Maybank IB Views

Thursday, October 6, 2011

Mah Sing Group RM1.80: Buy
New township to sustain growth

3rd land purchase in 2011.We are positive on MSGB's latest land purchase in Rawang. Apart from attractive pricing, the new land would provide resilient bread-and-butter sales and sustain MSGB's long-term growth. We raise our 2012-13 forecasts by 1-3% to factor in this project but lower our RNAV estimate by 21 sen to RM2.95 on higher WACC assumption of 9.4-11.4% (from 7.5-9.4%). Our new TP is RM2.36 based on a 20% discount to RNAV. Maintain Buy.

KFC Holdings (Malaysia) RM3.20: Hold
More time for India's operation Shariah-compliant

Hold maintained. With slower economic growth likely to have some dampening effect on consumption demand, we have lowered our same-store-sales growth assumption by 0.5%-pts for 2012 and 2013 to 1.3% and 1.5% respectively and trimmed our profit forecasts for 2012 and 2013 by 5% each year. Our DCF-based TP is correspondingly cut to RM3.37 from RM3.97 on lower earnings and a higher cost of equity of 8.6% from 7.9% previously, on account of higher economic risks. Valuations are still not appealing at this stage, with KFC trading at a prospective 2012 PER of 14.2x and dividend yields of just 2.1%.

The FBM KLCI rose 14.29-points to close at 1,375.67 yesterday. Its resistance areas of 1,376 and 1,410 will cap market gains, whilst the obvious support areas are located at 1,353 and 1,374.

Trading ideas are IJM, IGB and MHB.

Other Local News
Perodua, Proton: To ink deal. Perusahaan Otomobil Kedua (Perodua) expects to ink a collaborative agreement with Proton Holdings Bhd on certain aspects this year or early next year. (Source: The Star)

AirAsia: To take off for Da Nang. AirAsia Bhd is flying to Da Nang, Vietnam, from December 16 and the low-cost airline is confident of achieving a load factor of more than 80% based on the good load factor for its flights to Hanoi and Ho Chi Minh City. (Source: Business Times)

UEM Land: Unit appeals to IRB. UEM Land’s wholly owned subsidiary, Bandar Nusajaya Development Sdn Bhd (BND), received a notice of additional assessment from the Inland Revenue Board for additional tax and penalty in respect of the year of assessment 2006, resulting in an additional tax payable of RM73.8m . BND has commenced the appeal process against the additional assessment. (Source: Bursa Malaysia)

Malayan Flour Mills: Plans Indonesia venture. Malayan Flour Mills Bhd (MFM) has signed a shareholders' agreement with Indonesian company PT FKS Capital, Japan's Toyota Tsusho (Singapore) Pte Ltd (TTS) and PT Toyota Tsusho Indonesia (TTI) to establish a joint venture company named PT Bunga Sari Flour Mills Indonesia. MFM will own 30% stake in Bunga Sari for the purpose of carrying out the business of flour milling and distribution of flour products and by-products. The joint venture is expected to contribute positively to the profitability and growth of MFM Group in the future. (Source: Bursa Malaysia)

Plantation: MPOA will not quit RSPO. The Malaysian Palm Oil Association (MPOA) will not quit the Roundtable on Sustainable Palm Oil (RSPO) grouping but it is advising its members to stop seeking new RSPO certification for the production of certified sustainable palm oil (CSPO). Of the total RSPO-certified palm production, MPOA claimed that only 40% was taken up while the CSPO premium had plunged to only 30 US cents compared with USD50 per tonne in 2008. (Source: The Star)


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