Maybank IB Views

COMPANY UPDATE
Petronas Chemicals RM6.59: Buy
Optimistic amid external turmoil Shariah-compliant

Truly OPTIMAL. We visited Petronas Chemicals Group's 88% owned OPTIMAL Olefins production plant at Kerteh (Terengganu) on 10 March, and returned impressed with its state-of-the-art facilities. This production plant makes up roughly 6% of PCHEM's total capacity. There is no change to our earnings forecast and target price of RM8.00 based on 14.4x 2011 - which is the long-term industry mean PER.

SECTOR UPDATE
Construction: Overweight
Tracking the rail connection

MRT-LRT progresses, positive domestic catalyst. The start of pre-qualification (pre-Q) for the Sg Buloh-Kajang MRT elevated works, and tender for the LRT Package B, are positive developments for the market, amid a very weak external environment. That the MRT pre-Q is being called while public feedback on the track alignment is ongoing (it ends in mid-May) implies that the government remains committed to kick-start construction the soonest. We continue to Overweight Construction, which offers a domestic focus amid external turmoil.


Technicals
The FBM KLCI plunged 11.21 points yesterday to close at 1,484.14. Market breadth was quite negative, as the gainer-to-loser ratio was 126 to 812 while 160 counters were unchanged. Its resistance areas of 1,484 and 1,515 will cap market gains, whilst the weaker support areas are located at 1,445 and 1,474. Due to the DJIA’s bearish and the Nikkei’s very poor tone last night, we will see the FBM KLCI in a much weaker mode today, with persistent selling activities on rallies.

Trading Idea for today is a Take Profit call on CIMB

Other Local News
Axiata: Celcom's new deal to cut site cost by half. Celcom Axiata Bhd signed a contract with Ericscon and Huawei worth USD1m (RM3.1m) that will lead to savings in its site cost by half. (Source: The Edge Financial Daily)

KYM: Eyes RM500m GDV for Teluk Batik land. KYM Holdings Bhd's plans to take full control of its subsidiary Harta Makmur Sdn Bhd would steer the latter towards commercial and housing development in Teluk Batik, Perak, with an estimated gross development value of RM500m. (Source: The Edge Financial Daily)

Faber: Bullish on renewal of contracts. Faber Group Bhd is positive that its 15-year concession for government hospital support services, which expires in October, will soon be renewed for another 15 years based on the group's experience and track record. (Source: The Edge Financial Daily)

Handal Res: To diversify into rig building. Handal Resources Bhd, an offshore crane manufacturing and service provider, wants to diversify into the construction of rigs for marginal oil fields. The rights and bonus issue approved by shareholders will provide funds to finance the RM30m investments. (Source: Business Times)

Telco: U Mobile ropes in ZTE Corp to extend network. U Mobile Sdn Bhd and ZTE Corp of China signed an agreement which would see the local 3G mobile service operator extending its 42 Mbps network in Klang Valley, Negeri Sembilan and the northern region by 2H11. The three year deal also provides for the installation of LTE platforms in line with the plan to bring 100 Mbps wireless network across key cities in Malaysia. (Source: The Edge Financial Daily)

Autos: Honda Malaysia expects no immediate interruption in supply of cars. Honda Malaysia Sdn Bhd sees no immediate interruption in the supply of its models in Malaysia from the earthquake and tsunami that hit Japan last week. The inventory for the four complete knock-down models of Accord, CR-V, Civic and City and other four completely built-up models in Malaysia was sufficient for the next one to two months. (Source: Bernama.com)