Maybank IB Views

ECONOMICS
External Trade, Apr 2011
A mixed bad of data

Exports growth in Apr '11 accelerated to +11.1% YoY (Mar '11: +4.1% YoY; Maybank IB: +14.8% YoY; Consensus: +11.3% YoY) while imports growth moderated to +9.4% YoY (Mar '11: +12.1% YoY; Maybank IB: +13.9% YoY; Consensus: +10.8% YoY) resulting in RM11b trade surplus. From the previous month, both exports and imports fell by 6.6% MoM and 7.4% MoM respectively.

SECTOR UPDATE
Construction: Overweight
Reasons to be patient

Maintain Overweight. The construction sector has yet to perform (KLCON: +0.2% YTD vs. KLCI: +2.7%) on slow award flows. Although frusfrating, we believe the critical issue is timing rather than project cancellations. The Klang Valley light rail transit (LRT) extension Package B is at the final stage of award which should provide some cheers soon. Also, last week's game changer in the signing of Bakun's electricity sale brings clarity in new infrastructure works in Sarawak. Our top pick is Gamuda, followed by WCT and Hock Seng Lee (HSL).

Technicals
The FBM KLCI closed higher by 1.81 points to close at 1,559.85 last Friday. Its resistance areas of 1,562 and 1,576 will cap market gains, whilst the support areas are located at 1,539 and 1,559. Due to the world markets’ poor tone last Friday; we will see some volatility in the local bourse today.

Daily trading idea is a SHORT-TERM BUY call on SOP.

Other Local News
MAS: Confident despite escalating fuel price. Malaysia Airlines (MAS) has recorded 18% higher international pre-loads this year compared with 2010. Overall, when combined with the domestic sector, its pre-load factor was up by 10% YoY. (Source: The Star)

SP Setia: Plans RM2.8b projects. SP Setia Bhd will redevelop the Sri Johor, Sri Pulau Pinang and Sri Melaka low-cost apartments and the Taman Ikan Emas low cost homes in Bandar Tun Razak, Cheras at a total development value of RM2.8b. (Source: The Star)

Nestle: Not ruling out expansion of coffee plant. Nestle (Malaysia) Bhd will not rule out the possibility of expanding its coffee manufacturing facility in Malaysia as it expects surging demand for coffee. (Source: Business Times)

Scomi: Bags RM2.6b Brazilian monorail deal with partners. Scomi Engineering Bhd and its consortium partners have clinched a RM2.6b contract to build a monorail line in Sao Paulo, Brazil. Its scope of work in the consortium involved the supply of rolling stock, the vehicle management system, design for switches, system integration, system assurance as well as testing and commissioning. (Source: Bursa Malaysia)

Mudajaya: Gets letter of intent for RM720m job. Mudajaya Group Bhd has received a letter of intent to undertake subcontract works worth RM720m for Manjung Power Plant. (Source: Bursa Malaysia)

Eversendai: RM270m from its IPO for CAPEX. The listing of Eversendai Corp Bhd on the Main Market of Bursa Malaysia on July 1 will raise RM270m for the company for capital expenditure. Its founder Datuk A.K. Nathan will realise a gain of RM130m for selling 30% of the company he pioneered 27 years ago. (Source: The Star)