Maybank IB Views

Friday, May 20, 2011

Media: Overweight
Apr 2011 adex: Growth momentum continues

Overweight stance under review. Apr 2011 total gross adex grew 17% YoY, the strongest this year. May 2011 is likely to be 10% to 15% higher MoM as advertisers ramp up ad spend ahead of adex-friendly festivities in 3Q11. 4M11 total gross adex grew 14% YoY, ahead of our 8.3% forecast. Top picks MCIL and Media Prima performed well in the past month, possibly reflecting the still positive adex sentiment.

KLCC Property Holdings RM3.28: Hold
Results in line; new contribution from Lot C Shariah-compliant

Maintain Hold. KLCCP's RM574m FY03/11 realised pretax profit was in line, but 12 sen total DPS for FY03/11 was above expectations. In our view, KLCCP's annualised 3.4% net dividend yield for 2012 is less attractive compared to large cap REITs (6-6.5%). We lower our 9M11-2013 estimates by 1.6-16% to factor in the change in FYE. Maintain Hold with a new RM3.50 TP (15% discount to RM4.10 RNAV (+50 sen)).

Tanjung Offshore RM1.11: Sell
Grey visibility still Shariah-compliant

Reiterate Sell. Losses extended into 1Q, within our forecasts but below consensus expectation. Forward earnings will remain a challenge. Cost management strategies and operating prospects remain the key concerns. An equity cash-call could ensue should the cash situation worsen. TOFF will suffer an RM8m penalty cost for early bonds redemption. Valuations are expensive and consensus forecasts are aggressive. Ekuinas’ next move remains a wild card.

Star Publications (M) RM3.38: Hold
Fuzzy signals from this frequency Shariah-compliant

Maintain Hold call and DCF-based target price of RM3.71. We are mildly negative on Star's plan to acquire 80% of Capital FM for RM15m as it is loss-making and may cannibalise Star's three incumbent radio stations. Acquiring an outdoor company would have been wiser. We leave our earnings estimates unchanged pending further details.

CB Industrial Product Holding RM4.30: Buy
Variation to order book Shariah-compliant

Positive, but factored in. CBIP received a request from a customer to vary its order book, awarded back in Jan 2011. Consequently, the contract value was revised upwards by about RM31m and the expected incremental profit from the revision could be approximately RM4m. Although positive, we maintain our earnings forecasts as we have assumed RM180m of contract wins for FY2011. Maintain Buy with an unchanged TP of RM4.75 based on 7x 2011 PER.

The FBM KLCI rose marginally by 2.75 points to close at 1,544.02 yesterday. Its resistance areas of 1,548 and 1,565 will cap market gains, whilst the obvious support areas are located at 1,523 and 1,544. Due to the DJIA’s firmer tone last night, we will see some bargain hunting activities today.

Daily trading idea is a Short-Term Buy for TDM.

Other Local News
RHB: Sumitomo, Carlyle eye RM4.8bb RHB stake. Japan's Sumitomo Mitsui Financial Group and US private equity firm Carlyle are among leading contenders to place first round bids for a stake in RHB, after bigger rival CIMB said it is not keen to buy a stake. (Source: The Edge Financial Daily)

PPB: Eyes Indonesia's flour market. PPB Group Bhd is eyeing at least 10% of Indonesia’s flour market that currently dominated by his former business partner, Salim Group’s Liem Sioe Liong. This sets the stage for a professional rivalry between the two powerhouses as both groups allocate more resources to capture a larger slice of the burgeoning consumer business at the populous islands. (Source: The Edge Financial Daily)

UOA: RM10b projects in the pipeline. UOA Development Berhad, which is scheduled to list on the Main Market of Bursa Malaysia on June 8, has property projects worth RM10b in total gross development value (GDV) over the next 10 years. Moving forward, the company plans to retain its focus in the Klang Valley, especially its Bangsar South development poject, before considering other geographical locations. (Source: The Edge Financial Daily)

TDM: To invest RM120m in Indonesia. TDM will inject RM120m into its Indonesian operations at Kalimantan within the next eight to 10 years to build four oil palm mills in the area. They expect to see contributions from the Kalimantan operations by 2013 after they had initially invested RM44m in Kalimantan. (Source: The Edge Financial Daily)

Ramunia, Coastal: Agree to abort MoU. Ramunia Holdings Bhd and Coastal Contracts Bhd have aborted a memorandum of understanding (MoU) for the proposed collaboration, bidding and fabrication in relation to structures for the oil and gas industry. The MoU was entered into between both companies in January 2010, but had lapsed on May 18 this year as both parties have mutually agreed not to proceed with it. (Source: The Edge Financial Daily)

AirAsia: AirAsia X inks USD600m deal to buy General Electric engines. AirAsia X has signed a contract worth RM1.8b with General Electric to purchase jet engines for its new aircraft. Under the agreement, the long-haul low fare affiliate of AirAsia Group will purchase CF6-80E1 engines to power its three new A330-200s (with the option of two additional aircraft). (Source: The Edge Financial Daily)


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