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)

Read more...

Stocks to watch: TM, CIMB, MAS, Proton, AZRB, Faber

KUALA LUMPUR: After four straight days of losses on Bursa Malaysia last week where markets were roiled by the unrest in oil producer in Libya which saw investors taking money off the table, sentiment is expected to remain cautious in the week ahead, starting Feb 28.

There could be some mild buying interest in companies which announced a strong set of earnings but investors are not expected to rush into the market just yet.

On Wall Street, US stocks rose on Friday, bouncing back from a three-day sell-off as oil prices stabilised, but unease over the Libyan rebellion could be enough to keep buying in check.

The S&P 500 lost 1.7% for the week, breaking a three-week streak of gains. Friday's bounce followed a late recovery Thursday that showed buyers were ready to support shares after a bout of selling.

The Dow Jones industrial average gained 61.95 points, or 0.51%, to end at 12,130.45. The Standard & Poor's 500 Index advanced 13.78 points, or 1.06%, to finish at 1,319.88. The Nasdaq Composite Index rose 43.15 points, or 1.58%, to close at 2,781.05.

As for the outlook for the local stock market, Maybank Investment Bank Bhd head of retail research and chief chartist Lee Cheng Hooi expected FBM KLCI to remain volatile in the short term and very bearish in the medium term.

“We suggest that clients liquidate on rallies and remain more in cash, as there are very few price defensive counters.

“Due to the global market malaise recently, we will see the FBM KLCI in a much weaker posture today. We expect the market to remain weak as the foreign hedge fund money exits Malaysia,” he said, adding that the downturn could be a protracted one.

Stocks to watch during the week ahead after their financial results are TELEKOM MALAYSIA BHD [], CIMB Group Holdings Bhd, MALAYSIAN AIRLINE SYSTEM BHD [] (MAS), UEM Land Bhd, AHMAD ZAKI RESOURCES BHD [] (AZRB) and FABER GROUP BHD [].

TM proposed a capital distribution of about RM1.037 billion or 29 sen for each share held. TM said the proposed capital distribution will be funded through its existing cash balances, which stands at RM3.488 billion as at Dec 31, 2010.

TM also announced its earnings rose 135%to RM400.63 million in the fourth quarter ended Dec 31, 2010 from RM170.25 million a year ago.

Revenue was marginally higher by2.1% at RM2.32 billion from RM2.27 billion. Earnings per share were 11.2 sen compared with 4.8 sen. It proposed a final dividend of 13.1 sen per share.

For FY10, TM’s earnings surged 87.6% to RM1.20 billion from RM643.02 million. Its revenue rose 2.1% to RM8.79 billion from RM8.61 billion.

CIMB Group posted a record net profit of RM3.52 billion in the financial year ended Dec 31, 2010. For the fourth quarter, earnings were RM877.62 million, boosted by its Indonesian operations.

The 4Q net profit was 9.3% higher from the RM802.89 million a year ago. Revenue rose 16% to RM3.168 billion from RM2.731 billion. Earnings per share were 11.83 sen compared with 11.37 sen.

MAS posted net profit of RM225.92 million in the fourth quarter ended Dec 31, 2010, down 64.7% from RM640.12 million a year ago, on lower derivative gains and higher finance costs.

Its managing director and chief executive officer Tengku Datuk Seri Azmil Zahruddin was quoted saying MAs had operationally, done well in the quarter where traffic volumes rose 10% and yields were up 5%.

However, it was also weighed down by higher cost of fuel despite that it carried more passengers. Its fuel bill was 13% higher at RM1.2 billion in 4Q compared witrh RM1.06 billion due to higher fuel prices and consumption.

Its revenue rose 8.2% to RM3.67 billion from RM3.39 billion a year ago. Earnings per share were 6.76 sen compared with 31.17 sen.

Proton swung into the red with net loss of RM60.1 million in the third quarter ended Dec 31, 2010 compared to net profit of RM79.68 million a year ago, due mainly to higher branding costs as well as the restructuring expenses incurred by Lotus Group International Ltd.

Revenue for the quarter fell by 8.96% to RM1.83 billion from RM2.01 billion last year. Loss per share was 10.90 sen compared to earnings per share 14.50 sen previously. Net assets per share was RM9.73.

For the nine months ended Dec 31, 2010 Proton’s net profit fell 58.1% to RM90.5 million from RM216.29 million, although revenue rose to RM6.36 billion from RM5.97 billion.

Proton said as part of the transformation plans to turn around LGIL, it had started investing in rationalisation of dealers network, and branding activities to deliver the five-year business plans.

Proton also said that during 3Q, it had experienced lower domestic sales volume, as well as increased promotional and marketing spending by a principal subsidiary.

UEM Land Bhd recorded a 37.3% increase in its earnings to RM135.36 million in the fourth quarter ended Dec 31, 2010, boosted by higher revenue and higher margin achieved for one-off transactions from strategic land sales.

AZRB posted net loss of RM83.06 million in the fourth quarter ended Dec 31, 2010 compared with net profit of RM5.13 million a year ago following the termination of the Alfaisal University Campus project in Riyadh, Saudi Arabia.

Revenue shrank to RM52.62 million compared with RM105.56 million a year ago. Loss per share was 30.03 sen compared with earnings per share of 1.86 sen.

For the financial year ended Dec 31, 2010 its net loss was RM61.28 million compared with net profit of RM20.76 million in FY09. Its revenue was RM431.34 million compared with RM459.40 million.

Faber Group saw its net profit shrink to RM2.91 million in the fourth quarter ended Dec 31, 2010 from RM42.57 million a year ago. Revenue declined to RM203.95 million from RM303.93 million. Earnings per share were 0.8 sen only compared with 11.73 sen. It proposed dividend of eight sen per share compared with six sen.

For the financial year ended Dec 31, 2010 net profit was RM78.78 million compared with RM82.68 million in FY09.

Read more...

Views & News, Maybank IB (2010-11-09)

RESULTS REVIEW
Fraser & Neave Holdings RM14.62: Hold
Great FY10 but challenges remain

At our price target. F&N's share price has hovered around our price target of RM14.60 since we downgraded it to Hold on 6 August 10. 4QFY10 results, which were ahead of market, but in line with our ests, takes FY10’s net profit to a record high. A total 4Q dividend of RM1.48/sh was declared, of which RM1.10/sh was 'special'. Maintain Hold and RM14.60 TP.


COMMENTS ON NEWS
Aviation: Overweight
Firefly graduates to jet engines

Firefly to expand horizons. Firefly (MAS' LCC) announced its plans to launch services to East Malaysia on Jan 2011, and later to the ASEAN region. All systems are ready; regulatory approvals are granted, two leased Boeing 737-800 are in final stages of handover, staff are trained and ready to serve, and a promotional spearhead has been launched. Based on our analyses, the true winner is MAHB. The development is moderately negative on AirAsia and neutral on MAS.


Eastern Pacific Industrial Corp RM2.09: Buy
AZRB exits, state's holding enhanced Shariah-compliant

General Offer in the works? Lembaga Tabung Amanah Warisan Negeri Terengganu (LTAWNT) is now the 2nd largest shareholder after purchasing AZRB's 21.3% stake for RM112m (RM3.10/shr). The hefty 47% premium to Monday's closing price will create a positive buzz and further lift speculation that EPIC could be a privatization candidate. The acquisition may trigger a General Offer. Our RM2.40 target price is unchanged for now, based on 8x 2011 EPS. Buy.

Technicals
The FBM KLCI rose climbed 8.10 points to 1,519.84 yesterday. Due to the mixed tone in the USA last night, we may see the FBM KLCI in a steady mode today. Its resistance areas at 1,522 and 1,524 may cap market gains, whilst its support areas are located at 1,500 and 1,519.

Trading idea for today is a SHORT TERM BUY call on QSR.

Other Local News
AirAsia: Introduces Phuket-Bali Route. Budget airline AirAsia introduced the Phuket-Bali route four times a week, dubbing it as "from paradise to paradise". The new route aims to make travel more convenient for everyone and to stimulate tourism revenue and the local economy in Phuket. (Source: Bernama)

TA: Launches first wholesale funds. TA Investment Management Bhd has launched its first wholesale funds- TA Australia Income Fund 1 and/or II - which seek to provide investors with a regular income distribution in Australian dollar over an investment horizon of three and/or five years as well as to receive capital repayment in Australian dollar upon maturity. The fund will be invested in Australian dollar-denominated fixed rate note issued by foreign financial institution. (Source: The Star)

Masterskill: Plunges on PTPTN woes. Masterskill Education Group Bhd's shares have fallen steadily since late July. The selling pressure accelerated sharply over the past week, possibly due to concerns that National Higher Education Loan Fund (PTPTN) could be facing a deficit of RM46b as highlighted in the 2009 Auditor General's (AG) Report. Masterskill is said to rely on PTPTN to provide financing for 95% of its students. There are also fears that Masterskill's stock could see overhang pressures once the six month moratorium on selling by its pre-IPO investors expire at Nov 18. (Source: The Edge Financial Daily)

Accounting: Full IFRS compliance by 2012. Malaysia is on track to achieve full compliance to the International Financial Reporting Standards (IFRS) by 1 January 2012, Prime Minister Datuk Seri Najib Razak said. (Source: Business Times)

Economics: Malaysia to benefit from QE2, says Templeton. Emerging market such as Malaysia are set to benefit from monetary inflows as the US looks to investing in developing countries as a result of the second round of quantitative easing (QE2), said a global asset manager. Franklin Templeton Investments international chief investment officer Stephen Dover said a big portion of the money from QE2 would go into emerging markets, but these markets are at risk of overheating if not managed well. (Source: The Edge Financial Daily)

Read more...