Maybank IB Views

Friday, April 1, 2011

Banking: Overweight
Loan growth slows in February

Loan growth assumptions maintained. While there is some tapering off in loan growth in Feb, this may be attributed in large part to lumpy loans in Jan. The moderation in household loan demand, meanwhile, was as expected. We maintain our system loan growth forecast of 11.5% for 2011 (12.8% in 2010), with expectation that non-household loans will grow at a faster clip of 12.7% (12.3% in 2010) to supplant a moderation in household loan growth (10.5% in 2011 vs 13.2% in 2010). We maintain our Overweight on the banking sector with Buys on RHB Capital and CIMB.

Sunway REIT RM1.06: Buy
Buys Putra Place at a discounted price

Maiden acquisition post-listing. SunREIT has confirmed the purchase of RM514m Putra Place (PP). Despite the discounted purchase price and potential enhancement opportunities offered by PP, we are neutral on the deal given our concerns on the office market and huge capex and considerable timeline required before PP contributes significantly. No change to our earnings forecasts and RM1.15 target price pending further details from the management.

Petronas Chemicals Group RM7.24: Buy
Panic buying drives March higher Shariah-compliant

Supply disruption boost. PCHEM's product margin in Mac 2011 was USD1,204/ton (+40.4% YoY, +7.3% MoM), we estimate. The year-to-date product margin of USD1,106/ton is 28.5% higher YoY, and above our 2011 estimate of USD1,027/ton. The supply disruptions in Japan have triggered panic buying and pushed prices up. Maintain Buy; there is no change to our earnings forecasts and RM8.00 target price.

Lafarge Malayan Cement RM7.40: Buy
Here comes the ASP hike Shariah-compliant

Coal cost inflation proof. LMC will raise its gross cement ASP to RM318-320/mt (+6%) today to offset the coal cost increase and defend margins. Though there is no impact on our earnings forecasts, we think this would remove the overhang on share price, which has fallen 8% YTD on concerns over high coal costs. Currently trading at 14.8x 2012 PER, valuation is undemanding as Lafarge had traded up to 17x in the previous 2007 peak cycle. Maintain Buy; RM8.50 TP (17x 2012 PER).

Glomac RM1.79: Buy
Beats consensus forecasts Shariah-compliant

Maintain Buy. Glomac's RM48m 9MFY11 net profit (+70% YoY) was within our expectation but beats consensus estimates by 10%. Glomac is on track to record "record" profits as 9MFY11 net profit has already exceeded FY10's RM41m. We see sales picking up significantly in 4QFY11 (9MFY11: RM206m), given strong bookings from its RM285m Glomac Damansara (GD) Residences. We maintain our forecasts and RM2.38 target price (20% discount to RM2.97 RNAV).

The FBM KLCI rose by 13.50 points to 1,545.13 yesterday. Due to the DJIA’s marginally weaker tone last night, we will see the FBM KLCI in a benign mode today, with some pre-weekend profit-taking activities. Its resistance areas of 1,547 and 1,558 will cap market gains, whilst the obvious support areas are located at 1,528 and 1,545.

Trading idea for today is a Buy call on TASCO.

Other Local News
CIMB: In quick U-turn on BLR. CIMB Bank and CIMB Islamic Bank Bhd will not raise their respective base lending rate and base financing rate. The two banks back tracked on their decisions in less than 24 hours after having announced a rise in lending rates on Wednesday. (Source: The Edge Financial Daily)

Maybank: Sets price of DRP shares. Malayan Banking Bhd (Maybank) has fixed the issue price of new shares under its dividend reinvestment plan (DRP) at RM7.70 each. (Source: Bursa Malaysia)

MAHB: Expects RM1b revenue from commercial services. Malaysia Airports Holdings Bhd expects one third of its expected revenue of RM3b to originate from commercial services by 2014. (Source: The Edge Financial Daily)

Time Dotcom: In IPTV deal with Measat. Time Dotcom Bhd’s wholly-owned subsidiary, TT Dotcom Sdn Bhd (TTdC), has entered into a collaboration agreement with Measat Broadcast Network Systems Sdn Bhd (MBNS) to provide Internet Protocol television (IPTV) and broadband services across the Klang Valley and Penang. (Source: Bursa Malaysia)

Perisai: Explains its proposed Garuda Energy deal. Perisai revealed that with the acquisition of Garuda Energy, it would assume a debt of RM120m of the latter. (Source: Bursa Malaysia)

HELP: Sees potential in Sri Lanka and Cambodia. HELP International Corp Bhd (HIC) is looking to expand into Sri Lanka, Cambodia, the Middle East and Africa to franchise its education programmes as well as offer professional niche courses for business continuity to rev up its revenue stream. (Source: The Star)

O&G: MOX-Linde upbeat on M'sian ops. MOX-Linde Gases Sdn Bhd, a local subsidiary of the Germany-based industrial gas company The Linde Group, is set to invest further in the country. The company planned to set up two production facilities in Iskandar Malaysia. (Source: The Star)


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