Maybank IB Views

Thursday, June 2, 2011

1Q11 report card
Growth momentum tapering off

Fewer positive surprises. 1Q11 earnings reporting season saw fewer positive surprises (13:65:22 in earnings above:within:below expectations vs. 4Q10's 21:59:20). 1Q11 combined recurring net profit of our research universe contracted 5.3% QoQ but maintained its YoY climb (+8.4%). The YoY uptrend momentum is slowing down however, vis-a-vis double-digit growth in the past 5 consecutive quarters. This is not unexpected as we have forecasted slower corporate earnings growth in 2011, after a high base in 2010.

Dialog Group RM2.82: Buy
Pengerang project takes off, target price raised Shariah-compliant

Two is better than one. Securing the EPCC job for the Pengerang CTF project denotes progress. We expect the Pengerang CTF project on a full-scale commercial operation by 2017 to be the main driver to Dialog's earnings with dividends to boot. Notwithstanding that, Dialog is also highly tipped to bag the next few marginal field projects (i.e. Balai and Bentara), a positive to sentiment and price performance. Buy.

CB Industrial Product Holding RM4.26: Buy
Unlocking value Shariah-compliant

A re-rating catalyst. CBIP's proposed plantation disposal is positive as it unlocks value of its below-average plantation yielding estates; raising RM1.95/sh (RM268m) in cash and making RM1.02/sh (RM141m) in disposal gain. Post disposal, with potential net cash at 95sen/sh, CBIP is looking for expansion opportunities, failing which it may return part of its cash as special dividends to shareholders. We maintain our earnings forecasts and TP of RM4.75 based on 7x 2011 EPS for now.

The FBM KLCI closed lower by 1.87 points to close at 1,556.42 yesterday. Its resistance areas of 1,559 and 1,576 will cap market gains, whilst the support areas are located at 1,539 and 1,556. Due to the world markets’ very poor tone last night; we will see some great volatility in the local bourse today. We expect the FBM KLCI to remain volatile today, as it may be adversely affected by the US and regional markets.

Other Local News
EonCap: Primus to pay RM1.9m in court costs following dismissal. Following the dismissal of Primus (M) Sdn Bhd's petition against the sale of EON Capital Bhd (EON Cap) to Hong Leong Bank Bhd (HLB), Primus now has to pay RM1.9m in court costs. (Source: The Star)

SapCrest: Acquires shipyard stake. SapuraCrest Petroleum Bhd (SapCrest) has signed an agreement with Real Mild Sdn Bhd and Labuan Shipyard and Engineering Sdn Bhd (LSE) for the subscription of 25m new shares in LSE, representing 50% stake in LSE. (Source: Bursa Malaysia)

Benalec: Monetises reclaimed land in Melaka. Benalec Holdings Bhd entered into two separate deals, one on land disposal while another on a JV property development with Melaka based developer Vista Selesa Development Sdn Bhd. (Source: The Edge Financial Daily)

Paramount: Has ambitious RM4b projects in pipeline. Paramount Corp Bhd will embark on several projects with a total GDV of RM4b over the next 12 years and will invest RM250m to set up its new university campus in Glenmarie, Shah Alam. (Source: The Malaysian Reserve)

Energy: Sarawak to pay 6.25 sen per kWh for Bakun power. Sarawak will pay federal government 6.25 sen kWh for the purchase of electricity generated by the Bakun hydro power plant under a power purchase agreement (PPA). The basic tariff of 6.25 sen comes with an annual increase of 1.5%. (Source: The Edge Financial Daily)

Autos: Honda Malaysia to resume full production in August. Honda Malaysia Sdn Bhd’s Alor Gajah plant will resume full production on Aug 1, and will try to increase production by operating additional hours to catch up with shortage of supply from April through July. (Source: The Edge Financial Daily)


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