RHBInvest Research

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

Media:

• 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

YNH:

• 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).

Unisem:

• 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.

MISC:

• 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.

CIMB:

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

TM:

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

Proton:

• 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).