Maybank IB Views

Friday, August 5, 2011

IJM Corporation RM6.28: Hold
The India Connection Shariah-compliant

Hold maintained. Kitchen sinking is complete and management sees no further provisions in India, we learnt, during our site visit to IJM's projects in India in mid-July. We nevertheless see little catalyst for IJM in India as competition for infrastructure construction remains stiff while the property and toll operations are not major contributors as yet. Contributions from India are small at 2-3% of our earnings and RNAV estimates. We maintain our Hold call and RM6.50 RNAV-based TP, which implies a CY12 PER of 17.5x.

Guinness Anchor RM10.86: Hold
Pre-Arthur's Day toast

Impressive growth, results in line, but substantially priced-in. Guinness' FY11 net profit grew 19% to RM181m, on revenue growth of 10% to RM1,488m. Full-year results were within our expectation and consensus. However, with the stock price having trended upwards and with a mere 4% upside to our target price presently, we downgrade the stock to Hold with an unchanged target price of RM11.30.

External Trade, June 2011
Beat consensus, but headwins rising

Monthly export and import growth in June '11 beat consensus at +8.6% YoY (May '11: +5.4% YoY; Maybank IB: +9.8% YoY; Consensus: +5.8% YoY) and +6.3% YoY (May '11: +5.6% YoY; Maybank IB: +2.6% YoY; Consensus: +2.2% YoY). MoM, both bounced back by +4.1% and +6.8% respectively after two consecutive months of contraction. But it was a mixed performance on quarterly basis as export growth accelerated to +8.3% YoY in 2Q 2011 (1Q 2011: +4.8% YoY) while import growth slowed to +7.1% YoY (1Q 2011: +12.4% YoY). 1H 2011 trend is in line with our outlook of slower trade growth this year as exports and imports grew by +6.6% YoY and+9.6% YoY respectively vs our full-year forecasts of +8.4% (2010: +15.6%) and +10.8% (2010: +21.7%). Outlook for 2H 2011 is challenging amid multiple concerns on the external fronts, namely the signs of faltering US economic recovery, potential fallout from the Eurozone debt crisis and the downside risks from aggressive monetary policy tightening in large emerging economies i.e. China, India, Brazil.

The FBM KLCI rose 1.79 points to close at 1,546.89 yesterday. Its resistance areas of 1,546 and 1,565 will cap market gains, whilst the weaker support areas are located at 1,525 and 1,538.Due to the US markets’ crash last night; we will see some volatile trading activities in the local bourse today.

Trading Idea is a Take Profit call on BERTAM.

Other Local News
Affin: Scraps plan to buy Indonesian bank. Affin has discontinued plans to acquire a 80% controlling stake in PT Bank Ina Perdana (Bank Ina) given that Indonesia's central bank is mulling plans to reduce the limit on foreign majority shareholdings in Indonesia's commercial banks. (Source: Bursa Malaysia)

CIMB: Sets up investment banking advisory JV in Sri Lanka. CIMB Group Holding's indirect wholly owned subsidiary, CIMB securities International Pte Ltd, will establish an investment banking advisory joint venture in Sri Lanka. The JV company would be a subdiary of CIMB securities International upon its incorporation. (Source: Bursa Malaysia)

Catcha Media: Another new shareholder. Catcha Media Bhd says HSC Healthcare Sdn Bhd, headed by Dr Lim Yin Chow, has become a substantial shareholder by acquiring a 5% stake. (Source: Bursa Malaysia)

Transportation: Early study on KL-S'pore hi-speed train ready Aug 19. A pre-feasibility study on the high-speed train connecting Kuala Lumpur and Singapore is expected to be completed by Aug 19. The study would allow the government to decide on the corridors and stations to be located between Kuala Lumpur and Singapore. (Source: The Edge Malaysia Online)

Construction: KLIFD takes shape. 1Malaysia Development Bhd (1MDB), the government-owned firm in charge of setting up the Kuala Lumpur International Financial District (KLIFD), has picked Akitek Ju-rurancang (Malaysia) Sdn Bhd and its international partner, Machado Silvetti and Associates (MSA), as the project's master planners. The USD8b (RM23.7b) KLIFD, one of Malaysia's biggest projects, aims to tightly cluster financial institutions and top global firms on 30.3ha of land in the Imbi area, fronting Jalan Tun Razak here. (Source: Business Times)

Property: SP Setia Says not in talks with E&O. Sp Setia Bhd said it is not in any acquisition or takeover talks with rival Eastern & Oriental Bhd (E&O) or its shareholders. It was responding to a query from Bursa Malaysia based on reports that it is keen on buying E&O to gain access to land in Penang. (Source: Bursa Malaysia)

Plantation: Oil palm JV firms suffer RM34m losses on FFB theft. Oil palm joint-venture companies (JVCs) managed by the Sarawak Land Custody and Development Authority (LCDA) have suffered an estimated losses of RM33.6m due to theft of fresh fruit bunches (FFB) since last year. The NCR projects include SPB Penan Jambatan Suai Sdn Bhd whose 1,855ha plantation at Suai in Miri that is being jointly developed with Sarawak Plantation Bhd amd 150 landowners, had incurred losses of RM21.2m. (Source: The Edge Financial Daily)


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