Maybank IB Views

Monday, February 14, 2011

MARKET COMMENTS
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.


COMPANY UPDATE
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.


RESULTS PREVIEW
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.


RESULTS REVIEW
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.


Technicals
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)

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