RHBInvest Research

Faber

Company Update

• Risk of losing concession is relatively small
• Fair value has been raised to RM2.79 (from RM2.22).
• Upgrade our recommendation on the stock to Outperform, from market perform previously.

Corporate Highlights

TRC

New Coverage (published 30 Mar 2011)

• Among the cream of the crop of small-cap builders
• Initiate coverage with an Outperform recommendation. Fair value is RM1.80.

VS Industry

1QFY11 Results

• Net profit up 172.1% yoy
• Maintain Outperform. Fair value is RM2.44 .

Hiap Teck

1QFY11 Results

• Slowdown hits 1HFY07/11 performance due lower sales and margins at its manufacturing division.
• Indicative fair value is reduced to RM1.00 (from RM1.18 previously)

Perisai Petroleum

Visit Note

• The proposal appears to be a good deal for Perisai, given the availability of the asset coincides with the long-term charter contract which is expected to be net cashflow positive to Perisai.
• Fair value estimate of RM1.25-1.43/share.

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Maybank IB Views

INITIATING COVERAGE
YTL Power International RM2.29: Buy
It's got the POWER Shariah-compliant

Good time to accumulate. We initiate coverage on YTL Power International (YTLP) with a Buy call and RM2.70 target price. We like its portfolio of steady concession businesses. While we are positive on YES, we expect it to incur start-up losses. That said, we postulate YTLP cash flows are strong enough to maintain net DPS at 13.1 sen or a 5.7% net dividend yield. More M&As may beckon.

The FBM KLCI rose by 11.54 points to 1,531.63 yesterday. Its resistance areas of 1,533 and 1,544 will cap market gains, whilst the obvious support areas are located at 1,515 and 1,531. We expect the index to remain in a minor rebound mode in the short term and to be bearish in the medium term.

Trading idea for today is a Buy call on PETDAG.

Other Local News
Tan Chong: To upsize MTN programme to RM2b. Tan Chong Motor Holdings Bhd has received approval from the Securities Commission to upsize its asset-backed medium term notes (MTN) programme to RM2b from RM600m. The approval would enhance the group's ability to tap the capital markets for future funding needs. (Source: The Star)

AirAsia: Unit awaits nod for Jeddah. AirAsia X, is in the final stages of getting the green light from the Government to fly to Jeddah, Saudi Arabia. (Source: The Star)

CIMB: Raises BLR/BFR rates. CIMB Bank Bhd and CIMB Islamic Bank Bhd have announced an increase in their base lending rate (BLR) and base financing rate (BFR) by five basis points from 6.3% to 6.35%, effective from April 4. The change in the rates followed Bank Negara's decision to increase the statutory reserve ratio requirement by 1% to 2% with effect from tomorrow. (Source: The Star)

JCY: Eyes major client from Japan. JCY International Bhd is in the midst of courting one of the world's leading electrical and electronic (E&E) companies from Japan as its new client. (Source: The Star)

Cypark: Proposes to take over 32 landfills. Cypark Resources Bhd has submitted proposals to the government to take over as many as 32 non-sanitary landfills and to design, build and manage integrated waste disposal sites. (Source: Business Times)

Property: Putra Place finally sold for RM514m. The Putra Place in Kuala Lumpur has finally been sold to OSK Trustee Bhd for RM514m, some three years after the property was first put up for auction. OSK Trustee may have bought the property on behalf of one of the real estate investment trusts (REIT). (Source: Business Times)

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Stocks to watch: DBE Gurney, VS Industry, Ireka, Berjaya Corp

KUALA LUMPUR: Stocks on Bursa Malaysia could extend their gains on Thursday, March 31 as the first quarter winds down and the FBM KLCI at its highest since early February, as sentiment could be reinforced by the firmer overnight close on Wall Street.

Credit Suisse Research said Malaysia is expected to surprise on the upside in 2011 but uncertainties still remain over the sustainability of growth beyond 2011.

It said IJM Corp, Air Asia, Axiata and UEMLand were particularly interesting. IJM Corp. is a direct beneficiary of the Economic Transformation Programme (ETP). Air Asia and Axiata have gone beyond Malaysia shores and are riding on the region’s strong growth. UEM Land is working on a different approach to take advantage of the strong Singapore-Malaysia ties.

On Wall Street, U.S. stocks rose on Wednesday, March 30 with activity dominated by money managers buying recent winners, including energy and small-caps, as the quarter nears its end.

The Dow Jones industrial average added 71.60 points, or 0.58 percent, to 12,350.61. The Standard & Poor's 500 rose 8.82 points, or 0.67 percent, to 1,328.26. The Nasdaq Composite gained 19.90 points, or 0.72 percent, to 2,776.79.

At Bursa Malaysia, stocks to watch include poultry outfit DBE Gurney Resources Bhd, V. S. Industry Bhd (VSI), Ireka Corp Bhd, Berjaya Corp and Masterskill Education Group Bhd.

DBE Gurney’s additional 593.33 million new shares and 200 million warrants will be listed on Thursday. The warrants were issued for free to the subscribers of the renounceable rights issue of 400 million rights shares on the basis of one free detachable warrants for every two rights shares subscribed for.

The maturity date of the warrants is March 22, 2016 and the conversion price is 10 sen. The new shares of 10 sen were issued pursuant to the rights issue with warrants and capitalisation of amounts due to director and creditors settlement.

Meanwhile, The Edge FinancialDaily reports OSK HOLDINGS BHD []'s wholly owned subsidiary OSK Investment Bank Bhd (OSKIB) has emerged as the single largest shareholder of DBE Gurney, with 180.99 million shares or 26.88% of DBE's enlarged issued share capital.

V. S. Industry has set a dividend policy of making out an annual payment of at least 40% of its net profit to shareholders as dividends, and plans to disburse payouts on a quarterly basis. The dividend policy is effective in the current financial year ending July 31, 2011 (FY11).

VSI’s net profit in the second quarter ended Jan 31, 2011 surged 134.1% to RM10.1 million from RM4.4 million a year ago, due to higher revenue. The profit came mainly from the higher group sales as a result of the increased sales generated by its Malaysian and Indonesian operations.

Ireka Corp’s unit Ireka Engineering & CONSTRUCTION [] Sdn Bhd has received the letter of award from Transmission TECHNOLOGY [] Sdn Bhd for the proposed offices and hotel development in Kuala Lumpur for RM232.74 million.

The contract comprises of architectural and M&E works for basements and 13-level podium, a 27-storey office tower and a 37-storey office tower. The contract period for Tower 1 and Tower 2 is 18 months and 20 months respectively.

Berjaya Corp posted net profit of RM32.46 million in the third quarter ended Jan 31, 2011 compared with net loss of RM156.20 million a year ago on higher profit contribution from gaming, stockbroking, direct selling, retail and distribution businesses.

It said on Wednesday, March 3o that revenue rose to RM1.77 billion from RM1.66 billion while earnings per share were 0.74 sen compared with loss per share of 3.75 sen.

“The pre-tax loss of RM50.2 million in the previous year corresponding quarter was mainly due to the non-cash dilution effects amounting to RM150.46 million when the group's interest in BERJAYA LAND BHD [] (BLand) was diluted from 56.44% to 53.25% arising from the conversion of BLand ICULS to BLand shares upon its maturity on Dec 30, 2009,” it said.

For the nine-month period, it recorded net profit of RM244.47 million, a contrast from the net loss of RM64.47 million in the previous corresponding period. It posted pre-tax profit of RM612.64 million compared with RM309.58 million a year ago. .

Masterskill Education Group Bhd has recommended a final single tier dividend of 7.9 sen per 20 sen share for the financial year ended Dec 31, 2010. It said on Wednesday, March 30 the dividends would be payable on June 15. The group had on Oct 13, 2010, completed the distribution of an interim dividend of seven sen per share to the shareholders.

The total of 14.9 sen per share dividend for 2010 will represent a total payout of 60% of its net profit, equivalent to RM61 million.

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RHBInvest Research

UMW:

Visit Note

• Fairly valued
• We reiterate our Market Perform recommendation
• fair value of RM7.85 (unchanged).

Sector Call

Motor:

Sector Update

• Awaiting new growth drivers.
• We reiterate our Neutral view on the back of relatively tepid industry growth prospects in 2011 and few new catalysts to re-rate sector valuations.
• Tan Chong is our top pick.

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Maybank IB Views

Kencana Petroleum RM2.58: Buy
Bags Petrofac's Cendor Phase 2 gig Shariah-compliant

Maintain Buy; 20% upside. Kencana is on course to meet its job win targets for FY11. The RM216m Petrofac EPCC gig takes its outstanding orders to 69%, with 4 months to go. Our forecasts are unchanged, which implies a 3-year net profit CAGR of 26%. We value Kencana at RM3.10, based on 20x CY12 EPS. Our 20x PER target is validated in a capex-fueled, order book-driven upcycle.

Top Glove Corporation RM5.28: Hold
Stretching valuations Shariah-compliant

Sentiment driven. Latex cost has rebounded to the pre-Japan earthquake level of RM10.35/kg. We reduce our FY11 EPS forecast by 8% after we trim our sales volume assumption by 3%. Though Top Glove is trading at 15x CY12 PER (above its 5-year historical average of 13x), we think short-term interest on the stock will sustain owing to expectation of a falling latex cost in May. Reiterate Hold, TP is adjusted upward to RM5.10 (from RM4.55) as we roll forward our DCF valuation.

Technicals
The FBM KLCI rose higher by 5.84 points to 1,520.09 yesterday. Its resistance areas of 1,521 and 1,538 will cap market gains, whilst the obvious support areas are located at 1,505 and 1,520.

Trading idea for today is a Buy call on COASTAL.

Other Local News
MISC: To gain from sale and charterback of vessels. MISC Bhd's subsidiary, AET Inc. Ltd., entered into the sale and charterback of four tankers, namely two Aframaxes and two Very Large Crude Carriers (VLCCs). The total net cash proceeds from the transaction is USD167m for a gain on disposal of USD33m. (Source: Bursa Malaysia)

MRCB: Inks deal with Ekovest. Malaysian Resources Corporation Berhad has entered into a joint venture with Ekovest Berhad and KL Bund Sdn Bhd in relation to the River of Life Project. MRCB would have 40% equity in JV company while Ekovest would hold 60% stake. (Source: Bursa Malaysia)

DRB-HICOM: VW to make Pekan regional hub, plans to make 30,000 vehicles by 2018. DRB-HICOM Bhd's tie-up with German automotive giant Volkswagen AG (VW) to manufacture VW cars at the former's plant in Pekan, Pahang is expected to produce more than 30,000 (VW) vehicles at the plant by 2018. Pekan will become the regional automotive hub for VW. (Source: The Star)

Perisai: To buy Garuda Energy for RM210m. Perisai Petroleum Teknologi Bhd plans to buy all of Garuda Energy (L) Ltd, an oil and gas concern, for RM210m. Garuda Energy currently owns a jack-up rig that is being converted into a Mobile Offshore Production Unit (MOPU) at Jurong Shipyard, Singapore, by May 2011. (Source: Bursa Malaysia)

Metro Kajang: To beef up plantation, property units. Metro Kajang Holdings Bhd is buying more land in Kalimantan, Indonesia and in the Klang Valley to beef up its core plantation and property development divisions to drive earnings. Metro Kajang was looking to buy 20,000ha of plantation land from a local landowner in east Kalimantan. (Source: Business Times)

Petrolchemical: Petronas and BASF mull RM4b joint investment to set up petrochemical plant in Malaysia. Petroliam Nasional Bhd (Petronas) and BASF SE are considering a potential joint investment sum of RM4b to set up a plant to produce petrochemical products in Malaysia. (Source: The Malaysian Reserve)

Property: Malaysia to allocate land for affordable homes. The government will allocate a portion of its landbank for the construction of affordable housing, especially for Malaysians eligible for the My First Home Scheme. The affordable housing project, which will likely be stratified properties or apartments, will either be built by the government or through joint ventures with the private sector. (Source: Business Times)

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Maybank IB Views

COMPANY UPDATE
Public Bank RM13.04: Hold
Consumer lending still resilient...for now

Momentum sustained. The key takeaway from a recent Public Bank visit is that lending momentum remains very much intact on the consumer front, but that rate competition for both loans and deposits is unlikely to ease anytime soon. Our earnings forecasts are broadly maintained. While we like the stock for its solid fundamentals, much is reflected in the current share price (prospective 2011 P/BV of 3x, ROE: 23.9%) we believe, and we see little catalyst in the near term. Hold maintained with an unchanged DDM-derived TP of RM14.10 (payout ratio: 52%, cost of equity: 10.6%, terminal growth rate: 5%).

ECONOMICS
CPI, Feb 2011
Inflation rate heads further up...

Inflation rate in Feb '11 was a higher-than-expected and a 22-month high of +2.9% YoY (Jan '11: +2.4% YoY; Maybank-IB: +2.5% YoY; Consensus: +2.7% YoY). Sequentially, consumer prices increased by +0.5% MoM (Jan '11: +0.6% YoY; Dec '10: + 0.4%). "Food and Non-Alcoholic Beverages" (FNAB) and "Transport" accounted for 72.7% of the YoY increase. Meanwhile, "core" inflation rate which excludes FNAB prices and Transport costs picked up by +1.5% YoY (Jan '11: +1.2% YoY), led by higher prices of services, notably "Restaurants & Hotels", "Health" and "Education". We have revised our headline 2011 inflation rate forecast to +3% from +2.5% last week.

Technicals
The FBM KLCI rose 11.66-points and closed at 1,515.55 last Friday. The local market rose despite Japan’s nuclear woes at its reactor plants, Middle East tensions in Libya and Yemen as well as Portugal’s debt woes.The obvious support areas for the FBM KLCI are located in the 1,474 to 1,515-zone. The very firm resistance zone of 1,518 and 1,576 will see heavy liquidation activities.

Other Local News
AMMB-RHBCap: Merger may be back on the table. A proposal to merge AMMB Holdings Bhd and RHB Capital Bhd, which first surfaced in 2007, is back on the table. (Source: The Edge Financial Weekly)

MISC: Eyeing IHC Merwede. International shipping publications are speculating that national carrier MISC Bhd could be a potential investor in Holland’s IHC Merwede Holding BV. (Source: The Edge Financial Weekly)

MAS: Firefly banking on Iskandar to develop southern hub. FlyFirefly, a unit of Malaysia Airline System Bhd (MAS) will develop the Sultan Ismail International Airport as its southern hub in tandem with developments taking place at Iskandar Malaysia, the southern economic development corridor in Johor. (Source: The Edge Financial Daily)

Pos Malaysia: Declares 17.5 sen dividend, MPC joins bid. Pos Malaysia Bhd has recommended a first & final and special dividend totalling 17.5 sen per ordinary share less 25% tax in respect of the financial year ended Dec 31, 2010. Separately, Malaysian Pacific Corp Bhd and Amanah Raya Bhd are believed to have submitted a joint bid for the 32.2% equity stake in Pos Malaysia Bhd held by Khazanah Nasional Bhd. (Source: Bursa Malaysia, The Edge Financial Daily)

Mamee: To upgrade facilities. Mamee-Double Decker (M) Bhd, which aims to achieve an annual revenue of RM1b in five years, will spend 90% of its RM100m capital expenditure (capex) this year to upgrade its facilities and machinery in one of its Malacca plants. (Source: The Star)

SC: Zarinah’s term extended. The Securities Commission (SC) said the tenure of its chairman Tan Sri Zarinah Anwar has been extended for one year with effect from April 1. (Source: The Star)

Iskandar: 2012 to be tipping point for Iskandar. The first phase of catalyst projects in the ambitious Iskandar Malaysia will begin operations next year, signaling the beginning of a strong and sustainable metropolis of international standing. (Source: The Star)

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Maybank IB Flyer

1. Guan Chong Berhad (GUANCHG)

Guan Chong Berhad, Malaysia’s largest cocoa processor, has commissioned its cocoa grinding plant in Batam, Indonesia, which is expected to improve earnings significantly. The plant boasts of an initial annual grinding capacity of 60,000 tonnes, increasing the group’s total production by 75 per cent to 140,000 tonnes a year. This makes Guan Chong one of the largest cocoa processors in Asia.

2. Subur Tiasa Holdings Berhad (SUBUR)

Subur is a Malaysia-based company engaged in extraction and sale of logs and manufacturing of sawn timber. The Company, along with its subsidiaries, operates in three segments: logs trading, which includes the extraction and sale of logs; manufacturing, which includes the manufacturing and trading of plywood, veneer, raw and laminated particleboard, sawn timber, finger joint molding and supply of electricity, and others, which includes tree planting (reforestation) and oil palm plantation, sales of grocery, provision of towage and transportation services, property holding and development.

Subur Tiasa Holding Berhad’ pre-tax profit for the second quarter ended Jan 31, 2011 fell to RM7.53 million from RM8.32 million in the same quarter of 2010. It revenue fell to RM183.29 million from RM184.25 million previously.

The group said the slight decrease in revenue was mainly due to weakening of US dollar against the ringgit as the group’s export proceeds were denominated in US dollar. The group expected the operating performance for the remaining quarter to be satisfactory. With the tsunami and earthquake in Japan recently, there were some movements on listed wood-based companies on Bursa Malaysia and Subur might be one of the companies that could benefit from Japan's woes. (Bernama News, March 23, 2011)

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RHBInvest Research

MMHE:

Sector Update

• Getting tougher to grow
• Over-dependence on Petronas heightens the concentration risk
• Keen competition in all market segments could limit its ability to penetrate new markets
• Sharp rise in material costs could erode margins for “fixed-cost” contracts
• Cyclical risks of the crude oil price could lead to projects being shelved or delayed.
• Fair value RM6.26/share

**MMHE is Bloomberg code. RHBInvest stock code is 5186 named MHB

Macro View

Inflation:

• Accelerated to 2.9% in February, pointing to elevating price pressures
• We expect the Central Bank to resume raising interest rates from Jul 2011 and the OPR will likely be raised by 50 basis points in 2H 2011 to bring it to a more neutral level of 3.25%.
• We also expect the Central Bank to raise the SRR again by another 1.0%-pt to 3.0% in its next policy meeting on 5 May.

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Stocks to watch: Pos Malaysia, HELP, TA Enterprise, Maybulk

KUALA LUMPUR: The FBM KLCI posted six straight days of gains last Friday, March 25, with the FBM KLCI up 0.77% or 11.66 points to 1,515.55 following the recent aftermath of the Japan earthquake and the on-going Mid-East turmoil but trading is expected to be lacklustre in the week ahead.

On Friday, Wall Street advanced for a third straight day, giving the S&P its best weekly performance since early February, but volume remained light as global uncertainty persisted.

The Dow Jones industrial average gained 50.03 points, or 0.41%, to 12,220.59. The Standard & Poor's 500 Index rose 4.14 points, or 0.32%, to 1,313.80. The Nasdaq Composite Index added 6.64 points, or 0.24%, to 2,743.06.

For the week, the Dow gained 3.1%, the S&P climbed 2.7% and the Nasdaq advanced 3.8%.

As for Bursa Malaysia, overall trading has been lacklustre and gains restrained also on concerns of high oil price, rising food prices and the impact on inflation, which is forecast to climb between 2.5% and 3.5% this year.

Malaysia’s consumer price index rose 2.9% in February 2011 from a year ago as prices for food & non-alcoholic beverages and non-food rose. The CPI rose 0.5% from January. For the period of January-February, the CPI rose 2.7% from the previous corresponding period.

The index for food & non-alcoholic beverages and non-food for the month of February 2011 showed increases of 4.7% and 2.1% respectively as compared to the same month in 2010.

While the market has managed to eke out marginal gains, investors are expected to nibble on selected stocks with on-going news, including RHB Capital and companies which announced their results including HELP INTERNATIONAL CORPORATION [] Bhd and TA ENTERPRISE BHD.

Companies like POS MALAYSIA BHD, MALAYSIAN BULK CARRIERS BHD and PACIFICMAS BHD would see trading interest after declaring dividends.

Pos Malaysia declared dividends totaling 17.5 sen for the financial year ended Dec 31, 2010.

PacificMas announced a windfall, with an interim dividend of RM1.398 per share less 25% income tax (net RM1.0485 per share) and single tier dividend of 30 sen per share (tax exempt) for the financial year ending Dec 31, 2011.

Maybulk declared a final single tier dividend of 10 sen per share for the financial year ended Dec 31, 2010. The dividend would be paid on May 6 this year.

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Evergreen will rebound?

Evergreen Daily Chart

This is one of the stock counter that I trade recently. Will Evergreen rebound? I just wait n see...

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Tasco Berhad

Our company was incorporated in Malaysia under the Act on 10 September 1974 as a private limited company under the name of Trans-Asia Shipping Corporation Sdn Bhd. Subsequently, on 14 December 2001, it was converted to a public limited company and assumed the name of Trans-Asia Shipping Corporation Berhad.Our company was listed on the Main Board of Bursa Malaysia Securities Berhad on 28 December 2007 under the stock name "TASCO" (Stock Code:5140) in the category Trading/Services. Effective from 10 September 2009, our company name has officially change to TASCO Berhad.

Our Company is principally engaged as a total logistics solutions provider while its subsidiary companies are principally involved in the business of truck rental, in-house truck repair and maintenance, insurance agency services and warehouse rental as well as provider of services related to freight forwarding. Our logistics solutions comprises six (6) core business divisions, namely:-

•Ocean Division
•Air Division
•Land Division
•International Freight Division
•Auto Logistics Division
•Internation Network Solutions Division

Our Company commenced business operations in September 1975 following the issuance of shipping and forwarding licences by Royal Malaysian Customs. Our Company then only offered customs broking services to a limited number of customers and our major operational office was located in Port Klang with a total staff strength of five (5). Our Company later expanded our logistics solutions from customs broking to air and sea freight forwarding, trucking, warehousing and project management to fulfil our customers? demands.

Tasco is one of the selected company recommended by personal money magazine which they think can be performed through out of 2011 year.

source:tasco.com.my

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Maybulk declares final dividend of 10c per share

KUALA LUMPUR: MALAYSIAN BULK CARRIERS BHD [] declared a final single tier dividend of 10 sen per share for the financial year ended Dec 31, 2010.

It said on Friday, March that the dividend would be paid on May 6 this year.

For the financial year ended Dec 31, Maybulk net profit fell to RM238.37 million from RM243.79 million, on the back of revenue RM404.25 million.

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RHBInvest Research

Media:

Sector Update

• Strong start to the year
• Media Prima (FV=RM3.20) remains our preferred pick given its position as the largest integrated media player in Malaysia and given its relatively fixed cost structure, any increase in topline, will flow straight to bottomline. We maintain our Outperform call on MCIL (FV=RM1.38) and Star (FV=RM4.23).

Corporate Highlights

Gamuda:

• 2QFY11 Results/Briefing Note
• 1HFY07/11 net profit grows 20% yoy.
• Gamuda expects the Government to officially call for the tender for the tunneling works for the Sungei Buloh – Kajang line of the MRT project in 4Q2011.
• Gamuda formally announced that it had been granted by the Government a second extension of time for the completion of the Ipoh – Padang Besar double-tracking project to Nov 2014.
• The maiden launch of Gamuda City in Hanoi is expected in Jul.
• Maintain Market Perform. Fair value is RM4.03.

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Maybank IB Views

Gamuda RM3.79: Buy
Earnings uptrend intact Shariah-compliant

Above our expectations. 1HFY11 results included a RM16m positive accounting adjustment at SPLASH post-IC12 implementation, which was not reflected in our forecast. RM183m net profit (+20% YoY) made up 51% of our pre-revision RM355m full-year forecast. We raise our FY11-13 net profit forecasts by 8-9% p.a. to reflect this adjustment. Being non-cash in nature, our DCF valuation for SPLASH is unchanged and this too, has no impact on our RM4.45 RNAV-based target price for Gamuda. The stock remains our top pick in construction. Maintain Buy.

Technicals
The FBM KLCI rose marginally by 1.87 points to 1,513.84 yesterday. Its resistance areas of 1,515 and 1,529 will cap market gains, whilst the obvious support areas are located at 1,497 and 1,513. Due to the DJIA’s rebound tone last night, we will see the FBM KLCI in a slightly firmer mode today.

Daily Trading idea is a Short-Term Buy call on PCHEM.

Other Local News
Wah Seong: To make fans, blowers. Wah Seong Corp Bhd will set up a joint venture with PT Agrindo Prima Lestari (PTA) to manufacture industrial fans and blowers for the palm oil industry and other industries utilizing similar products in Indonesia. (Source: Bursa Malaysia)

SEGi: Plans 50% dividend payout. SEG International Bhd (SEGi) has announced a dividend policy to distribute a minimum of 50% of its group net profit to shareholders with effect from the financial year ending Dec 31, 2011. (Source: The Edge Financial Daily)

Transmile: Gets RM200m from aircraft sale. Transmile Group Bhd has completed the disposal of four of its aircraft to Federal Express Corp for USD67m (RM200m), paving way for the company to pare down its long term borrowings that totaled RM531.6m as at Dec 31, 2010. (Source: The Edge Financial Daily)

Autos: Toyota to restart hybrid vehicle output in Japan. Toyota Motor Corp would restart production of three hybrid models (Prius, Lexus HS250h and CT200h) on Monday after a massive earthquake this month disrupted output across the industry. (Source: The Edge Financial Daily)

SCORE: Nine companies investing RM20b in Score so far. Nine companies have to date confirmed investments totalling RM20b in the Sarawak Corridor of Renewable Energy (Score). This does not include the RM2b investment by a Taiwanese company in the halal industry hub. (Source: The Star)

Plantation: 'Abolish windfall tax' call. Four national oil palm associations which represents over 80% of the country's oil palm fraternity has submitted a joint memorandum to the Prime Minister, urging the Government to seriously re-consider abolishing or reviewing the imposed crude palm oil (CPO) windfall profit tax (WPT) for the sector. (Source: The Star)

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RHBInvest Research

Sime Darby:
Writeback of RM100m for Maersk Oil Qatar project.
We maintain our Outperform recommendation with RM10.60 fair value.

Macro View

BNM 2010 Annual Report:
Higher risk of inflation, degree of policy accommodation needs to be adjusted.
We expect the OPR to be raised by 50 basis points in 2H 2011 to bring it to a more neutral level of 3.25%.

Corporate Highlights

Kossan:
Expanding into clean room gloves.
Fair value maintained at RM5.12. Reiterate Outperform.

TNB:
Acquires stake in Integrax.
Maintain Market Perform.

TM:
Alcatel blacklisted.
Earnings growth is lacking until HSBB contributions pick up in FY12. Hence, maintain Underperform.


Hai-O:
Within expectations
Fair value of RM1.35. Underperform.

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Maybank IB Views

ECONOMICS
BNM Annual Report 2010
No Change in official 2011 GDP forecast

Official real GDP growth forecast remains at 5%-6% (2010: +7.2%) although the growth rates of GDP components were tweaked, while inflation is expected to accelerate to 2.5%-3.5% (2010: +1.7%). We maintained our growth forecast of 5.5% for now but raised our inflation rate (to +3% from +2.a5%) and crude oil price (to USD100/barrel from USD90/barrel). Risks, issues and challenges in 2011 include sustaining growth momentum, ensuring financial stability and dealing with rising inflationary pressures. In this regards, we expect OPR to be raised in Sep and Nov by a total of 50bps to 3.25% but sticking to our contrarion call of no further SRR hike after the 100bps increase to 2% on 11 Mar. We also see further prudential measures to deal with the specific issue of household debt.

SECTOR UPDATE
Banking: Overweight
Upbeat challenges

Maintain Overweight. The banking system remains in the pink of health with profits up a strong 34% last year, supported by strong asset ratios. Yesterday's analyst briefing, in conjunction with BNM's release of its 2010 Annual Report and Financial Stability and Payment Systems Report, sent a positive vibe on the domestic banking sector outlook, with key agenda in 2011 being to manage household sector resilience. There is no change to our earnings forecasts and calls for the banks.

COMPANY UPDATE
Sime Darby RM9.15: Buy
Moving on

Positive kicker to sentiments. Sime Darby has agreed on an out-of-court settlement with Maersk Oil Qatar (MOQ), which results in a RM100m write back of provisions (1.6sen/sh). The write back has no impact on our core earnings forecasts but is positive on sentiment. Going forward, the stock will gain further momentum from perpetual positive news flow. We are sideline on the ongoing lawsuits. Reiterate Buy with a RM10.60 sum-of-parts target price.

Notion VTEC RM1.98: Buy
To benefit from relocation exercise Shariah-compliant

New 'body mount' project from Nikon is a kicker. This new order could generate a net profit of RM4-6m and lift EPS by 3-4 sen. We maintain our forecasts for now. We do not rule out higher outsourcing contracts from Nikon as it reorganizes its operations in Japan. NVB's MSC tax status remains a work-in-progress but would add another 6 sen to EPS once approved. NVB remains a small-cap Buy, with a RM2.40 target price, based on 4.5x FY11 EV/EBITDA, reflecting regional peers' (ex-Japan) valuations.

ACQUISITIONS / DISPOSAL
Tenaga Nasional RM6.18: Sell
Buys 22.1% of Integrax Shariah-compliant

A hand in port operations. We are positive on Tenaga's acquisition of 22.1% Integrax, due to its strategic benefits and attractive valuation. The earnings increment is small - we estimate RM3-4m p.a. initially, based on a 22.1% share in Integrax's earnings (RM48m net profit in 2010), which will be offset by the acquisition cost. That aside, we are concerned about the current high coal prices and lack of clarity on a tariff hike that is undermining Tenaga's earning potential. No change to our earnings forecasts and DCF-based target price for now. Sell.

Technicals
The FBM KLCI inched up 2.87 points yesterday to close at 1,511.97. Its resistance areas of 1,513 and 1,529 will cap market gains, whilst the obvious support areas are located at 1,495 and 1,511.

Trading idea for today is a Buy call on SAPCRES.

Other Local News
RHBCap: ADCB meets investment bankers. RHB Capital Bhd's (RHBCap) single largest foreign shareholder Abu Dhabi Commercial Bank (ADCB) had called for a meeting among investment banks last week to pitch for an advisory role on the sale of its 25% stake in the local banking group. (Source: The Edge Financial Daily)

Malaysia Airlines: May raise surcharge. Malaysia Airlines (MAS) has warned that it would raise its fuel surcharges as the conflict in the Middle East was accelerating the pace of crude oil price hikes which in turn, threatens airline margins. (Source: The Star)

TM: UniFi subscribers almost doubled to 60,000 last year. Telekom Malaysia Bhd (TM) has almost doubled the number of customers for its high speed broadband service called UniFi, to 60,000 from 33,000 at the end of last year, beating its own estimates. (Source: Business Times)

Axiata: Suspends all dealings with Alcatel for 12 months. Axiata Group Bhd has imposed a 12-month suspension on Alcatel-Lucent group (ALU), including its Malaysian operations, which would bar it from any new bids for contracts, although it would continue all existing contracts. (Source: The Edge Financial Daily)

EON Bank: New CEO soon? Eon Bank Bhd may be one step closer to appointing a new group CEO to replace Datuk Michael Lor, with its board looking to submit a name to the central bank for approval soon. (Source: The Edge Financial Daily)

Property: Demand rebound lifts residential property market. The residential property market has been experiencing an upturn since the fourth quarter of 2009 as demand rebounded by 7.1% (2009: -2.3%) following improved consumer sentiments. Meanwhile, the increase in housing stock moderated in 2010 as housing started a declining trend. (Source: The Star)

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RHBInvest Research

Top Story: Century Logistics

• New Coverage
• Riding on improving trade activity
• Fair value is RM2.70. Initiate coverage with Outperform call.

Sector Call


Motor:

Sector Update

• Expected seasonal weakness
• MAA expects sales in March to recover given the normal working month and ongoing marketing promotions by auto distributors.
• No change to our TIV forecasts and Neutral sector stance.

Corporate Highlights

SEGI International:

Visit Note

• Leading education provider
• Our fair value for the stock is RM4.44.
• The premium is fair given SEGI’s superior net profit margin, the wider array of courses offered and its larger market cap.

SP Setia:

News Update

• Placement issue price fixed
• Maintain Outperform. As the proceeds raised from placement are lower than our expectations.
• Our fair value is reduced to RM7.17.
• For the property sector, we prefer Mah Sing, due to its cheaper valuations as well as 25% earnings growth over the next two years.

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Tenaga buys 22.12pct of Integrax for RM106.4m or RM1.60 per share

KUALA LUMPUR: TENAGA NASIONAL BHD (TNB) has moved in to acquire a 22.12% stake of INTEGRAX BHD [] for RM106.4 million or RM1.60 per share.

TNB said on Wednesday, March 23 that it had signed a share sale agreement with Halim Rasip Holdings Sdn Bhd to acquire the 66.538 million shares.

The power company said it the purchase price represented a premium of 13.5% to the five-day weighted average market price of Integrax shares up to and including March 18, of RM1.41.

“TNB intends to fund the purchase consideration entirely through internally generated funds,” it said.

It said Integrax’s subsidiaries were involved in port operations, marine services, industrial property and mining.

Lekir Bulk Terminal Sdn. Bhd., one of the subsidiaries of Integrax and its associate, Lumut Maritime Terminal Sdn Bhd, were involved in the provision of coal handling services and port facilities for TNB’s power plants, Stesen Janakuasa Sultan Azlan Shah, Manjung.

“The strategic acquisition will enable TNB to secure the coal handling services for its said power plant and enhance the efficiency and operations of its power station,” it said.

Read more...

Maybank IB Views

SECTOR UPDATE
Automotive: Neutral
On course, no pick-up ...

Maintain Neutral; in search of catalysts. Tepid sales in the Jan-Feb period concurs with our and market's assessment of Malaysia's auto growth trend for 2011. We remain Neutral on the sector, anticipating a mere 2-3% TIV growth as market reaches saturation. Stock-wise, we have upgraded Proton to a Hold following a 15% fall in share price post-our Sell call downgrade in Feb. MBM and TCM remain a Buy on inexpensive valuations whilst UMW is still a Hold.

COMPANY UPDATE
Petronas Chemicals Group RM6.74: Buy
Strong February Shariah-compliant

It only gets better. PCHEM's product margin in Feb 2011 was USD1,122/ton (+27.8% YoY, +10.5% MoM), we estimate. The year-to-date product margin of USD1,062/ton is 23.1% higher YoY and above our 2011 estimate of USD1,027/ton. Things are looking very positive for PCHEM to deliver record profits in 2011. Maintain Buy; there is no change to our earnings forecasts and target price of RM8.00.

S P Setia RM6.15: Buy
A golden opportunity to buy Shariah-compliant

FY11 to be a record year. The recent sell down on S P Setia (SPSB) shares represents a golden opportunity to buy the stock given SPSB's excellent sales performance and earnings growth prospects. SPSB will very likely exceed its RM3b sales target for FY11, a new record, given strong bookings and responses to its KL Eco City (KLEC) offices and residential tower. We fine-tune our earnings forecasts and tweak down our TP to RM7.10 (-1%) based on unchanged 10% premium to our new RM6.47 RNAV post-placement. SPSB stays our top buy for the sector.

ECONOMICS
Japan: Aftermath of 3/11
Hope vs Fear...

The casualties and damages of the Tohoku quake-tsunami on 11 Mar make it teh worst in Japan's modern history. Still, the hope is that of a localised and transitory effect, affecting growth in 1Q and/or 1H before recovery in 2H on rebuilding and resumption of business and industrial activities. The fear is that of a broader and prolonged impact due to the additional dimension of the disaster arising from the damaged nuclear power plant, risking radtioan leaks and contamination. Japan is Malaysia key trading partner and major source of FDI. Most immediate and visible impact is likely on commodities such as natural gas, timber and oil, and on manufacturing industries such as automotive and E&E.

Technicals
The FBM KLCI was marginally higher by 0.22 points to 1,509.10 yesterday. Its resistance areas of 1,510 and 1,529 will cap market gains, whilst the obvious support areas are located at 1,490 and 1,508. Due to the DJIA’s softer tone last night, we will see the FBM KLCI in lack lustre mode today.

Trading Idea for today is a Short-Term Buy call on PETDAG

Other Local News
TNB: To build gas-fired power plant in Sabah. Tenaga Nasional Bhd (TNB) plans to build a 300MW gas-fired power plant in Sabah. TNB has received in-principle approval to build the plant. The plan to build a gas-based plant comes after Malaysia's federal and Sabah state governments scrapped a plan to build a coal-fired power plant. (Source: Business Times)

Genting Plantations: ACGT Aims to Reduce Oil Palm Breeding cycle by 50%. ACGT Sdn Bhd, a unit of Genting Plantations Bhd, aims to reduce oil palm long breeding cycle by 50% to six years from 12 years via its genomics-based marker-assisted selection technology. The breakthrough would accelerate development and commercial release of oil palm seeds without any genetic modification. (Source: Bernama.com)

MAHB: Penang airport upgrade going smoothly. The RM250m upgrade of the Penang International Airport is 15.7% complete, while the target date for the whole project to be completed remains June next year. (Source: Business Times)

Benalec: Beachfront land for sale. Benalec Holdings Bhd is shaping up to be a major landowner and developer, as it will receive some 177.3 acres of land in Melaka in exchange for reclamation works. (Source: The Edge Financial Daily)

Ta Ann, Jaya Tiasa: To increase plywood output. Ta Ann Holdings Bhd and Jaya Tiasa Holdings Bhd, will increase plywood production by 15% and 50% respectively after winning orders from Japan to help with the country's reconstruction following its earthquake and tsunami. (Source: Business Times)

Utilities: Syabas invests in new pipe network. Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) has invested around RM115m in the alternative pipe network system to cope with rising demand for water supply. The new network would connect the water distribution system to the Sungai Semenyih and Sungai Langat water treatment plants and the first, second and third phases of the Selangor water distribution plant. (Source: The Star)

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RHBInvest Research

Top Story: Great Wall Plastics

Visit Note

• An undervalued package
• Our indicative fair value for the stock is RM0.96.
• We believe the premium is fair given GWP’s clarity in terms of its topline growth projections, and to a certain extent its earnings visibility.

Corporate Highlights

KSL:

News Update

• KSL Proposed rights issue of warrants at an issue price of 20 sen each on the basis of one warrant for every four existing shares.
• Overall, we are neutral on this exercise as we do not think that the company is in urgency to raise funds.
• We maintain our fair value at RM2.40. Prior to price-fixing date for the warrants, share price is likely to trend upward, as the company has also just received its final approval for the township project in Klang.

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Leader Universal's Saudi JV called off

KUALA LUMPUR: LEADER UNIVERSAL HOLDINGS BHD’s joint venture (JV) plan to supply cable and cable related equipment in Saudi Arabia has been called off by mutual agreement with its JV partners.

It said on Tuesday, March 22 that its unit Leader Universal (Labuan) Ltd (LULL) had entered into a termination agreement with Al-Ghazalah Development Co (Al-Ghazalah) and Suasana Daya Sdn Bhd (Suasana) to call of the joint venture.

The parties had on July 8, 2009 entered into an agreement to set up the JV for the purposes of selling and supplying of cables and cable related accessories and equipment with customers in Saudi Arabia, as well installation of cables and turnkey projects and supply and/or CONSTRUCTION of power transmission, distribution, substation and related projects in that country.

LULL was to hold 51% of the JV, while Al-Ghazalah was to have 30% and Suasana 19%.

Leader said that due to a change of plans, the parties had agreed not to pursue with the formation of the JV.

“However, the parties would continue to jointly explore business opportunities in Saudi Arabia,” it said

Read more...

Annjoo downtrend

Annjoo daily chart

Please look at the chart. Currently Annjoo is in downtrend mode.

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Maybank IB Views

Malaysia Airports Holdings RM6.08: Buy
January traffic shows strong start

Momentum still strong. MAHB's Jan 2011 traffic statistics reveals a strong 13.3% YoY passenger growth. This is above the region and world's averages, and also above its own 2011 guidance of 8%. This is impressive performance given there were no long holidays in January (New Year fell on a weekend). Cargo grew marginally by 3.3% YoY stemming from domestic traffic. Maintain Buy, no change to our earnings forecasts and RM7.12/share DCF-based target price.

Media Chinese International Limited RM1.20: Buy
More upside potential in these pages Shariah-compliant

Maintain Buy and RM1.35 TP. Since initiating coverage a month ago, MCIL's share price has appreciated by 37%, even hitting an all-time high of RM1.24 yesterday. Adex growth remains steady despite higher ad rates while newsprint prices are manageable in light of USD100/bbl oil. Assuming 60% net DPR, investors can expect 3% net dividend yield in 4QFY11 alone. Amid external turmoil, MCIL offers a calmer alternative with decent yields. Valuations remain attractive.

Technicals
The FBM KLCI closed higher by 4.99 points yesterday at 1,508.88. Its resistance areas of 1,510 and 1,529 will cap market gains, whilst the obvious support areas are located at 1,490 and 1,508. We expect the index to remain in a minor rebound mode in the short term and to be bearish in the medium term.

Daily Trading Idea is a Short-Term Buy call on MEDIAC.

Other Local News
AMMB: ANZ may raise stake in AMMB. Australia and New Zealand Banking Group Ltd (ANZ) may raise its equity interests to controlling stake in four of the Asian banks it has stakes in, including Malaysia's AMMB Holdings Bhd as the group sees important investment opportunities for it to make the next leap in Asia Pacific. (Source: The Edge Financial Daily)

Sime: Zubir's lawsuits against directors, not Sime Darby. Sime Darby does not expect the two lawsuits, which are filed by Emirates International Energy Services and Sime Darby's group former CEO Datuk Seri Ahmad Zubir against the former and current directors, to have any significant impact on the group. (Source: The Edge Financial Daily)

Salcon: Clinches 30-year concession for treatment plant. Salcon Bhd’s wholly owned subsidiary Salcon Changzhou (HK) Ltd (SCHK) has clinched a 30-year concession right to acquire, upgrade, operate and maintain a wastewater treatment plant on a transfer-operate-transfer basis in Changzhou. (Source: The Edge Financial Daily)

Benalec: Secures RM37m contract. Benalec Holdings Bhd’s unit has accepted a letter of award from COMTRAC Sdn Bhd to undertake the proposed earthworks, river protection works and its associated works at Klang worth RM37m. The scope of works includes earthworks, reclamation works, ground treatment and protection works. (Source: Bursa Malaysia)

Kulim: Malay chamber prepared to buy over Kulim. The Malay Chamber of Commerce Malaysia (DPMM) says it is prepared to buy over Kulim (M) Bhd to keep the company's Bumiputera ownership. (Source: Business Times)

Autos: February vehicle sales flat. Total vehicle sales were flat last month, slipping a marginal 0.66% to 40,387 units from 40,654 units in the previous corresponding period. It is attributable to seasonal trends and a shorter working month. (Source: The Star)

Tech: Mclean gets nod to list on ACE market. Singapore-based Mclean Technologies Bhd, a precision cleaning and plastic injection moulding service provider, has received the nod to float its shares on the ACE market this year. (Source: The Sun)

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Maybank IB Views

Petronas Chemicals Group Berhad :

Samuel Lee has upgraded his PT on Petronas Chemicals Group (PCG) to RM7.80 from RM6.80 previously. PCG is his top pick in the region and he continues to like the company for its earnings outlook especially in the high crude oil price environment. PCG is also one of the few petrochemical companies with volume expansion in 2011.

He has raised his earnings by 18% and 28% for FY11E and FY12E to reflect:
1) Higher PX and MEG spreads expected in 2011 due to higher cotton prices;
2) Higher Fertiliser & Methanol product prices on the back of stronger fertiliser demand and positive agricultural sector outlook;
3) Higher Naphtha price assumption which will lift product prices and spreads; and
4) Accelerating associate Income growth mainly from its 40% owned BASF/Petronas JV.

Further upside risk to our FY10-12 EPS CAGR of 20% is likely given :
1) our current PX-Naphtha spread assumption which remains below the YTD average of $700/ton;
2) higher utilisation as the company is targeting 90% consolidated operating rate vs 81.3% achieved during 9MFY11;
3) higher volumes if production at its Methanol 1 plant is ramped up faster than expected

JPM's Dec 2012 PT of RM7.80 is based on 2.5X FY12E P/B, which is at a 10% premium to regional peers.
Plantation :

Just to highlight that the Bursa Palm Oil Conference will held in KL for the next two days (8th-9th March). As with previous years, I expect CPO prices to be relatively firm as the market watches out for guidance from industry experts such Dorab Mistry, James Fry and Thomas Mielke.

Just to remind you of our view on CPO. We are positive on CPO prices in the 1H11 with CPO prices expected to peak in the 1Q11. We are cautious on outlook in the 2H11 given expectations of a production pick up and weakening CPO prices as a result. CPO price discount to soy-oil has widened to US$100/t from US$20/t in Jan-11 vs historical mean discount of US$160/t. Our CPO forecast for 2011E is RM3,400/t and for 2012E is RM3,200/t.

Our only OW call in the sector is Sime Darby Our positive view on SIME is NOT driven by stronger CPO prices BUT because of :
1) very low hanging fruits in the plantation division;
2) extremely low expectations by investors. Therefore, if they are able to meet consensus forecasts, analysts will need to upgrade their estimates;
3) oil and gas is no longer a drag after the provision;
4) it is at quite a sweet spot. Besides plantation, each of its other business segments including motor, heavy equipment and property are expected to perform better.

JPM's PT of RM11.00 offers an upside of 20%.

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Maybank IB Views

MARKET COMMENTS
Special Feature
Sarawak goes to the polls

Opportunity to accumulate. The Sarawak state assembly will dissolve today, paving the way for the 10th state elections. Share prices of Sarawak stocks had historically corrected after the dissolution of the state assembly post a short run-up, but this time around, share prices of most stocks have been down, affected by the external uncertainties. Any further weakness is an opportunity to accumulate the Sarawak construction stocks which are expected to see some major awards in the next few weeks. Hock Seng Lee (Buy; TP: RM2.30) is our pick.

Market Focus
Japan's disaster: Assessing the impact

Yen stabilises. G-7's agreed intervention in selling the Yen has bought back stabilisation, resulting in the currency pulling back to close at 80.58 per USD last Friday against a high of 76.25. The Yen, which rose a high 7.3% post the 11 March earthquake and tsunami at north-east Japan but prior to the G-7 agreed intervention, closed just 1.5% up since the disaster and after the agreed currency intervention. The earlier Yen climb was in anticipation of overseas money repatriation to Japan for rebuilding efforts. A stable Yen would limit the damage on Japanese exporters' earnings once factories restart.

SECTOR UPDATE
Banking: Overweight
Nipping the CC problem in the bud

System credit card (CC) risk manageable. System CC risks remain manageable at this point in time, and we see little impact to the local banks. Nevertheless, with high household debt, the threat of inflation negatively impacting disposable income levels, as well as signs of CC loan growth momentum beginning to outpace overall industry loan growth, BNM's vigilance and speed in nipping this issue in the bud is highly commendable. No change to our earnings forecasts and calls.

Technicals
The FBM KLCI rose 8.27-points and closed at 1,503.89 last week. The weaker support areas for the FBM KLCI are located in the 1,474 to 1,500-zone. The very firm resistance zone of 1,503 and 1,576 will see heavy liquidation activities.

Trading idea for today is a TAKE PROFIT call on TENAGA.

Other Local News
TM: Hopes to launch mobile voice services by year-end. Telekom Malaysia Bhd (TM) hopes to launch its mobile voice services by the end of this year. The company signed a memorandum of understanding with Celcom Axiata Bhd recently. Both companies will look into the collaborations in several areas, which include the possibility of TM becoming an MVNO (mobile virtual network operator) via Celcom's network. (Source: Business Times)

UEM Land: RM6b invested in Nusajaya. A total of RM6.2b in new investments from local and foreign investors have been received for development projects in the eight catalyst developments (except EduCity components) in Nusajaya. The investments included RM500m from Biocon Ltd, India to invest at SiLC (Southern Industrial and Logistics Clusters), RM2.3b Canal Homes at Puteri Harbour by Bandaraya Development Bhd and RM500m by Pantai Group for the Gleneagles Hospital at Medini. (Source: The Star)

Scomi Engineering: Likely to bag Brazillian monorail job. Scomi Engineering Bhd and its Brazilian consortium partners are likely to bag a USD782 m (RM2.4b) monorail job in Manaus, Brazil. (Source: The Edge Financial Weekly)

Rubber glove: Rubber price expected to be influenced by Thai decision. Malaysian rubber prices are expected to be influenced by the outcome of Thailand's national rubber committee meeting this week. The meeting would discuss whether to ask other major producers, Malaysia and Indonesia, to join the move to prevent a further drop in prices. (Source: The Star)

Plantation: EU not supporting NGOs against palm oil. The European Union is not using environmental non-government organisations as a "fifth column" to help it achieve its Renewable Energy Directive (RED) which places palm oil for biofuel at a disadvantage. RED is a result of a legislative decision between the council and parliament. RED is advancing sustainability in palm oil especially biofuel but it is not restricted to palm oil only. (Source: Business Times)

Aviation: Airport Operator interested in getting AirAsia X to fly to Munich. Munich Airport is interested to get AirAsia X to fly to Munich. (Source: Bernama.com)

Property: IRDK in reverse takeover talks. IRDK Group, a property development and construction outfit, says it is in talks with several listed property developers and manufacturing firms here for a reverse takeover. It expects a deal to materialise within the next 12 months to 18 months. (Source: Business Times)

Read more...

Maybank Invest Recommended Share Counter

1. Top Glove Corporation Berhad (TOPGLOV)
Since its inception in Malaysia in 1991, it has embarked on an impressive expansion plan to become the world’s largest rubber glove manufacturer.

2. Adventa Berhad (ADVENTA)
ADVENTA is principally involved in the manufacture and distribution of medical products and devices for the healthcare industry.

Since the Japanese earthquake, tsunami and nuclear plant woes, the demand for rubber had fallen. Thus rubber prices had also plunged. This would benefit the rubber glove manufacturers (rather than nitrile glove players like Hartalega). In this sense, these 2 rubber gloves stocks would benefit due to the lower rubber prices. Need for health-care products like gloves had risen since the Japan tsunami of 11 March 2011. Therefore, we strongly advocate some investment interest in this neglected sector for now.

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RHB Invest Research

YTL Power: New WiMAX pricing competitive; high dividends in doubt
Market Perform

Company Update

Our initial impressions on the Buzz are less than favourable mainly due to: 1) smaller-than-average screen size; 2) lack of applications; 3) keypad being too small; and 4) a not-so-friendly user interface. We welcome the news that YTL Comms plans to launch Android smartphones in Jun, given their rising popularity.



MCIL: A Closer Look Into MCIL’s Non-Malaysian Business Outperform

Company Update

MCIL became a global Chinese language media group with operations spanning from Southeast Asia, Greater China as well as in North America following the merger of Sin Chew, Nanyang and Ming Pao in 1H07. Based on the 9MFY11 results, the non-Malaysian operations accounted for 39% of group’s revenue and 17% of group’s PBT.



Sector Call



Banking: BNM tightens eligibility requirements for credit cards Overweight

Sector Update



BNM announced last Friday a revision to the eligibility requirements for credit cards. Effective immediately: 1) The minimum income requirement for new credit card holders is set at RM24,000 p.a. (previously RM18,000 p.a.); and 2) For cardholders earning less than RM36,000 p.a.: a) Cardholders can now only hold credit cards from a maximum of two issuers. Cardholders with cards from more than two issuers will need to decide by end-2011 their preferred issuers and will be given at least two years to service their outstanding credit card debt for the cards that are cancelled; and b) Maximum credit limit per issuer must not exceed two times the customer’s monthly salary. Affected customers are given a two-year grace period to meet the new requirements.

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RHBInvest Research

Property:

Sector Update
Fundamentals intact despite weak market sentiment
We lower our fair value on Glomac and YNH. As for KSL, the stock is still largely undervalued.
We maintain our Overweight rating on the sector. Our top pick is Mah Sing.



Corporate Highlights



UMW Holdings:

Company Update
UMW Secures NAGA-3 Contract
We reiterate our Market Perform recommendation and fair value of RM7.85



SP Setia:

Results Note
As good as expected
Maintain our Outperform call with an unchanged fair value of RM7.30



Kencana Petroleum:

Results Note
Earnings Mainly Bumped Up By KM-1
We maintain our fair value at RM2.85/share and our Market Perform call on the stock.

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RHB Research remains positive on property sector but sees volatile market ahead

KUALA LUMPUR: RHB Research said while it remains positive on the sector, it is not bullish particularly in the coming 2Q11 considering the volatile market ahead.

It said on Friday, March 18 the property sector is known for its cyclical and high beta nature, and it is not a heavy weight component in the FBM KLCI.

“For sector exposure, low beta property stocks are preferred, such as Paramount and Mah Sing. REITs also could turn in favour due to their defensive yields,” it said.

RHB Research said it was appropriate for investors to go for selective high beta stocks only if there is a strong project flow.

“In 2H11, key events to watch out for is the results for the tenders by developers for the Rubber Research Institute land, MRT’s “rail plus property” that Prasarana will develop with JV partners, and the official award of the development of land parcels in Singapore,” it said.

The research house said the biggest beneficiaries include MRCB, Ekovest (for river cleaning project) and UEM Land.

The key surprise will be the JV winners in particular for the RRI land, which we think are likely to be the GLC-linked reputable developers. The best bets are SP Setia, IJM Land and Mah Sing.

“We believe the M&A catalyst for the sector still exists. Speculation will be centered on “who is next” to merge with MRCB, after the deal to merge with IJM Land lapsed.

“Similar to ULHB/Sunrise (a property arm of Khazanah), MRCB is the “so-called” CONSTRUCTION []/property arm of EPF, but MRCB is lagging behind in its property development and brand name. In addition, by merging with a reputable developer, its valuations are expected to normalise to a reasonable level in hopes of better fundamental grounds,” it said

RHB Research believed catalysts for the small cap property stocks are limited after a short rally in early 2011.

It lowered its fair value on Glomac and YNH. As for KSL, the stock is still largely undervalued (at 60% discount to RNAV) considering that it has just received its approval for its Bandar Bestari township project in Klang.

“Overall, as we are keeping our calls on big cap stocks, we maintain our Overweight rating on the sector. Our top pick is Mah Sing,” it said.

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RHBInvest Research

IPO: APFT RM0.50
Top Gun made in Malaysia

Riding on positive industry outlook. Asia Pacific Flight Training Berhad (APFT) is the only stock with exposure to aviation training and it will list on the Bursa main market today. APFT will benefit from the growth plans of MAS, AirAsia and Firefly as these airlines will require more trained aviation professionals. Its IPO price of RM0.50 is attractive with a historical PER of 8.9x and 20-30% p.a. expected earnings growth for the next 2-3 years.


UMW Holdings RM7.17: Hold
PCSB charters Naga 3 rig Shariah-compliant

Priced in, maintain Hold. We expect the Naga 3 rig charter to contribute about 2% to UMW's net profit in 2012. We retain our earnings forecasts as we have built in this new charter into our model. Auto will continue to drive Group earnings in 2011 but the upside is limited. We remain cautious on UMW's O&G turnaround (i.e. WSP, Naga 2), a market contrarian, with minimal catalysts to excite in 1H. Our RM7.20 target price is unchanged, based on 12x 2011 EPS.


RESULTS REVIEW
S P Setia RM6.07: Buy
On track as strong sales continue Shariah-compliant

Maintain Buy. 1QFY11 normalised net profit of RM62m (+13% QoQ, +62% YoY) came in within expectations. Sales momentum remained strong with RM953m recorded in 4MFY11 (32% of SPSB’s RM3b FY11 sales target), lifting unbilled sales to RM2.1b (or 1.1x of our forecast). 2011 focus will be on its flagship RM6b KL Eco City (KLEC) project. We raise earnings by 2-4% and RNAV by 5 sen. Target price is raised to RM7.20 (+5 sen). SPSB is our top pick for the property sector.


Kencana Petroleum RM2.54: Buy
On track Shariah-compliant

We remain Buyers of Kencana. Interim results are tracking expectations. We foresee the momentum of contract flows picking up in 2HFY11 and strengthening into FY12 as PETRONAS' capex programs intensify. We do not rule out potential strategic partnership(s) should Kencana aim to participate in domestic deepwater development. We value Kencana at RM3.10, based on 20x CY12 EPS. Our 20x target is validated in a capex-fueled, order book-driven upcycle.


Technicals
The FBM KLCI closed lower by 0.35 points yesterday, almost unchanged at 1,492.09. Its resistance areas of 1,492 and 1,515 will cap market gains, whilst the weak support areas are located at 1,474 and 1,488. We expect the index to remain in a minor rebound mode in the short term and to be bearish in the medium term.

Trading Idea for today is a Take Profit call on AXIATA


Other Local News
Parkson: May foray into Indonesia. Parkson Holdings Bhd is teaming up with PT Tozy Bintang Sentosa (TBS) to expand its Parkson department stores in Indonesia. The TBS Group operates six retail stores under the brand names of Centro Lifestyle Department Store and Kem Chicks in Indonesia and it planned to add another two more stores. The eight stores were expected to generate more than USD100m in sales turnover in 2011. (Source: The Edge Daily)

Market: Capital market crosses RM2t. Securities Commission chairman Tan Sri Zarinah Anwar said Malaysia's capital market corssed the RM2t threshold for the first time ever as at end-2010, achieved an annual compounded growth rate of 11% from RM717b in 2000. (Soure: The Star)

Property: EPF buys 3rd London property for GBP148m. It marks the EPF's third property investment there since announcing an allocation of GBP1b for British property purchases. EPF's other 2 propery purchases are One Sheldon Square in Paddington Central, which was bought for GBP156m, and 40 Portman Square near Oxford Street which was acquired for GBP180m. The 2 properties have yields of 5.75% and 5.55% respectively. (Source: The Star)

Smelting: OMH plans Sarawak smelter. Austrialia-listed OM Holdings Ltd (OMH) plans to set up a manganese and ferro silicon alloy smelter under the Sarawak Corridor of Renewable Energy (SCORE) initiative, expected to be ready in 3Q 2011. The smelter facility is expected to have the capability to produce 300,000 tonnes of manganese ferro alloys and 300,000 tonnes of ferro silicon alloys a year. (Source: The Star)

Faber: Plans RM272m capital reduction. Faber Group Bhd will undertake a capital reduction to clean up its balance sheet, as part of a plan that will allow greater flexibility for the company to determine future cash dividend payouts. Faber will cancel 75sen of its current par value of RM1 a share. (Source: Bursa Malaysia)

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Maybank IB Views

Top Glove Corporation RM5.28: Hold
Assessing latex cost direction Shariah-compliant

Results below expectations. 1HFY11 net profit of RM62m (-54% YoY) made up 37% of our full-year forecast and 32% of market's. Share price rose 11% since our upgrade to Hold (from Sell) on 8th Mar, largely fuelled by sentiment on tumbling latex cost (-18% in 1-week). Our rating, TP and forecasts are under review as we assess the sustainability of low latex cost and sales recovery. Market is currently valuing Top Glove at 15x CY12 PER, above its 5-year historical average of 13.5x.


Technicals
The FBM KLCI rose 8.30 points yesterday to close at 1,492.44. Its resistance areas of 1,492 and 1,515 will cap market gains, whilst the very weak support areas are located at 1,474 and 1,490. Due to the DJIA’s very bearish tone last night, we will see the FBM KLCI in a weaker mode today, with persistent selling activities on rallies. As the market re-visited 1,474 recently, the FBM KLCI index traced out a nasty Head & Shoulders topping pattern.

Trading idea for today is a Take Profit call on MISC.


Other Local News
E&U: Bakun dam to generate power in July. The Bakun hydroelectric dam is expected to commercially produce 300MW of electricity in July. (Source: The Edge Financial Daily)

TMC: Ties up with Indon bank. TMC Life Sciences Bhd's unit Tropicana Medical Centre (M) Sdn Bhd (TMC) signed a Memorandum of Understanding (MoU) with Indonesia's Bank Riau Kepri to establish a credit card privilege discount programme. TMC is confident of achieving its 60% growth target this year through various marketing and strategic collaborative efforts with local and regional partners. (Source: The Edge Financial Daily)

Pharmaniaga: Secures concession. Pharmaniaga Bhd's wholly owned subsidiary Pharmaniaga Logistics Sdn Bhd has entered into a 10-years concession agreement with the Government for the right and authority to purchase, store, supply and distribute approved products to public sector customers. (Source: Bursa Malaysia)

SEGi: Hii ups stake to 32.2%, named to lead ECCE project. SEG International Bhd's (SEGi) group MD director Datuk Clement Hii Chii Kok has upped his stake further in the education group to 32.2%. Meanwhile, Rextar Capital Sdn Bhd ceased to be a substantial shareholder after disposing of 10.8m shares. Separately, SEGi has been appointed by the Government to lead the development of integrated early child care education under the National Key Economic Area. (Source: The Edge Financial Daily, The Star)

Aviation: Premium air travel to go down this month. The Japanese disaster will reduce premium air travel in March as it makes up 6% to 7% of the global market, the International Air Transport Association (IATA) said. It added that unrest in the Middle East and the Japanese disaster would likely hit February and March figures. (Source: The Star)
Outside Malaysia
U.S: Home construction slumps in February. Home construction dropped 23% to a 479,000 annual rate, while building permits slumped last month to a record low, Commerce Department figures showed. (Source: Bloomberg)

U.S: Producer prices in February rise more than forecast, led by food, oil. The producer-price index climbed 1.6% MoM from the prior month, the most since June 2009. The so-called core measure, which excludes volatile food and energy costs increased 0.2% MoM, matching forecasts. (Source: Bloomberg)

U.S: Mortgage applications fell last week on fewer purchases as a decline in borrowing costs failed to spur home buying. The Mortgage Bankers Association's index of loan applications declined 0.7% in the week ended March 11. The group's purchase index fell 4%, while a measure of refinancing climbed 0.9%.The prospect of further declines in home prices and more foreclosures in coming months may be prompting Americans to refrain from purchases. (Source: Bloomberg)

E.U: February inflation quickens, adding pressure on ECB. Inflation in the 17-nation euro region quickened to 2.4% YoY from 2.3% YoY in January. That's the fastest since October 2008 and exceeded the ECB's 2% limit for a third month. (Source: Bloomberg)

U.K: Jobless claims unexpectedly fall most in eight months in February. Jobless benefit claims dropped 10,200 from January to 1.45 million, the lowest since February 2009. Unemployment based on International Labour Organization methods rose by 27,000 in the three months through January to 2.53 million, the highest since 1994. (Source: Bloomberg)

China: Leading economic index rebounded in January, easing concerns that the government's campaign to curb inflation and asset bubbles may lead to a sudden slowdown in the world's second-biggest economy. The index rose 0.3% to 155 in January from the previous month. The indicator, designed to capture prospects over the coming six months, recorded the first decline since 2008 in December. (Source: Bloomberg)

Japan: Manufacturers were pessimistic in 2Q11 before quake struck. Sentiment among manufacturers with more than JPY 1b (USD 12m) in capital was minus 3.2 points this quarter compared with minus 8 three months ago. The survey was conducted before the nation's biggest earthquake on March 11, and a negative number means pessimists outnumber optimists. (Source: Bloomberg)

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RHBInvest Research

APM Automotive:

Visit Note

¨ Near Term Headwinds To Cap Share Price

¨ We are downgrading our call to Market Perform (from Outperform) and trim our fair value to RM5.50 (from RM6.10).



Sector Call



Rubber Glove: Improvement In Sentiment On The Back Of Falling Latex Prices

Sector Update

Top Glove Market Perform (FV: RM5.38)

Kossan Outperform (FV= RM5.12)

Adventa Outperform (FV=RM3.63)

Hartalega Market Perform (FV=RM6.14)



¨ Maintain neutral stance on the sector. Kossan remains our top pick thanks to its cheap valuation and for its well-regarded management.



Corporate Highlights



Top Glove:

Results Note

¨ Margin Boost From Latex Price Could Lift 2HFY11 Earnings

¨ Our fair value has been raised to RM5.38 (from RM4.10) and as such, we upgrade our call on the stock to Market Perform from Underperform.

Read more...

Maybank IB Views

COMPANY UPDATE
Petronas Chemicals RM6.59: Buy
Optimistic amid external turmoil Shariah-compliant

Truly OPTIMAL. We visited Petronas Chemicals Group's 88% owned OPTIMAL Olefins production plant at Kerteh (Terengganu) on 10 March, and returned impressed with its state-of-the-art facilities. This production plant makes up roughly 6% of PCHEM's total capacity. There is no change to our earnings forecast and target price of RM8.00 based on 14.4x 2011 - which is the long-term industry mean PER.

SECTOR UPDATE
Construction: Overweight
Tracking the rail connection

MRT-LRT progresses, positive domestic catalyst. The start of pre-qualification (pre-Q) for the Sg Buloh-Kajang MRT elevated works, and tender for the LRT Package B, are positive developments for the market, amid a very weak external environment. That the MRT pre-Q is being called while public feedback on the track alignment is ongoing (it ends in mid-May) implies that the government remains committed to kick-start construction the soonest. We continue to Overweight Construction, which offers a domestic focus amid external turmoil.


Technicals
The FBM KLCI plunged 11.21 points yesterday to close at 1,484.14. Market breadth was quite negative, as the gainer-to-loser ratio was 126 to 812 while 160 counters were unchanged. Its resistance areas of 1,484 and 1,515 will cap market gains, whilst the weaker support areas are located at 1,445 and 1,474. Due to the DJIA’s bearish and the Nikkei’s very poor tone last night, we will see the FBM KLCI in a much weaker mode today, with persistent selling activities on rallies.

Trading Idea for today is a Take Profit call on CIMB

Other Local News
Axiata: Celcom's new deal to cut site cost by half. Celcom Axiata Bhd signed a contract with Ericscon and Huawei worth USD1m (RM3.1m) that will lead to savings in its site cost by half. (Source: The Edge Financial Daily)

KYM: Eyes RM500m GDV for Teluk Batik land. KYM Holdings Bhd's plans to take full control of its subsidiary Harta Makmur Sdn Bhd would steer the latter towards commercial and housing development in Teluk Batik, Perak, with an estimated gross development value of RM500m. (Source: The Edge Financial Daily)

Faber: Bullish on renewal of contracts. Faber Group Bhd is positive that its 15-year concession for government hospital support services, which expires in October, will soon be renewed for another 15 years based on the group's experience and track record. (Source: The Edge Financial Daily)

Handal Res: To diversify into rig building. Handal Resources Bhd, an offshore crane manufacturing and service provider, wants to diversify into the construction of rigs for marginal oil fields. The rights and bonus issue approved by shareholders will provide funds to finance the RM30m investments. (Source: Business Times)

Telco: U Mobile ropes in ZTE Corp to extend network. U Mobile Sdn Bhd and ZTE Corp of China signed an agreement which would see the local 3G mobile service operator extending its 42 Mbps network in Klang Valley, Negeri Sembilan and the northern region by 2H11. The three year deal also provides for the installation of LTE platforms in line with the plan to bring 100 Mbps wireless network across key cities in Malaysia. (Source: The Edge Financial Daily)

Autos: Honda Malaysia expects no immediate interruption in supply of cars. Honda Malaysia Sdn Bhd sees no immediate interruption in the supply of its models in Malaysia from the earthquake and tsunami that hit Japan last week. The inventory for the four complete knock-down models of Accord, CR-V, Civic and City and other four completely built-up models in Malaysia was sufficient for the next one to two months. (Source: Bernama.com)

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RHBInvest Research

Top Story: Faber

Briefing Note

Moving Along Into 2011
Currently, the company has unbilled sales of RM140.8m and is on track to launch two property projects with an estimated GDV of RM509m.

No change to our earnings projections.

Our fair value remained unchanged at RM2.22 and we reiterate our Market Perform call on the stock.



Sector Call



Telecommunications:

Sector Update

Yes’ new pricing unlikely to disrupt market
Our top pick is DiGi, for decent earnings growth (mid-teens) and high dividend yield (c.6%).

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Maybank IB Views

SECTOR UPDATE
Oil & Gas: Overweight
East Coast Spotlight; WSC raised to Buy

5 companies, 2 states, 1 objective. We visited 5 oil & gas and chemical companies based in Terengganu and Pahang last week to track their respective development and progress. We covered Petronas Gas, Petronas Chemicals and Eastern Pacific Industrial Corp (EPIC) in Kerteh and Kemaman (both in Terengganu) and visited Wah Seong and KNM's operations in Gebeng (in Pahang). Wah Seong is now a Buy on improving prospects for its pipe coating operations.

Technicals
The FBM KLCI fell 0.27 points yesterday to close at 1,495.35. Its resistance areas of 1,495 and 1,529 will cap market gains, whilst the obvious support areas are located at 1,474 and 1,493.

Trading idea for today is a Buy call on MEDIAC.

Other Local News
SP Setia: More medium-cost apartments in Setia Alam. SP Setia Bhd plans to launch at least another 300 units of medium cost apartments in its Setia Alam township in the near future to benefit from the government's "My First Home Scheme". (Source: The Edge Financial Daily)

TM: Unit gets a further 10-year concession deal on Menara KL. Telekom Malaysia Bhd's (TM) subsidiary Menara Kuala Lumpur Sdn Bhd (MKLSB) has signed a 10-year concession agreement worth RM50m with the Government. (Source: Bursa Malaysia)

TDM: To build private specialist hospital in Kuantan. Terengganu Development Management (TDM) Bhd will build a RM120m private specialist hospital in Kuantan. The construction is expected to be completed by next year. (Source: The Edge Financial Daily)

Cocoaland: Buys Rawang land. Cocoaland Holdings Bhd is acquiring two pieces of industrial land in Rawang for RM7.85m from Riviera Properties Sdn Bhd. The lands are acquired for the construction of a factory and warehouse. (Source: Bursa Malaysia)

George Kent: To invest up to RM100m to expand ops. George Kent (M) Bhd plans to invest up to RM100m in the next three to four years to expand its meter and original equipment manufacturing (OEM) businesses. (Source: The Star)

APFT: Public subscription over subscribed. APFT Bhd's 15m shares allocated for public subscription has been oversubscribed by 12x. The company will be listed on the Main Market of Bursa Malaysia on March 18. (Source: The Star)

Benalec: Gets Melaka reclamation works. Benalec Holdings Bhd has entered into an agreement with Yayasan DMDI (DMDI) to undertake reclamation works at the coast of Kawasan Kota Laksamana in Bandar Melaka. (Source: Bursa Malaysia)

Property: Axis Global REIT IPO priced at RM1-RM1.05. The IPO of Malaysia's Axis Global Industrial REIT has set an indicative price range of RM1-RM1.05 a unit. The share base of about 2b units prices the IPO between RM2b-2.1b, will make it the second largest REIT in Malaysia after Sunway REIT's RM2.4b IPO last year. (Source: The Edge Financial Daily)

Plantation: Only 10 biodiesel plants operating. The government has issued 60 biodiesel manufacturing licences as at end-February 2011 but only less than one fifth has started production. This is due to the lack of demand for biodiesel exports and high palm oil prices in the 2H10. (Source: Business Times)

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Surge in timber demand seen post-Japan quake

But quantum of demand hard to determine

PETALING JAYA: Timber companies will benefit from the surge in demand from Japan as post-construction activities in the country take place following the devastating earthquake and tsunami that occurred there.

However, the quantum of demand from the surge for timber products is hard to quantify at the moment.

Malaysia is already the largest exporter of timber to Japan and imported timber products like plywood easily make up more than half of timber consumption in the country, according to analysts.

In a timber sector update yesterday, RHB Research said Malaysian companies were likely to benefit; specifically WTK Holdings Bhd and Ta Ann Holdings Bhd given their focus on the Japan market which constituted 80% to 90% of their timber product sales.

WTK and Ta Ann stocks yesterday ended the day's trading at RM1.33 and RM4.84 respectively, up 7 sen and 8 sen each. Earlier in the day, WTK had reached RM1.37 while WTK was up to RM4.96.

“The disaster in Japan has pushed the timber sector into the spotlight and put it on the radar of investors,” RHB said.

This could lead to a potential re-rating of the sector, the research house which has an overweight stance on the sector said yesterday.

Although it is still too preliminary to assess the impact of Japan's earthquake and tsunami on the timber sector, as an estimate, RHB said that for every US$10 per cu m increase in its timber product selling price assumptions, the earnings forecast for companies under its coverage would increase by 5% to 12%.

Meanwhile, AmResearch, in its update on the sector, said after contacting local timber players, they indicated that they did not expect a sudden and significant jump in timber exports towards the reconstruction process.

One timber player ruled out a “30%-40% jump in exports” to Japan, AmResearch wrote, but said the company expected a probable steady rise in demand from Japan to help in the reconstruction process.

The research house, quoting reports, said Japan imported nearly 1.15 million cu m of panel products worth RM1.7bil, representing almost half of Sarawak's total exports of 2.5 million cu m (RM3.43bil) for the 11 months until November last year.

That translated to an average selling price of RM442 per cu m.

In its report on the impact of Japan's earthquake, Credit Suisse said yesterday investors might benefit from selecting sectors such as construction materials where reconstruction demand can be expected over the near term.

In its note to clients on the impact of Japan's calamities, OSK Research said the timber and steel sectors could be winners.

Timber in particular could see heightened demand given that many Japanese houses are constructed with the use of significant hardwood timber and Malaysia is still the world's largest exporter of hardwood timber, according to OSK.

Analysts said risks to the demand would be price discounting from neighbouring countries with lower costs of production which would then result in lower exports from Malaysia.

source: thestar

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Tsunami hits global equity markets

PETALING JAYA: A severe earthquake and tsunami that hit Japan late yesterday afternoon was the latest shock to send tremors throughout global equity markets, a day after many of them reeled from a sell off on Thursday.

Asian markets, which were lower throughout the day on concerns of political unrest in the Middle East, reacted to Japan’s 8.9 magnitude earthquake in the last hours of trading, accelerating losses.

Meanwhile, equity markets in Europe opened in the red, as the world now waits to assess the damage Japan’s earthquake would have on the global economy and markets.

Global equity markets will remain volatile next week, as the latest incident adds to a series of incidents that will continue to spook investors, which included the political unrest in the Middle East and the resurfacing of euro-zone fiscal woes.

As at press time, a tsunami alert had been issued for New Zealand, the Philippines, Indonesia, Papua New Guinea and Hawaii.

Japan’s Nikkei 225 index closed lower by 1.72% yesterday, hitting a five-week low. Macquarie Group Ltd said in a research report issued yesterday that “inevitably there will be microeconomic disruptions” although the impact would be lower than that of the last major earthquake, Kobe, that hit Japan in 1995. Japanese stocks fell 8% in the week after that quake.

“Despite the scale of the disaster (yesterday), it is hard to find much evidence in the macroeconomic data of the effects of the Kobe earthquake. Industrial production dipped 2.6% month-on-month in January 1995 and then bounced 2.2% in February and a further 1% in March. Gross domestic product growth was 3.4% quarter-on-quarter annualised in first quarter of 1995,” the report said.

Macquarie added that the Japanese currency did not move significantly at the time, although it rose in subsequent months to a peak of just past ¥80 per US dollar in mid-April, but this did not seem to be related to the Kobe earthquake (there was significant trade tension with the US at the time).

“Significant yen repatriation that could push the currency higher and, at an extreme, disrupt global markets, looks unlikely,” it said.

The yen appreciated against all 16 of its most actively traded peers yesterday, with it trading at ¥82.23 per US dollar against its previous close of ¥82.98.

Other regional bourses also extended losses yesterday, with the South Korea’s Kopsi losing 1.31% to 1,955.54 points, Singapore’s STI down 1.04% to 3,043.49 points and Hong Kong’s Hang Seng Index shedding 1.55% to 23,249.78.

US stocks were also expected to extend their losses as US stock-index futures fell.

Crude oil futures for April traded on the New York Mercantile Exchange saw its prices fall below US$100 per barrel for the first time since early this month as the earthquake forced refiners to shutdown processing plants in Japan.

Meanwhile, the benchmark FTSE Bursa Malaysia KLCI fell 1.40% yesterday, its largest single day fall in over two weeks, driven by heavy selling in selected banking, plantation and telecommunication stocks.

The local benchmark index lost 21.29 points to end at 1,495.62 points yesterday, with losers crushing gainers at 678 to 118 and some 207 stocks remaining unchanged. Turnover was 1.02 billion shares done valued at RM1.85bil. The index hit an intraday low of 1,494.13 points.

Analysts said the sentiment on the local and regional bourses were reflective of the sell down in US equities on Thursday.

Among the banking stocks that were heavily traded yesterday include CIMB Group Holdings Bhd, which shed 6 sen to RM7.98, Malayan Banking Bhd lost 9 sen to RM8.71 and AMMB Holdings Bhd fell 10 sen to RM6.36.

IOI Corp Bhd, Sime Darby Bhd, Axiata Group Bhd, Maxis Bhd and Telekom Malaysia Bhd saw large volumes change hands yesterday. Petronas Chemicals Group Bhd, which fell 16 sen to RM6.56 with 27.2 million stocks traded, also dragged down the index.

source: thestar

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Maybank IB Views

Other Local News
KL Kepong: Drops plans to issue RM912m bonds. Kuala Lumpur Kepong Berhad (KLK) has dropped plans to issue USD300m (RM912m) bonds based on the company's current financial condition. KLK feels it no longer requires the planned RM912m, five-year unsecured guaranteed exchangeable bonds with an over-allotment option to increase the issue by RM304m. (Source: Bursa Malaysia)

Alam Maritim: Unit bags RM11m deal. Alam Maritim Resources Berhad's unit has accepted an extension of a spot charter contract to supply one straight supply vessel for RM10.9m. The one-year contract will contribute positively to its financial year ending December 31.(Source: Bursa Malaysia)

Hong Leong Bank: Gets nod for RM912m bonds. Hong Leong Bank Berhad has been given approval by the Securities Commission to issue up to USD300m (RM912m) Senior Unsecured Bonds. The proceeds from the bond issuance will be used for working capital and general banking purposes. (Source: Bursa Malaysia)

Ahmad Zaki Resources: Wins RM145m job. Ahmad Zaki Resources Berhad has won a RM145.4m job to complete the remaining works of Lebuhraya Pantai Timur, Phase 2, in Terengganu. The job is expected to contribute positively to AZRB Group's earnings and the net tangible assets for the financial years ending 2011 to 2012 (Source: Bursa Malaysia)

BLand Berhad: To sell BVC India for RM15m. Berjaya Land Berhad is disposing of its 100% stake in Berjaya Vacation Club India Pte Ltd (BVC India) for RM15.1m cash. The proposed disposal would result in an exceptional gain of about RM11.1m for the current financial year ending April 30, Bland said, adding that the cash proceeds of RM15.1m would be used by the group for working capital (Source: Bursa Malaysia)

MAS: Hedge down on unclear economy. Malaysia Airlines drastically reduced its fuel hedging levels this year to 25% from 60% last year due to uncertainty in the economic recovery and higher fuel hedging entry cost. Malaysia Airlines fuel hedge levels are said to be in line with its benchmarked peers, with current hedge levels ranging from 17% to 35%. (Source: The Star)

Outside Malaysia

U.S: 4Q10 household worth rises by USD 2.1tr, Fed says as share prices rose and families rebuilt finances tattered by the recession. Net worth for households and non-profit groups increased at a 16.6% annual pace to USD 56.8tr after rising at a 9.1% rate in the previous three months. American households also cut debt for an 11th consecutive quarter. (Source: Bloomberg)

U.S: Jobless claims rose by 26,000 last week to 397,000, highlighting the uneven nature of the improvement in the U.S. labor market. The total number of people receiving benefits in the prior week fell to the lowest since October 2008. (Source: Bloomberg)

U.S: Trade deficit widened more than forecast in January as a surge in imports led by costlier crude oil overshadowed record exports. The gap in goods and services increased 15% MoM to USD 46.3b, from USD 40.3b in December. Imports jumped 5.2% MoM, the most since March 1993, while exports grew 2.7% MoM. (Source: Bloomberg)

U.K: BOE keeps stimulus as recovery concerns outweigh inflation. The Monetary Policy Committee, led by Governor Mervyn King, set the key rate at 0.5% for a 25th month. They also left their bond program at GBP 200b (USD 324b. (Source: Bloomberg)

U.K: Manufacturing production jumped in January by the most in 10 months, a sign the economy is resuming growth after a winter freeze dented the recovery. Factory output rose 1% MoM from December, when it shrank 0.1% MoM. The index of manufacturing rose to 92.9, the highest since October 2008. (Source: Bloomberg)

Spain: Government bond ratings were downgraded by Moody's Investors Service by one notch to Aa2 from Aa1. The outlook on the Aa2 ratings is negative, Moody's said. The main triggers for the downgrade include Moody's expectation that "the eventual cost of bank restructuring will exceed the government's current assumptions, leading to a further increase in the public debt ratio. (Source: Bloomberg)

China: Reported an unexpected USD7.3b trade deficit, the biggest in seven years, buttressing the government's case against U.S. arguments for faster gains in the Yuan. Exports rose 2.4% YoY in February, the least since 2009 as Lunar New Year holidays disrupted shipments, and imports climbed 19.4% YoY, customs bureau data showed. (Source: Bloomberg)

Japan: Economy contracted more than the government initially estimated in the fourth quarter because of a downward revision to capital investment and consumer spending. GDP shrank at an annualized 1.3% rate in the three months ended Dec. 31, more than the 1.1% contraction reported last month, the Cabinet Office said. (Source: Bloomberg)

India: Exports rose at a faster pace last month, figures released by trade secretary Rahul Khullar showed, supporting economic growth and providing scope for the central bank to raise interest rates. Merchandise shipments surged 49.8% YoY to USD23.6b in February, Khullar, secretary in the Ministry of Commerce, told reporters in New Delhi. (Source: Bloomberg)

S. Korea: Bank of Korea raised interest rates for the second time this year after inflation exceeded its target ceiling for two consecutive months. Governor Kim Choong Soo boosted the benchmark seven-day repurchase rate to 3% from 2.75%, the central bank said in a statement in Seoul. (Source: Bloomberg)

Thailand: Consumer confidence fell for the first time in three months in February after oil and food prices surged. An index measuring sentiment dropped to 72.2 from 72.6 in January, the University of the Thai Chamber of Commerce said in a statement in Bangkok. (Source: Bloomberg)

Philippines: Export growth eased in January as electronics sales rose at a slower pace. Shipments abroad grew 11.8% YoY to USD4b after rising a revised 26.5% YoY in December, the National Statistics Office said in Manila. (Source: Bloomberg)

Australia: Employers unexpectedly cut workers in February for the first time in 18 months as floods and a cyclone disrupted hiring in the nation's northeast. The number of people employed fell by 10,100 from January, led by a drop in part-time jobs, the statistics bureau said in Sydney. The jobless rate held at 5%. (Source: Bloomberg)

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Maybank IB Views

ACQUISITIONS / DISPOSAL
Glomac RM1.72: Buy
Deep value, strong upside potential Shariah-compliant

Growth intact on strong sales. We expect 9MFY11 results, due on 31 Mar, to be in line (+70% YoY). Glomac will very likely beat its RM500m FY11 sales target thanks to strong take-up at Glomac Damansara (GD), lifting total unbilled sales above the RM1b mark this year. This excludes potential enbloc sales worth up to RM445m, some of which are at the advanced stage of negotiations. We raise earnings forecasts by 6-11% and RNAV by 11%. Our TP is upgraded to RM2.38 (20% discount to RM2.97 RNAV). Glomac is our top small-cap property pick.

ECONOMICS
Industrial Production Index (IPI), Jan '11
No surprise in the slow start to 2011...

Jan '11 industrial production growth decelerated further to +1.0% YoY (vs revised Dec '10: +4.5% YoY; Maybank IB: +1.7% YoY; Consensus: +1.2% YoY). Manufacturing and electricity output continued to post growth albeit at slower paces while mining output contracted for a fourth consecutive month. MoM, overall production grew by +0.4% from Dec '10.


Technicals
The FBM KLCI fell 6.78 points yesterday to close at 1,516.91. Its resistance areas of 1,516 and 1,530 will cap market gains, whilst the obvious support areas are located at 1,500 and 1,514.

Trading idea for today is a Buy call on SAPCRES.

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Maybank IB Views

ECONOMICS
Economic Transformation Programme (ETP)
Keeping the momentum going...

Round four of ETP update saw the announcement of 23 investments totaling RM14.75b involving 9 new Entry Point Projects (EPPs) and 14 other projects/initiatives in 8 National Key Economic Areas (NKEAs), giving to-date totals of 60 projects/initiatives in 46 EPPs under 11 NKEAs with RM95.4b investment producing RM137.2b in GNI and creating 224,358 jobs. Therefore, 35% of the 131 EPPs, 12% of the targeted RM794.5b EPP investment, 12.8% of the targeted RM1.1tr incremental GNI and 6.8% of new jobs creations have been announced.


SECTOR UPDATE
Media: Overweight
A strong finish, an encouraging start

Maintain Overweight. Media earnings surprised on the upside during the 4Q10 results season on strong adex growth. Jan 2011 industry gross adex growth remained encouraging at +14% YoY led by TV as consumer sentiment remained robust at a 3 ¼ year high. We expect seasonal weakness in Feb 2011 but still a likely high single to low double digits growth in percentage terms YoY. Media Prima's recent share price weakness is an opportunity to accumulate and MCIL is a value proposition at single digit valuations.
Click here for full report »
Technicals
The FBM KLCI rose marginally by 1.92 points yesterday to close at 1,517.66. Its resistance areas of 1,517 and 1,537 will cap market gains, whilst the obvious support areas are located at 1,498 and 1,516. We expect the index to remain in a minor rebound mode in the short term and very bearish in the medium term.

Trading idea for today is a Short-Term Buy call on PCHEM.
Click here for full report »
Other Local News
Sime Darby: Emery Oleochemicals to invest RM416m. Prime Minister Datuk Seri Najib Razak announced a RM416.2m investment led by the Emery Oleochemicals Group in three sub-projects to produce bio-lubricants and green polymer additive as well as surfactants for home and personal wellness products. Emery Oleochemicals Group is a 50:50 JV between Sime Darby Plantation and PTT Chemicals of Thailand. (Source: The Edge Financial Daily)

Bursa: Aims to double derivatives trade volume. Bursa Malaysia Derivatives Bhd aims to double its daily trading average to 50,000 contracts over the next three years in line with growing investor interest. The collaboration with US-based CME Group to expand trading of commodity futures, increase the volume of existing products and introduce new products, would drive the market's growth. (Source: Business Times)

Cypark: To build renewable energy park for RM94m. Cypark will spearhead an initiative to build a 10MW Renewable Energy Park on 26 hectares of remediated landfill in Pajam, Nilai, Negeri Sembilan with an investment of RM94.3m. (Source: Bursa Malaysia)

REDtone: Upbeat about venture into health care. General Electric Malaysia will collaborate with local partners that include REDtone International Bhd, to develop diagnostic services nexus (DSN), a teleradiology hub that involves RM30m of investment. (Source: The Star)

Infrastructure: McKinsey appointed consultant for MRT. McKinsey & Co has been hired as consultants to carry out the value management study (VMS) on the mass rapid transit (MRT) project. The VMS is an important element in SPAD's plan to ensure that the MRT is carried out in the most cost-efficient way. (Source: The Star)

Plantation: Call to speed up approval of foreign workers for harvest season. The Federal and Sabah state governments have been urged to quickly approve new applications of foreign workers to harvest fresh fruit bunches in the months ahead. This is to enable the industry to achieve the 17.6m tonnes crude palm oil output target this year. The industry will need to hire up to 50,000, or 20%, more foreign workers to harvest fresh fruit bunches from the trees as more oil palms reach their prime fruit-bearing age profile. (Source: Business Times)

Property: Easy first home. Young working adults earnings less than RM3,000 a month can now obtain up to 100% financing to buy their first home under the My First Home Scheme. The scheme will unable young adults to buy houses costing between RM100,000 and RM220,000 with a repayment period of up to 30 years. The scheme sees the participation of 25 conventional and Islamic financial institutions. (Source: The Star)

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