Maybank IB Views

Tuesday, April 26, 2011

Media: Overweight
March 2011 adex: Strong recovery

Maintain Overweight. Mar 2011 total gross adex grew 14% YoY after easing 2% YoY in Feb 2011. Apr 2011 is likely to be flattish MoM as advertisers consolidate before adex friendly festivities in 3Q. YTD, total gross adex grew 13% YoY. Therefore, our 5% total gross adex growth forecast for 2011 is under review. Our top pick remains MCIL.

Nestle (Malaysia) RM48.18: Sell
Fully priced in; downgrade to Sell Shariah-compliant

Downgrade to Sell. Nestle (Malaysia)'s share price has done well, up 11% year to date, outperforming the KLCI (+0.3%), and surpassing our RM45.00 DCF based target price. Last Friday's analyst briefing post 1Q11 results reporting offers no new developments; we maintain our forecasts. The stock currently trades at 25.5x 2011 earnings, which is at one standard deviation above its mean PER of 24.8x since 2000. We think that its near-term earnings growth potential is fully in the price, while dividend yield has also tapered off with the rise in its share price.

The FBM KLCI rose 1.30 points to close at 1,524.05 yesterday. Its resistance areas of 1,524 and 1,541 will cap market gains, whilst the obvious support areas are located at 1,514 and 1,522.Due to the DJIA’s negative tone last night, we may see the FBM KLCI remain benign today.

Trading idea for today is a Short-Term Buy call on PADINI.

Other Local News
Sime Darby: Unit secures RM1.2b contract. Sime Darby Bhd’s wholly owned subsidiary, Sime Darby Engineering Sdn Bhd (SDE), has been awarded the contract to fabricate KBB Topsides for the Kebabangan Northern Hub Development Project (Contract) by Kebabangan Petroleum Operating Company Sdn Bhd worth RM1.2b. This would increase SDE's current orderbook to RM2.2b. (Source: Bursa Malaysia)

Integrax: Revived Integrax-Vale accord on the cards. Port operator Integrax Bhd is set to revive the terminated deal with Brazilian mining giant Vale International S.A. However, this depends on the outcome of an Integrax EGM next week to vote on resolutions to reconstitute its board of directors. (Source: The Star)

Bernas: Gets agreement extension for 10 more years. Padiberas Nasional Bhd (Bernas) has on April 22 received a letter from the Public Private Partnership Unit under the Prime Minister’s Department on the extension of the Bernas Agreement, which gives Bernas monopoly over the country’s rice imports, for a period of ten years. (Source: Bursa Malaysia)

EonCap: China bank eyes stake in EONCap. China Construction Bank Corp (CCB) has approached the Malaysian government about buying a stake in EON Capital (EONCap). (Source: Business Times)

Telco: M'sia taking steps to reduce broadband rates. A new consortium, Konsortium Rangkaian Serantau Sdn Bhd under the Entry Point Projects (EPPs), has been set up to buy international bandwidth for Internet traffic to lower the costs of Internet protocol (IP) transit. (Source: The Star)
Outside Malaysia
U.S: Sales of new homes rose in March to 300,000 annual rate as the weakest industry in the economy strained to recover. New-home sales, tabulated when contracts are signed, climbed 11.1% to a 300,000 annual pace. Housing prices fell from a year ago. (Source: Bloomberg)

China: Cheapest Big Macs suggest the CNY and the HKD are the most undervalued currencies in the world, trading at discounts of 40% or more versus the greenback. McDonald's Corp's signature burger cost the equivalent of USD 2.18 in China at the end of last year, USD 1.90 in Hong Kong and USD 3.71 in the U.S, according to The Economist's Big Mac Index. China's discount has narrowed to 40% from 41% since then owing to yuan gains, while Hong Kong's pegged currency has kept its gap at 49%, according to data compiled by Bloomberg. (Source: Bloomberg)

Taiwan: March industrial production increased more than estimated, bolstering the central bank's scope to raise borrowing costs again. Output rose 13.82% YoY, after gaining a revised 12.93% YoY in February, the Ministry of Economic Affairs said in Taipei. (Source: Bloomberg)

Singapore: Inflation held at 5% in March as housing and transportation costs surged, supporting the central bank's decision this month to allow further currency appreciation. Prices rose 0.1% MoM from February, without adjusting for seasonal factors. (Source: Bloomberg)

Vietnam: Inflation in April accelerates to fastest pace in 28 months, putting pressure on the government to tighten policy further after almost doubling a key interest rate in less than six months. Consumer prices climbed 17.51% YoY in April compared with the 13.89% YoY pace last month. Prices rose 3.32% MoM in April from March. (Source: Bloomberg)

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