Maybank IB Views

Thursday, April 21, 2011

Rubber Gloves: Neutral
Long-term value in nitrile

Keeping a cool head. Aggressive expansion plans at the nitrile segment could lead to ASP weakness in the short term before demand from emerging markets catches up. However, the long-term prospects for nitrile remain promising as the pricing disparity favoring nitrile gloves will remain for the longer term. No changes are made to our forecasts, ratings and DCF-derived TPs for Hartalega (Buy, TP RM6.80), Kossan (Buy, TP RM3.60) and Top Glove (Hold, TP RM5.10). Hartalega remains our top pick in the sector.

Sunway REIT RM1.07: Buy
Foreign bidder tried to nullify acquisition

Summons filed by foreign bidder. SunREIT has received a summons from two individuals to nullify its purchase of the RM514m Putra Place (PP). However, SunREIT management is confident of taking over PP and announced yesterday the completion of the PP acquisition. There is no change to our earnings forecasts as we have not factored PP into our estimates. Our DCF-based target price is maintained at RM1.15.

Malaysia Airports Holdings RM6.15: Buy
Holding steady

Momentum remains strong. MAHB's Feb 2011 traffic statistics reveal a steady 9.7% YoY passenger growth (2M 2011: +11.5% YoY). This is above the region and world's averages, and also above its own 2011 guidance of 8%. Cargo volumes shrunk marginally by 3.2% YoY due to the seasonal impact of Chinese New Year. Maintain Buy; no change to our earnings forecasts and RM7.12/share DCF-based target price.

CPI, Mar 2011
In line with expectations...

Inflation rate in Mar '11 rose by +3.0% YoY (Feb '11: +2.9% YoY; Maybank-IB: +3.0% YoY; Consensus: +3.1% YoY). It increased MoM for the 11th straight month by 0.1%. Core inflation rate - measured as CPI excluding the prices of Food & Non-Alcoholic Beverages and Transport - gained by +1.6% YoY (Feb '11: +1.5% YoY). YTD, inflation rate was 2.8% in 1Q 2011 vs 2.0% in 4Q10 and 1.3% in 1Q10. Our inflation forecasts for this year and next year are +3.0% and +2.9% respectively.

Nestle (Malaysia) RM48: Hold
Strong start, as usual Shariah-compliant

Strong 1Q not a suprise. Nestle recorded a strong RM152.7m net profit (+10% YoY) which makes up 35% of our and consensus full-year forecast. This is not unusual for Nestle with 1Q being a seasonally stronger quarter. We are maintaining our forecasts and DCF-based target price of RM45.

The FBM KLCI rose 9.49 points to close at 1,531.02 yesterday. Its resistance areas of 1,541 and 1,565 will cap market gains, whilst the obvious support areas are located at 1,514 and 1,531.

Trading idea for today is a Buy call on COASTAL.

Other Local News
Sime Darby: Insider trading probe. The Securities Commission (SC) is carrying out insider trading investigations surrounding the mega-merger that created Synergy Drive, the group that's now known as Sime Darby Bhd. The capital market watchdog had called in some people for questioning and the probe appears to be looking at information that may have been leaked out before the first announcement on November 27, 2006. (Source: Business Times)

IGB: Work on Mid Valley City Phase 3 to begin. IGB Bhd will commence the building of Mid Valley City's third phase in the next few months, while two other development projects are also set to take off. Phase 3 is planned as a commercial development with an office and a retail building with estimated gross built-up area of more than 1m sq ft. (Source: The Edge Financial Daily)

Telco: Spore, Msia mobile roaming rates down from May 1. Singapore and Malaysia mobile phone subscribers will see price reduction of up to 30% for voice calls and 50% for SMS and mobile roaming services from all mobile operators in the two countries from May 1. (Source: The Edge Financial Daily)

Autos: Toyota market share drops, rivals maintain. Toyota passenger car market share in Malaysia fell in the 1Q11 while Honda managed to maintain its market share and the Nissan grew its share by about 1ppt. (Source: The Star)

Islamic Banking: Khazanah sounds out Bank Islam on Muamalat stake. Khazanah Nasional Bhd plans to sell its 30% stake in Bank Muamalat Malaysia Bhd, a move which could pave way for a merger between the Islamic lender and its bigger rival Bank Islam Malaysia Bhd. (Source: Business Times)

Banking: Zeti reappointed as Bank Negara governor. Bank Negara's governor Tan Sri Dr Zeti Akhtar Aziz has been reappointed for a five-year term, effective May 1. (Source: The Star)

Construction: E-tender system to take off soon. Construction Industry Development Board (CIDB) is making preparations to implement National e-Tendering Initiative (NeTi) that will be the platform to process online job tenders under the Works Ministry. (Source: The Star)

Property: Inflation and demand to lift property prices. Malaysian property prices are expected to increase at an average of between 10% and 20% this year, in light of rising inflation and increase in demand for local properties by foreigners. (Source: The Star)


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