Maybank IB Views

Thursday, October 13, 2011

YTL Power International RM1.69: Buy
Strike while the iron is hot

Deep value emerging. YTL Power International's (YTLP) share price has slipped to attractive levels implying net dividend yields of 5.5% or more than 10% above the historical average and only 1.3x 1-year forward P/BV which is an 8½ year low and even below the Global Financial Crisis (GFC) trough of 1.6x in Oct 2008. This devaluation is despite its relatively resilient earnings base. Therefore, we maintain our DCF based TP of RM2.02 but upgrade our call from Hold to Buy.
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CIMB Group Holdings RM7.30: Hold
Lower interest rates in Indonesia

Hold. We see minimal financial impact to CIMB's earnings from lower interest rates in Indonesia and do not expect further rate reductions. We have nevertheless already factored in lower net interest margins (NIM) this year and next from competitive pressure. Our forecasts for CIMB are unchanged, while our TP of RM7.10 (1.9x 2012 P/BV) is maintained.
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The FBM KLCI surged 16.85-points to close at 1,428.50 yesterday. Its resistance areas of 1,432 and 1,453 may cap market gains, whilst the obvious support areas are located at 1,401 and 1,428.

Trading Idea is IOICORP
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Other Local News
Berjaya Land: Berjaya Air JV scrapped. The proposed JV to run Berjaya Air in Indonesia was terminated as both parties could not finalise the terms of the shareholders' agreement and other related arrangements. (Source: Bursa Malaysia)

F&N Holdings: To boost Malaysia Operation amid Thai flood. The new RM42m production line procured from KRONES would boost F&N beverages' carbonated soft drinks (CSD) polyethylene terephthalate (PET) output by 30% from 672,000 bottles per day or 139.2m bottles a year. (Source: Malaysian Reserve)

Brewery: Fake liquor is pouring into the country. Fake liquor is targeting restaurants, pubs and karaoke lounges in the country. Malaysia is ranked among the top 5 countries affected by the problem of counterfeit liquor and the authority has seized RM671,000 worth of fake liquor during the first eight months of the year, compared to RM790,000 seized in last year. (Source: The Star)

Prasarana: Hands over KVMRT project to MRT Co. Syarikat Prasarana Negara Bhd officially handed over the Klang Valley My Rapid Transit (KVMRT) Project to MRT Co yesterday and is expected to begin in 2Q or 3Q of next year. SPAD will be the project’s supervising agency while MMC-Gamuda has been appointed as the project delivery partner. (Source: The Edge Financial Daily)

Media: Adex expected to see double digit growth. Minister of International Trade and Industry Datuk Seri Mustapa Mohamed says Malaysia's advertising expenditure (Adex) is expected to record a double digit growth this year, based on the Adex for the first 5 months of this year which has already reached RM4b, 16% higher than last year. (Source: The Sun)

Banking: HSBC Amanah to add 16 new branches by 2013. HSBC Amanah Malaysia Bhd plans to open 16 new branches by 2013 to tap the increasing demand for Islamic financial services. Currently, the bank has 10 branches nationwide. (Source: The Sun)


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