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)