Maybank IB Views

RESULTS REVIEW
Tenaga Nasional RM6.03: Sell
Hot gas and coal sweat Shariah-compliant

"Oh my God" scenario. RM1,299m 1HFY11 core net income (-18.8% YoY) was 61% of our full-year forecast and 49% of consensus. 1H was very tough, but business conditions will be even more challenging in 2H due to higher coal prices, a shortage of natural gas supply and possibility of a tariff hike. Maintain Sell with a lower price target of RM5.40, based on 4.6x FY12 EV/EBITDA – a 20% discount to its long-term average to reflect the challenging operating environment.

Maintain Sell. RM179m 1Q11 net profit (-7% YoY, -2% QoQ) is in line, at 23.6% of our forecasts and 24% of consensus. We think BAT is pricey at 18x 2011 PER given its lackluster growth in earnings (2.5% 3-year forward net profit CAGR) and unattractive dividend yield (5%). Maintain Sell with a target price of RM42.50 based on DCF valuation. Our earnings forecasts are unchanged.

TH Plantations RM2.18: Buy
1Q11: Strengthening ASPs Shariah-compliant

Results within expectation. 1Q11 results accounted for 19% of our full-year net profit, in line with its seasonal trend of a slower 1Q. Our target price is marginally adjusted upwards by 2% to RM2.50 after tweaking our assumptions on mature areas and FFB yields. We maintain our Buy call on THP for its undemanding valuation of 9.6x 2011 PER, below its 2-year mean of 11x.

Technicals
The FBM KLCI fell 4.69 points to close at 1,526.33 yesterday. Its resistance areas of 1,526 and 1,541 will cap market gains, whilst the obvious support areas are located at 1,514 and 1,524. Due to the DJIA’s positive tone last night, we may see the FBM KLCI remain steady today.

Trading idea for today is a Buy call on GUANCHG.

Other Local News
JTI: Will consider paying special dividend this year. Chairman Datuk Seri Mohd Nadzmi Mohd Salleh said that JTI is exploring the possibility of investments but if it doesn't need the money, it will look into what are the best ways to give back in terms of dividends. This is in response to intense speculation that JTI may declare a special dividend this year to help out its Japanese parent. (Source: Business Times)

IPO: Quake delays IPO of world's largest syariah REIT. The listing of Malaysia's Axis Global Industrial real estate investment trust (REIT), has been pushed back by about a month after 2 of its Japanese assets were damaged by the March earthquake. The 2 assets have been removed from its initial asset composition and the size of the REIT has been slightly reduced. (Source: The Edge Daily)

Oil & Gas: Petronas signs unitization agreement with Malaysia-Thailand Joint Authority for the gas field straddling across Block PM 301 in the northeast coast of Peninsular Malaysia and Block A-18 in the Malaysia-Thailand Joint Development Area. The unitisation agreement gives Petronas rights to the reserves in the unitised area, which has an estimated ultimate recovery of 1.25t standard cubic feet of gas. (Source: The Edge)

Oil & Gas: RM7.2b helicopter deals inked. Weststar Aviation will provide 9 helicopters in a deal worth RM4.2b to Petronas Carigali Sdn Bhd, ExxonMobil Exploration and Production Malaysia Inc, Newfield (Malaysia) Incorporated, Petrofac (Malaysia-PM304) Ltd and Talisman (Malaysia) Ltd. MHS Aviation Bhd, meanwhile, sealed the remaining RM3b contract to provide 5 choppers to Petronas Carigali, ExxonMobil Exploration and Newfield. (Source: Business Times)

Transocean: BP sues for $40b over oil spill in Gulf of Mexico. BP Plc sued Transocean, seeking at least $40b (RM120.3b) in damages and other costs from the owner of the Deepwater Horizon rig. BP said on 20 April 2010, every single safety system and device and well control procedure on the Deepwater Horizon failed, resulting in the casualty. (Source: The Sun)

Jerneh Asia: Eyes Sabah developer. After hiving off its core insurance business in Malaysia, Jerneh Asia Bhd has now set its sights on acquiring Sabah based property developer Sagajuta (Sabah) Sdn Bhd, whose flagship project is the massive RM1.2b 1Borneo mixed development in Kota Kinabalu. (Source: The Edge Daily)