Maybank IB Views

Monday, July 25, 2011

Rubber Gloves: Neutral
YTY: Still single and available

Glove-makers to reconsider YTY? YTY has rejected Latexx Partner's (Latexx) offer to merge their businesses. Given its strong nitrile capacity, YTY continues to appeal to the bigger glove producers (i.e. Top Glove, Hartalega) and private equity funds. With the Latexx-YTY deal off, we believe the bigger glove-makers will take a relook at YTY for the overnight capacity/earnings enhancement and longer-term value creation potential. While pricing can be the deterrent, it is still earnings accretive. We believe M&A play in the sector is not over yet.

Quill Capita Trust RM1.09: Hold
First half on track

Maintain Hold. QCT's RM16.9m 1H11 net profit (+6.8% YoY) came in as expected. 4 sen DPU was also in line. Despite the over-supply outlook in the office segment, we maintain our Hold rating given: 1) its decent 7.9% yield (8% sector), 2) prudent and active asset management, and 3) 61% of its office NLA being located in Cyberjaya, which has no oversupply vs. KL city centre. No change in our forecasts.

The FBM KLCI lost 12.19-points and closed at 1,565.06 last Friday. The weaker support areas for the FBM KLCI are located in the 1,525 to 1,552-zone. The next resistance levels of 1,566 and 1,597 will see heavy selling and liquidation activities.

Trading Idea is Yinson

Other Local News
Proton: To spend RM100m on R&D yearly. Proton Holdings Bhd is allocating between RM90m and RM100m to the research and development activities (R&D) yearly to ensure it remains competitive in the automotive industry. (Source: The Star)

Sime Darby: Expects crop production to increase by 6%. Sime Darby Plantation Bhd expects its crop production to increase by 6% in the financial year ended June 30, 2011 as compared to the previous financial year as the cyclical down trend of the oil palm has ended. (Source: The Star)

CIH: To distribute up to 90% of Permanis sale proceeds. CI Holdings Bhd (CIH) is looking at distributing no less than half of the RM820m proceeds from the sale of its bottling unit Permanis Sdn Bhd to Asahi Group Holdings Ltd. (Source: The Edge Financial Daily)

Eng Teknologi: Receives RM307m privatisation offer. Eng Teknologi Holdings Bhd's major shareholders has made an offer via investment vehicle TYK Capital Sdn Bhd to take the company private at an indicative offer price of RM2.50 per share or RM307.2m. (Source: Bursa Malaysia)

Property: RM150m in deals sealed at Penang property fair. About RM150m worth of property has been sold or booked at the Star Property Fair 2011, reflecting optimism in the property market here. The number of registrations and buyers had also exceeded expectations. (Source: The Star)


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