Maybank IB Views
Monday, January 31, 2011
COMPANY UPDATE
Gamuda RM3.83: Buy
NO to Selangor's water offer Shariah-compliant
As expected. SPLASH's rejection of the Selangor Government's latest offer was expected, for the offer values SPLASH at just 0.63x book, we estimate. We had anticipated the action by SPLASH's shareholders, including Gamuda which holds a 40% stake. We foresee the water consolidation exercise in Selangor to be another long drawn affair. No change to our earnings forecasts and target price for Gamuda.
S P Setia RM6.42: Buy
Strengthening its foothold in JB Shariah-compliant
New Tebrau land boosts EPS by 2.4%. We are positive on the recent land purchase in Tebrau given its fair pricing. The land is expected to enhance our FY13 earnings by 2.4%, whilst leaving negligible impact to our RM6.50 RNAV. We continue to like SP Setia (SPSB) and see the recent correction in the share price as an excellent opportunity to accumulate the shares. No change to earnings forecasts and RM7.15 TP (10% premium to RNAV). Reiterate Buy.
RESULTS REVIEW
CIMB Group Holdings RM8.45: Buy
Pipeline remains healthy
Pipeline healthy, regional operations contributing well. CIMB's pre-results briefing last Friday (2010 results will be announced 23rd Feb) largely steered clear of specifics. The overall tone nevertheless remains upbeat into 2011, for CIMB enters the year with a healthy business pipeline and strong growth in regional operations. No change to our earnings forecasts. Buy maintained with an unchanged DDM-based target price of RM10.30.
Digi.Com RM25.30: Hold
Results above, dividends below Shariah-compliant
Mixed surprises. RM1.18b 2010 net profit (+18% YoY) was above our expectation at 108% as ongoing operational efficiency initiatives continue to bring results. We upgrade our 2011-12 earnings forecasts by 6-7% p.a., and DCF based target price to RM26.70 (+7%), which implies 16.6x 2011 PER. A fourth 43sen single-tier DPS brings 2010 DPS to 163sen, representing 107% net profit payout (2009: 138%), below our 130% forecast. No change to our 105% payout forecast for 2011 which implies 6.7% net yield at current levels. Maintain Hold.
Guinness Anchor RM9.63: Hold
The second part of a perfect pint pour
Above expectations. RM103m 1HFY11 net profit (+46.5% YoY) made up 61% of our full-year forecast due to unexpected cost write-back. We maintain our earnings forecasts, pending details on the write-back which should be a one-off. No change to our RM10.60 DCF-based target price which implies 16x 2011 PER. Guinness remains a Hold.
SECTOR UPDATE
Banking: Overweight
Dec '10 statistics: Loans Up 12.8% YoY
2011 loan growth of 10-11%. The positive of 2010 is that household and corporate loan demand kept pace to support economic momentum, with growth rates of 13.2% and 12.3% respectively. Overall system loans ended the year up 12.8% YoY, marginally above our full-year forecast of 12%. We look to lending momentum of 10%-11% for 2011 and maintain an Overweight on the banking sector.
Technicals
The FBM KLCI plunged 25.54-points and closed at 1,521.89 last week as some further heavy profit-taking and liquidation activities caused the market’s large fall for the second consecutive week. The weaker support areas for the FBM KLCI are located in the 1,474 to 1,505-zone. The key resistance zone of 1,521 and 1,576 will offer major selling and liquidation activities.
Weekly trading idea is an ACCUMUALTE call on SAPCRES
Other Local News
Alam Maritim: Bidding for RM400m jobs. Alam Maritim Resources Bhd is bidding for RM400m worth of jobs this year to ride on the recovering sector which was subdued last year due to the global economic crisis. The offshore marine transportation service provider will submit bids in Indonesia, Brunei and Sabah as part of the group's long-term growth plan. (Source: Business Times)
Gaming: Genting said to be keen on Pan Malaysian Pools. The Genting group is making a bid for Pan Malaysian Pools Sdn Bhd (PMP), the number forecast operator (NFO) owned by Tanjong plc. Its bid is in the higher end among bids that have been submitted. The other bids are believed to be between RM1.8b to RM2.5b. (Source: The Edge Financial Daily)
Infrastructure: No rates hike on two highways. The Prime Minister announced that the toll rates for the Kuala Lumpur-Karak Expressway and East Coast Expressway Phase One would not be increased for the next five years. The decision was made following a review of transportation costs, including restructuring of the toll charges and to ease the people's burden. Furthermore, no compensation would be paid to the concessionaires of the two highways. (Source: The Star)
Infrastructure: All eyes and ears on second MRT line. The second mass rapid transit (MRT) line, which circles the Kuala Lumpur city centre (KLCC) orbital and known as the "circle line", is already in the final planning stage. The details are expected to be announced in March. The circle line is expected to cover the hotspots surrounding the KLCC, Jalan Bukit Bintang, the new Kuala Lumpur International Financial District in Dataran Perdana, KL Ecocity, Pusat Bandar Damansara and Sentul, among others. (Source: The Star)
Regulations: Changes in takeover rules. The Securities Commission (SC) and Bursa Malaysia raised the minimum shareholder approval threshold for takeovers via asset and liabilities route to 75% from the previous simple majority minimum. Other significant changes include the need for companies undergoing privatisation to obtain independent advice to ascertain if the offer is fair and reasonable and to ensure high net-worth investors are well informed of any structured products being offered to them. (Source: The Star)
