RHBInvest Research

Thursday, September 29, 2011

Top Story: TNB – Still no clarity on gas issue Underperform (down from MP)

Company Update

¨ Given the downside risk to GDP growth ahead, we lower our electricity demand growth assumptions for TNB to 1.8% p.a. for FY12-13 (previously 3.2%), based on lower GDP multiplier effect assumption of 0.5x (previously 0.7x) as we expect demand from industrial users to weaken further.

Property: Wind or smoke? Underweight

Sector Update

¨ Looking at the recent development (Sime/E&O, SP Setia, and Bandaraya selling assets) in the property sector, although it could provide some trading interest in certain property stocks on speculation of a privatisation exercise, we believe the slew of events is one-off. M&A wave will be short-lived and not widespread. Taking the past events as a clue, mega M&A interests died down for 9 months after the lapse of MRCB-IJMLD offer beginning of this year. Hence, the M&A angle is not a strong re-rating catalyst for the sector. Valuations of property stocks should continue to price in fundamentals at least six months ahead.

Education: Waning optimism Neutral (down from OW)

Sector Update

¨ We are turning cautious on the prospects for the education sector in the coming quarter given: 1) rising macroeconomic headwinds; 2) illiquidity of the stocks in the sector; 3) the relatively small market cap of the education stocks (less than RM1bn); and 4) high foreign shareholdings for HELP (12.5%) and Masterskill (49%), increasing their susceptibility to volatile portfolio flows.

Corporate Highlights

SP Setia: Giving you a second chance Market Perform (up from UP)

News Update

¨ SP Setia announced that it has received a takeover offer from PNB to acquire the remaining shares not already owned at an offer price of RM3.90 and warrants at RM0.91. However, SP Setia’s Board (excluding 2 members from PNB) has decided to seek a competing offer from other interested parties.

Axis REIT: New acquisition in Penang Market Perform

News Update

¨ Axis REIT proposed to acquire two land parcels in Seberang Perai with a GFA of approximately 408,250sq ft and is located within the Bukit Tengah Industrial Park. The land includes a single-storey warehouse with office and ancillary buildings. Total purchase consideration for the property is RM59m. With the inclusion of the property, total assets of Axis REIT will increase to around RM1.4bn.

HELP: Below expectations again Underperform (down from OP)

3QFY11 Results

¨ 9MFY10/11 net profit of RM9.4m (-25% yoy) missed our and consensus expectations by 33%. HELP’s 9MFY11 revenue of RM79.6m (+2.3% yoy) also missed our and consensus estimates by 12% and 10% respectively. No dividend was declared during the period.

Adventa: Below expectations Market Perform

3QFY11 Results

¨ 3QFY10/11 net profit (-51.0% yoy; -12.1% qoq), was below our and consensus expectations with 9MFY11 net profit (flat yoy) accounting for 65% and 64% of our and consensus full-year estimates respectively.


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