Maybank IB Views

COMPANY UPDATE
Top Glove Corporation RM4.75: Hold
Tide is turning Shariah-compliant

Can't get any worse. We see limited downside from current level: (i) share price has fallen 22% since our downgrade in Sep '10 and is close to our old TP of RM4.70; (ii) earnings may bottom in 2QFY11 (expected to be flat QoQ) and sequentially, driven by new capacities in 2HFY11; (iii) latex cost has stabilised and is set to fall by May after the "wintering season". Our DCF-derived TP is lowered to RM4.55 (from RM4.70) after tweaking our FY11-12 forecasts (-5-11%). But, downside to our TP from current level is only 4%, hence we raise Top Glove to a Hold.


KNM Group RM2.53: Buy
Momentum rising Shariah-compliant

Earnings could surprise on the upside. We concur with KNM's industry perspective of an improving operating outlook. Post briefing, we cut 2011 EPS estimate by 13% but are keeping 2012-13 forecasts unchanged. There is room for upgrades, for our 2012 earnings forecast is 21% below guidance. KNM remains a Buy and we expect the stock to gain traction once it proves its ability to deliver on earnings.


Sunway Holdings RM2.20: Buy
Sunny skies: Another job win Shariah-compliant

Looking bright. The latest RM74m contract brings to total RM369m job wins for the year to date. We expect job win momentum to pick up, based on by a huge RM16b tender book. Sunway is a Buy with a fair value of RM2.85 (11x 2011 PER) and a merger offer price of RM2.60.


Technicals
The FBM KLCI slipped 6.87 points yesterday to close at 1,515.74. Its resistance areas of 1,515 and 1,530 will cap market gains, whilst the obvious support areas are located at 1,498 and 1,512.

Trading Idea is a Sell call on MAYBULK


Other Local News
Sime Darby: Plantation unit explores potential investment in vegetable oil plant in Europe. Sime Darby Plantation has identified the Languedoc-Roussillon region in France as a potential location to establish its multi-feedstock vegetable oil processing plant as part of its strategy to expand into key areas around the world. The proposed plant, to be located in the coastal town of Port-la-Nouvelle, will help to meet the growing demand for edible oil in Southern Europe and North Africa. (Source: Bursa Malaysia)

AirAsia: Thai AirAsia eyes at least USD150m from IPO. Thai AirAsia plans to raise at least USD150m (RM454.5m) from its initial public offering (IPO), which is targeted by the end of this year. Thai AirAsia has named Credit Suisse Securities (Thailand) Ltd, CIMB Securities (Thailand) Ltd and Thanachart Securities Public Co Ltd as its joint lead underwriters. (Source: Business Times)

Nestle Malaysia: Budgets up to RM120m for capex. Nestle Malaysia Bhd has budgeted RM100m to RM120m to expand its capacity this year. The increase in capacity allows the group to expand its export market, namely Indonesia and Philippines, as well as the domestic market. (Source: The Edge Financial Daily)

QSR: Sets up Cambodian unit. QSR Brands Bhd has incorporated a company in Cambodia, Integrated Poultry Industry (Kampuchea) Pte Ltd, for the purpose of operating a broiler and processing production in Phnom Penh. (Source: Bursa Malaysia)

FDI: Invest KL targets 10 MNCs annually. Invest KL, expected to be launched by end-April, is targeting to attract at least 10 multinational companies (MNCs) annually to invest in Kuala Lumpur and the Klang Valley. Invest KL had attracted two MNCs, Schlumberger and Vale, so far. (Source: The Star)

Transportation: Feasibility studies on high-speed KL-Singapore rail. The Government is currently undertaking feasibility studies on a high-speed rail connecting Kuala Lumpur and Singapore. The feasibility studies would take about eight weeks to complete. (Source: The Star)

Telco: P1 part of SK Telecom's larger plans. While investors may have turned sceptical towards loss-making WiMAX player Packet One Networks Sdn Bhd (P1), its new strategic partner SK Telecom (SKT) believes there is much value in P1's wireless business as a launchpad for SKT's aspiration to expand regionally in Southeast Asia. SKT said that either P1 or Green Packet could become part of SKT's expansion plans in Southeast Asia later. (Source: The Edge Financial Daily)

Economics: External reserves increased slightly in the second half of February 11 to RM338.6b (USD109.8b) as at 28 February 11 from RM338.0b (USD109.6b) on 15 February 11. The latest reserve amount is equivalent to 8.1 months of retained imports and 4.3 times short-term external debt. (Source: Bank Negara)