Maybank IB Views

Tuesday, May 3, 2011

Digi.Com RM29.08: Hold
Positioning for the future Shariah-compliant

Positive surprise. 1Q11 RM331m net profit (+19% YoY, -0.3% QoQ) made up 26.4% of our previous full-year forecast of RM1.25b and 25.5% of consensus. We however cut our 2011-12 earnings forecasts by 20% and 22% respectively on accelerated depreciation charges, while our 2013 net profit is raised by 4% to incorporate higher margin assumptions. Our Hold call is maintained, with a raised EV/EBITDA target price of RM30.00 (RM26.70 previously).

The FBM KLCI inched up 12.20-points and closed at 1,534.95 last Friday. The local market again remained lacklustre in quiet trading despite the DJIA’s firm upward performance. The obvious support areas for the FBM KLCI are located in the 1,498 to 1,534-zone. The firm resistance zone of 1,540 and 1,576 will see heavy liquidation activities.

Trading Idea is a Short-Term Buy call on F&N

Other Local News
AirAsia: To re-impose fuel surcharge. AirAsia Bhd has finally succumbed to the pressure of persisting high fuel prices and will re-introduce fuel surcharge ranging from RM10 to RM30 per flight after having abolished its fuel surcharge policy in late 2008. (Source: The Star)

Sime Darby: Motors to expand further in China. Sime Darby Motors is planning to expand the number of its vehicle outlets from 14 to 20 in the short term within both first and second-tier cities in China this year. (Source: The Star)

EonCap: Closure of deal. The board of EON Capital Bhd (EON Cap) has accepted the RM5.1b takeover bid by Hong Leong Bank Bhd (HLB), capping a 16-month battle to create the country's fourth-largest bank by assets. It also proposed a surprise net interim dividend of RM312m, or 45 sen per share, in addition to the offer price. (Source: The Star)

Utilities: Selangor confident of solving water issue. The Selangor government is confident that it will be able to solve issues pertaining the restructuring of the state's water industry through discussions with the Federal government as stipulated under the Water Services Industry Act 2006. (Source: The Star)

Iskandar: To attract RM73b new investment, Italian firm Galperti to set up plant. Iskandar Malaysia aims to attract RM73b new investments to the country's first economic growth corridor starting from January 2011 until December 2015. Separately, an Italian-based group is set to open a manufacturing plant in the Setia Business Park (SBP) in Iskandar Malaysia as part of the company's expansion plan into Asia. Galperti Manufacturing Malaysia Sdn Bhd is a subsidiary of the Galperti Group Italy, a market leader in the manufacturing of forged components for the oil and gas industries, in addition to chemical and petrochemical plants. (Source: The Star, Business Times)

Property: Residential property boom in Johor Baru. The prices of residential properties have risen by an average of 40% since 2006, in a city which used to suffer from an overhang of properties. Property owners and buyers can expect property prices in Johor Baru to rise by a further 10-20% by end of 2011, on increased costs alone. (Source: Business Times)

Construction: Three names submitted for Gemas-JB rail job. The Chinese government is understood to have nominated three companies to partner local outfits in bidding for the RM7b Gemas-Johor Baru double-tracking project. The companies include China Railway Engineering Corp (CREC) and China Raiway Construction Corp Ltd. The 3rd company is understood to be partnering Tan Sri Tan Kay Hock, who controls Johan Holdings Bhd and George Kent (M) Bhd. (Source: The Edge Financial Weekly)


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