RHBInvest Research

Monday, February 28, 2011

Top Story: Market Momentum

  • Market Update
  • Down by not out
  • Our stress test suggests that all sectors except banks may be at risk if cost inflation becomes critical. The heavyweight sectors include plantation, telecom, O&G and utilities. This also suggests that recent top outperformers could face a reversal if the macro environment remains uncertain.
  • We reiterate our view that a market pull back would present an opportunity to take advantage of the value that will re-emerge. As such our Overweight calls on the banks and telecom sectors are unchanged. We also maintain our Overweight calls on plantation, oil & gas and property sectors although the cautious environment may cause continued selling pressure on these stocks in the near term.

Sector Call


  • Sector Update
  • Strong start to the year
  • Media Prima (FV=RM3.20) remains our preferred pick given.We maintain our Outperform call on Media Chinese (FV=RM1.32) and Star (FV=RM4.23). Maintain Overweight on the sector.

Corporate Highlights


  • News Update
  • YNH AEON coming to Seri Manjung
  • Seri Manjung is expected to raise the property values in the township.
  • No change to forecasts. Fair value kept at RM2.31

Petronas Chemicals:
  • Briefing NoteBeneficiary of higher utilisation and product prices
  • Maintain Outperform with new fair value of RM7.27/share (previously RM7.25).

  • Briefing Note
  • Softening in 1Q, but to bounce back after
  • No change to forecasts. Fair value is RM2.65 based on 11x FY11 FD EPS.

  • Briefing Note
  • Three culprits
  • MISC cautioned that the petroleum tanker segment is “bracing itself for another difficult year ahead” as “the over-supply situation is finally hitting home”.
  • Fair value is RM7.59. Maintain Underperform.

  • 4QFY10 Results/Briefing Note
  • Raising the bar for 2011
  • No change to fair value of RM9.80 and Outperform call.

  • 4QFY10 Results/Briefing Note
  • Returns excess cash
  • We revised our fair value to RM3.84 (previously RM4.05)
  • Downgrade from trading buy to Underperform.

  • 3QFY11 Results/Briefing Note
  • Lotus restructuring costs kick in
  • Proton sales recovered to 15,806 units (+36.8% mom) in Jan 2011 helped by higher Inspira deliveries. Nonetheless, earnings going forward will be severely affected by write-offs arising from the ongoing LTP while its net cash position will remain under pressure.
  • We reiterate our Underperform call and reduce our fair value to RM4.00 (from RM4.15).


Investment gains boost TM net profit

Sunday, February 27, 2011

KUALA LUMPUR: Telekom Malaysia Bhd (TM) saw its fourth quarter ended Dec 31, 2010 net profit more than double to RM400.63mil from RM170.25 a year ago due to higher revenue and investment gains made by the disposal of shares.

TM booked a net gain of RM213.3mil from the sale of Measat Global Bhd and Axiata Group Bhd shares attributed to lapsed ESOS options.

The company also announced plans to carry out a capital distribution to its shareholders of some RM1.04bil, or 29 sen per RM1 each, in line with its capital management framework to return excess cash to shareholders.

While the business environment for its current financial year will remain challenging due to the intense competitive landscape, TM group chief executive officer Datuk Seri Zamzamzairani Mohd Isa says the company is set to take its stage of growth to the next level.

This would be on the back of its performance improvement programme, its focus on customer centricity and as it sought to achieve 1.1 million premises passed and a total of 78 exchange areas by the end of this year under its high-speed broadband project, UniFi, he told reporters at the company's result briefing yesterday.

The company's financial year ending Dec 31, 2011 (FY11) headline key performance indicators include a revenue growth of 2.5%, earnings before interest, tax, depreciation and amortisation margin of 32% and customer satisfaction measure of 70, which uses TRI*M index measuring end-to-end customer experience at all touch points. TM was able to meet all three headline KPIs for FY10.

For the quarter under review, revenue was up 2.11% to RM2.32bil from RM2.27bil from a year ago, due to higher revenue from data, Internet and multimedia and non-telecommunications-related services, which mitigated the impact of lower revenue from voice and other telecommunications-related services.

TM said data revenue increased by 14.4% to RM490.8mil in the quarter compared with RM428.9mil previously due to demand for higher bandwidth services.

Internet and multimedia posted higher revenue by 12.6% to RM436.6mil owing to an increase in broadband customers to 1.68 million in the quarter compared with 1.43 million a year ago.

Its earnings per share was 11.2 sen.

For its full year, TM's net profit was up 88% to RM1.21bil from RM643.03mil in FY09. Its revenue was up 2.1% to RM8.79bil driven by higher operating revenue from data services, Internet and multimedia and other telecommunications-related services, which grew by 15.4%, 5.9% and 4.2% respectively, and helped mitigate the decline in voice revenue.

TM has proposed a final gross dividend of 13.1 sen on top of the interim gross dividend of 13 sen distributed last September.

Its earnings per share for FY10 was 33.9 sen.

source: thestar


Stocks to watch: TM, CIMB, MAS, Proton, AZRB, Faber

KUALA LUMPUR: After four straight days of losses on Bursa Malaysia last week where markets were roiled by the unrest in oil producer in Libya which saw investors taking money off the table, sentiment is expected to remain cautious in the week ahead, starting Feb 28.

There could be some mild buying interest in companies which announced a strong set of earnings but investors are not expected to rush into the market just yet.

On Wall Street, US stocks rose on Friday, bouncing back from a three-day sell-off as oil prices stabilised, but unease over the Libyan rebellion could be enough to keep buying in check.

The S&P 500 lost 1.7% for the week, breaking a three-week streak of gains. Friday's bounce followed a late recovery Thursday that showed buyers were ready to support shares after a bout of selling.

The Dow Jones industrial average gained 61.95 points, or 0.51%, to end at 12,130.45. The Standard & Poor's 500 Index advanced 13.78 points, or 1.06%, to finish at 1,319.88. The Nasdaq Composite Index rose 43.15 points, or 1.58%, to close at 2,781.05.

As for the outlook for the local stock market, Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi expected FBM KLCI to remain volatile in the short term and very bearish in the medium term.

“We suggest that clients liquidate on rallies and remain more in cash, as there are very few price defensive counters.

“Due to the global market malaise recently, we will see the FBM KLCI in a much weaker posture today. We expect the market to remain weak as the foreign hedge fund money exits Malaysia,” he said, adding that the downturn could be a protracted one.

Stocks to watch during the week ahead after their financial results are TELEKOM MALAYSIA BHD [], CIMB Group Holdings Bhd, MALAYSIAN AIRLINE SYSTEM BHD [] (MAS), UEM Land Bhd, AHMAD ZAKI RESOURCES BHD [] (AZRB) and FABER GROUP BHD [].

TM proposed a capital distribution of about RM1.037 billion or 29 sen for each share held. TM said the proposed capital distribution will be funded through its existing cash balances, which stands at RM3.488 billion as at Dec 31, 2010.

TM also announced its earnings rose 135%to RM400.63 million in the fourth quarter ended Dec 31, 2010 from RM170.25 million a year ago.

Revenue was marginally higher by2.1% at RM2.32 billion from RM2.27 billion. Earnings per share were 11.2 sen compared with 4.8 sen. It proposed a final dividend of 13.1 sen per share.

For FY10, TM’s earnings surged 87.6% to RM1.20 billion from RM643.02 million. Its revenue rose 2.1% to RM8.79 billion from RM8.61 billion.

CIMB Group posted a record net profit of RM3.52 billion in the financial year ended Dec 31, 2010. For the fourth quarter, earnings were RM877.62 million, boosted by its Indonesian operations.

The 4Q net profit was 9.3% higher from the RM802.89 million a year ago. Revenue rose 16% to RM3.168 billion from RM2.731 billion. Earnings per share were 11.83 sen compared with 11.37 sen.

MAS posted net profit of RM225.92 million in the fourth quarter ended Dec 31, 2010, down 64.7% from RM640.12 million a year ago, on lower derivative gains and higher finance costs.

Its managing director and chief executive officer Tengku Datuk Seri Azmil Zahruddin was quoted saying MAs had operationally, done well in the quarter where traffic volumes rose 10% and yields were up 5%.

However, it was also weighed down by higher cost of fuel despite that it carried more passengers. Its fuel bill was 13% higher at RM1.2 billion in 4Q compared witrh RM1.06 billion due to higher fuel prices and consumption.

Its revenue rose 8.2% to RM3.67 billion from RM3.39 billion a year ago. Earnings per share were 6.76 sen compared with 31.17 sen.

Proton swung into the red with net loss of RM60.1 million in the third quarter ended Dec 31, 2010 compared to net profit of RM79.68 million a year ago, due mainly to higher branding costs as well as the restructuring expenses incurred by Lotus Group International Ltd.

Revenue for the quarter fell by 8.96% to RM1.83 billion from RM2.01 billion last year. Loss per share was 10.90 sen compared to earnings per share 14.50 sen previously. Net assets per share was RM9.73.

For the nine months ended Dec 31, 2010 Proton’s net profit fell 58.1% to RM90.5 million from RM216.29 million, although revenue rose to RM6.36 billion from RM5.97 billion.

Proton said as part of the transformation plans to turn around LGIL, it had started investing in rationalisation of dealers network, and branding activities to deliver the five-year business plans.

Proton also said that during 3Q, it had experienced lower domestic sales volume, as well as increased promotional and marketing spending by a principal subsidiary.

UEM Land Bhd recorded a 37.3% increase in its earnings to RM135.36 million in the fourth quarter ended Dec 31, 2010, boosted by higher revenue and higher margin achieved for one-off transactions from strategic land sales.

AZRB posted net loss of RM83.06 million in the fourth quarter ended Dec 31, 2010 compared with net profit of RM5.13 million a year ago following the termination of the Alfaisal University Campus project in Riyadh, Saudi Arabia.

Revenue shrank to RM52.62 million compared with RM105.56 million a year ago. Loss per share was 30.03 sen compared with earnings per share of 1.86 sen.

For the financial year ended Dec 31, 2010 its net loss was RM61.28 million compared with net profit of RM20.76 million in FY09. Its revenue was RM431.34 million compared with RM459.40 million.

Faber Group saw its net profit shrink to RM2.91 million in the fourth quarter ended Dec 31, 2010 from RM42.57 million a year ago. Revenue declined to RM203.95 million from RM303.93 million. Earnings per share were 0.8 sen only compared with 11.73 sen. It proposed dividend of eight sen per share compared with six sen.

For the financial year ended Dec 31, 2010 net profit was RM78.78 million compared with RM82.68 million in FY09.


RHBInvest Research

Saturday, February 26, 2011

Sime Darby:

  • 2QFY11 Results/Briefing Note
  • Core net profit rose 22% yoy in 1HFY11 on the back of an 18% yoy rise in turnover, coming mainly from higher margins in the heavy equipment and motor divisions, offset slightly by lower margins in the plantations and energy & utilities divisions.
  • Target price is reduced to RM10.60 (from RM11.10). Maintain Outperform.

Corporate Highlights

Ann Joo: Underperform
  • 4QFY10 Results/Briefing Note
  • Net loss in 4QFY12/10 due to lower margins
  • No change to our forecasts. Fair value is RM3.02 based on 10x FY11 fully diluted EPS of 30.2sen.


RHBInvest Research

–Underperform (down from MP)

  • Visit Note
  • A long road ahead
  • We downgrade our call to Underperform (from market perform) as we see business risks being heavily weighted on the downside with few positive catalysts within our investment horizon. Fair value to RM4.15 (from RM5.60).

Macro View

  • Economic Highlights (published 23 Feb 2011)
  • Rose to 2.4% in Jan, pointing to rising price pressure
  • We expect inflation to grow at 3.0% (an upward revision from 2.8% previously) in 2011.
  • As a whole, we expect the OPR to be raised by 50-75 basis points in 2H 2011 to bring it to a more neutral level of 3.25-3.50%.

Sector Call

Motor : Neutral
  • Sector Update
  • A decent start to 2011
  • Staying Neutral on autos. We revise our 2011 and 2012 TIV forecast to +4.0% and +2.1% respectively, with the replacement cycle and sales growth already having peaked.

Corporate Highlights

MRCB: Trading Buy
  • Ekovest-MRCB JV awarded LOI for River Of Life project
  • Fair value is RM2.65. Maintain Trading Buy

PLUS: Underperform
  • Deal is sealed – ceasing coverage
  • We advise investors looking for stocks with a similar defensive quality like PLUS to consider telecom stocks, which offer high dividend yields supported by strong free cash flows.

AFG: Market Perform
  • Briefing Note (published 23 Feb 2011)
  • Staying conservative
  • No change to forecasts. Fair value of RM3.60 and Market Perform call maintained.

Media Prima:
  • 4QFY10 Results/Briefing Note
  • FY10 core net profit jumped 132.4% yoy
  • Fair value maintained at RM3.20. Reiterate Outperform.

Axiata: Market Perform
  • 4QFY10 Results/Briefing Note
  • Potential headwinds ahead
  • Maintain Market Perform call and fair value of RM5.75


Maybank IB Views

Wednesday, February 23, 2011


Petronas Gas RM11.22: Buy
No surprises; retain Buy Shariah-compliant

In line. We see PGas as a major beneficiary as Malaysia liberalises its gas supply and prices. We expect sustained earnings growth as PGas reaps transportation income from 3rd party gas injected into the PGU network pipeline by 2014 or earlier. PGas remains in our Buy list with a RM14.10 DCF-target price, which offers a 26% upside.

RHB Capital RM8.17: Buy
Underlying business growth still firm

Maintain Buy. 2010 results were within our expectations and consensus. Our 2011 and 2012 forecasts are raised by 6% and 10% respectively on higher loan growth and lower charge off assumptions, while our DDM-derived target price is raised to RM9.40 from RM9.10 as a result. Underlying business growth remains firm while valuations are undemanding with the stock trading at a prospective 2011 PER of 11x versus a peer average of 13.4x. RHB's prospective P/BV of 1.6x compares favorably against a peer average of 1.8x (ex-Public Bank) despite a higher ROAE of 15% for 2011 versus the latter's 14.6%.

British American Tobacco RM46.32: Sell
Puff-ing away, challenging outlook

Boosted by one-off. RM731m 2010 net profit (-2% YoY) included RM15.5m gain from sale of Shah Alam property in 4Q10. RM716m 2010 core net profit (-4% YoY) fell short of expectations at 97% of our (RM741m) and 98% of consensus. 4Q10 was operationally weak, with sales volume down 10% QoQ, post a 3sen per stick excise hike in Oct 2010. Industry outlook is challenging, while BAT's blended margins are also expected to come off with more export volume targeted for 2011. Maintain Sell with a lower RM42.50 target price (-50sen).

Malaysia Marine and Heavy Engineering Holdings RM6.40: Hold
Results as expected; downgrade to Hold Shariah-compliant

In line, inching in to target price. Results tracked expectations but we downgrade MMHE to Hold following a sterling share price performace since its initial public offering (IPO) in Oct 2010 (+77% from RM3.61 retail IPO price). MMHE should see several sizeable job wins in 2QCY11 (i.e. Tapis CPP, Malikai TLP) but these have been priced in, we believe. Upside potential to our RM6.50 22x CY12 PER based target price are narrowing.

Genting Plantations RM7.97: Hold
Cautious outlook Shariah-compliant

In line. RM320m 2010 net profit was stronger (+36% YoY) on higher CPO ASPs despite weaker production. The results were in line with our forecast. Going forward, we see minimal upside to Genting Plantations' share price as we expect CPO spot to normalise during 2H11. Genting Plantations is most leveraged to CPO prices among the large cap plantation stocks. Our revised earning and valuation estimates resulted in a lower RM8.60 target price (-5%). Maintain Hold.

Sunway City RM4.12: Buy
Beats the market; targets RM1.5b sales Shariah-compliant

Maintain Buy. SunCity's 2010 RM191m normalised net profit came in above expectations. This year, SunCity targets RM1.5b sales (+22% YoY). In our view, a bigger entity with RM3.6b market capitalisation and an enlarged balance sheet post-SunCity-SunHoldings merger will improve shares trading liquidity and enable the merged entity to take on larger projects. We raise our forecasts by 3-9% but maintain the RM5.10 target price (offer price). We advise shareholders to accept the merger offer. SunHoldings warrants provide a cheaper entry to the new Sunway group.

The FBM KLCI tumbled by 12.22 points to 1,513.63 yesterday. Its resistance areas of 1,513 and 1,533 will cap market gains, whilst the obvious support areas are located at 1,490 and 1,510.

Trading idea for today is a TAKE PROFIT call on IOICORP.

Other Local News
Auto: Total vehicle sales up 8% in January. Total vehicle sales in January increased 8% to 54,696 units from 50,622 units recorded a year ago, as car makers ramped up production by about 20% to meet the Chinese New Year deleveries. Malaysian Automotive Association (MAA) said sales volume for February is expected to be lower than that of January 2011. (Source: The Edge Daily)

Economic: BNM reserves at RM338b. Bank Negera Malaysia's (BNM) international reserves amounted to RM338b (USD109.6b) as at Feb 14. The reserves position was sufficient to finance 8.1 months of retained imports and was 4.3 times the short-term external debt. (Source: Bernama)

MAHB: ventures into China with Nagamas JV. Malaysia Airports Holdings Bhd (MAHB) marked its maiden venture into China yesterday with the signing of a joint cooperation agreement with Nagamas International Bhd (NIB). It facilitates the joint provision of airport operation, management and technical consultancy services for the Yongzhou Lingling Airport in China. (Source: Bernama)

Petra Perdana: Banks on deep-water finds. Petra Perdana Bhd could be a major beneficiary of jobs stemming from Petronas recent deep-water finds at Sarawak's NC3 and Spaoh-1 deep-water wells. Petra Perdana has a mixed fleet of 25 vessels, of which 14 are larger vessels above 9,000bhp which are ideal for deep-water. (Source: The Edge Daily)

TM, Axiata: Back together in fixed and mobile business. Demerged Telekom Malaysia Bhd (TM) and Celcom Axiata Bhd entered into wide collaboration from high speed broadband (HSBB) services and wholesale Internet access to infrastructure sharing. This will result in substantial savings for both firms, although the figures are only expected to be quantified after the deal is sealed. (Source: The Sun)

TNB: Country’s first solar power plant. TNB will soon call for tenders for the project in Putrajaya that is estimated to cost RM60m. It marks a major step forward in the country's drive to harness renewable energy sources to wean itself from an over-reliance on fossil fuels and TNB will have a head-start in terms of knowledge. (Source: The Star)


RHBInvest Research

Mutiara Goodyear:

  • Visit Note
  • A turnaround story
  • New projects to be launched in 2011-2012 amounted to RM1.9bn. We expect earnings to leap frog with a growth of 67% in FY11 from FY10 annualised net profit of RM20.3m.
  • Our fair value on the stock is RM1.60. At the current price, the stock is trading at 9x PE, which is reasonable for a small cap developer.

Macro View

  • Economic Highlights (published 22 Feb 2011)
  • Rising inflationary pressure and policy options
  • We expect inflation to rise at a much faster pace of an average rate of 2.8% in 2011, compared with +1.7% in 2010.
  • OPR to be raised by 50-75 basis points in 2H to bring it to a more neutral level of 3.25-3.50%.

Sector Call

Telecom: Overweight

Sector Update
  • Celcom Axiata and TM have entered into MOU for strategic collaboration to provide fixed/mobile solutions.
  • Another step towards convergence We maintain our earnings forecasts for now. Maintain Overweight. The sector is defensive against the growing unrest in the Middle East which may hurt market sentiment in the short term.
  • Building Materials: Higher cement price effective 1st Mar
  • Neutral
Sector Update
  • YTL Cement: Fair value is raised to RM5.85
  • Outperform
  • Lafarge: Fair value is raised to RM7.87
  • Market Perform (up from UP)

Corporate Highlights

  • Briefing Note
  • Daihatsu winds back commercial vehicle franchise
  • We maintain our Outperform call on valuation grounds. Our fair value of RM3.95 is unchanged.

  • Outperform (up from MP)
  • Briefing Note
  • Raw material prices stabilised
  • Our fair value is raised to RM3.50 (from RM2.95). Upgrade to Outperform.

  • Briefing Note
  • Forex to boost earnings
  • Fair value is revised to RM9.35. We maintain our Outperform call on the stock.

Genting Plantation: Market Perform
  • 4QFY10 Results/Briefing Note
  • Optimistic management outlook on prices and production prospects .
  • Fair value has been reduced to RM9.20 (from RM9.65), based.
  • Maintain Market Perform.


RHBInvest Research

RH Petrogas:

New Coverage ( Singapore )
RH Petrogas (RHP) is a new independent oil company, listed on the Singapore Stock Exchange, that is ultimately owned by Malaysia ’s Rimbunan Hijau Group.
We forecast FY10-12 net earnings of S$1.1m, S$3.0m and S$3.6m.
Fair value estimate to RM1.43/share.
We initiate coverage on the stock with an Outperform call.

Corporate Highlights


  • Briefing Note (published 21 Feb 2011)
  • AMMB Positioned for future rate hikes
  • No change to our earnings forecasts. Fair value of RM7.42 and Outperform call maintained.

Ann Joo:

Results Preview
  • FY10 results to come in below expectations
  • Indicative fair value is reduced to RM3.02 (from RM3.14).

2QFY11 Results/Briefing Note
2QFY06/11 results were within our and consensus expectations. More dividend cheer.
No change to forecasts. Fair value of RM10.20 and Outperform call maintained.

  • Company Update
  • PRG 4QFY12/10 results below expectations
  • Fair value is revised to RM6.55 (from RM7.10 previously) after our PRG earnings adjustment. Maintain Outperform.


Maybank IB Views

Tuesday, February 22, 2011


Malayan Banking RM8.86
Upside surprise to dividends

Within expectations. Maybank's results were within expectations, with a 1HFY11 net profit of RM2.15b or 50% of consensus' RM4.32b. 2QFY11 net profit rose 13% QoQ largely on the back of much reduced credit charge offs; operating profit was flat (+1.3% QoQ). Dividends surprised on the upside with an interim net cash DPS of 3 sen and an electable portion of 18 sen net under the Dividend Reinvestment Plan.

KFC Holdings (M) RM3.85: Hold
A great 2010; more challenging 2011 Shariah-compliant

Done well, but downgrade to a Hold. KFC's share price has risen 92.5% over the last 52 weeks. While it continues to consistently deliver sustained top-line and >10% p.a. bottom-line growth, we see a lack of near-term catalysts. Although our DCF-value rises 8.4% post-2010 results to RM3.97/sh, this implies little upside to its current market price. At our new TP, KFC would trade at 16.7x 2012 PER.

TH Plantations RM1.90: Buy
4Q10: Charging ahead Shariah-compliant

A strong showing. Results were ahead of forecasts on stronger than expected 4Q10 performance driven largely by higher CPO prices. We raise our FY11 net profit forecast by 13% after incorporating higher average CPO price of RM3,100/t (+7%). THP remains a Buy with a higher RM2.35 target price (+9%). Valuation wise, THP is attractive at 8.1x, trading at 1sd below its mean one-year forward PER of 11x.

RCE Capital RM0.53: Sell
Strong quarter, but uncertainties still

Above expectations. 9MFY11 net profit made up 83% of our RM105m full-year forecast and 88% of consensus on sustained margins. We raise our FY11-13 net profit forecasts by 6% p.a.. Despite continous earnings delivery, the larger picture remains cloudy as there is no development yet on KOWAJA's compliance with cooperatives guidelines which affects RCE's earnings growth post FY11. Maintain Sell with an unchanged RM0.45 TP based on 0.7x P/B (end-2010).

Notion VTEC RM2.06: Buy
Profits rebound; special dividend surprise Shariah-compliant

NVB's earnings rebounded 64% QoQ in 1QFY11, fueled by stronger camera segment's performance and a RM2m currency gain. It surprised with special dividends (via treasury shares distribution of 13 shares for every 1,000 held). Our unchanged 2-year net profit CAGR forecast of 38% has upside potential. Clinching MSC tax status could further lift EPS by 6 sen. Maintain Buy with a RM2.40 target price.

Kossan Rubber Industries RM3.29: Buy
Better than peers at riding out the storm Shariah-compliant

Expect commendable 4Q10 results. Kossan's 4Q earnings are likely to have been stable QoQ (+17% YoY) on sustained EBIT margins. Such a performance would be highly commendable in our view, considering the fact that high latex prices had negatively impacted the margins and earnings of its latex peers in the recent quarter. Latex gloves presently account for 60% of Kossan's glove production with nitrile accounting for the remaining 40%. Kossan's share price has unjustifiably underperformed the bigger latex peers by 5% YTD and valuations are undemanding. Maintain Buy and DCF-derived TP of RM3.60.

The FBM KLCI rebounded strongly by gaining 8.29 points at 1,525.85 yesterday. Its resistance areas of 1,526 and 1,544 will cap market gains, whilst the obvious support areas are located at 1,500 and 1,523.

Trading idea for today is a Buy call on KIANJOO.

Other Local News
Banking: Mizuho Malaysia gets MoF approval for its commercial banking licence.The licence would enable it to provide a full range of financial services to multinational companies seeking to establish and expand their broad manufacturing base. (Source: The Edge Daily)

Oriented Media: In reverse takeover. Bina Puri will be injecting its polyol manufacturing business and power assets in Indonesia into OMedia in exchange for new shares, making Bina Puri the largest shareholder in OMedia, after the reverse takeover (RTO) is concluded. Ace Market-listed OMedia is presently involved in the sale of information technology-related products and services. (Source: The Edge Daily)

Parkson: To accelerate expansion in China. MD Alfred Cheng said the company will open 8 to 9 stores a year through 2013, after opening 5 last year and spend up to RMB500m this year on new stores and remodeling existing outlets. (Source: Malaysian Reserve)

MAS: Offering up to 85% discount for all destinations. Malaysia Airlines (MAS) is offering up to 85% discount to all destinations in conjunction with the 8th edition of the Malaysia Airlines Travel Fair (MATF'11) from Feb 21 to Feb 28. The travel period for the fares is from March 21 to Dec 31. MAS is also offering up to 50% discount for business class seats for all of its destinations for the first time. (Source: Malaysian Reserve)

Healthcare: Medical records online by 2015. At least 20 government hospitals nationwide will be able to serve patients faster by 2015 when medical records are accessible online. However, having a common database for medical records has raised concerns on privacy and confidentiality. (Source: New Straits Times)


Maybank Invest Recommended Counters

This week, we highlight for you 4 counters.

1. Dialog Group Berhad (Dialog)

Dialog Group Berhad through its subsidiaries provides engineering, procurement, construction and commissioning services and plant maintenance services. It also retails petroleum to oil, gas and petrochemical industries, as well as markets specialty chemical and equipments.

Dialog is chosen to be on of the highlights this week based on two factors i.e. it is one of the top picks & buy for the market (specially in the O&G sector) and one of the key drivers of the Malaysia ETP.

Price: RM2.20
52 week high: RM2.29
52 week low: RM1.00
Mkt Cap: RM4.4b
P/E: 33.4x
ROE: 25.8%
Target Price: RM2.73

2. Scientex Berhad (Scientx)

Scientex Berhad through its subsidiaries manufactures polyvinyl chloride (PVC), polyurethane leather sheetings, packaging materials, bricks and automotive parts. It also operates in property investment, development and leasing, as well as deals in securities.

Low PE is a criteria in highlighting Scientx this week as well as being one of the larger and unique packaging material companies on Bursa .

Price: RM2.53
52 week high: RM2.59
52 week low: RM1.32
Mkt Cap: RM0.6b
P/E: 8.4x
ROE: 15.3%
Target Price: RM3.38

3. Notion VTEC Berhad (Notion)

Notion VTEC Berhad is a metal processing company that provides products and services that include designing and developing high precision cutting tools, provides machining and services.

This stock is highlighted this week as it is an oversold stock. In addition, there is a recovery in disk drive makers for cameras which will benefit the Company as a result.

Price: RM2.12
52 week high: RM3.50
52 week low: RM1.50
Mkt Cap: RM0.3b
P/E: 8.4x
ROE: 18.9%
Target Price: RM2.35

4. Sozo Global Limited (Sozo) - not Shariah compliant as it is yet to get Halal certification.

Sozo Global Limited is a one-stop gourmet convenient food specialist that offers RTS food, frozen vegetables, canned food and other foods such as VF snacks and asparagus tea products.

Basically, Sozo is highlighted in this week's flyer as it is a new Chinese food company listed on Bursa with a positive share price momentum on the stock.

Price: RM0.91
52 week high: RM0.93
52 week low: RM0.64
Mkt Cap: RM0.4b
P/E: 4.7x
ROE: 71.1%
Target Price : RM1.18

Regards and Happy reading!


RHBInvest Research

Monday, February 21, 2011


  • 4Q10 results may beat our estimates.
  • No change to forecasts. Fair value is RM9.80 and Outperform call maintained.

Corporate Highlights

  • To end on a high.
  • Maintain fair value at RM5.75, we downgrade Axiata from Outperform to Market Perform.
  • Expecting FY10 core net profit to be flat yoy.
  • No change to forecasts. Maintain fair value at RM4.25

  • Tracking expectations.
  • Fair value raised to RM7.42. Upgrade to Outperform from market performs.


Maybank IB Views

4Q10 Real GDP
Within expectations...

4Q10 real GDP growth slowed for the third consecutive quarter to +4.8% YoY. QoQ, the economy expanded by +1.5% (2Q10: +2.5%). Real GDP growth for the whole of 2010 was +7.2% (2009: -1.7%). Domestic demand -especially consumer spending and gross fixed capital formation - provided the lift to the economy as external trade eased further. Forward-looking indicators like global PMI and Malaysia's index of leading economic indicators point to steady global and domestic growth momentum in the early part of 2011. Therefore, we expect growth to stabilise at around 5% in 1H 2011 (2H 2010: +5.1%) before accelerating to 6% in 2H 2011, thus maintaining our full-year 2011 forecast of 5.5% growth.

Banking: Overweight
As interest rates rise...

Minimal impact expected from base case scenario. Regional rate hike concerns are unlikely to dissipate anytime soon, in our view, and Malaysian banks are unlikely to be spared the volatility. Analysis of our base case monetary policy scenario, however, suggests that the overall impact to bank earnings is minimal, with a positive bias to most banks within our coverage with possibly the exception of AMMB, should interest rates rise. Our top picks are CIMB and RHB Capital.

AMMB Holdings RM6.32: Hold
An issue of sentiment

Downgrade to Hold. While we do not expect a significant impact to bank earnings under our monetary policy response assumptions, it is our view that AMMB is unlikely to outperform its peers in this current environment of rising interest rates, by virtue of its less favorable asset-liability mix. Valuations at current levels are fair vis-a-vis its peers, while dividend yields lag. 3QFY11 results, meanwhile, were uninspiring. Our DDM-derived target price is lowered to RM6.80 from RM7.10 on rolling forward valuations and earnings downgrades.

The FBM KLCI rebounded 23.04-points and closed at 1,517.56 last week, as a locally-led rebound rally emerged after the previous week’s foreign sell-down. The obvious support areas for the FBM KLCI are located in the 1,474 to 1,517-zon and resistance at 1,519 and 1,576 will.

Trading idea for today is a ACCUMULATE call on SCIENTX.

Other Local News
UMW: Toyota targets 90,000 units sales. Automobile giant UMW Toyota Motor is anticipating nationwide sales to exceed 90,000 units this year to maintain its market share at 15% this year. UMW Toyota's strategy was to launch a series of new models this year, such as the new Lexus CT200h hatchback next week. (Source: The Star)

Pos: Khazanah starts restricted tender for Pos. Khazanah Nasional Bhd has entered into the second stage of the divestment process of its 32.2% stake in Pos Malaysia Bhd, starting with the restricted tender process for bidders. Bidding would be on a level playing field whereby the emphasis would be on bidders who would be able to introduce sound strategies and business plans sustainable to bring the postal entity to the next level of growth. (Source: The Edge Financial Daily)

Ramunia: In talks with Coral Alliance. Ramunia Holdings Bhd is in talks with oil and gas outfit Coral Alliance Sdn Bhd-believed to be linked to Tengku Datuk Ibrahim Petra and Robert Lee, former directors of Petra Energy Bhd- for a possible synergistic tie-up or even an acquisition of the latter. In any case, a joint venture or an acquisition of Coral Alliance by Ramunia will benefit the latter as Coral Alliance is said to be the frontrunner for a hook-up and topside maintenance contract from Petronas. (Source: The Edge Financial Weekly)

Ivory: Secures major tenants for Penang Times Square. Penang-based Ivory Properties Group Bhd has signed up several tenants that will take up sizeable areas in Times Square, along Jalan Datuk Keramat. The shopping centre’s total tenancy will increase from about 50% now to about 80% by April or May. The new tenants are reputable restaurateurs such as Tao, Ming Garden and Coffee Island. (Source: The Edge Financial Weekly)

Manufacturing: Solutia to invest RM305m on sulfur factory. US-based Solutia Inc is set to invest RM305m to build a new high-tech facility to manufacture insoluble sulfur, a vulcanising agent for critical application in tire industry. It is part of an expansion plan to the current plant operating in Gebeng industrial area here and by doing so, Solutia will double the capacity, making it the world’s largest manufacturing site for insoluble sulfur. (Source: The Star)

EPF: Declares 5.8% dividend for 2010. The Employees Provident Fund (EPF) announced a 5.8% dividend for the year ended Dec 31, 2010, slightly higher than the 5.65% given out in 2009. The RM21.6b dividend payout is the highest in the history and a 11.55% increase compared with the RM19.37b paid out in 2009. (Source: The Edge Financial Daily)


Stocks to watch: AMMB, Tasek, Mudajaya, Hap Seng

Sunday, February 20, 2011

KUALA LUMPUR: Investors will have to brace for the flurry of corporate results flowing from Monday, Feb 21 including those from the Genting group, SIME DARBY BHD, AIRASIA BHD, MALAYSIAN AIRLINE SYSTEM BHD (MAS), MALAYAN BANKING BHD and CIMB Group Holdings Bhd.

Other companies due to announce their results include KUALA LUMPUR KEPONG BHD, IJM Corp Bhd and GAMUDA BHD.

Most importantly, investors want to know what is the outlook for the companies, especially those with international operations, in the face of volatile external environment and record high oil prices.

On Friday, Bank Negara announced the Malaysian economy grew at a slower pace of 4.8% in the fourth quarter of 2010 compared with 5.3% in the third quarter due to the weaker growth in external demand which impacted the manufacturing sector.

It said 4Q growth was still underpinned by higher private and public sector spending, but the central bank expects the pace of growth to be affected by moderating external demand. Manufacturing grew at a slower pace due to slower external demand while the agriculture sector registered a decline, mainly due to the decrease in palm oil output.

“The pace of growth of the Malaysian economy will be affected by the environment of moderating external demand. Growth will, nevertheless, be supported by continued firm expansion in domestic demand.

“Private consumption spending will continue to benefit from the favourable labour market conditions, firm commodity prices and access to financing. The roll-out of CONSTRUCTION and infrastructure activities and the implementation of the economic transformation programme by the government are likely to provide significant support to the growth momentum in private investment,” it said.

MIDF Research head Zulkifli Hamzah said the Malaysian market was still reeling from a selldown by foreign investors. Preliminary data from Bursa shows that foreign investors were still net sellers this week.

“Last week, they sold in terms of gross value, RM4.3 billion of Malaysia equity. This week, we estimate a gross outflow of about RM2 billion,” he told theedgemalaysia.com.

“We do not expect the GDP numbers to have a crushing impact on the market when it opens on Monday. Investors are likely to be more apprehensive over the slew of corporate results due to be unveiled next week,” said Zulkifli.

Stocks to watch with fresh corporate developments include AMMB HOLDINGS BHD, Tasek Corp Bhd, MUDAJAYA GROUP BHD and HAP SENG CONSOLIDATED BHD.

AMMB’s net profit for the third quarter ended Dec 31, 2010 rose 21.2% to RM325.31 million from RM268.47 million a year ago. The higher net profit was mainly due impairment writeback on financial investment and doubtful sundry receivables of RM38.3 million and RM2.3 million respectively as compared to impairment loss of RM19.2 million and RM4.0 million for previous corresponding quarter.

Revenue rose to RM1.82 billion from RM1.71 billion in 2009. Earnings per share was 10.83 sen while net assets per share was RM3.31.

For the nine months ended Dec 31, AMMB’s net profit rose 34% to RM1.03 billion from RM766.87 million, on the back of revenue RM5.3 billion, up from RM4.87 billion a year earlier.

Tasek’s earnings in the fourth quarter surged 325% to RM69.1 million from RM16.25 million. The much improved group results apart from the RM43.6 million gain from disposal of PLANTATION and other property, was mainly in line with the increase in group's total revenue compounded by better local cement sales margin.

Tasek said revenue rose 15% to RM133.67 million from RM116.08 million. Earnings per share were 43.3 sen compared with 8.77 sen. It proposed a bumper dividend, comprising of preference dividend of 6%, ordinary dividend 30% and special dividend 50%.

Mudajaya’s net profit for the fourth quarter ended Dec 31, 2010 rose 39% to RM57.09 million from RM41.05 million a year earlier, driven by the increased level of activities. Revenue rose to RM230.29 million from RM211.76 million a year ago. Earnings per share were 13.96 sen while net assets per share rose to RM1.75 from RM1.

Mudajaya proposed a final dividend of 3.0 sen per ordinary share of 20 sen each under the single tier system for FY10.

For the 12 months in 2010, Mudajaya’s net profit surged 75% to RM208.45 million from RM119.18 million a year ago, on the back of revenue RM869.43 million.

Hap Seng Consolidated’s net profit for the fourth quarter ended Dec 31, 2010 surged to RM103.13 million from RM7.69 million a year earlier, driven by improvement in revenue in all divisions except for fertilisers trading which was affected by lower average selling prices.

Revenue rose 19.3% to RM810.88 million from RM679.6 million. Earnings per share were 18.30 sen while net assets per share was RM4.59. For the financial year ended Dec 31, 2010, Hap Seng’s net profit rose 222% to RM323.16 million from RM100.24 million a year ago.

Hap Seng proposed to pay out as final dividend about 50% of its net profit tax and minority interest totalalling RM123.98 million or 22 sen per share.

RAMUNIA HOLDINGS BHD is eyeing some RM300 million worth of fabrication jobs this year as projects up for grabs start pouring into the market again, underpinned by the surge in crude oil prices.

Chief executive officer Nor Badli Munawir Mohamad said on Friday that while Ramunia's existing order book was negligible, he expected it to grow this year after Petroliam Nasional Bhd committed to opening more marginal oilfields and issue more oil and gas contracts this year.


EPF declares higher dividend of 5.8% for 2010

KUALA LUMPUR: The Employees Provident Fund (EPF) has declared a dividend of 5.8 percent for 2010, up from 5.65 percent declared the year before, buoyed primarily by good performance in the equities market.

“The remarkable investment income achieved in 2010 was especially driven by the performance of equity investments,” said EPF Chairman Tan Sri Samsudin Osman in a statement on Sunday.

“The improved financial and economic conditions provided the market with sufficient liquidity, allowing profit taking activities throughout the year.

“The dividend amount paid out is derived after deducting net impairment allowance on financial assets, investment expenses, operating expenditures and statutory charges as well as dividend on withdrawals,” he said.

EPF will be paying out a total of RM21.61bil to members, an increase from the 2009 dividend payout of RM19.37bil.

The dividend rate of 5.8 percent underscores an impressive year in which gross investment income reached a historical high of RM24.06bil, reflecting a 39.76 percent increase over the RM17.22bil gross investment income recorded in 2009, the statement said.

For the year under review, a total of RM10.94bil was earned from equities, a significant increase from RM4.85bil earned in 2009.

Loans and bonds were the second largest investment income contributor in 2010, recording RM7.02bil in gross investment income, compared to RM6.63bil posted the previous year.

Malaysian Government Securities was the third largest income earner for the year contributing RM5.30bil compared to RM5.22bil in 2009.

The year 2010 saw about two-thirds of EPF’s total investment assets remaining in low-risk fixed income instruments with stable streams of income.

“As a retirement fund, our primary objective is the preservation of capital while at the same time adding value to members’ retirement savings. In pursuit of this objective, we will continue to adopt a prudent investment approach,” Samsudin said.

Members can check their EPF Account Statement for the crediting of the 2010 dividend, either via EPF Kiosks, counters or i-Akaun, from Monday, 21 February 2011.

source: thestar


Honda Malaysia Call Back Honda City and Jazz

Friday, February 18, 2011

Yesterday, Honda Malaysia announced that they will call back 21,956 units of the third-generation City (model year 2009) as well as 1,680 units of the second-generation Jazz (model year 2009 and 2010).

Honda addresses problems with the lost motion springs and the retainers in the affected vehicles, with replacement of these to be carried out with countermeasure parts.


Masterskill CEO may raise his stake in company

KUALA LUMPUR: Masterskill Education Group Bhd group chief executive officer Datuk Seri Edmund Santhara is considering to up his stake in the group.

In a filing with Bursa Malaysia on Wednesday, the education-based Masterskill said Edmund, who owns some 90.6 million shares, or 22.1% stake in the company had announced his intention to deal in his securities in Masterskill.

“(I'm) looking at purchasing at this price,” Edmund said when contacted by StarBiz yesterday.
Datuk Seri Edmund Santhara ... ‘Well, I need to wait and see.’

However, he said he could only buy the shares today as per Bursa Malaysia rules.

“Well, I need to wait and see. Perhaps, anything below RM2 doesn't justify keeping the company listed,” Edmund said when asked on the amount of shares he intended to purchase.

Last December, he told StarBiz that the share price then of RM2.22 was not “justifiable” for a firm that made about RM100mil in net profit annually.

He said that the company was fundamentally sound and that its Kuching campus was already in operation.

“The current share price weakness presents a great buying opportunity for Edmund to accumulate its shares,” an analyst said, adding that Edmund's move to purchase more shares may be a practical thing to do.

The analyst said most companies undertake share buybacks if they believe their shares are undervalued, or to send a signal of confidence in the company.

Masterskill, which raised RM771.3mil from its initial public offer (IPO) in May 2010, has succumbed to selling pressure yesterday.

The counter fell to a record low since its listing after Fidelity Management and Research (FMR) LLC, the parent of Fidelity Investment, sold 280,000 shares in the former.

The counter fell 8 sen, or 4.32%, to RM1.77, its lowest since its listing on May 18, 2010.

However, Edmund remains unperturbed by the divestment by FMR.

“It's a simple portfolio investment, so it's normal. The company fundamentals remain strong,” he said.

Edmund was confident its share price would stabilise soon. “As the company is good, the price will soon stabilise after the seller is gone, mainly Fidelity Investments,” he said.

FMR, one of Masterskill's substantial shareholders, has been trimming its stake in the education group since October. Following the disposal of 280,000 shares, FMR held a direct stake of 20.6 million shares, or 5.02% in Masterskill.

Dealers attributed the price slide the stock has fallen some 30 sen from its one-month high of RM2.34 on Jan 13 mainly to the recent selling pressure. However, they believed the selling might not be done as yet.

As at Sept 30, the nursing and allied health sciences education provider has 17,613 students. It posted a net profit of RM26.2mil for the third quarter ended Sept 30 on revenue of RM80.7mil.

The education group is due to announce its fourth quarter ending Dec 31, 2010 financial performance tentatively next Wednesday. Bloomberg's consensus estimates expect Masterskill to post RM104.6mil in net profit for the full financial year ended Dec 31, 2010.

source: thestar


RHBInvest Research

Top Story

YTL Power –Market Perform (up from UP)

  • Visit Note
  • More to come from “Yes”. Expect two new Yes devices in Mar when YTL Comms launches the Samsung Buzz mobile phone (mobile voice and SMS) and the Zoom router (enabling and sharing an Internet connection within a premise).
  • Raised our SOP-derived fair value on YLTP from RM2.20 to RM2.57.
  • YTLP offers investors attractive gross dividend yields of around 7% p.a..

Corporate Highlights

CIMB: Outperform

Company Update
  • CIMB Niaga posts strong finish to FY2010
  • No change to forecasts. Fair value of RM9.80 and Outperform call maintained.

MBM: Outperform
  • 4QFY10 Results
  • Slower growth ahead
  • No significant changes to forecasts. Outperform call retained on valuation grounds.
  • FV lowered to RM3.95 (from RM4.96).

CSC Steel: Outperform
  • 4QFY10 Results
  • Weak 4QFY10 due to margin contraction
  • We continue to like CSC Steel due to its undemanding valuations, strong balance sheet with a net cash of RM241.4m or 64sen/share (after 13sen dividend payout), and attractive dividend yield.
  • Indicative fair value is reduced to RM2.01.

Daibochi: Market Perform
  • 4QFY10 Results
  • Full-year FY10 net profit of RM18.2m (-19.6% yoy) was within expectations
  • For 2011, we believe Daibochi will continue to grow its revenues as it did in 2010 (+20.7% yoy) through continuous product innovations in both F&B and non-F&B segments.
  • Our fair value is unchanged at RM2.95

Wah Seong: Underperform
  • 4QFY10 Results
  • FY10 weak but within expectation
  • FY11 will be a better year for earnings as both the pipe-coating and engineering divisions have already started to post improvements in 4QFY10. Current order book and tender book stand at RM1.4bn and RM5.7bn respectively, with the pipe-coating division contributing about 50% to both numbers.
  • Maintain forecasts, Underperform call and our RM2.02/share fair value at this juncture.


RHBInvest Research

Top Story


  • Briefing Note
  • Looking forward to growth.
  • Maintain Outperform call on the stock and fair value at RM29.10.

Corporate Highlights

IOI Corp:
  • 2QFY11 Results
  • IOIC recorded an estimated net EI loss of RM3.7m in 2QFY11, which included RM73m fair value loss on derivatives in the manufacturing division.
  • Dampened by the weather
  • We cut our SOP-based target price to RM6.70 (from RM7.65). We believe IOIC’s earnings may continue to disappoint for the rest of FY11, stemming from the weather-affected crop and potentially lower CPO prices achieved vis-à-vis current market prices.
  • We downgrade the stock to Market Perform (from outperform).

  • 2QFY11 Results
  • 2Q results broadly in line
  • No change to forecasts at this juncture, as we expect earnings to accelerate in the 2HFY11.
  • Maintain Outperform call on the stock and RM2.82/share SOP-based fair value.


4QFY10 Results
Amway’s FY12/10 net profit of RM78.3m (+7.9% yoy) was below expectations.
The main variance to our forecasts was the higher-than-expected selling and distribution expenses during the year, which was 14% higher than our estimates.
Our fair value is maintained at RM10.23 based on unchanged WACC of 8.9%. Maintain Outperform.


4QFY10 Results/Briefing Note
  • A soft patch in FY10, growth to resume in FY11
  • We have cut our FY11-12 earnings forecast by 3.6% and 6.1% respectively mainly due to reflect 1) higher effective tax rate; 2) lower non-airport revenue; and 3) Higher operating costs and depreciation.
  • Correspondingly, our fair value is reduced to RM7.80 based on “sum-of-parts”. Maintain Outperform.


Maybank IB Views

Thursday, February 17, 2011


Malaysia Airports Holdings RM6.20: Buy
Accountants and Taxman Spoilt an Otherwise Fantastic Year!

Below estimate. RM378m (+0.4%YoY) 2010 recurring net income was 12% below our forecast and 2% above of consensus. There was a host of accounting treatment items and a substantially higher than statutory tax rate which masks the true performance of an otherwise a fantastic year. Nonetheless, we look forward to a promising 2011 as we enter the fourth year of the aviation up-cycle underpinned by strong GDP growth, global trade and tourism boom. Maintain Buy, no change to our RM7.12/share DCF-based target price.

IOI Corporation RM5.71: Hold
Largely priced in Shariah-compliant

In line. RM920m 1HFY11 recurring net profit (+14% YoY) is 45% of our full-year forecast. Reported RM1.02b net profit (+8% YoY) is also within street's expectations at 46% of consensus full-year estimate. We raise our FY11 net profit forecast by 9% after imputing for stronger average CPO price of RM3,500/t in 2H (1H: RM2,800/t). Our sum-of-parts based target price is marginally lifted to RM6.35 (+5sen).

Dialog Group RM2.13: Buy
On track Shariah-compliant

Pengerang CTF & marginal field projects are catalysts. Dialog's 2QFY11 net profit of RM36m (+9% QoQ) took 1H earnings to RM69m (+24% YoY), on track to meet our forecasts. We remain optimistic about Dialog's long-term growth prospects, driven by its CTF projects in Pengerang. Dialog is also touted to be in the running to co-develop PETRONAS' marginal field projects, a major positive in our view. Maintain Buy with an unchanged RM2.60 SOP target price.

The FBM KLCI traded mixed to finally close higher by 0.97 points to 1,506.30 yesterday. Its resistance areas of 1,506 and 1,541 will cap market gains, whilst the weaker support areas are located at 1,480 and 1,504.

Trading idea for today is a TAKE PROFIT call on MEGB.

Other Local News
Sime Darby: To challenge suit by Abu Dhabi firm. Sime Darby Engineering Sdn Bhd (SDE), a wholly-owned subsidiary of Sime Darby has confirmed that Emirates International Energy Services (EMAS) has indeed filed the suit against the company and vowed to challenge the suit. EMAS has written a letter to SDE claiming compensation in the amount of USD20m for not accepting several projects EMAS had identified for SDE. However, SDE stressed that it was under no obligation to accept EMAS's recommendations and had no time bound requirements to decline EMAS's recommendations. (Source: Bursa Malaysia)

QL Resources: Boilermech gets nod to float on Ace Market. Boilermech Holdings Bhd (BHB), an indirect associate company of QL Resources, has obtained approval to list on the Ace Market of Bursa Securities. (Source: Bursa Malaysia)

Green Packet: Defers Ebitda-breakeven target to end-2011. Green Packet Bhd has deferred its target of breaking even at the Ebitda level to the end of this year as opposed to the first quarter of 2011. The deferment was due to the more competitive environment and lower price point in the nomadic (portable) broadband segment. (Source: The Edge Financial Daily)

Ramunia: Azizul pares down stake in Ramunia. Ramunia Holdings Bhd's major shareholder Datuk Azizul Rahman Abdul Samad has pared down his stake significantly recently, raising speculations that he may exit the group soon. Azizul indirect shareholding in Ramunia fell to 73.3m shares, representing 11.06% stake, from 14.3% or 94.7m shares as at Dec 30, 2010. (Source: The Edge Financial Daily)

Supermax: Counts on new income stream. Glove maker Supermax Corp Bhd is banking on a new income stream derived from global sales and marketing network to mitigate any effects of higher production cost. The company would aggressively globalise its operations via its network of about 700 distributors worldwide. The new income stream is expected to contribute 5% of its 2011 net profit. (Source: The Star)

Metro Kajang: To buy plantation land in Kalimantan. Metro Kajang Holdings Bhd is in negotiations to acquire 20,000ha of plantation land in East Kalimantan. The acquisition could double the size of its plantation land bank which measures about 16,000ha at present. Metro Kajang expects to see contributions from its oil palm venture in 2012, when it will contribute 20% to group revenue. (Source: The Edge Financial Daily)

Utilities: Govt no to coal power plants in Sabah. The government has agreed not to build coal-fired power plants in Sabah. The proposed construction of the plant in Felda Sahabat, Lahad Datu, to meet electricity supply needs in Sabah's east coast had previously received objections not only from local non-governmental organizations but also international activists. (Source: The Edge Financial Daily)


PetDag 3Q net profit up 26pct to RM236.16m

KUALA LUMPUR: PETRONAS DAGANGAN BHD net profit for the third quarter ended Dec 31, 2010 rose 26.1% to RM236.16 million from RM187.25 million a year earlier, driven by higher product average selling prices and sales volume.

The company said on Wednesday, Feb 16 that the higher net profit was also due to lower operating costs.

Revenue for the quarter rose to RM5.93 billion from RM5.34 billion. Earnings per share were 23.8 sen, while net assets per share was RM4.60.

On its prospects, PetDag said market demand conditions remained challenging due to the weaker economic growth prospects in the last quarter of its financial year.

“However, the market leadership will continue to be maintained with continuous strategic marketing efforts and initiatives. Efforts to improve margin will continue through cost optimisation and operation efficiency initiatives.

“Profits for the current financial year however may be impacted by fluctuations in international oil price, petroleum product costing and global economy,” it said.


Dialog 2Q net profit up 25.7pct to RM35.99m

KUALA LUMPUR: DIALOG GROUP BHD []’s earnings rose 25.7% to RM35.99 million in the second quarter ended Dec 31, 2010 from RM28.63 million a year ago, due mainly to higher contribution from its engineering and CONSTRUCTION and plant maintenance activities in Malaysia and Singapore.

It said on Wednesday, Feb 16 that revenue slipped 2.5% to RM268.53 million from RM275.57 million in 2009. Earnings per share were 1.84 sen while net assets per share was 26.3 sen.

For the six months, earnings rose 24.3% to RM69.09 million from RM55.56 million. Revenue declined 8.9% to RM532.33 million from RM584.42 million.

Reviewing its performance for the quarter, Dialog said its specialist products and services for international operation also performed better in the current financial quarter.

Dialog added the Langsat Terminal (One) Sdn Bhd in Tanjung Langsat, Johor, where its phase one started operations in September 2009 and phase two in April 2010 had contributed positively to the group’s financial results in the current quarter.

On its prospects, Dialog said it would continue to grow its core businesses with recurring income, such as, its specialist products and services, and plant maintenance services while at the same time focusing resources on the expansion of its logistics and upstream businesses.

“The group will continue to expand its scope and capability for provision of expertise services to the upstream sector of the domestic oil and gas industry.

“We will continue to expand our geographic footprint and widen our presence in existing markets while penetrating new ones internationally. In line with a strengthening global oil and gas market, we will continue to focus on growing and developing our human capital and talent pool to cater for our rapid expansion.”

Barring any unforeseen circumstances, Dialog said it was optimistic that its performance would be favourable for the financial year ending June 30, 2011.


RHBInvest Research

Property: – Outlook and concerns

UEM Land , SP Setia, IJM Land and KSL are confident in their property sales this year with more new launches scheduled in the pipeline.

Rising building material costs such as steel bar, cement as well as the shortage of labours are key concern.

UEM Land: Correlation between ULHB’s foreign shareholding and share price is 0.94. Hence, any short-term capital reversal would result in relatively strong profit taking activities on the stock. However, continuous news flow on IDR will keep investors’ interested on the stock. If we include the contribution from potential development of Singapore land parcels, RNAV/share is estimated at RM3.05.

IJM Land: A total of about RM2bn worth of new launches is scheduled for this year. Unbilled sales have risen from about RM800m to almost RM1bn. While management has conservatively estimated a GDV of only RM4bn for Canal City , we believe the actual GDV could amount to RM9-10bn.

SP Setia: Closed about RM1bn sales from KL EcoCity project – 10 blocks of boutique offices and over 90% of strata office units were booked. In addition to the unbilled sales of RM2.4bn, given the RM7-8bn worth of new projects in the pipeline, RM3bn sales target seems to be rather modest. Meanwhile, continued news flow on landbanking will provide some support to the share price.

KSL – Estimate that total value of all assets could amount to RM700-800m – similar to its current market cap. Although the delay in obtaining approval for Bandar Bestari could yield some earnings risk, the stock’s underlying asset are still under-estimated by the market

IRDA – Following the bilateral agreement between Malaysia and Singapore governments, increased interest from China is particularly strong on hotels and resorts business. Total investment from Singapore is now about S$2bn. Note that for Temasek and other developers from Singapore to enter, this suggests that the Singaporeans are confident on the potential of IDR, which will then lead to value appreciation for the real estate and properties in Johor.

Maintain Overweight. Top picks are SP Setia, IJMLD, Mah Sing (fair value is upgraded to RM3.03) and KSL. Considering the current valuations of the sector, we see better values in the small-mid cap property stocks such as Mah Sing and KSL which are trading at 15.7x and 8x FY11 PE, respectively.

Sime Darby:

  • Lawsuit from Emirates International Energy Services (EMAS) asking for nearly US$200m in damages, stemming from a dispute over tender bids.
  • No change to forecasts, target price of RM11.10 and our Outperform call.


IOI Corp Q2 profit up

PETALING JAYA: IOI Corp Bhd, a palm oil player, records a 12.8% year-on-year (YoY) in net profit to RM520.2mil for its second quarter ended Dec 31, 2010 due to better performance of its plantation and property businesses.

Revenue for the period under review was also up by 29.7% YoY to RM3.97bil.

According to IOI Corp in its filing to Bursa Malaysia today, the plantation segment reported a 14% increase in operating profit to RM363.7mil for the quarter under review as compared to RM319.9mil a year ago.

“The higher profit is mainly due to higher crude palm oil (CPO) and palm kernel (PK) prices realised,” it said.

Average CPO price realised for quarter under review RM2,800 per tonne compared to RM2,225 per tonne a year ago, while average PK price realised for the quarter RM1,979 per tonne compared to RM1,089 a year ago. “The higher operating profit for property development and investment is mainly due to gains recognised on disposal of investment properties amounting to approximately RM61mil during the quarter.

Cumulatively, IOI net profit for the first six months of the current financial year was at RM1.02bil compared to RM939.5mil in the same period in the previous financial year.

Its revenue for six months period also went up to RM7.49bil from RM6.33bil a year ago.

source: thestar


Maybank IB Views

Wednesday, February 16, 2011


Media Chinese International Limited RM0.875: Buy
Ride this dragon Shariah-compliant

Initiate coverage with a Buy call and RM1.22 TP. We like Media Chinese International (MCIL) for its dominance in the Chinese newspaper segment. With growing circulation, it will be able to capture a larger share of newspaper adex. Trading at an attractive 10x CY11 PER (lowest among the media stocks) and offering a decent 5.3% net dividend yield (highest among peers), MCIL offers value. Investors can also expect M&As or higher dividends for more upside potential.

The FBM KLCI rose 10.81 points to 1,505.33 on Monday. Its resistance areas of 1,505 and 1,541 will cap market gains, whilst the weaker support areas are located at 1,474 and 1,500.

Trading idea for today is a TAKE PROFIT call on RHBCAP.

Other Local News
AMMB: EPF accumulating shares in AMMB. The Employees’ Provident Fund (EPF) has been accumulating shares in AMMB Holdings Bhd recently, increasing its stake in AMMB by 11.1% to 12.93% in AMMB. (Source: The Edge Financial Daily)

Oil & Gas: Petronas finds new O&G fields offshore Sarawak. Petronas has made a major oil and gas (Q&G) discovery from two wells that have the potential of producing both oil and gas in offshore Sarawak. The preliminary evaluation indicated about 100m stock tank barrels (mmstb) of oil and 0.2 trillion standard cubic feet (tscf) of gas in place respectively. (Source: Business Times)

Property: Race to let out office space. Competition among lessors of office space in Kuala Lumpur is expected to intensify this year, with average rental of office space in the business district projected to remain unchanged at USD24.31 (USD1 = RM3.05) per sq ft a year. This brings the total stock of office space in the area to 31.1m sq ft compared with 28.1m sq ft in 2010. (Source: Business Times)

Mining: Canadian miner to speed up Pahang ops. Monument Mining Ltd, a Canadian gold mining and exploration company, plans to buy two new drill rigs for USD1m (RM3.05m) to speed up its current exploration programmes in Pahang. Monument owns Selinsing gold mine, Damar Buffalo Reef and Famehub in Pahang, within the central gold belt district of Malaysia. (Source: Business Times)

Government: Sarawak assembly unlikely to be dissolved this week, says Taib. Sarawak Chief Minister Tan Sri Abdul Taib Mahmud yesterday said the state legislative assembly will not be dissolved by this week to pave way for the state election. (Source: The Edge Financial Daily)


Maybank IB Views

Monday, February 14, 2011

Special Feature
Dong devalues again

Small financial impact. The Dong devaluation, by 9.3% last Friday (11 February), was not unexpected. Forex loss in the profit and loss (P&L) statements of Malaysian corporates under our coverage are negligible. Impairment for investments for the property developers can be "compensated" via higher subsequent selling prices which are usually denominated in USD. No change to our earnings forecasts and recommendations for the Malaysian corporates.

AirAsia RM2.69: Buy
AirAsia to defer aircraft delivery, again.... Shariah-compliant

Fourth deferral. AirAsia has deferred its 2012 aircraft delivery schedule from 24 to 14. This is its fourth deferral to date. The 10 aircraft deferred will be pushed to 2015 delivery schedule. No impact to our forecasts as we have already expected this aircraft deferral intention. Maintain Buy with a target price of RM3.36 based on 9.0x 2011 PER, 20% discount to peers.

Malaysia Airports Holdings RM6.02: Buy
MAHB Showed its true metal in 2010

Conclusion to a good year. MAHB will release its 4Q10 results on 16th Feb. 4QCY is seasonally the best. Based on the operating statistics published, we expect net recurring net income of RM154m (11.9% YoY, 63.4% QoQ) - this is MAHB's best quarter ever. MAHB is our top aviation pick as it is well placed to enjoy the current air travel up-cycle. Maintain Buy, no change to our RM7.12/share DCF-based target price.

Amanah Raya REIT RM0.945: Buy
Beats consensus, driven by new acquisitions

Maintain Buy. AAREIT’s 2010 RM41.4m realised net profit (+34% YoY) was within our expectation, but above consensus estimates by 12%. We continue to like AAREIT for its 7.7% 2011 yield (on par with 7.8% industry), and good earnings visibility and sustainability supported by long lease agreements with step-up features. We however lower our forecasts by 3-11% and DCF-based TP by 7 sen to RM1.12 to factor in slower-than-expected completion of three PKNS’s asset acquisitions.

The FBM KLCI plunged 37.30-points and closed at 1,494.52 last week, as fierce foreign selling emerged. Repatriation from the Asia-Pacific zone to Europe and USA was the obvious foreign fund agenda over the last 3-4 months and this especially accelerated last week in the region. Regional currency weakness (on the Vietnamese Dong, IDR and PHP) added to the regional malaise. The weaker support areas for the FBM KLCI are located in the 1,415 to 1,474-zone. The firm resistance zone of 1,494 and 1,544 will see heavy liquidation activities.

Weekly trading idea is a technical Take Profit call on CIMB

Other Local News
Auto: Proton confident of maintaining sales. The Proton Edar Dealers Association (Peda) is confident that Proton can sustain its current sales above its close competitor, Perodua. According to Peda, this would be achieved through better quality, delivery process, product line-up and marketing plan. Proton sales had superceded Perodua in the last month partly due to a healthier supply of cars and strong support from banks in approving loans and faster disbursement. (Source: Bernama)

Aviation: Turkish Airlines plans direct flight to KL in near future. Istanbul-based Turkish Airlines is eyeing Kuala Lumpur (KL) as one of its new flight destinations in the region, in line with plans to further expand its route network into Asia and the Far East region. (Source: Malaysian Reserve)

Logistics: Project to boost east coast economy. Kuantan Port City (KPC) is projected to attract up to RM38b investments by 2020 and help the East Coast Economic Region (ECER) and the country's first Special Economic Zone located within it to be an industrial and logistics hub. The ECER encompasses Kelantan, Terengganu, Pahang and the Mersing district in Johor. (Source: The Star)

Mah Sing: RM3b projects in the pipeline. Mah Sing Group is ready to roll out RM3b worth of new launches this year on positive domestic economic outlook. Mah Sing's group MD says there will be sustained demand in mid-tier to high-end properties, both landed and high rise in the residential, commercial and industrial segments. Mah Sing's new launches will comprise a mix of landed residential, niche size serviced residences, shop offices, retail units, small office/home office and industrial. (Source: Business Times)

Maybank: Set for windfall from sale of BII shares. Malayan Banking Bhd has sent out a request for proposals (RFP) for the secondary placement of at least a 17% block in Bank Internasional Indonesia (BII), which could net some RM2.35b in proceeds. Maybank is sitting on its investment in Bii which is about RM9b, inclusive of the rights issue. Today, BII has a market capitalization of RM13.8b (based on IDR700 per share). (Source: The Edge Weekly)

Media Prima: Radio Networks stays focused on online media. Media Prima Radio Networks (MPRN) CEO Seelan Paul said radio is no longer just about airtime spot. Online media is growing leveraging on online portal is crucial to stay attractive in this business. Radio is a great medium to work together with online media. (Source: Business Times)

RHB Capital: See a change at the top? Speculation is rife that a change is imminent in the top management of RHB Capital Bhd. According to industry sources, the group's CEO Datuk Tajuddin Atan, may leave the banking froup to take up the top position at Bursa Malaysia Bhd, replacing Datuk Yusli Mohamed Yusoff. (Source: The Edge Weekly)


Eye On Stocks

Saturday, February 12, 2011

THE oil and gas sector has seen a flurry of activity, stoked by newsflow from the Economic Transformation Plan and Petronas' high capital expenditure, which may hit RM40bil this year. On the back of this, analysts are expecting Dialog Group Bhd to turn in record net profits for its year ending June 30, 2011.

The announcement of Dialog's RM5bil Pengerang terminal project in partnership with the Johor government and Vopak in January indicates that the construction of the 5 million cu m terminal is set to commence in mid-2011 as scheduled.

Also, the entire southern Johor region is expected to add up to 10 million cu m of tank terminal capacity, including Tanjung Bin and the Port of Tanjung Pelepas.

“With Dialog's excellent track record in constructing and delivering the past two projects in Kertih and Tanjung Langsat, we expect the group to be a strong contender for orders of up to RM10bil,” said AmResearch.

CIMB has raised its target price from RM2.20 to RM2.70 to include concession earnings from the terminals in Kertih, Tanjung Langsat and Pengerang, and recurring income from the Jubail supply base.

Dialog's recent contract included a RM65mil contract to provide EPCC works for a new Bintulu cooling tower for Asean Bintulu Fertilizer Sdn Bhd could raise the group's existing secured orders by 13% to RM600mil.

CIMB has a profit forecast of RM149.5mil, while AmResearch is forecasting the company to turn in RM143.5mil in net earnings. - By Tee Lin Say



Stocks to watch: Banks, plantations, Rimbunan Sawit, REDtone

KUALA LUMPUR: The Malaysian stock market saw a total of RM28.10 billion erased from its market capitalisation during the Feb 7-11 period, aggravated by foreign selling of mostly banks and PLANTATION stocks with high foreign shareholdings as they shifted part of their funds to developed markets including the US.

Market capitalisation was reduced from RM1,302.61 billion to RM1,274.51 billion while the 30-stock FBM KLCI fell 2.67% or 41.08 points from 1,535.60 to 1,494.52. The FBM 100 fell 2.42% or 250.05 points from 10,300.05 to 10,050.00 while the broader FM Emas shed 2.34% or 248.44 points from 10,601.25 to 10,352.81.

According to Credit Suisse Research, global emerging markets recorded US$11.5 billion of outflows in funds, of which almost half were from China and Brazil, in the past three weeks,

MIDF Research head Zulkifli Hamzah told theedgemalaysia.com that as expected, the selldown by foreign investors continued on Friday and it will probably take a couple more days for the selling to unwind before price stabilises.

“On some technical angle, such as the RSI, the market is already in the oversold territory. However, this can persist for a while which is a good opportunity to accumulate in our opinion. There was strong buying by local institutions on Friday and that should mitigate further downside in the market,” he said.

“We do not think that it is a case of foreigners cashing out of Malaysia en bloc. Amidst the selling, some foreign investors have been picking up good stocks at depressed prices. Indeed, gross purchases by foreigners had been evenly matched until Wednesday, and peaked on Thursday. These came after China’s decision to raise interest rates. Foreign investors dumped Malaysian banking stocks fearing that the local authority may follow suit and tighten monetary condition via the SRR (statutory reserve ratio), rather than the OPR (Overnight Policy Rate) route,” he said.

Stocks to watch include banks and plantations which had been oversold in the recent weeks. CIMB Equities Research said it was downgrading the regional plantation sector from Trading Buy to Neutral.

The downgrade was because most of the planters have outperformed the market since its sector upgrade; spot CPO price has done better than expected, is close to its peak and should head south in the second half. CIMB Research also said the sector valuations are broadly in line with market price-to-earnings. But this is balanced by the bright earnings outlook in the current year and M&A potential.

“We raise our CPO price forecasts by 16% to US$1,100 (RM3,200) for 2011 and by 5% to US$1,000 (RM2,900) for 2012 given the smaller-than-expected supply.

Meanwhile, AmResearch remained positive on the banking sector and it sees minimal impact of any possible increase in the statutory reserve requirement (SRR) by Bank Negara.

It said the SRR is currently at a historically low level of 1%. Its sensitivity analysis indicates a –0.3% to –2.2% downgrade to net earnings, based on an SRR rate hike of 1%.

“The ones which may be affected the most would be EON Cap (-2.2%), Alliance Financial Group (-2.1%), Maybank (-2.1%) and Public Bank (-1.4%).

“We estimate every one percentage points increase in SRR rate to reduce the amount available for lending by RM7.65 billion just for eight local banks alone. Nonetheless, we remain positive about the banking sector. Our buys are CIMB, Maybank, Hong Leong Bank and RHB Cap,” it said.


Rimbunan Sawit Bhd’s subsidiary, R.H. Plantation Sdn Bhd is buying 4,857 hectares of oil palm plantation in Niah for RM118 million. It had entered into a memorandum of understanding with Sheba Resources Sdn Bhd to purchase the land. Sheba Resources is the registered owner of the land which has been charged to Agro Bank Malaysia Bhd for RM145.69 million.

The Edge weekly reports that with REDtone’s Malaysian operations in the red, the telco is looking to prepaid shopping cards in China to innovate its way to profitability.

In Latexx Partners Bhd, Lembaga Tabung Haji acquired 2.69 million sahres on Feb 7 to 9, raising its shareholding to 6.97% or 15.38 million shares.

On Jan 31, fund management company Navis Asia VI Management Company Ltd has offered RM852.03 million to acquire all the assets and liabilities of Latexx Partners or RM3.10 per share. At Friday’s closing price of RM2.83, there is upside for investors to pick up the shares.

In RHB Capital Bhd, its single largest shareholder, the Employees Provident Fund disposed of 5.88 million shares on Feb 7 and 8, reducing its stake to 46.6% or 1.003 billion shares.

Network Guidance Sdn Bhd (NGSB) has withdrawn claims for damages totaling RM400 million and loss of profit of RM500 million against TELEKOM MALAYSIA BHD and TM Net Sdn Bhd over an alleged breach of contract.

In the re-amended claim, NGSB sought a declaration that both parties had entered into an agreement for a joint-venture project but TM breached the agreement.

As a result of the breach of agreement, NGSB suffered loss and damages. NGSB said it is now claiming special damages totalling RM23.95 million.

AIRASIA BHD has signed an agreement with Airbus S.A.S to revise the delivery dates of 10 Airbus A320 aircraft from 2012 to 2015. The move was to allow some flexibility to switch from its current order of the classic A320 to a new generation A320 aircraft which is more fuel efficient when such aircraft come into production in the near future.

With the deferment, the delivery of 24 aircraft in 2012 would be reduced to 14 aircraft, while the number of deliveries in 2015 will be increased from nine aircraft to 19 aircraft, it said.


RHBInvest Research

Friday, February 11, 2011


Sector Update

  • Looking to the sky for guidance
  • We reiterate our view that our CPO price assumptions of RM3,100/tonne for 2011 and RM2,900/tonne for 2012 would be maintained as long as the weather normalises and La Niña ends within the next few months, resulting in “normal” production levels in 2H2011. However, if La Niña persists, CPO prices could potentially remain high at above RM3,500/tonne for the entire year.
  • No change to our Overweight rating on the sector.

Macro View


Economic Outlook (published 10 Feb 2011)
  • Slower economic growth in 4Q 2010, but momentum is building for a rebound in 2H 2011.
  • Going forward, the global economy, though will likely expand at a slower pace in 1H 2011.We expect the country’s real exports to expand at a slower pace in 2011, after returning to positive growth in 2010.
  • On the local front, domestic demand will likely be resilient in sustaining the country’s economic growth going forward, albeit at a more moderate pace. As a whole, we expect real GDP growth to normalise to 5.0% in 2011, from +7.0% estimated for 2010.

  • Economic Highlights (published 10 Feb 2011)
  • Moderated To 4.2% in Dec, translating to slower GDP growth in 4Q 2010
  • As a result, we estimate that real GDP growth is likely to have moderated to 4.3% yoy in 4Q, from +5.3% in 3Q and a peak of +10.1% in 1Q.

Corporate Highlights

Dayang: Market Perform
  • News Update
  • Wins topside maintenance contract
  • Maintain Market Perform call, with an unchanged fair value of RM2.60/share.


Maybank IB Views


Industrial Production Index, Dec'10
Hovering around low single-digit growth level for now…

Dec '10 industrial production growth was below expectation at +4.2% YoY (vs revised Nov '10: +5.4% YoY; Maybank IB: +5.6% YoY; Consensus: +5.0% YoY). Highlight from the data was the further pickup in manufacturing production. Total output growth was weighed down by lower mining output and slower growth in the power sector.

Market Strategy
Succumbing to regional selling pressure Shariah-compliant

Succumbed. The KLCI 30 was down 32 pts (2.1%) yesterday to close below the 2010 year-end close of 1,519 for the first time this year. Malaysian equities finally succumbed to selling pressure, in step with regional markets which have weakened since early this year. YTD, the KLCI is down 1%, but on relative terms, it has still "outperformed" regional indices STI (-2.7%), SET (-7.9%) and JCI (-8.9%). Rising food and commodity prices stoke inflation fear, and in turn, rising interest rate concerns across the region. China, Indonesia and Thailand have raised their benchmark interest rates by 25 bps each this year.

WCT RM3.34: Buy
2010 to finish strong; positives ahead Shariah-compliant

Potential upside surprise. 2010 final quarter results, to be released on 25 Feb, may surprise on the upside, despite a possible provision for Bakun CW2. There is no change to our net profit forecasts for now; we anticipate a 33% growth in 2011 and 13% in 2012. 2011 will be a record earnings year. Our target price is unchanged at sum-of-parts RM3.75 after rolling over our valuation period, but based on fully diluted EPS with e.158m new warrants coming on stream. WCT stays a Buy.

Eastern Pacific Industrial Corp RM2.35: Hold
In line, Tanjung Agas poses competition Shariah-compliant

Maintain Hold, no near-term catalysts. We now expect a tapered 3-year forward net profit CAGR of 4%, which forms the basis of our concern. Also, the proposed Tanjung Agas development in Pahang will pose a stiff competition to EPIC in the long term. Maintain Hold with a raised RM2.55 target price (+6%) based on unchanged 8x 2011 PER target, but after raising our 2011-12 net profit forecasts by 5-10%.

The FBM KLCI tumbled 32.08 points to 1,503.99 yesterday. Its resistance areas of 1,503 and 1,533 will cap market gains, whilst the weaker support areas are located at 1,474 and 1,500.

Other Local News
Dayang: Wins RM802m Petronas Carigali contract. Dayang Enterprise Holdings Bhd's (DEHB) wholly owned subsidiary Dayang Enterprise Sdn Bhd (DESB) has received a contract worth RM802mil from Petronas Carigali Sdn Bhd. The contract involved the provision of topside structural maintenance services in Sarawak, Sabah and Peninsular Malaysia. (Source: Bursa Malaysia)

MTD Cap: Suitors up offer for MTD Cap to RM11 a share. The major shareholders of MTD Capital Bhd (MTD Cap) that had proposed to take over the company for RM9.50 cash per share previously, have revised their offer to RM11 cash per share. The revised offer values MTD Cap at RM3.03b, RM430m higher than the previous valuation of RM2.6b. (Source: The Edge Financial Daily)

O&G: Petronas confident oil business won't be affected by split in Sudan. Petroliam Nasional Bhd (Petronas) is confident its oil business in Sudan would not be affected after the people of Southern Sudan, where the oil fields are sited, voted for independence last month. (Source: The Star)

Plantation: FTA with India will boost Malaysia palm oil sector. Next week's free trade agreement (FTA) signing between Malaysia and India will be a further boost for the country's palm oil sector and Sabah, in particular, stands to benefit. India would be reducing duties on palm oil as part of the FTA, which will make it easier for Malaysian palm oil players to export to India. (Source: The Star)

Plantation: January CPO output lowest in 12 months. Malaysian crude palm oil (CPO) output fell 14.18% or 174,791 tonnes to 1.057m tones in January, from 1.232m tones in December 2010, according to Malaysian Palm Oil Board (MPOB). This represents the lowest in 12 months. (Source: The Edge Financial Daily)


Maybank IB Views


Notion VTEC RM2.01: Buy
Jumping for joy Shariah-compliant

A strong headstart. NVB's 1QFY11 core results are expected to be robust, likely ahead of consensus forecasts, but within ours. Our current FY11 net profit forecast is 14% above consensus. The camera segment (from new sub-assembly orders) will drive FY11 growth while the HDD section will take a back seat. We maintain our 2-year net profit CAGR forecast of 38% and introduce FY13 forecast. Clinching MSC tax status could further lift EPS by 6 sen. NVB stays a Buy with a RM2.40 TP, on improving business conditions and earnings prospects.

The FBM KLCI closed lower by 3.48 points at 1,536.07 yesterday. Its resistance areas of 1,536 and 1,558 will cap market gains, whilst the obvious support areas are located at 1,515 and 1,533. The FBM KLCI has temporarily stalled at its new all-time high of 1,576.95 on 6 January 2011. A short-term trading low was then seen at 1,558.64 on 11 January 2011.

Trading Idea for today is an Accumulate call on CBSTECH.

Other Local News
MPHB: Signs MoU to buy balance 49% of Magnum. MPHB has proposed to acquire the remaining 49% stake in Magnum Holdings Sdn Bhd and other securities in Magnum. The total purchase consideration for the acquisitions is RM1.64b and shall be satisfied by way of issuance of new MPHB shares at an issue price of RM2.30 per MPHB share and RM809m in cash. (Source: Bursa Malaysia)

Axis REIT: Proposes income reinvestment plan. Axis Real Estate Investment Trust (Axis REIT) has proposed a plan that enables unit holders to reinvest their cash distribution received into new units. Also, the property manager to issue up to 75.18m new units, representing up to 20% of the existing approved fund size. (Source: Bursa Malaysia)

DRB-HICOM: To assemble Passat in November. DRB-HICOM and Volkswagen AG will start production in November with the assembly of Volkswagen Passat sedan 1.8 litre at the automotive complex in Pekan. The Pekan plant is expected to manufacture between 40,000 to 50,000 Volkswagen cars annually. (Source: The Star)

UMW: Consolidation under way. UMW Holdings Bhd plans to consolidate and rationalise some of its core businesses to become leaner and meaner. Consolidation is under way for its manufacturing and engineering and equipment divisions as UMW looks to leverage on its vast range of products and services. The oil and gas (O&G) division may also be restructured, while UMW Oil & Gas Bhd's listing plan remains on the cards once it returns to profitability. (Source: Business Times)

GPacket: Signs pact with Time Warner. Green Packet Bhd has signed an agreement with Time Warner Cable, the second largest cable operator in the United States, to provide its next generation connection management solutions. Time Warner Cable will use customised versions of Green Packet's Intouch connection manager, Intouch reporting server and Intouch update server for its Windows and Mac platforms. (Source: The Star)

Coastal: Sells vessels for RM268m. Coastal Contracts Bhd's wholly-owned subsidiaries have collectively secured contracts for the sale of seven offshore support vessels, three tugboats and two oil barges for an aggregate value of about RM268m. Including the new contracts, Coastal Group has about RM760m worth of vessel sales orders awaiting delivery to customers up to 2012. (Source: The Star)

Property: BTS expected to be mandatory by 2015. The Build-Then-Sell (BTS) 10:90 mode of house ownership is expected to be made mandatory by 2015. The drafting of the amendments to the Housing Developers Act will include a clause calling for the gradual implementation of the BTS system. (Source: The Sun)

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