RHBInvest Research

Tuesday, April 5, 2011

Top Story: Utilities

  • Sector Update
  • TNB lacks catalysts going forward.
  • YTL Power may lose a bit of shine since the key investment thesis for the stock has historically been high dividend yields.
  • The restructuring of the water sector in Selangor is expected to remain in a deadlock situation.
  • We maintain our Underweight stance on the sector due to lack of catalysts.

Sector Call

Oil & Gas:
  • Sector Update
  • Improvement seen for vessel market
  • Petra Perdana (OP, FV = RM1.39) thus reflects the expected rise in valuation for the company’s vessel assets.
  • We maintain our Overweight call on the sector in light of the positive bias on the sector’s outlook. Our top picks are Petronas Chemicals (OP, FV = RM9.02) and SapuraCrest (OP, FV = RM4.37).

  • Sector Update
  • It’s a “sellers” market now for plywood given the anticipated increase in demand from Japan, low inventory level, limited increase in supply, and disruption in Japan domestic plywood production.
  • We downgrade our call on WTKH to Market Perform (from outperform previously) due to the limited upside to our fair value. WTK share price has rallied by 65% since the Japan earthquake on 11 Mar.
  • We reiterate our Overweight call on the sector. Top picks are Jaya Tiasa (OP, FV = RM7.84) and Ta Ann (OP, FV = RM7.99).


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