RHBInvest Research

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).

Timber:

• 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).