Maybank IB Views

COMMENTS ON NEWS
CapitaMalls Malaysia Trust RM1.17: Buy
Buys shopping mall in Kuantan Shariah-compliant

A yield-enhancing acquisition. We are positive on CMMT's latest RM310m East Coast Mall acquisition given that it is yield accretive and attractive in pricing. More importantly, it would enhance our 2012-13 earnings forecasts by 10-11%. The purchase will be funded by a placement of up to 299m new units (est. RM332m proceeds assuming RM1.11 issue price). We maintain our forecasts and RM1.27 TP. Buy.

Technicals
The FBM KLCI gained 2.63 points and ended at 1,548.51 yesterday. Its resistance areas of 1,551 and 1,567 will cap market gains, whilst the obvious support areas are located at 1,530 and 1,548.Due to the US markets’ firm tone last night; we will see some initial low volume buying activities in the local bourse today. The market could possibly gap-up, with slim chances of follow-through buying.

Daily trading idea is a Short-Term Buy call on FAVCO.

Other Local News
TNB: Unit wins job in Pakistan. Tenaga Nasional Bhd's (TNB) unit TNB Repair and Maintenance Sdn Bhd (TNB Remaco) has secured an operation and maintenance agreement worth USD14.1m (RM43m) from Pakistan's Laraib Energy Ltd. Under the contract, TNB Remaco will provide services for an initial period of five years with an option of extending for another seven years. (Source: The Star)

MBM: To conclude talks in 12 mths. MBM Resources Bhd, which has allocated RM250m for capital expenditure, is expecting to conclude talks with an international firm in the next 12 months to set up an assembly plant locally. (Source: The Edge Financial Daily)

PetDag: Plans 50 new stations. Petronas Dagangan Bhd will invest up to RM400m to set up between 30 and 50 petrol stations, annually, over the next five years. (Source: The Star)

MRCB: Poised to clinch RM800m LRT contract. Malaysian Resources Corp Bhd (MRCB) is poised to secure soon a contract worth as much as RM800m from Syarikat Prasarana Negara Bhd. The contract is for civil works for phase two of the Ampang light rail transit (LRT) extension line linking Putra Heights to Shah Alam, Selangor. (Source: Business Times)

Plantation: MSM prices IPO shares at RM3.50 each. MSM Malaysia Holdings Bhd has priced its initial public offering (IPO) at RM3.50 per share for institutional investors. (Source: The Star)

Economics: Government seeks extra operating expenditure. The Government tabled a bill seeking a supplementary allocation of RM13b for operating expenditure, raising the spending budget for this year by 8% to RM176b. RM6b will be allocated to the Finance Ministry which includes RM5.6b subsidy for petroluem products. RM1.5b will be for Education Ministry and RM1b to Health Ministry. (Source: The Star)

Economics: Exports to hit RM700b in 2011, FDI to at least match RM29b recorded in 2010. Exports is expected to rise 9.5% to RM700b in 2011 from RM639.4b recorded last year, while FDI into Malaysia could at least matched if not surpassed last year's figure of RM29b, according to MITI. (Source: The Star)

Economics: Government expands the ban on subsidised RON95 sales to now include foreign-registered vehicles (except motorcycles) driven by Malaysians effective immediately. Previously, Malaysians driving foreign-registered vehicles need to show their MyKads. The ban also includes sales of subsidised NGV. (Source: The Star)

Economics: Minimum wage by year-end?Minimum wage policy could be implemented by year-end, according to PM. The National Wage Consultation Council Bill 2011 will be presented to Cabinet by the Human Resource Ministry before its tabling in the current Parliament's session. (Source: NST)

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XOX, SP Setia, Favelle Favco, Berjaya Food

KUALA LUMPUR: Stocks which could see trading interest on Friday, June 10 include XOX Group Bhd, which will make its debut on the ACE Market.

Other companies which could see trading interest are SP SETIA BHD, FAVELLE FAVCO BHD, Berjaya Food Bhd and MAA HOLDINGS BHD.

Meanwhile, investors are expected to be cautious also because of the weaker than expected industrial data announced on Thursday. Malaysia’s industrial production index contracted 2.2% on-year in April, the first time in 17 months and CIMB Economics Research said this suggesting a soft patch going into 2Q.

“The contraction was a surprise as we expected an increase of 1.6% while consensus projected 2.5%. In January-April, factory output rose 1.5%,” it said.

CIMB Research said the soft patch in the manufacturing sector, which accounted for 27.6% of total GDP, would weigh on 2Q GDP growth, which it estimated to expand 4% to 4.5%.

“Even though the manufacturing sector has pulled back sharply from its rapid pace, domestic non-tradable sectors, namely the services and CONSTRUCTION sectors, should continue to keep the economy rolling along decently.

“Domestic demand should still call the shots, supported by the stepping up of private investment growth under the Economic Transformation Programme (ETP). As such, we maintain our GDP growth estimate of 5.5% for this year and 6.0% for 2012,” it said.

As for XOX, the mobile virtual network operator reported net loss of RM1.66 million in the quarter ended March 31 mainly due to the selling and distribution expenses which were necessary in creating brand awareness for XOX’s services.

It recorded revenue of RM12.68 million on the back of about 391,000 subscribers. It recorded an average revenue from sales of recharge of approximately RM30 per user per month.

The offer price of the shares is 80 sen. It received 6,652 applications for 106.5 million shares with a total value of RM85.2 million, for the public tranche of 7.5 million shares.

Meanwhile, SP Setia said it was confident that its 2011 sales target of RM3 billion would be met after the company recorded sales of RM1.66 billion in the first seven months of the year.

Net profit for the second quarter ended April 30, 2011 surged 80% to RM92.22 million from RM51.21 million a year earlier, due including to gain from the disposal of an investment property.

Revenue for the quarter rose to RM496.75 million from RM409.07 million a year earlier. Earnings per share were 5.55 sen while net assets per share was RM1.78. It declared a gross interim dividend of five sen per share.

Favelle Favco received four contracts to supply cranes and spare parts totaling more than RM70.3 million. Three of the orders were to supply cranes and the fourth was to supply the spare parts.

Berjaya Food’s net profit slipped 14.2% to RM2.505 million in the fourth quarter ended April 30, 2011 compared with RM2.92 million a year ago due to higher advertising and promotional expenses.

Revenue rose 9% to RM17.75 million from RM16.28 million. Earnings per share were 1.77 sen versus 2.07 sen a year ago. It proposed dividend of three sen a share.

For the financial year ended April 30, 2011, its net profit rose 22% to RM10.59 million from RM8.68 million while its revenue increased by 19% to RM71.94 million from RM60.41 million.

FOCUS DYNAMICS TECHNOLOGIES [] Bhd’s new 144.58 million shares issued under the rights issue with warrants and 96.39 million warrants will be listed and quoted on Friday.

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Stock Counter that Maybank Recommended

The following are the shares that recommended by Maybank:

Dialog Group Berhad , since its commencement in 1984, the Company has grown into one of Malaysia's leading integrated specialist technical services providers to the oil, gas and petrochemical industry. The Company jointly built, owned and operated Kertih and Langsat Terminal. Buy at RM1.46 and price target is RM1.72.

Favelle Favco Berhad , reputation for building the world's fastest cranes has cemented the Company's position in the market for super high rise buildings having constructed 9 out of 10 of the worlds' tallest buildings ever built. Buy at RM1.14 and price target is RM1.42.

Java Berhad , the company that has an exclusive rights to harvest logs from 55,000ha of timber concession areas in Sabah. Buy at RM0.63 and price target is RM0.75.


Hap Seng Plantations Holdings Berhad , the company that is principally engaged in the cultivation of oil palm and processing of fresh fruit bunches, having a combined area of 37,630 hectares located in Lahad Datu, Sandakan and Tawau. Buy at RM3.02 and price target is RM3.40.

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