS / DISPOSAL
PLUS Expressways RM4.61: Buy
MMC to bid for PLUS? Shariah-compliant

More details end of today. MMC Corporation is expected to throw in a bid for PLUS end of today, thus emerging as the third bidder. Today will be an interesting day for PLUS for any other offer for its businesses plus a RM50m cash deposit must be effected by the end of today. Our Buy call on PLUS, premised on RM4.70-DCF derived TP, has been put on review since PLUS' share price surged to the UEM-EPF offer price.


COMPANY UPDATE
Notion VTEC RM2.00: Buy
Secures new orders from Nikon; target price lifted Shariah-compliant

Target price raised to RM2.40 (+23%) following a 7-19% upgrade to FY11-12 EPS for Nikon's new sub-assembly of DSLR camera lens, and after raising our EV/EBITDA target. A further 7% rise in EPS and target price is possible should NVB secure the MSC tax break. NVB remains a Buy, offering an improving business condition and earnings prospect.


ECONOMICS
US Economy
"Jobless Recovery" no more...?

Dec 2010 labour market data was mixed amid lower than expected rise in non-farm payrolls (Dec 2010: +103,000; Nov 2010: +39,000; consensus: +150,000) and bigger than expected decline in unemployment rate( Dec 2010: 9.4%; Nov 2010: 9.8%; consensus: 9.7%) . However, there are plenty of structural issues in the job market (e.g. high labour underutilisation rate and long-term unemployment) that resulted in Fed's cautious outlook with the central bank expecting jobless rate to fall only to 8% two years from now and the labour market to normalise only in four to five years. Therefore, jobless recovery remains a risk to the US economy and a challenge to policymakers.


Technicals
The FBM KLCI gained 53.30-points and closed at 1,572.21 last week as some very firm new year broad-based buying activities caused the market’s superb surge.The firm support areas for the FBM KLCI are located in the 1,531 to 1,572-zone. The key resistance level of 1,576 may offer some token selling only. We anticipate further bullishness for this week.

Our weekly trading Idea is a technical Strong Buy call on KENCANA.


Other Local News
MRCB-Ecovest: Poised to bag river clean-up job. A joint venture between Ekovest Bhd and Malaysian Resources Corp Bhd (MRCB) is on the verge of receiving a letter of award from the government for a portion of the Klang Valley river beautification project that is worth RM8b. The Klang River clean-up project is part of a RM15b rehabilitation and development plan for the river, under the ETP. Another company eyeing the project is YTL Corp Bhd’s Wessex Water Ltd, which bided for the project with I-Bhd. (Source: The Edge Financial Weekly)

MRCB, IJM Land: Reconsider merger plans. Malaysian Resources Corp Bhd (MRCB) and IJM land Bhd could be taking another look at the merger plan. Meanwhile, IJM Land does not rule out the possibility of working with MRCB in a joint venture capacity rather than a merger of the two companies. (Source: The Edge Financial Weekly)

Boustead: In talks to buy army base land for RM8b project. Boustead Holdings Bhd is in talks with the government to buy the 98ha Batu Cantonment army base at Jalan Ipoh, Kuala Lumpur for a mixed commercial and residential properties project worth more than RM8b. The Batu Cantonment army base, which has been there for over 40 years, will be relocated. (Source: Business Times)

Hap Seng: Raise funds via rights issue, placement. Hap Seng Consolidated Bhd is proposing a private placement of up to 124.5m new shares (representing 20% of existing share capital), followed by a two-for-one bonus issue, and a renounceable rights issue on the basis of one rights share and one warrant for five shares (post bonus). The funds raised would be utilised for capital expenditure requirements, corporate purposes and additional working capital purposes. (Source: Bursa Malaysia)

Conglo: JCorp may sell land, property to pare down debts. Johor Corp (JCorp) is considering selling various assets including land, properties and plantation assets to partly repay its current RM3.6b debt which is due for repayment in July next year. The state investment arm plans to bring down the debt level of RM3.6b to a “sustainable level” of between RM1b and RM1.5b. (Source: The Star)

Infrastructure: MRT line from Sg Buloh to Kajang to be finalised between April and May. The locations of the 35 stations of the first mass rapid transit (MRT) line from Sg Buloh to Kajang are expected to be finalised between April and May. The line, with about 9.5km underground will run through Sg Buloh, Kota Damansara, Kuala Lumpur, Cheras to Kajang. (Source: Bernama)

Aviation: Inaugural Riau Air Flight to Melaka. The inaugural Boeing 737-500 Riau Air flight from Riau to Melaka International Airport (LTAM) in Batu Berendam is expected to give the airport a boost. Riau Air would begin its thrice-weekly Pekan Baru-Melaka flights next week. Meanwhile, Riau Air is also eyeing air connections between Pekan Baru and Johor Bahru via Senai airport. (Source: Bernama)

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