Maybank IB Views

Wednesday, October 19, 2011

Malaysia Marine and Heavy Engineering Holdings RM5.95: Buy
Bags Telok Gas job, more to follow Shariah-compliant

A direct proxy play to PETRONAS' domestic capex programmes. We are positive on MMHE's latest Telok Gas project job win. We expect more contract wins to follow, foreseeing strong orderbook visibility extending beyond 2013. The FLNG, TLP and RAPID projects are among the high-ticket items that would propel orders and earnings growth. MMHE is among our top picks in the sector. Maintain Buy with a RM8.00 target price, based on 20x 2013 EPS.

RHB Capital RM7.20: Hold
The alternative scenario

Hold maintained. Our RHB Cap-OSK analysis thus far has assumed a merger scenario involving a share exchange at the listed entity levels of RHB Cap and OSK Holdings. If RHB Cap exchanges shares for OSK Investment Bank (OSK IB) instead, the overall cost is theoretically lower, by our estimates, subject to final pricing. Our Hold call on RHB Cap is maintained, with an unchanged RM7.60 TP (2012 P/BV target of 1.3x, ROE: 13.3%). At this juncture, we do not foresee an immediate upward re-rating of the enlarged RHB Cap if the merger goes through.

China: 3Q 2011 GDP
Soft landing so far...

3Q 2011 real GDP marked the third consecutive quarter of mild moderation in growth… China's economy continued to grow YoY by more than +9% in 3Q 2011, but the pace slowed to +9.1% from +9.5% in 2Q 2011. Consensus estimate was +9.2%. QoQ growth remained at 2% or more so far this year i.e. 3Q 2011: +2.3%; 2Q 2011: +2.4%; 1Q 2011: +2%; 4Q 2010: +2.4%. YTD, the economy expanded by +9.4% (Jan-Sep 2010: +10.6%; 2010: +10.4%).

The FBM KLCI plunged 25.41-points to close at 1,439.94 yesterday. Its resistance areas of 1,439 and 1,465 will cap market gains, whilst the obvious support areas are located at 1,403 and 1,433.

Trading Idea is ENG

Other Local News
Proton: Looks to commercialise electric vehicles by 2013. Proton Holdings Bhd is looking to commercialise its electric vehicles in 2013. The Proton Saga EV is expected to be priced at RM70,000 and Proton Exora Range Extender at about RM100,000. Proton and government are also working on a mechanism to build the infrastructure for electric vehicle charging centres. (Source: The Edge Financial Daily)

MAS: Takes over Firefly's jet services. Malaysian Airline Systems Bhd (MAS) has embarked on a network rationalization programme in which its subsidiary, Fly Firefly Sdn Bhd, will concentrate on serving short-haul turboprop operations and Malaysia Airlines focus on enhancing its premium full-service offering. The takeover of Firefly's jet services on Dec 4 is part of the service separation plans under the business realignment exercise which addresses the continuing heavy losses being incurred by Firefly's jet operations. (Source: The Edge Financial Daily)

UEM: To build hospital? UEM Group Bhd and its joint venture partner Najcom Sdn Bhd are understood to have bagged the contract to build a women and children's hospital in Kuala Lumpur costing between RM700m and RM900m. (Source: The Edge Financial Daily)

Top Glove: To spend RM100m on plant upgrades. Top Glove Corp Bhd has allocated RM100m to upgrade and expand its factories at Sadao in Thailand. It is also looking at making more value-added variants at its Banting and Ipoh facilities. Currently, Top Glove has 21 factories and 395 production lines with a total production capacity of 35.3b pairs of gloves per annum. By May 2012, Top Glove targets to produce 41.6b pieces of gloves per annum.

Healthcare: Parkway Pantai's international push. Parkway Pantai Ltd aims to triple the revenue contribution from its international operations to 33% by expanding in Asia. It is already one of the region's biggest healthcare groups, operating more than 3,000 beds under 16 hospitals currently, and is in the process of adding another 2,300 beds in eight new hospitals from 2013 onwards. Apart from three new hospitals in Malaysia, Parkway Pantai is also building five other hospitals in Singapore, Vietnam, China, India and the United Arab Emirates. (Source: Business Times)


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