Maybank IB Views

ECONOMICS
Economic Transformation Programme (ETP)
Update #5...

12 more projects, initiatives and enablers with RM11.16b investment commitments under eight Entry Point Projects (EPPs) in seven National Key Economic Areas (NKEAs). They are to generate RM16.62b in gross national income (GNI) and 74,457 new jobs. The biggest project in this round of announcement is the Karambunai Integrated Resort City (KIRC) under Tourism NKEA with investment value of RM9.6b (86% of total) generating RM9.319b GNI (56% of total) and 11,002 jobs (14.8% of total) by 2020. To date, 41.2% of EPPs, 13.4% of the total EPP investments, 14.3% of the targeted incremental GNI and 9.1% of expected new jobs creations have been confirmed.

RESULTS REVIEW
Bursa Malaysia RM7.93: Sell
Boosted by robust market

Above house forecast. RM40.5m 1Q11 net profit (+44% YoY, +36% QoQ) made up 30% of our full year forecast, and 26% of consensus. No change to our earnings forecasts, expecting market activities to taper off in 2Q11. Maintain Sell; the stock remains overvalued trading on 31x current year earnings, significantly above its larger sized peers and recent M&A valuations. Our target price is based on sum-of-parts, with 25x PER target on 2011 earnings plus surplus cash.

SECTOR UPDATE
Automotive: Neutral
Marvelous March; anxiety ahead

From content to concern. Mar 2011 auto sales was abnormally strong, a one-off event, in our view. Looking ahead, Malaysia's car production is expected to soften in the months ahead, affected by the supply chain disruption in Japan. The auto sector remains a Neutral. The longer term operating landscape lacks catalyst and remains close-ended, deterring foreign automakers from making Malaysia a regional hub. Stock-wise, share price is expected to trade sideways. MBM and Tan Chong remains a Buy while Proton and UMW are Holds.

Technicals
The FBM KLCI declined 6.39 points to close at 1,521.53 yesterday. Its resistance areas of 1,521 and 1,540 will cap market gains, whilst the weaker support areas are located at 1,500 and 1,514.
Trading idea for today is a Buy call on SBCCORP.

Other Local News
MAHB: North Korea's Air Koryo makes maiden landing at KLIA. North Korea national airline Air Koryo made its maiden landing at KL International Airport (KLIA) on Monday and will start a twice-weekly service to Kuala Lumpur from Pyongyang on April 18. (Source: The Star)

BAT: Expects to double exports this year. British American Tobacco (Malaysia) Bhd (BAT) expects to double exports this year, a move that will give it a small revenue boost amid tougher sales at home. It may also sell some machinery it no longer needs, valued at between RM18m and RM20m. (Source: Business times)

Berjaya: Confirms Kim Eng approach. Berjaya Corp Bhd confirmed that Kim Eng Holdings Ltd has approached it about the possibility of buying all of Inter-Pacific Securities Sdn Bhd. (Source: Bursa Malaysia)

Smartag: Gets role in Customs project. Smartag Solutions Bhd said it was named to be part of a government project to provide security and trade facilitation system for the Royal Malaysian Customs at its checkpoints throughout the country. (Source: Business times)

E&U: SEB to buy 30% of Bakun Dam for RM1.3b? Sarawak Energy Bhd (SEB), the state utility company, is believed to have proposed to acquire a 30% stake in the Bakun Hydroelectric Power project for RM1.3b cash. SEB is valuing Bakun Dam project at RM6b which is below the RM8b expected by Sarawak Hidro Sdn Bhd. (Source: The Star)

O&G: Petronas exits Cairn India. Petroliam Nasional Bhd (Petronas) has sold its entire 14.9% in Cairn India Ltd for USD2.1b (RM6.4b). (Source: Business times)

Steel: Starshine plans to list on Ace Market by Q3. Steel products player Starshine Holdings Bhd (SHB) is planning a listing on Bursa Malaysia's Ace Market by the third quarter of the year. It will invest RM32m in a new plant in Klang and new machinery to broaden its product offering. (Source: The Star)