RHBInvest Research

Top Story: Faber

Visit Note
Timing remains the issue
Fair value is raised to RM2.77 from RM2.59. We reiterate our Outperform call on the stock.

Sector Call


Utilities:

Sector Update
Federal government yet to buy out water bonds
Puncak would be a potential beneficiary, given our view that the company has been holding out for the federal government (with deeper pockets) to make a better offer.
Unless the federal government subsequently makes a good offer, the water sector restructuring may drag on with no clear outcome in sight.

Corporate Highlights

KPJ:
1QFY11 Results
Although KPJ’s 1Q11 net profit of RM27.5m (flat yoy; +13.1% qoq) accounted for 20% of our and consensus full-year forecasts respectivel.y
We maintain our fair value of RM4.94/share. We reiterate our Outperform call on the stock.

ILB:

1QFY11 Results
Weak 1QFY12/11, but stronger 2H ahead
Fair value is RM1.55. Maintain Outperform.

Read more...

Stocks to watch: EON Capital, United Plantations, MMC, IOI Corp, Faber

KUALA LUMPUR: The market will continue to see strong newsflow especially from the oil and gas companies’ positive earnings, economic data, while EON Capital Bhd will see a price surge after a hefty dividend plan when Bursa Malaysia resumes trading on Wednesday, May 18

Bank Negara Malaysia will release its first quarter GDP data after market close and economists expect 5% growth. The economy grew 4.8% in 4Q of 2010.

Also on tap is the consumer price index in April. The CPI for rose 3% year-on-year in March from 99.4 to 102.4 and when compared with the previous month, the CPI increased by 0.1%.

EON CAPITAL BHD [] has declared a special tax exempt dividend of RM5.16 per share. The dividend will go ex on June 9 while the entitlement date is June 13.

United PLANTATION []s Bhd posted net profit of RM86.09 million in the first quarter ended March 31, 2011, up 76% from RM48.90 million a year ago and it expects the current financial year results to be better, boosted by more replanting.

It declared a final dividend of 20% per share or 15 sen net per share and a special dividend of 35% per share or 26.25 sen net per share. The dividends will go ex on June 30.

Investors can expect more upside from United Plantations after its comments that palm oil production in Malaysia and Indonesia was expected to recover in 2011 based on the recovery in the biological yield cycle after a pronounced setback in 2010.

MMC CORPORATION BHD [] plans to list its subsidiaries -- Gas Malaysia Sdn Bhd and Malakoff Bhd -- and also its unit Johor Port.

MMC group managing director Datuk Hasni Harun said the first company to be likely listed would be its 51% owned Gas Malaysia.

Hasni said Malakoff is worth about RM7 billion currently while Gas Malaysia and Johor Port are worth RM5 billion and RM1.5 billion respectively.

IOI CORPORATION BHD [] reported net profit of RM656.71 million in the third quarter ended March 31, 2011, up 19.6% from the RM549.02 million a year ago, boosted by the better overall performance of the group, especially plantations.

Its 3QFY11 pre-tax profit of RM780.86 million was 10% higher than the RM709.27 million a year ago. Revenue rose 37.7% to RM4.34 billion from RM3.15 billion while earnings per share were 10.25 sen versus 8.6 sen.

For the nine-months ended March 31, 2011 (9MFY11), it said net profit was RM1.74 billion compared with RM1.52 billion a year ago. Revenue was higher at RM11.83 billion versus RM9.48 billion.

Digistar Corp Bhd’s earnings surged to RM4.57 million in its second quarter ended March 31, 2011 from only RM457,000 a year ago underpinned by better profit margins from its system integration and broadcast engineering projects.

Its revenue jumped 91.5% to RM23.57 million from RM12.31 million a year ago while earnings per share were 2.31 sen compared with 0.26 sen.

FABER GROUP BHD []’s subsidiary and the joint venture partner have been unable to secure any of the business in the building maintenance services and clinical waste management in Brunei.

Its 70% owned Faber Medi-Serve Sdn Bhd and its joint venture agreement (JVA) with Brufors Technical Services had acknowledged the JVA had lapsed as they had failed to sure any business.

ESSO MALAYSIA BHD []’s earnings surged 154% to RM154.82 million in the first quarter ended March 31, 2011 from RM60.94 million a year ago, boosted by inventory holding gains.

Revenue rose 30% to RM2.6 billion from RM2 billion reflecting higher average product prices and increased retail volume. Earnings per share were 57.30 sen compared with 22.60 sen.

Read more...

RHBInvest Research

Top Story: TNB

Results Preview
Bracing for weaker 2Q
TNB lacks catalysts due to slowing electricity demand growth and no clear timeline for a formal fuel cost pass-through formula.
Maintain Market Perform.

Corporate Highlights

Faber:
Company Update
Potential bidder for Khazanah’s hospital support concession
We maintain our fair value of RM2.79. Outperform call on the stock.

Parkson:
News Update
Going Into Indonesia Via Acquisition of Centro Department Stores
Assuming the deal does go through, we estimate that it would increase PHB’s FY06/12 earnings by ~1.7-2%,
Fair value is maintained at RM5.90. Keeping our Market Perform recommendation on the stock.

IOI:

News Update
Finally announces South Beach buy
Our estimates suggest this acquisition would have an immediate negative earnings effect of 4-5% p.a. from the interest expense incurred, given that earnings from this property development would not come in until 2015.
Reduced our SOP-based target price to RM5.60 (from RM5.90).No change to our Underperform call on the stock.

Read more...

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.

Read more...

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)

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)

Read more...

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%).

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...

Maybank IB Views

SECTOR UPDATE
Property: Overweight
Buoyant outlook

Maintain Overweight. The Malaysian Property Summit 2011 on 18 January reinforced our bullish stance on the sector. We reiterate that the upcoming MRT project is a catalyst for a structural change in the Greater KL / Klang Valley property scene, resulting in a positive re-rating of property/land values. Glomac and Mah Sing offer higher upside to our target prices after strong share price performance by SP Setia, our top pick for 2011. For REITs exposure, we like SunREIT.


RESULTS REVIEW
Tenaga RM6.49: Sell
Still waiting for the silver bullet Shariah-compliant

Strong topline underpinned by commercial and domestic users. 1QFY11 revenue of RM7.7b (5.3% YoY, -1.8% QoQ) was better than our expectation driven by strong power demand. Reduced excess capacity payment of RM200m partially offsets the impact of higher coal price (+RM168.8m YoY). However, Tenaga is facing severe headwinds from rising coal prices, dwindling gas supply and its silver bullet solution (tariff increase) is opaque at best. No change to our earnings forecasts and DCF-based target price for now. Maintain Sell.


ECONOMICS
CPI, Dec 2010
Inflation rate creeping up...

Consumer price index (CPI) rose by 2.2% YoY in Dec '10 (Nov '10: +2.0% YoY), the fastest pace in 18 months, mainly reflecting the impact of another round of fuel and food (sugar) subsidy reduction. MoM, it gained for the third consecutive month (Dec '10: +0.4%; Nov '10: +0.3%; Oct '10 +0.3%). For the whole of 2010, inflation rate was 1.7%. No change to our 2011 inflation rate forecast of 2.5%, and we still expect the Overnight Policy Rate (OPR) to be hiked by 50bps to 3.25% in 2H2011.


Technicals
The FBM KLCI closed lower by 3.53 points at 1,566.51 yesterday. Its resistance areas of 1,566 and 1,576 may cap market gains, whilst the obvious support areas are located at 1,545 and 1,561.
Trading idea for today is a TAKE PROFIT call on FABER.


Other Local News
AirAsia: Weighs listing in US or HK, spurred by demand for its shares from foreign investors. Earlier reports stated the low-cost carrier was looking at Thailand as an option for a secondary listing, in an effort to become a full-fledged Asean airline. Now, however, the company has set its sights on more mature markets, considering the strong buying interest in AirAsia's shares from investors in the US and Europe. (Source: Business Times)

Auto: TIV to hit record high this year. New motor vehicle sales are expected to grow by a modest 2.1% this year as car ownership in the country is already high even by developed-country standards, said the Malaysian Automotive Association (MAA). (Source: The Sun)

Aviation: Algae have potential as biofuel for aviation industry. Professor Dr Nor Aieni Mokhtar, the national oceanography directorate at the Ministry of Science, Technology and Innovation said unlike other biofuels such as bioethanol from corn and biodiesel from soyabean, the lipids from micro-algae can be transformed into jet fuel. (Source: Business Times)

EPF: Buys RM720m building on London's Fleet Street. The Employees Provident Fund (EPF) acquired a third office building of 225,000 sq ft on Fleet Street for £148m (RM717.8m). The building has housed law firm Freshfields Bruckhaus Deringer since 1989 and has over 10 years left on its lease. (Source: The Edge Financial Daily)

F&N: Targets Brunei, Thailand expansion. Fraser & Neave Holdings Bhd (F&N) is seeking to become a regional food and beverage (F&B) giant and has secured rights to market, distribute and sell its products in Thailand and Brunei. (Source: Malaysian Reserve, Business Times)

MTD: Road blocks in privatization. The bid by joint offerors (holding a stake of more than 50% in MTD Capital Bhd) to take over the remaining shares in the group at RM9.50 per share may not materialize now that the stock has closed above the offer price. (Source: The Edge Financial Daily)

Pasdec: To launch RM252m projects. Kuantan-based property developer Pasdec Holdings Bhd plans to launch at least RM252m worth of properties in Pahang this year. These include integrated developments Pasdec Persona, Pasdec Perdana and Pasdec Idaman as well as upscale mixed commercial developments Pasdec Mahkota and Pasdec Avenue. (Source: The Edge Financial Daily)

Steel: Vale project may cost up to RM14b. Brazilian mining giant Vale International SA's construction costs in its iron-ore transshipment project will be between RM9b and RM14b over a five-year period, and the project will likely start in July or August this year. Perak government has no equity participation in the project while local companies will be subcontracted to participate in the trickle-down activities. They will include Malaysian companies involved in iron ore, steel, fabrication, shipbuilding, canning and tin. (Source: The Star)

Read more...

RHBInvest Research

Top Story

• Time to take some bold steps?
• Target price of RM11.10, upgrade to Outperform (from market perform).

Sector Call


Property:

• The “re-pricing” wave is coming to Johor.
• Maintain Overweight on the sector. Our picks are: SP Setia (OP, FV = RM6.95), and IJMLD (OP, FV = RM3.50) for big caps; and KSL (OP, FV = RM2.78) and Mah Sing (OP, FV = RM2.50) for small-mid caps. For Johor exposure, KSL is our fundamental pick.

Corporate Highlights

Faber:

• Non-renewal for two of its UAE contracts
• Fair value has been cut to RM2.35/share (from RM3.77 previously).
• We downgrade our call on the stock to Underperform, from outperform.

CIMB: Outperform

• CIMB Niaga loan growth to stay healthy
• No change to forecasts. Fair value of RM9.80 and Outperform call maintained.

IOI: Outperform

• Exchange of land
• The reason for the land exchange is that IOI has embarked on a redevelopment of a portion of the golf course land owned by Resort Villa into a shopping complex as part of its IOI Resort City development.
• Forecasts are unchanged.
  
• We maintain our target price of RM7.65 and our Outperform call on the stock

TNB: Market Perform

• TNB yesterday signed two agreements for the Ulu Jelai Hydroelectric project.
• We maintain our indicative fair value of RM7.50.

Read more...

RHBInvest Research Highlight 18 Nov 2010

Top Story

CI Holdings:
Thirst quenching prospects.
We value CIH at RM4.90. Initiate coverage with Outperform.

Corporate Highlights

CSC Steel:
Near-term outlook cloudy, but dividend may surprise to the upside.
Fair value cut to RM2.12. Maintain Outperform.

HL Bank:
Loan growth gained further traction.
Fair value raised to RM11.00, from RM10.70. Maintain Outperform.

Paramount:
Above expectation.
Maintain Outperform, with an unchanged fair value of RM6.20.

Faber:
Expect a weaker 4Q, concession pending renewal.
Fair value has been lowered to RM3.77 (from RM3.82). Outperform call on the stock.

Media Prima:
3Q Earnings boosted by continued recovery in adex.
Fair value is revised to RM2.82 from RM2.75. Reiterate Outperform.

MPI:
Lower contribution from higher margin packages.
Market Perform call with a fair value of RM6.35.

Technical Highlights

Daily Trading Strategy:

• Expect a knee-jerk reaction today.
• Trading sentiment is suspected to stay negatively biased in the near term.
• Given the recent sharp falls in the regional markets, and the negative news flows on more tightening measures in China to tame inflation, as well as the renewed debt crisis in Europe.
• Investors are expected to stay defensive in sessions ahead, in our view.
• The index should seek support at the 40-day SMA near 1,489.
• Losing 1,450 will be seen as a trigger to a major correction phase on the FBM KLCI.

Daily Technical Watch: Karambunai Corp

• Sentiment remains negatively biased
• Immediate Support at RM0.18
• Immediate Resistance at RM0.225

Read more...