Maybank IB Research

COMPANY UPDATE
Public Bank RM13.30: Buy
To kick off the reporting season

Raising our TP. Factoring in a 3% increase to our BV/share for FRS139 adoption and a higher target P/BV of 2.8x (2.7x previously) on updating our historical parameters, we are raising our TP on Public Bank to RM14.60 from RM13.50 previously. We maintain our Buy call for exposure to Public Bank’s impeccable fundamentals while a net yield of 4% provides support to share price.

RESULTS REVIEW
CapitaMalls Malaysia Trust RM1.45: Hold
East Coast Mall starts contributing

On track. CMMT's 2011 realised net profit of RM110.9m came in as expected. 2011 DPU of 7.9sen was also in line. CMMT has grown its asset size by 31% to RM2.8b since its listing in July 2010 with the Gurney Plaza Extension and ECM acquisitions. Potential earnings catalysts could come from the reconfiguration of outdoor car park lots at ECM into retail spaces. Hold.

Technicals
The FBM KLCI lost 0.41 points and closed at 1,522.66 last Friday ahead of the CNY holidays. The local market remained quiet in range-bound trading despite high volumes of between 1.44b to 1.94b shares traded. Some position-squaring ahead of the weekend and the impending CNY holidays later in the week caused a mild downward drift in the local bourse.

Trading Idea is an ACCUMULATE call on UNISEM, with upside target prices of MYR1.49 & MYR1.63.

Other Local News
Genting Bhd: RM120m deal with AWE. AWE Ltd (AWE), an Australian-based oil and gas exploration and production company, has entered a sale and purchase agreement with a subsidiary of Genting Bhd, whereby a wholly-owned subsidiary of AWE will acquire a 100% interest and operatorship of two production-sharing contracts (PSCs) offshore Indonesia. It also included an undeveloped oil field with an estimated 76m barrels of recoverable oil. The consideration for the acquisition of the interest in the PSCs will be USD39m (RM121.1m). (Source: The Star)

Sp Setia: Liew joins PNB in improved bid for SP Setia. Permodalan Nasional Bhd has revised its takeover offer for SP Setia Bhd's shares to RM3.95 apiece from RM3.90 previously, in a new deal with joint bidder CEO Tan Sri Liew Kee Sin. As the joint offeror, Liew will keep his 8% share of SP Setia. Liew will remain as SP Setia's group president and CEO for three years. He will be given a put option to sell his stake in SP setia to PNB at RM3.95 after the three-year period. (Source: Bursa Malaysia)

Perodua: Says sales slowed in January. Perusahaan Otomobil Kedua Sdn Bhd (Perodua) has appealed to the government and the banking industry to loosen up the loan application process after new car sales slowed in January. New car sales had lost some momentum, because banks are taking a longer time to process loan applications. (Source: The Sun)

MPHB: To sell hotel to pare down debt. Multi-Purpose Holdings Bhd (MPHB) is in talks to sell a hotel in Kuala Lumpur for about RM50m as a part of its asset rationalization programme. Its wholly owned subsidiary, Syarikat Perniagaan Selangor Sdn Bhd, owns hotels in Penang, Pudu and Ampang, which are managed by Flamingo Managament Sdn Bhd. The other assets up for sale are its insurance business - Multi Purpose Insurans Bhd - as well as its stockbroking business. (Source: The Edge Financial Weekly)

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Maybank IB Research

COMPANY UPDATE
SapuraCrest Petroleum RM4.58: Buy
Orders 2 pipelay vessels Shariah-compliant

Maintain Buy with a RM5.60 TP. SapCrest's rapid expansion of its marine fleet to capitalise on the boom in the installation of pipelines and facilities (IPF) markets is positive, in keeping with its aspiration to be a regional player. This strategy will be rewarding, if executed well. However, contributions will only be realised from FY15. We remain positive on its strong ability to grow and pursue new jobs for medium term growth, and continue to rate SapCrest a Buy.


KNM Group RM0.96: Sell
Riding through a transition phase Shariah-compliant

Target price cut to RM0.88 (-19%) following a 10-19% downgrade in FY12-13F earnings forecasts on lower revenue recognition. While margin pressure has abated on improving order flows, we are cautious of KNM's cost management abilities and so retain a conservative stance on our estimates. KNM needs to deliver a consistent set of quarterly results to warrant a re-rating. Sell maintained.


Technicals
The FBM KLCI closed 3.27 points higher at 1,525.56 yesterday. Its resistance areas of 1,530 and 1,545 may cap market gains, whilst obvious support areas may be located at 1,505 and 1,525.

Trading idea is an ACCUMULATE call for UNISEM.

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RHBInvest Research

Sector Call



Semiconductor: Moving to P/BV valuation methodology Underweight

Sector Update

Unisem: New fair value of RM0.92 Underperform

MPI: New fair value of RM2.19 Underperform

¨ With the poor earnings visibility on the back of weak guidance by major players in the industry, the outlook for 2012 remains in doubt amidst the bearish outlook in the global economy. Furthermore, post Unisem’s analyst briefing recently, there was lack of conviction as to whether the guided 4Q2011 revenue decline would be short-term, with a quick a recovery in 2012, although management appeared optimistic on such a scenario.

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RHBInvest Research - Sector Call

Sector Call



Timber: Temporary build-up in plywood inventory in Japan Overweight

Sector Update

¨ According to the latest Japan Lumber Report, there has been a build-up of imported plywood inventory in Japan (mainly in thick panel) due to the arrivals of orders placed after the March earthquake disaster. As a result, prices for CP and SP reported by timber companies have weakened recently from its peak of US $620/m3 in May/June to about US$540-560/m3 by July/August.



Semiconductor: No signs of a turning point yet Neutral

Unisem: Fair value RM1.76 Market Perform

Notion: Fair value RM2.10 Market Perform

JCY: Fair value RM0.53 Underperform

MPI: Fair value RM4.18 Underperform

¨ Jun 11 chips sales of US$24.7bn posted the first drop on yoy basis by -0.5% after chalking yoy growth since the Oct 09 when it dropped 2.4%. The weaker chip sales suggests that chip demand in certain segments remains weaker than expected but could not be fully offset by strong demand for mobile devices as well as corporate IT spending. On mom basis, chips sales fell by 1.4% after gaining 1.8% in May.

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RHBInvest Research

Corporate Highlights



Allianz: Still interested in M&As Outperform (up from MP)

Company Update

¨ The failure to strike a deal with MNRB for a stake in Takaful Ikhlas was disappointing in our view, although we understand that Allianz would continue to pursue a Takaful business.

¨ Allianz is also not ruling out other M&A to strengthen its conventional insurance business. In this regard, we believe that a potential target could be in the general insurance sector due to the high capital requirements from the RBC framework and also the high level of competition in the sector, as there are currently 29 general insurance players (inclusive of six composite insurers).



Axiata: XL fell a bit short Outperform

Company Update

¨ 67%-subsidiary, XL Axiata (XL), posted 2QFY11 core net profit of Rp842bn (+>14.8% yoy), representing only 43% of both our and consensus full-year estimates.

¨ 2Q revenue increased 0.5% qoq, mainly due to strong data & VAS revenue (+13.6% qoq), mostly offset by weaker voice (-0.7% qoq) and SMS (-2.2%). EBITDA margin was marginally lower by 0.7ppt qoq to 52.3%. Nonetheless, together with lower net interest cost (-12.9% qoq), 2Q core net profit increased 14.3% qoq.



Unisem: Initiating internal restructuring Market Perform

Briefing Note

¨ Unisem is initiating an internal restructuring in order to transform into a “World Class Supplier” to be on par with major players within the industry. These include putting in place advance IT systems i.e. ERP to integrate all its plants for better efficiency. Going forward, management expects improvement in cycle time, productivity, and better cost savings through better waste management.

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CIMB Research maintains Neutral on Unisem

KUALA LUMPUR: CIMB Equities Research is maintaining its Neutral call on Unisem Holdings Bhd and retains its RM1.40 target price.

It said on Monday, Aug 1 that Unisem management’s downbeat tone during Unisem’s 2Q11 results briefing and the slight delay in the loading of its tier-1 customer surprised it though there had been hints in its 2Q announcement.

“The positive takeaway was the greater push towards copper wire bonding, its goal of being a world-class supplier, which would help bring in more tier-1 customers and its relook at its processes to cut cost.,” it said.

CIMB Research said taking its cue from the subdued guidance, it cut its FY11 EPS forecast by 16% but maintain our FY12-13 numbers as earnings should normalise then.

“The earnings adjustment has no impact to our RM1.40 target price as we continue to value the stock at a 10% discount to its five-year P/BV of 1.0x. As there are no re-rating catalysts in sight and near-term prospects are weak, we maintain our NEUTRAL rating,” it said.

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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: Fajarbaru

Visit Note
Upbeat on new contract wins
The new contract wins could potentially come from: (1) Package B of the Ampang and Kelana Jaya LRT line extension project; (2) Building jobs for schools, colleges and university campuses; and (3) Infrastructure works in the East Coast.
FY06/11 net profit forecast is reduced by 10% as we now assume the RM150m contract for the five new LRT stations to only start contributing in FY06/12 (vis-à-vis FY06/11 we assumed previously).
Fair value is trimmed from RM1.65 to RM1.57 but maintain Outperform.

Sector Call

Banks: Mar ‘11 system data

Sector Update
Leading indicators charting new heights
No change to our Overweight stance on the sector. CIMB, AMMB and Affin are our top picks for the sector.

Semicon: March chip sales still up yoy Neutral

Sector Update

Unisem: Fair value at RM1.99 Market Perform

MPI: Fair value at RM4.95 Underperform

Notion: Fair value RM2.25 Market Perform

JCY: Fair value at RM0.74 Underperform (down from MP)


Corporate Highlights

JCY:

Visit Note

• Labour issues to affect margins in FY11
• Also, management highlighted there could be potential component shortages mainly for the motor controller chips that could affect the global supply chain of the HDD industry.
• We are reducing our FY11 net profit by 11.3% mainly to input higher operating expenses. However, we are raising our FY13 net profit by 7.6% to reflect margin improvement on the back of its expansion to China .
• Thus, we downgrade our call to Underperform (from market perform) and a lower fair value of RM0.74/share based on unchanged 10x CY11 EPS.

AirAsia:

Briefing Note

• Growth story and IPO of overseas units not without caveat
• Fair value is RM2.10. Maintain Underperform.

Digi:

1QFY11 Results/Briefing Note

• 1 Network modernisation will not affect dividends
• We have fine-tuned our earnings forecasts by 0.2-0.7% for FY11-13 due to marginally lower depreciation charges from lower capex assumptions.
• Fair value raised to RM30.00 from RM29.10 due to lower capex assumptions of RM650m p.a. (previously RM720-750m). Although we like the stock as a decent dividend yield play with data-led revenue growth, we believe the stock is almost fully valued at this juncture. Downgrade to Market Perform.

Axiata:

Company Update

• A fairly strong start to 2011 for XL
• The strong 1QFY11 growth in XL reinforces our Outperform call on Axiata, which offers good growth prospects albeit moderating this year. Maintain our SOP fair value of RM5.75.

Paramount:

News Update

• Acquiring land in Klang. Total cash consideration is RM110m, to be funded by internal funds and/or borrowings.
• We are positive on this acquisition, as Klang is the 2nd largest city in Klang Valley after KL, with a population of close to 750k. A well-planned commercial development is hence marketable.
• No change in our earnings estimates pending guidance from the management on GDV of the project.
• Maintain Market Perform with an unchanged fair value of RM5.92.

EON Capital:

News Update

• Eon Cap announced last Friday that the Board had accepted HL Bank’s offer, subject to and conditional upon: 1) the payment of an interim net dividend amounting to RM311.9m by Eon Bank (Proposed Interim Dividend); 2) the Proposed Interim Dividend received by Eon Cap shall not form part of the assets of Eon Cap to be disposed to HL Bank; and 3) the offer price of RM5.06bn remains unchanged and shall not be adjusted for the payment of the Proposed Interim Dividend. HL Bank has since confirmed that it is agreeable to the above conditions.
• The Proposed Interim Dividend is subject to the approval from BNM. In addition, an application will be made to the SC for the proposed change in control of MIMB Investment Bank. Once BNM’s and SC’s approvals are obtained, both parties shall proceed and complete the transaction.
• No change to our fair value of RM7.30 (based on HL Bank’s offer price) and Underperform call.

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RHBInvest Research

Top Story: E&O

Company Update

• The recent in-principal approval for E&O’s STP2 project is a significant quantum leap for E&O, as it finally crystallises the value within the group
• E&O will become the largest land owner on the Penang island, set to enjoy the increasing property values on the island, fuelled by rising FDIs. Considering the scarcity of land on the island, this would make land a very valuable asset for developers.
• The upside potential is accentuated by the MOU that was entered yesterday between the state government and Chinese state-owned contractor Beijing Urban Construction Group (BUCG) to construct a 6.5 km tunnel to link the island and mainland that stretches from Gurney Drive to Butterworth. This latest development certainly bodes well for E&O’s project in STP, due to its close vicinity to the 3rd link, capturing rising population flow to the island while easing the traffic congestion issues.
• We think E&O should be worth more now given the green light from the state government which clears up the largest uncertainty, while also enjoy the state’s infrastructure investments. We hence raise our fair value to RM2.00 (from RM1.85 previously)

Corporate Highlights

Petronas Gas:

Company Update
Minimal impact from lower gas volume
Maintain Outperform call and our RM13.95/share fair value.

Paramount:

Company Update
We downgrade Paramount to Market Perform, as we believe the stock is now fully valued –Nevertheless, dividend angle of the stock is still rather attractive.
No change to forecasts. Although we downgrade the stock to Market Perform, our fair value is unchanged at RM5.92,.We believe the on-going (2-for-5) bonus issue and (1-into-2) share split exercise will continue to support the share price. An EGM will be held in early Jun for the approval of the proposed exercise.

HELP International

Briefing Note
On track with its Subang 2 campus
No change to forecasts. Our fair value is maintained at RM2.87,We reiterate our Market Perform call on the stock.

Unisem:

Briefing Note

• Unisem guided for 2Q11 revenue to grow at 5-6% qoq driven by strong demand for Quad Flat No Lead (QFN), higher-margin ball grid arrays (BGA) and micro-electro-mechanical-systems (MEMS). Furthermore, Unisem highlighted it is already seeing a pick-up in orders which suggests stronger growth in 2H2011.
• Our fair value is lowered slightly to RM1.99/share based on 11x FY11 FD EPS. Maintain Market Perform.

EON Capital:

News Update

• High Court dismisses Primus’ petition
• No change to forecasts and fair value of RM7.30 (based on HL Bank’s offer price). Maintain Underperform.

SEGi:

1QFY11 Results

• Stronger margins in 1Q11
• Our fair value has been raised to RM5.05 (from RM4.54).We believe SEGi’s current valuations are undemanding compared to HELP.The stock offers strong earnings prospects and decent dividend yield of 4.3% (ex-special dividend). Hence, we reiterate our Outperform call on the stock.

Axis REIT:

1QFY11 Results

• 1Q10 realised net profit of RM16.2m (+39.4% yoy; +0.2% qoq) missed our expectation and consensus estimates by about 10%. However, we expect earnings to pick up in upcoming quarters due to completion of acquisition of a new property recently.
• No change to forecasts. We maintain our Outperform recommendation on Axis REIT. Our indicative fair value is kept at RM2.71.

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RHBInvest Research

Top Story: Shifting Trends – Currency plays

Market Update

In RHBRI’s Economic Highlights yesterday, we highlighted our view that the RM/USD exchange rate could strengthen further in the near term to RM2.90. We now look at the impact on sectors and companies.

Sector Call

Motor: Beneficiary of a Stronger RM Neutral

Sector Update

MBM Resources: Fair value raised to RM3.45 (from RM3.25) Market Perform

Tan Chong: Fair value raised to RM5.40 (from RM5.20) Market Perform

UMW: Fair value raised to RM7.60 (from RM7.50) Market Perform

APM: Fair value raised to RM5.60 (from RM5.50) Market Perform

Proton: Fair value lowered to RM3.55 (from RM4.00) Underperform

Corporate Highlights

TH Plantations: Weathering the storm Outperform

Visit Note

As with most of the other plantation companies with significant landbank in Sabah, THP’s FFB production suffered in 1QFY11, due to the excessive La Nina induced rainfall, which made harvesting activities difficult. So far, the rain has been less heavy in Apr, and management is hopeful that the weather will improve. Despite this, we are wary of a delayed impact of the wet weather on FFB yields, which could potentially come 5-6 months and 10-12 months later,



MPI: To pick-up in the long term Market Perform

Briefing Note

Management guided for 4QFY11 revenue to remain flat qoq as sales volume for its legacy packages remain tepid but offset by strong demand for its newer chip packages. We note that utilisation for micro-leadframe-packages (MLP), module packages and test is fully utilised around 90% but its overall utilisation rates was dragged down to around 85% due to slower demand for legacy packages i.e. PDIP



Unisem: Weaker than expected 1Q Outperform

1QFY11 Results

1QFY11 net profit of RM5m was below expectations. The key variance was mainly due to: 1) lower-than-expected EBITDA margins of 14.3% due to lower contribution from SiP, MEMS and BGA packages; 2) strengthening of RM against the US$ and 3) losses in Batam and Wales.

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RHBInvest Research

Top Story: Plantation – Production getting back on track
Neutral

Sector Update
Malaysia’s CPO production recovered in Mar, rising 29.4% mom, while exports rose by 10.8% mom, resulting in a 9.1% mom increase in closing stock levels to 1.61m tonnes (from 1.48m tonnes in Feb). While part of the mom increase could be attributed to the shorter month in Feb, we believe the bulk of the increase was due to recovering FFB yields in the country as the La Niña effect started wearing off and weather started normalising.

Macro View

IPI: Bounced back to 5.0% yoy in February

Economic Highlights (published 11 Apr 2011)
Industrial production bounced back to +5.0% yoy in Feb, after softening to +0.5% in Jan and compared with +4.5% in Dec, due to a rebound in manufacturing production and stronger electricity output as well as a smaller fall in mining output during the month.
The rebound in Feb’s industrial and manufacturing production will likely be temporary and it will likely weaken back in the months ahead. As a result, we expect real GDP growth to moderate to 4.6% yoy in the 1Q, from +4.8% in the 4Q of last year.

Sector Call


Semicon: More consolidation for the industry? Neutral

Sector Update

Unisem: Fair value at RM2.65 implies 32.5% upside Outperform

MPI: Fair value at RM5.96 Market Perform

Notion: Fair value maintained at RM2.25 Market Perform

JCY: Fair value unchanged at RM0.81 Market Perform

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RHBInvest Research

Top Story: Market Momentum

• Market Update
• Down by not out
• Our stress test suggests that all sectors except banks may be at risk if cost inflation becomes critical. The heavyweight sectors include plantation, telecom, O&G and utilities. This also suggests that recent top outperformers could face a reversal if the macro environment remains uncertain.
• We reiterate our view that a market pull back would present an opportunity to take advantage of the value that will re-emerge. As such our Overweight calls on the banks and telecom sectors are unchanged. We also maintain our Overweight calls on plantation, oil & gas and property sectors although the cautious environment may cause continued selling pressure on these stocks in the near term.

Sector Call

Media:

• Sector Update
• Strong start to the year
• Media Prima (FV=RM3.20) remains our preferred pick given.We maintain our Outperform call on Media Chinese (FV=RM1.32) and Star (FV=RM4.23). Maintain Overweight on the sector.

Corporate Highlights

YNH:

• News Update
• YNH AEON coming to Seri Manjung
• Seri Manjung is expected to raise the property values in the township.
• No change to forecasts. Fair value kept at RM2.31

Petronas Chemicals:

• Briefing NoteBeneficiary of higher utilisation and product prices

• Maintain Outperform with new fair value of RM7.27/share (previously RM7.25).

Unisem:

• Briefing Note
• Softening in 1Q, but to bounce back after
• No change to forecasts. Fair value is RM2.65 based on 11x FY11 FD EPS.

MISC:

• Briefing Note
• Three culprits
  

• MISC cautioned that the petroleum tanker segment is “bracing itself for another difficult year ahead” as “the over-supply situation is finally hitting home”.
• Fair value is RM7.59. Maintain Underperform.

CIMB:

• 4QFY10 Results/Briefing Note
• Raising the bar for 2011
• No change to fair value of RM9.80 and Outperform call.

TM:

• 4QFY10 Results/Briefing Note
• Returns excess cash
• We revised our fair value to RM3.84 (previously RM4.05)
• Downgrade from trading buy to Underperform.

Proton:

• 3QFY11 Results/Briefing Note
• Lotus restructuring costs kick in
• Proton sales recovered to 15,806 units (+36.8% mom) in Jan 2011 helped by higher Inspira deliveries. Nonetheless, earnings going forward will be severely affected by write-offs arising from the ongoing LTP while its net cash position will remain under pressure.
• We reiterate our Underperform call and reduce our fair value to RM4.00 (from RM4.15).

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Maybank IB Views

COMPANY UPDATE
Ann Joo Resources RM2.97: Buy
Riding on bullish construction cycle Shariah-compliant

Looking forward to demand rebound. 4Q10 results may undershoot market's expectation by 25% due to weak ASPs. However, we think market is likely to look beyond the poor results and impute for volume recovery in 2011-12. Greater visibility of domestic pump-priming is raising the profile of construction steel sector, yet valuation remains a 35% discount to KLCI. Maintain Buy, with a revised TP of RM3.30 as we roll-over our valuation to 2012 EPS at an unchanged PER of 11x.


Technicals
The FBM KLCI closed higher by 3.95 points at 1,539.55 yesterday. Its resistance areas of 1,540 and 1,558 will cap market gains, whilst the obvious support areas are located at 1,515 and 1,538.

Trading ideas for today are two BUY calls on DAYANG and BSTEAD.


Other Local News
MPHB: Expected to announce major acquisition. Trading in the securities of Multi-Purpose Holdings Bhd (MPHB) was suspended from 2.30pm on Tuesday, Feb 8, pending a material announcement. MPHB will be announcing a major acquisition today, reliable sources said, although speculation is rife that the company could also be announcing the re-listing of its gaming subsidiary Magnum Corp Sdn Bhd. (Source: The Star)

PJD: Plans RM1.7b projects by Q3. PJ Development Holdings Bhd (PJD) will be launching four projects worth about RM1.7b by Q3 2011. The projects are located in Sri Hartamas and Cheras in Kuala Lumpur, Butterworth in Penang, and Kuantan in Pahang. In Sri Hartamas, PJD will launch Duta Kingsbury, comprising more than 300 units of condominiums. (Source: Business Times)

Unisem: Plans to spend RM250m to ramp up plant expansion. Unisem (M) Bhd may spend more than RM250m this year to construct and equip new plants as capacity fills up with rising sales. Among others, Unisem plans to build a new plant in Ipoh, Perak, as the existing facility is nearing its production limit even after an expansion in 2010 to upgrade the assembly, test and wafer-bumping capabilities. (Source: The Malaysian Reserve)

Banking: Below 10m credit cards issued, corporate loans growth to continue. The total number of credit cards in circulation in the country has dropped below 10m, partly affected by the RM50 service tax introduced in Budget 2009 and as more people opt for debit cards. Separately, corporate loans growth fuelled by working capital loans is expected to continue its upward trend this year supported by the multitude of projects under the Economic Transformation Programme (ETP) and the 10th Malaysian Plan (10MP). (Source: The Star)

Autos: Earlier liberalization? The government may bring forward the liberalization of the automotive industry to several years earlier than 2020, amid mounting pressure for a level playing field between national and non-national players, and as foreign automakers express keen interest to set up or expand their manufacturing presence in the country. Financial benefits such as R&D grants and soft loans, mainly benefit local companies, are likely to cease with liberalization. Protective policies would have to be abolished too. (Source: The Edge Financial Daily)

Property: UOA to list development arm. The board of United Australia Ltd (UOA) which is listed primarily on the Australian Stock Exchange (ASX), has submitted documents to Bursa Malaysia for a proposed listing of its development arm on the main market. UOA hopes to have its development arm listed on Bursa by June 2011. (Source: The Edge Financial Daily)

Property: Proposal for higher licence deposits set to test developers. The possible raising of the deposit required for a property developer's licence may not reduce the number of abandoned projects, but could instead lead to costlier homes, said the Real Estate and Housing Developers Association (Rehda). (Source: The Edge Financial Daily)

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RHBInvest Research

Regional Perspectives

• Top picks that are already regional champions (CIMB, Genting, KLK and MAHB) as well as those that have the potential to become so (SP Setia, Kencana and Dialog).

Sector Call


Semiconductor:

• Equipment orders continue to weaken
• Underweight

Unisem:

• Fair value maintained atRM2.31
• Market Perform

JCY:

• Fair value maintained at RM0.64 Underperform

MPI:

• Fair value unchanged at RM5.17 Underperform
  

Notion:

• Fair value unchanged at RM1.68 Underperform
• Maintain Underweight call on the sector.

KSL:

• A value pick
• Fair value is RM2.78.
• Outperform

Evergreen:

• Outperform
• To build a new glue resin plant in Gurun, Kedah
• Fair value is RM2.57

Read more...

RHBInvest Research

Top Story

Adventa:
Core FY10 Earnings Expected To Be Flat YoY
Upgrade to Outperform from Market Perform previously.
Fair value is RM2.47.

Sector Call


Semiconductor:

Oct chip sales flat mom

• Unisem: Fair Value RM2.31 OP
• JCY: Fair Value RM0.64 UP
• MPI: Fair Value RM5.17 UP
• Notion: Fair Value RM1.68 UP
• Maintain our Neutral call on the sector.

Corporate Highlights


Dayang:
Disposing Of Borcos For RM135m Cash
Fair value is reduced from RM3.86 to RM3.36.
Maintain Outperform.


Technical Highlights

Daily Trading Strategy:

• Sell Into Strength…
• Yesterday’s surprise jump on the bargain-hunting activities has led the FBM KLCI to close more positive.
• The buying momentum, if it continues, is likely to spur more buying, hence leading the index to retest the key resistance at 1,525 and the record level of 1,531.99 soon.
• However, on the regional markets sentiment that we think could still dampen the local trading behavior should the regional markets fall rapidly in the near term.
• Market sentiment will turn positive only if it moves into a higher trading zone from 1,531.99.

Daily Technical Watch: Petra Perdana

• Further rally possible if it removes the RM0.925 level soon.
• Immediate Support = RM0.74
• Immediate Resistance = RM0.925

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RHBInvest Research

Top Story

Building Materials

Steel Sub-sector: Ann Joo vs. Southern Steel.
Still premature to turn bullish on the steel sub-sector.

Macro View

Trade

• Exports slowed down markedly in Sep.
• We expect the country’s exports to slow down in 2011, after a strong rebound in 2010.
  

BNM Measures

• Bank Negara Malaysia announced tightening measure on property financing.
• Move is to ensure a stable and sustainable property market.
  

Sector Call

Property

• The overhanging issue is now over.
• Maintain Overweight on the sector.
• We continue to like SP Setia (OP, FV = RM5.94) and IJM Land (OP, FV = RM3.50).

Banks

• BNM implements LTV cap of 70%
• Overweight stance on the sector maintained.

Corporate Highlights

Sunrise

• Suspension + unusual interim dividend.
• Maintain Outperform call and fair value of RM3.30

Daibochi

• The rising raw material price predicament.
• Fair value is RM3.10. We downgrade our call to Market Perform.

Unisem

• Guiding for a weaker 4QFY12/10.
• Fair value is RM2.31. Maintain Outperform.

Mah Sing

• 2 land banking deals cost RM166.5m
• Fair value is RM2.40. Maintain Outperform.

QL Resources

• Private placement, share split, and free warrants issue.
• Fair value is RM6.46. Maintain Outperform.

Technical Highlights


Daily Trading Strategy

• Trading is expected to be volatile today.
• Compounded with a drastic move by the Bank Negara late yesterday to curb speculative purchase on property sector.
• Ahead of the shortened week due to the Deepavali holiday on Friday, the trading sentiment in local bourse is expected to stay cautious.
• Technically, if the index manages to remove Monday’s high of 1,511.24, the index will gear towards the historical peak at 1,524.69.

Daily Technical Watch: Mulpha

• Turn bullish only if it sustains at above RM0.52 in the near term.
• Immediate Support at RM0.52
• Immediate Resistance at RM0.62

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RHBInvest Research Highlights 03rd November 2010

Top Story

AirAsia:

• AirAsia still a better bet versus Tiger Airways.
• Fair value is RM3.01. Maintain Outperform.

Corporate Highlights

Unisem:

• 3QFY12/10 in line with expectations.
• Fair value is RM2.31. Maintain Outperform.

Technical Highlights

Daily Trading Strategy:

• A possible revisit of 1,500 and the 10-day SMA.
• We believe that the recent bullish breakout from 1,500 remains valid and the 10-day SMA should protect the current uptrend.
• To restore bullish momentum, the FBM KLCI must regain the recent high of 1,511.24 and tick-up the momentum indicators.

Daily Technical Watch: MAS

• Further downside will trigger a medium-term “sell” signal on the SMAs
• Immediate Support at RM2.03
• Immediate Resistance at RM2.20

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RHBInvest Research Highlights 02nd November 2010

Top Story

China Plays:

• Customer, supplier, partner.
• Our China picks are Parkson, Unisem, KLK, and ILB.

Sector Call

O&G:

• Sector Riding On Positive News Flow and “Hot Money”
• We maintain our Neutral stance on the sector.

Sector Update:

• Dialog: Fair value raised to RM1.47. Outperform
• Dayang Enterprise: Fair value raised RM3.01.Outperform
• Sapuracrest: Fair value raised to RM2.97.Outperform
• Petronas Gas: Fair value raised to RM13.51.Outperform
• Kencana: Fair value raised to RM2.03.Market Perform
• Wah Seong: Fair value maintained at RM2.21.Market Perform

Semiconductor:

• Chip sales up stronger moo but continues to narrow yoy
• Remain cautious on the sector and reiterate our Neutral call

Corporate Highlights

MAHB:

• Racing to be the Asean hub: MAHB vs. AOT .
• Fair value remains unchanged at RM7.72. Outperform

KFC:

• Acquisition of four companies from JCorp.
• Fair value is RM3.85.Trading Buy call on the stock.

Technical Highlights

• Daily Trading Strategy:
• Cautious sentiment to continue.
• Positively, we keep our bullish projection based on the Fibonacci Projection method at 1,668 for the medium term.
• Outcome of the US FOMC meeting, the US mid-term election and the local by-elections in Kelantan and Sabah this week remain the key potential issues

Daily Technical Watch: Dialog:

• Revisiting UTL near RM1.30 to reassess Monday’s breakout momentum.
• Immediate Support at RM1.30
• Immediate Resistance at RM1.50

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