Maybank IB Research

COMPANY UPDATE
IJM Corporation RM5.45; Buy
Major wins

Upgrade to Buy. Two major pieces of news today - MRT job win and WCE concession win by Kumpulan Europlus - are positive for IJM, in terms of order book enhancement. However, we retain our earnings forecasts and RNAV-based target price pending details. Share price has come off since our last update and at current levels, the stock offers a 14% upside to our target. We upgrade our call to a Buy.

Alam Maritim Resources RM0.74; Hold
RM115m contract win to start 2012 Shariah-compliant

Positive but not yet a re-rating prospect. Securing Samsung's RM115m contract is newsflow-positive, and should contribute about 17.4% to 2012 earnings (which we have already factored in). While the contract flow momentum brought on by PETRONAS' capex plans is building up, Alam's stretched balance sheet will continue to curtail its growth potential (i.e. expansion of fleet size). Until this is addressed, Alam remains a Hold with a RM0.85 target price (9x 2012 EPS).

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Maybank IB Views

ECONOMICS
US FOMC Preview
Expecting something...

The latest round FOMC meeting was originally scheduled for a day (20 Sep) but was extended to two days (20-21 Sep) to allow a fuller discussion on the economic development and outlook, as well as the Fed's policy responses. No QE3 is expected amid the lack of consensus at Fed on such policy. Instead, we are looking at the formal announcement of the "Operation Twist" where Fed will lengthen the average maturity of its securities holdings to extend the commitment to very low interest rate on the short end of the interest rate spectrum to the long end. Recall that Fed pledged to keep the fed fund rate at 0%-0.25% until at least mid-2013 at the previous FOMC meeting (9 Aug).

SECTOR UPDATE
Power: Neutral
Projek Lekas, what it means to us

Get ready for higher tariff. This report aims to quantify the impact of importing liquefied natural gas (LNG) when PETRONAS' re-gasification plant (LEKAS) is ready (expected July 2012). The imported LNG will be costlier than Tenaga's current gas supply - which is subsidized - hence, power tariff must rise to reflect this. On the flip side, Tenaga will have greater certainty of supply and avoid further incidence of having to burn costly oil and distillates, like the episode experienced in 3QFY11.

Technicals
The FBM KLCI tumbled 17.81-points to close at 1,413.12 yesterday. Its resistance areas of 1,413 and 1,440 will cap market gains, whilst the weaker support areas are located at 1,382 and 1,400. Due to the US markets’ weaker tone last night; we may see a volatile tone for the index today. Some persistent foreign liquidation activities may depress the markets’ today.

Trading Idea is a Take Profit call for SIME, PCHEM and IJM.

Other Local News
Sime Darby: In talks to buy Bucyrus’ distribution assets. Sime Darby Industrial Sdn Bhd (SDI) is in talks to buy the distribution assets of Bucyrus International Inc. Sime Darby might announce the deal by end of the year, adding that the acquisition would enable Sime to extend the range of its products to cover both surface and underground mining equipment. SDI expects to remain busy for the next three years with an order book of RM3b. (Source: The Edge Financial Daily)

AirAsia: Thai AirAsia puts off IPO to 1Q11. The Thai unit of Malaysia's AirAsia Bhd has delayed the initial public offering (IPO) of its shares to the 1Q12 from 4Q11. The delay is because it needs more time to restructure its organisation and conduct due diligence. (Source: Business Times)

Hartalega: MD to buy Budi Tenggara. Hartalega Holdings Bhd’s MD Kuan Kam Hon plans to buy 100% of Budi Tenggara Sdn Bhd, which has a direct 4.99% stake in Hartalega and a 13.9% stake in Hartalega Industries Sdn Bhd, which in turn has a 50.6% in Hartalega. If the deal goes through, Kuan will control 51.5% of Hartalega and Securities Commission has granted a waiver from making a mandatory general offer. (Source: Business Times)

BRDB: To sell four assets for RM914m. Bandar Raya Development Bhd (BRDB) has decided to part with four investment properties including Bangsar Shopping Centre , Menara BRDB, CapSquare Retail Centre and Permas Jusco Mall for a cash consideration of RM430m with net liabilities of RM484m to be assumed by the buyer, valuing the entire transaction at RM914m. Following the disposal, BRDB will distribute part of the proceeds to its shareholders via a net cash dividend of 80 sen per share. (Source: Bursa Malaysia)

Plantation: Another vote against Aussie palm oil Bill. The Food Standards Amendment (Truth in Labelling - Palm Oil) Bill 2010 was rejected by Australia's House of Representatives Economics Committee in Canberra yesterday, the second committee to do so since it was tabled in Parliament. Malaysia is awaiting the final vote from the Parliament. (Source: Business Times)

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Maybank IB Views

IJM Corporation RM6.28: Hold
The India Connection Shariah-compliant

Hold maintained. Kitchen sinking is complete and management sees no further provisions in India, we learnt, during our site visit to IJM's projects in India in mid-July. We nevertheless see little catalyst for IJM in India as competition for infrastructure construction remains stiff while the property and toll operations are not major contributors as yet. Contributions from India are small at 2-3% of our earnings and RNAV estimates. We maintain our Hold call and RM6.50 RNAV-based TP, which implies a CY12 PER of 17.5x.

RESULTS REVIEW
Guinness Anchor RM10.86: Hold
Pre-Arthur's Day toast

Impressive growth, results in line, but substantially priced-in. Guinness' FY11 net profit grew 19% to RM181m, on revenue growth of 10% to RM1,488m. Full-year results were within our expectation and consensus. However, with the stock price having trended upwards and with a mere 4% upside to our target price presently, we downgrade the stock to Hold with an unchanged target price of RM11.30.

ECONOMICS
External Trade, June 2011
Beat consensus, but headwins rising

Monthly export and import growth in June '11 beat consensus at +8.6% YoY (May '11: +5.4% YoY; Maybank IB: +9.8% YoY; Consensus: +5.8% YoY) and +6.3% YoY (May '11: +5.6% YoY; Maybank IB: +2.6% YoY; Consensus: +2.2% YoY). MoM, both bounced back by +4.1% and +6.8% respectively after two consecutive months of contraction. But it was a mixed performance on quarterly basis as export growth accelerated to +8.3% YoY in 2Q 2011 (1Q 2011: +4.8% YoY) while import growth slowed to +7.1% YoY (1Q 2011: +12.4% YoY). 1H 2011 trend is in line with our outlook of slower trade growth this year as exports and imports grew by +6.6% YoY and+9.6% YoY respectively vs our full-year forecasts of +8.4% (2010: +15.6%) and +10.8% (2010: +21.7%). Outlook for 2H 2011 is challenging amid multiple concerns on the external fronts, namely the signs of faltering US economic recovery, potential fallout from the Eurozone debt crisis and the downside risks from aggressive monetary policy tightening in large emerging economies i.e. China, India, Brazil.

Technicals
The FBM KLCI rose 1.79 points to close at 1,546.89 yesterday. Its resistance areas of 1,546 and 1,565 will cap market gains, whilst the weaker support areas are located at 1,525 and 1,538.Due to the US markets’ crash last night; we will see some volatile trading activities in the local bourse today.

Trading Idea is a Take Profit call on BERTAM.

Other Local News
Affin: Scraps plan to buy Indonesian bank. Affin has discontinued plans to acquire a 80% controlling stake in PT Bank Ina Perdana (Bank Ina) given that Indonesia's central bank is mulling plans to reduce the limit on foreign majority shareholdings in Indonesia's commercial banks. (Source: Bursa Malaysia)

CIMB: Sets up investment banking advisory JV in Sri Lanka. CIMB Group Holding's indirect wholly owned subsidiary, CIMB securities International Pte Ltd, will establish an investment banking advisory joint venture in Sri Lanka. The JV company would be a subdiary of CIMB securities International upon its incorporation. (Source: Bursa Malaysia)

Catcha Media: Another new shareholder. Catcha Media Bhd says HSC Healthcare Sdn Bhd, headed by Dr Lim Yin Chow, has become a substantial shareholder by acquiring a 5% stake. (Source: Bursa Malaysia)

Transportation: Early study on KL-S'pore hi-speed train ready Aug 19. A pre-feasibility study on the high-speed train connecting Kuala Lumpur and Singapore is expected to be completed by Aug 19. The study would allow the government to decide on the corridors and stations to be located between Kuala Lumpur and Singapore. (Source: The Edge Malaysia Online)

Construction: KLIFD takes shape. 1Malaysia Development Bhd (1MDB), the government-owned firm in charge of setting up the Kuala Lumpur International Financial District (KLIFD), has picked Akitek Ju-rurancang (Malaysia) Sdn Bhd and its international partner, Machado Silvetti and Associates (MSA), as the project's master planners. The USD8b (RM23.7b) KLIFD, one of Malaysia's biggest projects, aims to tightly cluster financial institutions and top global firms on 30.3ha of land in the Imbi area, fronting Jalan Tun Razak here. (Source: Business Times)

Property: SP Setia Says not in talks with E&O. Sp Setia Bhd said it is not in any acquisition or takeover talks with rival Eastern & Oriental Bhd (E&O) or its shareholders. It was responding to a query from Bursa Malaysia based on reports that it is keen on buying E&O to gain access to land in Penang. (Source: Bursa Malaysia)

Plantation: Oil palm JV firms suffer RM34m losses on FFB theft. Oil palm joint-venture companies (JVCs) managed by the Sarawak Land Custody and Development Authority (LCDA) have suffered an estimated losses of RM33.6m due to theft of fresh fruit bunches (FFB) since last year. The NCR projects include SPB Penan Jambatan Suai Sdn Bhd whose 1,855ha plantation at Suai in Miri that is being jointly developed with Sarawak Plantation Bhd amd 150 landowners, had incurred losses of RM21.2m. (Source: The Edge Financial Daily)

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Maybank IB Views

MARKET STRATEGY
2H 2011 Outlook
External headwinds, domestic strength (mid-year check)

External headwinds. We expect global equities to remain volatile in second half 2011 on renewed concerns over US' economic recovery, Eurozone's sovereign debt crisis and China's monetary tightening measures. Waning confidence on the resolution of Eurozone's debt problems will prompt broad-based risk aversion in equities. In addition, the unrest at MENA has persisted; it is likely to extend for awhile.

ECONOMICS
Malaysia: Development & Outlook, 2H 2011
Reality Check

We revised downward our 2011 real GDP growth forecast to 5.1% (previous 5.5%), taking cue from continued softness in 2Q 2011 after the lower-than-expected 1Q 2011 growth amid signs of elevated global economic risks that weighs on external demand on the back of factors such as worsening Eurozone soveriegn debt crisis, US economy that is losing momentum as QE2 ended, slowing China's economy and continued inflationary presures in the emerging and developing countries. In addition, rising inflation and interest rates dampen domestic consumer spending. Critical to upholding the growth momentum this year is therefore investment, with ETP implementation a crucial factor, which should be supportive of the domestic economy in 2H 2011.

CPI, May 2011
See you at "4" next...?

Consumer price index (CPI) increased by 3.3% YoY in May '11 (Apr '11: +3.0% YoY; MaybankIB: +3.3% YoY; Consensus: +3.3% YoY), accelerating for the sixth month in a row to the fastest pace in 26 months. MoM, it gained +0.3%. 2011 YTD inflation rate was +3% YoY. CPI excluding Food & Non-Alcoholic Beverages and Transport picked up for the fourth consecutive months to +2% YoY (Apr '11: + 1.8% YoY), the highest in almost two years. Factoring in the impact of the hikes in the subsidized prices of sugar, diesel, gas and power in May-June, we see monthly inflation rate surging to 4% in June-July, and had earlier revised our annual inflation rate to 3.4% (3% previously) for 2011 and 3.3% (2.9% previously) for 2012.

INITIATING COVERAGE
BIMB Holdings RM1.97: Buy
A blast from the past Shariah-compliant

Ready to stamp its mark again. Once the largest Islamic bank in the country, BIMB Holdings (BIMB) lost its luster when it plunged into the red in 2005/2006. New management has spent the last couple of years cleaning up legacy financing problems at the commercial bank, which also saw two rounds of capital injection over the past five years. With much of the clean-up completed alongside a corporate rebranding of Bank Islam and Syarikat Takaful Malaysia (Takaful Malaysia), BIMB is poised once again to stamp its mark as one of the country's leading Islamic financial institutions. We initiate coverage on BIMB with a Buy call and a RM2.40 target price on a sum-of-parts (SOP) basis.

COMPANY UPDATE
RHB Capital RM8.75: Hold
Back to the drawing board

Downgrade to Hold. Our call on RHB Capital is lowered to a Hold from Buy, after restoring our valuations to levels prior to recent corporate exercises. On the back of a re-based target price of RM9.40 from RM10.40, upside to current share price is 7%. While valuations remain decent, various non-tangible issues are likely to weigh on sentiment in the near term, in our view.

RESULTS REVIEW
Kencana Petroleum RM2.79: Buy
On track, with upside potential Shariah-compliant

We remain Buyers of Kencana. 9MFY11 results track expectations. We expect earnings momentum to strengthen into FY12 as Kencana secures higher orders and consolidates AME's earnings. We do not rule out a 2nd RSC and a strategic partner to develop deepwater fabrication capabilities; a positive, in our view. Our RM3.10 target price, based on 20x CY12 EPS, has not incorporated these potentials.

Technicals
The FBM KLCI gained only 1.23-points and closed at 1,564.66 last Friday. The local market remained quite steady despite the Greek debt worries and bad US economic news (like the increased number of people seeking unemployment benefits). The obvious support areas for the FBM KLCI are located in the 1,536 to 1,563-zone. The firm resistance zone of 1,564 and 1,576 will see very heavy liquidation activities.

Trading Idea is a Short-Term Buy call on PANAMY.

Other Local News
Proton: Nears deal with foreign carmaker. Proton Holdings Bhd will be finalising a collaboration with a foreign car maker next month, which is expected to bring up to RM800m of investment into the country. The tie-up involves using the partner's transmission for Proton's new engine. (Source: Business Times)

IJM: Shortlisted for India highway project. IJM Corp Bhd is one of the 11 companies shortlisted for a mega inter-state highway project estimated to cost about RM4b. The 555km highway stretches from Kishangarh, near Jaipur, in Rajasthan to Ahmedabad, in Gujarat, via Udaipur. (Source: The Star)

Sime Darby: New pay scheme to attract Malaysians too. Sime Darby Plantation Sdn Bhd expects its new pay scheme for estate and mill workers to attract not only foreigners but Malaysians as well. (Source: The Edge Financial Daily)

Muhibbah: Gets RM338m job. Muhibbah Engineering (M) Bhd has been awarded a RM338m contract by Northport (M) Bhd for the development of a multi-purpose wharf and other facilities at Container Terminal 4. (Source: Bursa Malaysia)

Plantation: Minister concerned over Aussie palm oil Bill. Plantation Industries and Commodities minister Tan Sri Bernard Dompok expressed grave concern on the passing of the Food Standards Amendment (Truth in Labelling - Palm Oil) Bill 2010 by the Australian Senate on Thursday. The Bill which is now under consideration by the Lower House, Australian Parliament, seeks to mandate the labeling of palm oil for the purpose of ensuring ‘that consumers are provided with clear, accurate information about the inclusion of palm oil in foods’. (Source: The Star)

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RHBInvest Research

Top Story: Axiata - Celcom still holding firm Outperform

Briefing Note
Celcom managed to register healthy prepaid net adds of 177k (4QFY10: +52k) thanks to greater focus on the prepaid segment over postpaid.


Sector Call

Semiconductor – Apr chip sales weaken to 3.9% yoy Neutral

Sector Update

Unisem: Fair value at RM1.99 Market Perform

Notion: Fair value at RM2.25 Market Perform

Apr chip sales fell 2.2% mom after rebounding 2.3% in Mar 11. We reckon this was partly due to the abrupt decline in chip demand due to the Japan disaster that occurred in Mar. On the other hand, Apr chip sales appeared weak with yoy growth of 3.9% compared to Mar 11 growth of 8.4% yoy.

Corporate Highlights

Puncak Niaga: Cash flows intact despite IC 12 Trading Buy

Briefing Note Management clarified that there is essentially no impact to the underlying business and cash flows despite adopting IC 12.

Puncak however conceded that it will record losses in FY11, but will return profitable in FY12 with the scheduled 25% water tariff hike in Jan 2012.

IJM: Raising Stakes In Two Indian Units Underperform

News Update
IJM has proposed to raise its stakes in CIDB Inventures and Swarna Tollway by 16.9% and 17% to 95% and 98.5% for RM46.4m.



CBIP: Sells plantation subsidiaries, RM1.07/share gain on sale Outperform (upgraded)

News Update
CBIP entered into two share sale agreements to dispose of its 100%-owned subsidiaries, Sachiew and Empresa for RM108.12m and RM159.94m cash, respectively. Sachiew is the holder of a provisional 60-year lease for 3,720ha of land in Suai, Miri, which also has a 30t/hr CPO mill. Empresa is the holder of a provisional 99-year lease for 5,936ha of land in Bok, Miri, which also has a 45t/hr CPO mill.

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RHBInvest Research

Top Story: Penang Property Update

• Sector Update
• Property sector is the key beneficiary of all the infra developments and strong capital investment flow in Penang.
• IJM Land and E&O, which are the prime beneficiaries of the upcoming major infra developments and strong capital investment flows into the Penang state.
• Our estimated fair value for E&O is RM1.91,we maintain our Overweight stance on the sector. Our top picks are IJM Land and Mah Sing.

Sector Call

Banking:

Sector Update

1QCY11 report card
Low loan impairment allowances provides relief to slow start
No change to our Overweight stance on the sector.

Media:

Sector Update 1Q11

1. Apr Adex For TV and Print Grew 17.8% YoY
2. Media Prima remains our preferred pick given its position as the largest integrated media player in Malaysia. In addition, we believe there is still scope for further synergies to be unlocked across its different platforms.
3. No change to our Overweight call on the sector.

Building Material:

Sector Update

• Impact of electricity and natural gas tariff review
• Maintain Underweight for the sector.

Corporate Highlights

TNB:

Briefing Note

• TNB’s outlook received a boost after receiving an average tariff hike of 7.12% effective 1 Jun and the formalisation of a fuel cost pass-through (FCPT) formula.
• Fair value raised to RM8.00 (previously RM5.60). Upgrade to Outperform from Underperform.

CBIP:

Results / Visit Note

• Benefitting from plantation arm
• Raise target price to RM4.90 (from RM4.65), after updating for CBIP’s latest net debt figure.
• No change to our Market Perform recommendation on CBIP.

MCIL:

Results Note

• FY11 Ends On A High Note
• Fair value is raised to RM1.43 (from RM1.38), which is based on unchanged target CY11 PER of 13x.
• We reiterate our Outperform call on the stock.

Petronas Gas:

News Update

• Minimal Impact From Government’s Gas Price Hike
• We maintain our RM13.95/share fair value and Outperform call on the stock.

Petronas Chemicals:

News Update

• Minimal Impact From Government’s Gas Price Hike
• Fair value for the stock decreases slightly to RM8.92/share (from RM9.02/share previously). We maintain our Outperform call on the stock.

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Maybank IB Views

IJM Corporation RM6.20: Hold
Kitchen sinking, losses in 4Q Shariah-compliant

Maintain Hold. 4QFY11 fell into a loss due to provisions and project losses at the construction business. Totalling RM124m, the amount was much larger than the anticipated RM70m. Nonetheless, we retain our FY12-13 earnings forecasts, expecting these to be one-off. Share price has stay flat (-0.1%) since we downgraded the stock on 24 Feb. It could remain there for a while as the market digests the poor 4Q results, while upcoming RM5b potential contract flows from the WCE and NPE extension have been partially priced in. No change to our RM6.50 RNAV-based TP for now, which implies 20x CY2012 PER.

Alam Maritim Resources RM1.05: Sell
Still a struggle Shariah-compliant

Results were below expectations. Alam suffered its third consecutive quarterly loss, with a RM7m net loss in 1Q11. We cut 2011 forecast by 18% but place our recommendation and RM0.79 (1x book) target price under review pending an update with management. We think the worst is over for the domestic vessel charter industry, which would trigger a re-rating for the vessel operators.

Amanah Raya REIT RM0.95: Buy
On track; new assets boosted earnings

Maintain Buy. AAREIT's RM10.9m 1Q11 net profit (+29% YoY) came in within expectations. 1Q DPU of 1.8 sen (95% payout) was also in line. We like AAREIT for its good 8.7% 2012 yield (compared to 8.1% M-REIT sector). In our view, the yield is sustainable as the majority of AAREIT's leases are long-term with step-up features. We maintain our earnings forecasts and RM1.12 DCF-based TP.

Technicals
The FBM KLCI gained 7.75 points to close at 1,548.69 on Friday. Its resistance areas of 1,550 and 1,565 will cap market gains, whilst the obvious support areas are located at 1,527 and 1,548. We expect the FBM KLCI to remain range bound today.

Weekly trading idea is a Short-Term Buy on ESSO.

Other Local News
MAHB: Strong interest to jointly develop 50 acres near KLIA2. Twenty companies have collected request for proposal (RFP) documents to partner Malaysia Airports Holdings Bhd (MAHB) to develop 50 acres near KLIA2 in Sepang. The RFP is for the privatisation of the 50-acre commercial development that would comprise premium factory outlets centre, a food and beverage centre and an auto city. (Source: The Star)

Bina Puri: Bids for RM400m Negri job. Bina Puri Holdings Bhd has bid for a contract worth over RM400m for associated civil works to extend a 1,000MW power plant in Negri Sembilan with Japan's Mitsui & Co. (Source: Business Times)

Property: UOA's final retail price fixed at RM2.52. UOA Development Bhd’s institutional price has been fixed at RM2.60 per share while the retail price is RM2.52 per share, which was below the indicative retail price of RM2.90. (Source: The Edge Financial Weekly)

Stockbroking: More licences for foreign stockbroker. Securities Commission Malaysia is offering two new licences to foreign stockbroking houses, specifically for the retail side of the business. Singapore based Phillip Securities Pte Ltd is one of the investment firms eyeing the licence. (Source: The Edge Financial Weekly)

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RHBInvest Research

Top Story: Benchmarking –

Market Update (published 27 May 2011)

• The review of the FBM indices will be based on 31 May share prices.
• YTD, the FBM KLCI has risen by just 1.4%. Looking ahead, notwithstanding concerns about the strength of US and EU economic growth, we believe the market will be driven by M&A, corporate restructuring and to some extent the follow-through from earlier-announced ETP projects. This is further supported by decent market earnings growth of 11.3% and 12.0% for 2011-2012.

Corporate Highlights

WCT :

Briefing Note

• Still Confident About RM2bn New Jobs In FY12/11
• Maintain Underperform. Fair value is RM2.37.

Petronas Chemicals :

Briefing Note

• Product Prices, Fertilisers And Methanol Division Capacity Utilisation Keep Earning Intact
• We maintain our Outperform call and RM9.02/share fair value.

MMHE :

News Update
Signing MOU For Sime Darby’s Pasir Gudang Yard Acquisition

Sime Darby :
3QFY11 Results/Briefing Note

• In 3QFY11, Sime recorded a net EI loss of RM7.9, comprising forex gain RM0.5m, the RM98.5m writeback for the Maersk Oil project, a RM73.9m impairment on biodiesel and bioganic assets and a RM33m impairment loss on a property project, bringing total EI for 9MFY11 to a loss of RM11m.

Fair value has been reduced slightly to RM10.60 (from RM10.70). Now that the sale of the O&G division has been announced, we believe Sime would need to gain further ground by being more focused on its other divisions to improve operational efficiencies, to improve its market value and standings in the different industries it operates in.

We maintain our Outperform recommendation on the stock.



IJM Land :

Results / briefing note
The value has yet to be fully appreciated
We maintain our Outperform call with an unchanged FV of RM3.28, IJMLD continues to be our top pick for the sector.



IJM:
FY03/11 Performance Weighed Down By Construction Losses In 4Q
Maintain Underperform. Fair value is RM6.12.Sime Darby :

3QFY11 Results/Briefing Note

• In 3QFY11, Sime recorded a net EI loss of RM7.9, comprising forex gain RM0.5m, the RM98.5m writeback for the Maersk Oil project, a RM73.9m impairment on biodiesel and bioganic assets and a RM33m impairment loss on a property project, bringing total EI for 9MFY11 to a loss of RM11m.
• Fair value has been reduced slightly to RM10.60 (from RM10.70). Now that the sale of the O&G division has been announced, we believe Sime would need to gain further ground by being more focused on its other divisions to improve operational efficiencies, to improve its market value and standings in the different industries it operates in.
• We maintain our Outperform recommendation on the stock.

IJM Land :

Results / briefing note

• The value has yet to be fully appreciated
• We maintain our Outperform call with an unchanged FV of RM3.28, IJMLD continues to be our top pick for the sector.

IJM:

• FY03/11 Performance Weighed Down By Construction Losses In 4Q
• Maintain Underperform. Fair value is RM6.12.

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Stocks to watch: Sime, IJM, Alam Maritim, Ta Ann, Kulim

KUALA LUMPUR: The market could trade sideways on Monday, May 30 due to the lack of impressive earnings growth late last week, analysts said.

With the corporate season coming to an end on May 31, with Maxis Bhd and Axiata Group Bhd among the remaining heavyweights to announce the results, the market would need more stimuli to spur buying interest.

Stocks which could see trading interest would be SIME DARBY BHD, IJM Corp, ALAM MARITIM RESOURCES BHD, TA ANN HOLDINGS BHD and Kulim (Malaysia) Bhd. All the companies reported their results on Friday.

Sime Darby posted net profit of RM820.12 million in the third quarter ended March 31, 2011 compared with net loss of RM308.63 million a year ago. Revenue increased by 39.8pct to RM10.59 billion compared with RM7.57 billion. Earnings per share were 13.66 sen.

IJM Corp swung into the red in the fourth quarter ended March 31, 2011 with net loss of RM20.19 million versus a net profit of RM111.04 million a year ago due to its overseas operations. The losses were expected by the market as it would have to make provisions and losses in its international operations.

Its operating profit before tax fell by 53.9% to RM75 million compared to RM163 million a year ago “following the provision made against contractual claims, recovery of receivables and project losses in some of the group’s overseas projects”.

Its revenue rose 20.9% to RM1.047 billion from RM866.46 million mainly due to the CONSTRUCTION, property, industry and infrastructure divisions. It announced an interim dividend of 7.0 sen a share

Land & General posted losses of RM3.22 million in the fourth quarter ended March 31, 2011 compared with net profit of RM12.91 million a year ago mainly due to losses in quoted investments.

“The loss for the current quarter arose mainly due to fair value loss of RM3.5 million recognised on its quoted investments, net interest expenses of RM1.1 million recognised from FRS 139 implementation, and share of losses from its jointly controlled entities of RM1.7 million,” it said.

Alam Maritim posted net losses of RM7.38 million on weaker performance by it offshore support vessels segment. Net loss for 1Q ended March 31, 2011 was a stark contrast of RM20.51 million a year ago.

Revenue fell 48% to RM34.68 million from RM66.87 million. Loss per share was 0.9 sen compared with earnings per share of 4.0 sen.

On a more upbeat note, Ta Ann said higher overall selling prices for timber products and better performance for the PLANTATION []s business pushed Ta Ann Holdings Bhd’s first quarter earnings up by 232% to RM26.56 million from RM7.89 million a year ago.

Revenue rose 10.3% to RM181.44 million from RM179.93 million while earnings per share were 10.32 sen compared with 3.10 sen.

Kulim’s earnings jumped 105% to RM127.10 million in the first quarter ended March 31, 2011 (1QFY11) from RM61.89 million a year ago.

Its revenue climbed 34% to RM1.657 billion from RM1.234 billion while earnings per share were 10.12 sen compared with 16.40 sen a year ago.

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Stocks to Watch: EON Bank, EON Capital, DiGi, Masterskill, construction, O&G

KUALA LUMPUR: The FBM KLCI is likely to kick-off May on a cautious note as historically the market drifts lower in this month.

With few fresh leads coming from the regional markets after the extended weekend, as well as a three-day break starting in Japan on Tuesday, investors will likely look for domestic news flow to decide on how best to allocate their funds.

Meanwhile, US stocks rose last Friday on strength from Caterpillar and other industrials, lifting the Dow and Nasdaq to their best monthly performance since December, according to Reuters.

The advance at Wall Street on Friday was also due to Federal Reserve chairman Ben Bernanke's pledge to keep cheap money flowing through the economy pushed the Nasdaq to a 10-year high, and gold and silver broke records.

MIDF Research head Zulkifli Hamzah said the FBM KLCI closed 0.7% lower in April, the first time in seven years that the market ended the month on a negative note.

He said it was not a reassuring development moving into May as the market tended to drift lower for the month, adding that in seven out of the last 10 years, the KLCI closed May lower.

Zulkifli said he expects a continuation of positive news flow particularly with regards to the ETP-related initiatives in May.

The oil and gas sector was likely to remain upbeat with expectations of more contract announcement on upstream E&P projects both in the deepwater and marginal field developments, he said.

"Stocks of major offshore oil and gas fabricators such as MMHE and Kencana may attract buying interests in view of the pending announcements," he said.

He also said the government had announced its intention to begin CONSTRUCTION of the MRT project in July this year, the exact date being July 8, 2011, adding that tender pre-qualifications for some sections of the project were expected to be undertaken as soon as the month of May.

"Hence we may see some excitements in big construction players such as Gamuda and IJM Corp in anticipation of the tender exercises," he said.

On Bursa Malaysia, stocks to watch include EON Bank Bhd and EON CAPITAL BHD, DIGI.COM BHD, Masterskill Education Group Bhd, construction, and, oil and gas counters.

EON Bank has proposed a dividend of RM311.94 million, translating into 44.9 sen per share, but to be paid to its parent EON Capital Bhd.

The proposed interim dividend was a surprise when EONCap announced on Friday, it had accepted HONG LEONG BANK BHD's offer of RM5.06 billion or RM7.30 per share.

DiGi posted net profit of RM331.39 million in the first quarter ended March 31, 2011, up 19% from RM278.25 million a year ago. Revenue rose 10.8% to RM1.43 billion from RM1.29 billion. It declared an interim dividend of 43 sen.

Masterskill won its suit against Sistem Televisyen Malaysia Bhd (STMB) over the visuals of its college on a TV3 news report about 60 colleges which had been deregistered.

Read more...

RHBInvest Research

Top Story: Construction -Neutral

• Sector Update
• Big Time For Small Caps
• Our top small-cap picks are Fajarbaru (FV = RM1.65) and TRC (FV = RM1.94).

Corporate Highlights

IOI:

• Visit Note
• Luck is not on its side
• Reduce target price to RM5.90 (from RM6.15).
• Maintain our Underperform recommendation on the stock.

IJM Corp:

• News Update
• “Approval In-Principle” For West Coast Expressway And NPE Extension.
• Both projects will be “two bites on the same cherry” for IJM
• Maintain Underperform. Fair value is RM6.39.

• TNB: News Update
• Signs agreement for Manjung project
• Maintain Market Perform.

Read more...

Maybank IB Views

ACQUISITIONS / DISPOSAL
RHB Capital RM8.72: Buy / AMMB Holdings RM6.57: Hold
Merge AMMB & RHB Cap? Why not....

Could it, should it, would it? Could the merger take place? We think it is plausible, for it would tie in with aspirations for further consolidation in the industry and the creation of larger banks. Should AMMB and RHB Capital merge? We believe such an exercise could be earnings accretive and synergistic. Would it happen? That's the billion Ringgit question .... that we will have to leave open-ended. We maintain a Buy on RHB Capital with a marginally higher TP of RM9.50 (from RM9.40) and a Hold on AMMB (TP: RM6.80) for now.

COMMENTS ON NEWS
IJM Corporation RM6.35: Hold
Two new toll concessions Shariah-compliant

Lacking details. Two toll concessions, given the go-ahead by the government last Friday, should positively boost IJM Corporation's construction order book, which stands at approximately RM4.1b now. We estimate order book could easily double. The impact on valuations cannot however be assessed in the absence of further information. We maintain our Hold call on IJM for now, with an unchanged RM6.50 RNAV target price, which implies 21x 2011 earnings multiple.

Technicals
FBM KLCI rose 39.83-points and closed at 1,555.38 last Friday. The fine support areas for the FBM KLCI are located in the 1,498 to 1,555-zone. The firm resistance zone of 1,558 and 1,576 will see heavy liquidation activities.

Trading idea for today is a Buy call on PCHEM.

Other Local News
TNB: Unit signs deal for Manjung plant. Tenaga Nasional Bhd (TNB) unit TNB Janamanjung Sdn Bhd (TNBJ) has signed an engineering, procurement and construction agreement with a consortium led by Alstom Power System SA for the 1,000 MW Manjung coal-fired power plant project. (Source: Bursa Malaysia)

YTL Power: Japanese partner to bid for RM9b Java project. YTL Power International Bhd has teamed up with a Japanese consortium to bid for a 2,000MW coal-fired power plant project in Central Java worth USD3b (RM9b). YTL Power and its Japanese partner have agreed to a 20:80 debt equity ratio, with the Japanese consortium assuming the larger portion of the risk. (Source: The Malaysian Reserve)

Kenanga-ECM Libra: Merger in the works? ECM Libra Financial Group and K&N Kenanga Holdings Bhd are believed to be exploring a potential merger with a possibility of ECM's shareholders selling out to Kenanga. (Source: The Edge Financial Daily)

Boustead: Eyeing majority stake in Esso M'sia with LTAT. Boustead Holdings Bhd and its parent company Lembaga Tabung Angkatan Tentera (LTAT) are believed to be eyeing Exxonmobil International Holdings Inc's 65% stake in Esso Malaysia. (Source: The Edge Financial Daily)

Plantation: World Bank lifts palm oil moratorium. The World Bank last Friday lifted an 18-month global moratorium on lending for new palm oil investments, endorsing a strategy that focuses on supporting small farmers that dominate the sector. (Source: Business Times)

Plantation: Felda Global plans sweet IPO. Felda Global Ventures Holdings Sdn Bhd plans to list some of its businesses starting with its sugar operations this year. The initial public offering (IPO) of wholly-owned Malayan Sugar Manufacturing (MSM) may raise more than RM1b. Felda Global plans to list five companies and it is already in talks with a few investment banks. (Source: Business Times)

Construction: Three foreign players in race for Pudu Jail redevelopment. Three foreign players are among the 10 companies shortlisted by the master developer, UDA Holdings Bhd for the redevelopment project of the Pudu Jail site. The companies are Dubai-based Damac Group teaming up with UEM Land, state-owned China State Construction Engineering Corp that has tied up with Kumpulan Jetson Bhd and Keppel Land Ltd. (Source: The Edge Financial Daily)

Read more...

Stocks to watch: IJM, Mitrajaya, K.Euro, Sunway, Sime Darby

KUALA LUMPUR: CONSTRUCTION stocks would be in focus in the week ahead, starting Monday, April 4 as the government rolls out more projects under the Economic Transformation Programme (ETP).

Prime Minister Datuk Seri Najib Razak has given the assurance that the government will announce a slew of new major and exciting projects in the next few months, providing traction in implementing effectively the ETP.

Meanwhile, analysts expect external newsflow to impact investors’ sentiment in the second quarter,

“Nevertheless, beyond the short-term volatility, we believe there is still room for the market to move higher in the 2H as investors’ worries are somewhat exaggerated and the global economic recovery will unlikely be derailed,” said RHB Research Institute.

It said the external headwinds that dragged down global equities will likely dissipate and transform into potential catalysts for the market to come back in the second half.

“These include: 1) Worst of the Japanese disaster over with reconstruction plans being put in place; 2) Political upheavals in the Middle-east and North Africa subside and oil price normalises; 3) Receding threat of accelerated inflation for Emerging Asia as weather conditions improve and food prices ease; and 4) Domestically, implementation of ETP gaining speed with cheers from general election news flow from time to time,” RHB Research Institute said.

Meanwhile, interest in biogas is expected to pick up with power giant TENAGA NASIONAL BHD signing an MoU on Monday with Sime Darby PLANTATION [] and Mitsui & Co., Ltd to study the potential of using biogas to generate power at Sime Darby’s oil palm estates.

The study, which will see a collaboration of facilities, skills-set and knowledge based on each company’s area of expertise, intends to take Sime Darby Plantation’s sustainability efforts to new heights.

Other stocks to watch would be IJM Corp, Mitrajaya Holdings, Kumpulan Europlus and Sunway Holdings following fresh corporate news.

IJM Corp Bhd’s unit New Pantai Expressway Sdn Bhd (NPE) has received the go-ahead from the Public Private Partnership Unit of the Prime Minister’s Department for the proposed New Pantai elevated highway extension to Ampang-Kuala Lumpur.

Mitrajaya’s unit has accepted the RM90.78 million contract for the extension project of the Ampang light rail transit (LRT) line in Kinrara.

Kumpulan Europlus said its 64.2% owned West Coast Expressway Sdn Bhd has received a letter from the Public Private Partnership Unit approving in-principle the proposed construction of West Coast Expressway (Taiping-Banting).

The project is to be privatised on a build-operate-transfer basis and the negotiation is expected to be completed within six months from the date of the letter.

Sunway Holdings has accepted a RM22.56 million contract from Singapore-based Sim Lian Group Ltd’s subsidiary to undertake the substructure of three blocks along Jalan Tun Razak here.

Its unit Sunway Geotechnics (M) Sdn Bhd accepted the letter of award for the contract from Sim Lian’s subsidiary Perumahan SLG Central Sdn Bhd for the piling of three blocks of commercial building.

SAM Engineering & Equipment (M) Bhd (formerly LKT INDUSTRIAL BHD) is acquiring the assets and manufacturing business of engine casing, a division of Singapore Aerospace Manufacturing Pte Ltd for RM135 million in cash and loan stocks. The acquisition was part of its long-term strategy to grow the business and diversify the customer base beyond the current backend business.

The proposed acquisition would interest investors after its major shareholder Singapore Precision Engineering Ltd (SPE) intends to retain the listing status of SAM Engineering and it would undertake a proposed rectification plan about its shareholding.

Read more...

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.

Read more...

JP Morgan maintains Overweight on IJM, WCT, Neutral on Gamuda

KUALA LUMPUR: JP Morgan Asia Pacific Equity Research maintains its overweight ratings on IJM Corp Bhd and WCT Corp Bhd and its neutral rating on GAMUDA BHD.

It said Malaysian CONSTRUCTION stocks have been beaten down on heightened risk aversion following the Middle east and North Africa (MENA) political turmoil.

“Gamuda, IJM and WCT are down 4.8%, 1.8%, and 4.3% YTD, in our view providing a good buying opportunity for IJM, our top pick in the construction space, and for WCT in the mid-cap space, as we think valuations have become more attractive, and they are trading well within mean and 1SD (one standard deviation),” it said in a research note issued on Friday, March 4.

In its analysis, JP Morgan Research said Gamuda’s exposure to MENA was small, at 1.7% of total outstanding construction order book, IJM’s is 2%, while WCT’s is the largest, at 42%.

The bulk of WCT’s exposure is to Qatar, where WCT’s management believes the risks are lower given that Qatar has the highest GNP per capita in the world.

Qatar’s proven natural gas reserves stood at approximately 896 trillion cubic feet as of Jan 1, 2011, and it holds almost 14% of total world natural gas reserves, the world’s third largest.

WCT’s major project in Qatar, the RM1.36 billion ministerial building (37% of outstanding order book) is buffered by advance payments, while all progress billings are on a monthly basis, mitigating risks further.

Gamuda’s share price was down 2.5% year-to-date in market capitalisation against a 0.9% sum of the parts (SoTP) exposure from MENA, IJM’s market capitalisation fell 7.3% against no SoTP exposure from MENA, while WCT fell 6.3% against SoTP exposure of 0.9% from Bahrain and 19.9% from Qatar.

“We remain positive on the construction sector, supported by rollout of projects under the Economic Transformation Progamme (ETP), and RM67 billion private-public partnership (PPP) projects under the 10th Malaysia Plan.

“Recent newsflow has turned even more positive for the sector, with the appointment of Gamuda-MMC as the project delivery partner for the RM36 billion mass rapid transit (MRT) project, slated to commence in July this year; and the letter of intent given to MRCB for the close to RM18 billion River of Life project, both part of the ETP.

“We expect positive construction order flows will be the driver of share price performance. Another project due for award soon is the second package of the RM7 billion LRT extension project, for which tenders will close by April,” it said.

Read more...

RHBInvest Research

Top Story: Public Bank – Expect a solid finish to FY10
Announcing its 4QFY10 results later this month with full-year net profit estimate of RM3bn.

• With 9M annualised gross loan growth at 13.7%
• Non-interest income to remain at healthy
• Expect a second interim gross DPS of 35 sen
• Maintain Outperform with FV of RM15.40

Construction: BLT to roll out RM3bn jobs this year

• Believed that the RM3bn police quarter/station contracts largely went to privately owned Class-A Bumiputera contractors.
• Expect the winners of the RM3bn jobs to sub-contract out part of their jobs that will translate orderbooks to other players in the industry.
• Downgrading IJM to Underperform from Market Perform as valuations are now ahead of fundamentals.
• Maintain Overweight. Top "tactical" pick is Gamuda (FV=RM4.51) and top "value" pick is Fajarbaru (FV=RM1.37)

SP Setia:

• Swapping of IMR Land in Bangsar for a new integrated complex construction at Setia Alam
• Bangsar IMR Land to be developed into an integrated complex of residential and high-rise office buildings
• Maintain Outperform with an unchanged fair value of RM8.05

VS Industry:
Orders from for Dyson vacuum cleaners have already exceeded internal expectations
Recently secured a contract to produce components for an international leading water management solution company based in Australia
Raised our FY11-13 revenue assumptions by 1.6%, 3.6% and 0.1% respectively
Upgrade to Outperform with fair value of RM2.44

Read more...

Maybank IB Views

Market Strategy
Riding the high waves

Positives dominate. We expect Malaysian equities to scale new highs in 2011 supported by: (i) liquidity flows as funds continue to move into emerging markets, courtesy of the US’ 2nd dose of quantitative easing (QE2), (ii) the growing possibility of an early general election (GE), (iii) domestic investment upcycle from direct investments and the Economic Transformation Programme (ETP) implementation, and (iv) corporate exercises – M&As, privatisations and GLIC divestments – helped by low interest rates and ample liquidity.


ECONOMICS
2011 Outlook
Global Headwinds, Local Undercurrents

Volatile external environment amid “sustainability, solvency and stability” risks... Uncertainty remains over the strength and staying power of US recovery, hence the extension and expansion of monetary and fiscal stimulus. Eurozone sovereign debt turmoil persists amid concerns over the vulnerability of the peripheral economies and contagion to other countries, financial institutions’ exposure via intra-regional loans and holdings of government papers, as well as the public and banking sectors’ funding gaps. For emerging markets, namely Asia Pacific (ex-Japan) and BRIC, the issue is that of macroeconomic and financial stability as they grapple with “bubblenomy” risk arising from the combination of hot money inflows, excessive currency movements as well as general and asset price inflation.


SECTOR UPDATE
Banking: Overweight
Nov '10 statistics: Chugging along robustly

Remain Overweight. Bank Negara reported that loans to households continued to take the lead in Nov 2010, up +1.3% MoM and +13.9% YoY. Loans to businesses, which account for a smaller 44.5% of total system loans, was up +1.4% MoM but this translated into a comparatively slower +10.3% YoY. We remain Overweight on Banking as the over-riding theme in 2011 should be for project financing requirements under the ETP to spur loans growth further.


COMPANY UPDATE
IJM Corporation RM6.23: Buy
Property merger is off Shariah-compliant

Call under review. The aborted IJM Land-MRCB merger is a major disappointment as expectations have been built in for a much stronger outlook under an enlarged group. No change to our earnings forecasts which have yet to incorporate the merger potential. However, share price, which has been up 11% since the merger was proposed, is closing in to our RM6.40 RNAV. Our target price is under review pending an update with management to revisit its prospects.


Axis REIT RM2.37: Buy
Another yield accretive acquisition Shariah-compliant

Last acquisition for 2010. We are positive on the latest office purchase in Cyberjaya given its fair pricing as well as attractive 8% net property yield (vs. 6.9% funding cost). This yield-accretive acquisition is expected to enhance our 2011-12 EPS forecasts by 1.5-3.4%. We continue to like AXRB’s proven track record and hands-on management. Maintain Buy with a higher RM2.63 TP (+1.2%).


Dialog Group RM1.79: Buy
Bags ABF's EPCC job Shariah-compliant

We are bullish on fabricators. Dialog's ABF EPCC job win exhibits stronger orders and tender pipelines, and the momentum is set to sustain in 2011, especially for CTF-related EPCC works. We have raised Dialog's SOP target price to RM2.60, now incorporating part of its deepwater Pengerang centralized tankage facilities (CTF) project, which will feature prominently over the next few years. Buy.


Technicals
The FBM KLCI gained 7.33-points and closed at 1,518.91 last week, as some profit taking activities on stocks trimmed the market's initial advance. The obvious support areas for the FBM KLCI are located in the 1,474 to 1,518-zone. The key resistance areas of 1,520 and 1,531 may cap any rebound activity. we favour marginal chances of an upside break towards 1,531.99 in the medium-term.

Our weekly trading idea is a SHORT-TERM BUY call on TDM.


Other Local News
RHB, Pos Malaysia: To launch new banking service. RHB Banking Group, in a collaborative effort with Pos Malaysia Bhd, is launching the Pos Malaysia-RHB Shared Banking Services to enable banking services for its customers at selected Pos Malaysia outlets nationwide. The first phase would involve 21 selected Pos Malaysia outlets in the Klang Valley and Negri Sembilan. (Source: The Star)

Construction: RM144m allocated for infrastructure facilities in Kelantan. The Rural and Regional Development Ministry has allocated RM144m to provide infrastructure facilities in Kelantan during 2011. The projects include the provision of water and electricity supply, construction of roads, and building of houses for the poor. (Source: The Star)

Construction: RM1.46b island project revived. The RM1.46b Pulau Melaka twin reclaimed island project has been revived after a decade of financial and legal woes. The project, that involves the construction of some 400 commercial shop lots comprising a total of 1,534 units, would resume by September 2011. Most of the development work on the island has been completed with 521 units finished. (Source: The Star)

Mining: Advance SCT restarts Malaysian aluminium smelting plant. Advance SCT Ltd, one of Singapore's largest traders of aluminium, copper and stainless steel scraps, has restarted its aluminium smelting plant in Malaysia last month. The smelter would produce 200 to 400 tonnes of aluminium ingots monthly. It has also secured an exclusive contract to supply at least 1,000 tonnes a month of first grade copper scraps to China-based Qingyuan Shengli Copper Material Co Ltd. (Source: The Star)

Plantation: Oil palm dealers concerned about MPOB's new rule. The Malaysia Oil Palm Dealers Association (MOPDA) has expressed concern over Malaysian Palm Oil Board’s (MPOB) move to bar dealers from buying and selling oil palm fresh fruit bunches (FFB). The MPOB ruling, effective since 1st January 2011, allows estates, smallholders and dealers to sell directly to millers, preventing small dealers from being monopolised by big dealers, and enhancing the quality of oil palm fruits so that the oil extraction rate would exceed 25%. (Source: The Star)

Insurance: AXA Affin, BH Insurance to merge. AXA Affin General Insurance Bhd will merge with BH Insurance (M) Bhd and operate as single entity starting Jan 1. The combined turnover of the two entities puts them among the top five insurers in the country. (Source: The Star)

Read more...

Stocks to watch: IJM Land, MRCB, Dialog, Talam

MRCB weekly chart

KUALA LUMPUR: Shares of IJM Land and MALAYSIAN RESOURCES CORP Bhd (MRCB) will be the stocks to watch on Monday, Jan 3 after their shares slid ahead of the negative news that the proposed merger had fallen through.

However, AmResearch said it was maintaining its BUY rating on both IJM Corp Bhd and IJM Land Bhd with unchanged fair values of RM7.52 a share and RM3.88 a share, respectively.

IJM Land weekly chart

“IJM Land was sold down (pre-suspension share price of RM2.86) this morning (Jan 30) prior to the announcement that the proposed merger with MRCB had been aborted. We are unfazed. The issue now is the relative investment merits of IJM Corp and IJM Land. We believe they have enough strong catalysts for them to move forward on their own,” AmResearch said in a research note after the announcement.

Other stocks which could be in focus on Monday include DIALOG GROUP BHD, Berjaya Corp Bhd, Talam Corp Bhd, RANHILL BHD and SilverBird Group Bhd.

Dialog’s subsidiary Dialog E&C Sdn Bhd has secured a RM64.6 million contract from Asean Bintulu Fertilizer Sdn Bhd (ABF) to build a cooling tower in Bintulu, Sarawak.

Dialog weekly chart

The scope of work would involve the engineering, procurement, CONSTRUCTION, commissioning and associated works of the new tower.

Berjaya Corp net profit for the second quarter ended Oct 31, 2010 jumped 66.9% to RM86.54 million from RM51.83 million a year ago.

The better performance was due mainly to write-back of impairment in value of investment in associated companies and gain on disposal/partial disposal of subsidiary companies as well as gain arising on accretion of interest in an associated company and lower finance costs.

BJCorp’s revenue for the quarter rose 6.2% to RM1.72 billion from RM1.62 billion in 2009. Earnings per share were 1.97 sen while net asset per share was RM1.39.

Talam posted net loss of RM83.29 million in the third quarter ended Oct 31, 2010 compared with net profit of RM118,000 a year ago, mainly due to losses on disposal of two parcels of development PROPERTIES totaling RM43.85 million and foresees a challenging remaining financial year for the group.

Talam weekly chart

Standard & Poor's Ratings Services has placed its “B” long-term corporate credit rating of Ranhill Bhd on CreditWatch with negative implications. It also placed its B- issue rating on US$220 million 12.5% senior unsecured notes due October 2011 issued by Ranhill (L) Ltd on CreditWatch with negative implications.

SilverBird’s net profit for the fourth quarter ended Oct 31, 2010 rose 36.66% to RM835,000 from RM611,000 a year ago mainly due to the sales growth in its core business of consumer food division.

Revenue for the quarter rose 6.75% to RM153.92 million from RM144.19 million in 2009. Earnings per share were 0.22 sen while net assets per share were 53 sen.

Read more...

Maybank IB Views

RESULTS REVIEW
Gamuda RM3.83: Buy
No surprises in 1Q, MRT in the bag ! Shariah-compliant

Positive big win. RM88.5m 1QFY11 net profit (+11% YoY) is 25% of our full-year forecast and 23% of consensus. Construction and property drove earnings uptrend. The award of the Greater KL MRT project delivery partner (PDP) role to MMC-Gamuda is positive, to potentially drive mid term earnings. No change to our earnings forecasts for now, while we have already imputed a 50sen impact from the MRT project in our RM4.45 RNAV-based target price. Maintain Buy.


COMPANY UPDATE
IJM Corporation RM6.27: Buy
Another major win; MRT, LRT jobs ahead? Shariah-compliant

Replenishing nicely. A new RM461m building works contract has lifted IJM's FY11-YTD job wins to RM1.61b, closing in to our RM2b estimate for FY11. No change to our earnings forecasts. Last Friday's Greater KL MRT project go-ahead and the remaining packages of the LRT extension works may benefit IJM, based on its works experience. The stock remains a Buy with a RM6.40 RNAV-based TP.


Technicals
The FBM KLCI lost 7.40-points and closed at 1,499.28 last week. The obvious support areas for the FBM KLCI are located in the 1,474 to 1,495-zone. The key resistance areas of 1,499 and 1,531 may cap any rebound activity.


Other Local News
EPIC: Ambitious plans for Tasik Kenyir. Eastern Pacific Industrial Corp Bhd (EPIC) has been granted the project to transform Terengganu's Tasik Kenyir, the largest man-made lake in Southeast Asia, into a duty-free shopper's paradise. This is part of the redevelopment plan to turn Tasik Kenyir, which will attain a duty-free status by the end of 2012, into a major tourist spot. (Source: The Star)

Genting Group: Gets nod for Vietnam venture, eyes Sri Lanka. The JV between Genting Group and a Vietnam fund manger VinaCapital has obtained approval from the central government for a USD4b (RM12.5b) casino resort project in Hoi An city, Vietnam. The large scale project features a five-star hotel, resort villas and a casino. Genting Group is also exploring the setting up of a casino in Sri Lanka, as its parliament recently passed the Gambling (Special Provision) Bill to legalise gaming. (Source: The Edge Financial Weekly)

Sime Darby: Culprits in Sime's RM2.1b losses to face full brunt of the law. The Malaysian Anti-Corruption Commission (MACC) has found several "elements of fraud" in Sime Darby Berhad and has shared its findings with police and the Companies Commission (SSM) for them to initiate action. Sime Darby was found to have breached several provisions under the Penal Code, the Companies Act and the Anti-Corruption Act 2009. (Source: The Star)

DiGi: Plans to spend RM700m in capex next year. DiGi.com Bhd will invest RM700m in 2011 in capital expenditure, focusing on enhancing data and internet rather than voice services. Revenue growth is expected to be a high single digit to 10% with the expanding contribution from data and Internet business. (Source: The Star)

RHBCap: EPF may sell 9% in RHBCap. The Employees Provident Fund (EPF) is planning to sell another 9% stake in RHB Capital Bhd to a diverse group of institutional fund managers. The senior management of RHB Banking Group participated in roadshows in the region and in London and New York to meet foreign investors, mostly institutional fund, for the divestment. (Source: The Edge Financial Weekly)

Kencana: JV with Petrofac may bag Berantai job. Kencana Petroleum Bhd and its technical partner London-based Petrofac Ltd have emerged as the front runners to bag the exploration of the Berantai oil and gas field at PM309, off the coast of Peninsular Malaysia. Kencana and Petrofac may opt for either a processing platform or a standalone development, utilizing a floating production, storage and offloading (FSPO) vessel. (Source: The Edge Financial Weekly)

Conglo: JCorp seeks to remove Muhammad Ali. Johor Corp (JCorp) is seeking to remove Tan Sri Muhammad Ali Hashim, its previous head for 18 years, from the boards of three listed companies it has direct stakes in. JCorp has called for EGMs at Kulim (M) Bhd, KPJ Healthcare Bhd and Damansara Realty Bhd (DRealty) for this purpose. (Source: The Star)

Scomi Marine: Unit to sell foooour logistic firms. Scomi Marine Bhd (SMB) unit Scomi Marine Services Pte Ltd has proposed to sell four companies to its 80.5%-owned subsidiary PT Rig Tenders Indonesia Tbk for IDR323.1b (RM538.3m) in a group-related corporate exercise. The four companies Scomi Marine Services is disposing of (its entire equity interest) are CH Logistics Pte Ltd, CH Ship Management Pte Ltd, Grundtvig Marine Pte Ltd and Goldship Private Ltd. (Source: The Star)

KPJ: Shareholders approve hospitals sale. KPJ Healthcare Bhd's shareholders have approved the disposal of three hospitals to the company's associate Al-Aqar KPJ Real Estate Investment Trust (REIT) for RM138.8m. KPJ, a 48.4% associate of Johor Corp, has a 43% stake in Al-Aqar KPJ REIT. The three hospitals being sold were the Bandar Baru Klang Specialist Hospital and the Kluang Utama Specialist Hospital in Malaysia as well as the Rumah Sakit Bumi Serpong Damai hospital in Jakarta. (Source: The Star)

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RHBInvest Research

Gamuda:

• Trading Buy
• 1QFY07/11 net profit grows 20% yoy, appointed MRT’s PDP
• Fair value is RM4.51.
• Maintain Trading Buy.

Corporate Highlights


IJM:

• Awarded RM461m building contract for Naza’s Platinum
• Fair value is RM6.16.
• Maintain Market Perform.

Hai-O:

• Weak MLM sales continues
• Maintain Underperform.

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