Maybank IB Views

ECONOMICS
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 COMMENTS
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.


RESULTS PREVIEW
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.


RESULTS REVIEW
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%.


Technicals
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)