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)