RHBInvest Research

Top Story: WTK – Lower plywood production to weigh on 1H11 results Outperform

¨ WTK’s log production volume in 2Q11 was higher by +33% qoq and +28% yoy respectively due to normalised weather conditions. WTK has guided that its current realised price is US$220/m3 for meranti SQ up, which is lower than our expectation of US$260/m3 for FY11.

¨ We revised our fair value to RM2.55 based on unchanged target PER of 12x revised FY12 EPS of 21.2 sen. Maintain Outperform.



Corporate Highlights



Sunway Bhd: A single stock that gives all real estate exposure Outperform (Initiating coverage)

¨ Upon listing, Sunway Bhd will potentially become the 3rd/4th largest property player in Malaysia . The company will offer investors full fledge offerings of the real estate sector, ranging from property development to various property assets as well as construction arm. The key strength of Sunway Bhd after merger will be the leaner organisation and operating structure that will ultimately yield cost savings.

¨ We estimate an FY12-13 earnings growth of 7% and 11%, underpinned by RM1.6bn worth of unbilled sales, RM2bn worth of construction orderbook, as well as RM75-80m recurring income from property assets and Sunway REIT.



CIMB: CIMB Niaga 2Q11 results – Coming along nicely Outperform

¨ CIMB Niaga reported 2Q11 net profit of IDR818.6bn (+35.4% yoy; +12.5% qoq), bringing 1H11 net profit to IDR1,546.1bn (+37% yoy).

¨ Management guided for NIM to average around 5.4-5.5% for this year, roughly around current levels. Meanwhile, management now expects CIMB Niaga to post loan growth in excess of 20%, as compared to around 20% previously (1H1: 22.5% annualised). However, CASA growth ahead would be more challenging given that depositors are now seeking higher yields.

¨ No change to forecasts. Fair value of RM9.80 (15x CY12 EPS) and Outperform call maintained.



SapuraCrest: Buying Clough’s marine construction division Outperform

News Update

¨ Sapuracrest announced a proposal to acquire Clough’s “Marine Construction” business for AUD127m (RM400.5m) cash. Completion is expected by 4QCY11.

¨ The acquisition will: 1) Strengthen Sapuracrest’s international foothold (especially Australia ); 2) Increase its asset base; and 3) Spearhead an entry to the subsea market.

¨ Maintain Outperform and fair value of RM5.04/share (based on 21x FY13 EPS).