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)