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)