RHBInvest Research

Top Story : AirAsia – 9MFY12/11 results to trail consensus Underperform (down from MP)

Results Preview

- We expect AirAsia's 9MFY12/11 results to meet our forecast but trail the market expectations.





Corporate Highlights



Unisem : Weak 4Q ahead Underperform

Briefing Note

- Unisem expects revenue to decline 8-10% amidst the softening demand for electronics stemming from the slowdown in global economy. Nevertheless, despite the anticipation of a drop in revenue, Unisem still expects 4Q earnings to improve from the previous quarter on the back of cost-cutting measures.





Mah Sing : Adding a “Thai” flavour into Icon City Market Perform (up from UP)

News Update

- Mah Sing entered into a MOU with Central Pattana Public Company Ltd to study the potential investment of developing and managing a shopping mall in Icon City through a JV and/or partnership. The MOU takes effect on 2 Nov and is valid until formal agreements are entered into within six months time with an automatic extension of three months.

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Stocks to watch: TH Plantations, AirAsia, MAS, Kumpulan H&L

KUALA LUMPUR: Stocks on Bursa Malaysia could advance on Friday, Oct 21, following fresh positive economic data from the US while interest could continue to be focused on glove makers and selected stocks.

But overall market sentiment would be cautious, as sentiment always hinges on the volatile European and US economic data.

On Wall Street, stocks ended with modest gains on Thursday, shifting back and forth on incremental developments in Europe where leaders sought to reassure investors that a solution to the debt crisis would come soon.

Germany and France released a statement on Thursday saying leaders would now hold two summits to discuss the debt crisis, with a solution in place by Wednesday's second meeting.

The Dow Jones industrial average ended up 37.16 points, or 0.32 percent, at 11,541.78. The Standard & Poor's 500 Index was up 5.51 points, or 0.46 percent, at 1,215.39. The Nasdaq Composite Index was down 5.42 points, or 0.21 percent, at 2,598.62.

At Bursa Malaysia, among the stocks to watch are TH PLANTATION []s Bhd, AIRASIA BHD [] and MALAYSIAN AIRLINE SYSTEM BHD [] (MAS)and Kumpulan H&L High-Tech Bhd.

TH Plantations’ earnings rose 53.8% to RM33.12 million in the third quarter ended Sept 30, 2011 from RM21.53 million a year ago as it benefited from higher prices for crude palm oil, palm kernel and fresh fruit bunches. Its revenue increased 37.7% to RM115.97 million from RM84.22 million. Earnings per share were 6.51 sen compared with 4.41 sen.

For the nine-month period, its earnings jumped 85.6% to RM87.12 million from RM46.93 million while revenue increased by 27.9% to RM303.73 million from RM237.44 million.

AirAsia and MAS have appointed their own independent advisers to advise the non-interested directors and the non-interested shareholders of each airline on the proposed warrants exchange.

Kumpulan H&L High-Tech’s 70% owned subsidiary in Thailand has temporarily ceased its operations there due to the severe floods.

H&L High-Tech Mould (Thailand) Co. Ltd. (H&LM) located at Bangpa-In Industrial Estate, Ayutthaya had halted its operations. H&LM manufactures metal parts for electronic and metal surface treatment.

BRITISH AMERICAN TOBACCO (M) [] Bhd’s earnings rose 3.3% to RM176.27 million in the third quarter ended Sept 30 from RM179.65 million. Its revenue increased by to RM1.104 billion from RM993.59 million, earnings per share were 61.70 sen compared with 59.80 sen. It declared an interim dividend tax exempt of 60 sen a share compared with 64 sen a year ago.

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Stocks to watch: Gadang, KNM, Top Glove, AirAsia

KUALA LUMPUR: Stocks which could see trading interest on Wednesday, Oct 12 include GADANG HOLDINGS BHD [], KNM GROUP BHD [], TOP GLOVE CORPORATION BHD [] and AIRASIA BHD [] following the recent corporate developments.

Gadang secured a RM410.87 million contract from the Public Works Department to complete the abandoned works at the Shah Alam Hospital. Its unit Gadang Engineering (M) Sdn Bhd had accepted the letter of acceptance for the project at the 300-bed hospital.

KNM Group Bhd has secured a conditional US$200 million (RM638 million) contract to build a waste to energy plant in Sri Lanka from OCTAGON CONSOLIDATED BHD []’s subsidiary Orizon Renewable Energy (Private) Ltd.

KNM Process Systems Sdn Bhd was awarded the contract to build the plant which would have the capacity to process up to 1,000 tons per day of municipal solid waste to generate a minimum of 40 MW of gross electrical energy in Colombo.

Top Glove’s net profit for the fourth quarter ended Aug 31, 2011 fell 42% to RM26.09 million from RM45.01 million a year earlier, due mainly to high latex prices, weaker US dollar and oversupply situation.

Revenue for the quarter edged up to RM541.84 million from RM541.39 million in 2010. Earnings per share fell to 4.22 sen from 7.30 sen in 2010, while net assets per share was RM1.85.

For the financial year ended Aug 31, Top Glove’s net profit fell 53.86% to RM113.14 million from RM245.23 million in 2010, on the back of revenue RM2.05 billion.

AirAsia scrapped the proposed joint venture with Vietjet Aviation Joint Stock Company after some of the conditions were still not fulfilled despite the joint venture agreements were signed in February 2010.

The low-cost carrier said some of the conditions under the JV agreements remained outstanding include regulatory approval for Vietjet to employ the AirAsia brand across its commercial operations.

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Maybank IB Views

Banking: Neutral
Earnings growth cut

Neutral. We maintain our Neutral stance on the banking sector on the premise that valuations are fair for most of the stocks within our coverage, particularly amid a competitive operating environment and slower earnings growth projections. Top picks in the sector continue to be AMMB Holdings, BIMB Holdings and CIMB Holdings.

Technicals
The FBM KLCI rebounded 29.28-points and closed at 1,474.09 last Friday. The local market remained somewhat firm on low volume buying on blue chip stocks as the bourse played catch-up with global markets over the 3-day holiday break. The weaker support areas for the FBM KLCI are located in the 1,423 to 1,470-zone. The next resistance levels of 1,474 and 1,511 will see very heavy liquidation activities.

Trading Idea is a technical Take Profit call on GAMUDA.

Other Local News
AirAsia: EPF buys 10m more shares. The Employees Provident Fund (EPF) had bought 4.27m shares on Aug 25 and 5.72m shares the following day. With the acquisition, EPF increased its equity interest to 12.5%. (Source: Bursa Malaysia)

RHB: Withdraws MD application to Bank Negara. RHB Banking Group has withdrawn its application to Bank Negara Malaysia to seek the appointment of Renzo Viegas as MD of RHB Bank Bhd. The reason for the withdrawal is its current internal reorganization. (Source: The Edge Financial Weekly)

BRDB: To reward shareholders, divest BSC. Bandar Raya Developments Bhd (BDRB) is looking to pay a bumper dividend to its shareholders in a complex corporate exercise that may see it dispose its Bangsar Shopping Centre (BSC). (Source: The Edge Financial Weekly)

Plantation: Oil palm seeds to cost 30% more. The price of oil palm seeds, now at RM1.85 each, will be raised by 30% to RM2.35 starting January next year. The increase is due to the recent hike in labour wages and foreign worker levy, fertiliser cost, electricity tariff and packaging material cost. (Source: Business Times)

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Stocks to watch: CIMB, Mudajaya, AirAsia, MAS

KUALA LUMPUR: CIMB Group Holdings Bhd will be among the heavyweights stocks to watch on Wednesday, Aug 24 following the release of its second quarter results which was a record.

Other stocks which could be in focus are MUDAJAYA GROUP BHD [], Axiata Group Bhd and also airlines AIRASIA BHD [] and MALAYSIAN AIRLINE SYSTEM BHD [], which reported a sharp difference in results.

Oil and gas companies would continue to see interest, including pipe manufacturers Wah Seong Corp Bhd following plans for a 200km pipeline off Terengganu.

CIMB’s earnings rose 9.1% to a record RM970 million in the 2Q ended June 30 from RM889 million a year ago, underpinned by the local consumer banking operations and continued high growth at CIMB Niaga. Its earnings rose 5.8% from 1Q.

For the first half, its net profit rose 9.3% to RM1.887 billion which was equivalent to net earnings per share (EPS) of 25.4 sen.

Mudajaya could see strong trading interest after a 11.2% increase in earnings of RM60.29 million in 2Q from RM54.22 million a year ago, mainly due to more activities. Revenue increased by 70.6% to RM356.11 million from RM208.63 million.

Mudajaya declared a second interim single tier dividend of 12.5% or 2.5 sen per share of 20 sen each.

Axiata's net profit rose 14.94% to RM663.05 million in 2Q from RM576.82 million a year ago, mainly due to higher contribution from XL, Idea and Multinet, as well as lower depreciation, amortisation and impairment charges.

Revenue rose to RM4.05 billion from RM3.85 billion. Earnings per share were 8.0 sen compared with 7.0 sen. It declared an interim tax exempt dividend of 4.0 sen per share for FY ending Dec 31, 2011.

However, net profit fell 19% to RM1.21 billion in the first half from RM1.49 billion a year ago. Revenue increased by 4.2% to RM7.99 billion from RM7.66 billion.

AirAsia reported earnings of RM104.25 million in the second quarter ended June 30, 2011 as its operations were affected by higher fuel costs, which rose 31%.

Earnings fell 47.5% from the RM298.93 million a year ago. It declared its maiden dividend of 3.0 sen a share. The low-cost carrier said fuel costs increased by 31% to an average US$140 per barrel from US$106 a year ago.

MAS’ net loss for the second quarter ended June 30, 2011 narrowed to RM526.68 million compared with net loss of RM534.73 million a year ago as it continued to be impacted by the high fuel prices.

Its revenue was RM3.485 billion compared with RM3.213 billion a year ago. Loss per share was 15.76 sen compared with 16 sen. Its derivatives loss was lower at RM56.08 million, a sharp decline from the RM217.16 million a year ago.

However, for the six months ended June 30, MAS’ net loss widened substantially to RM769.02 million from net loss RM224.68 million in 2010.

Petroliam Nasional Bhd and its production sharing partners are embarking on a RM15 billion project to extract gas from fields off Peninsular Malaysia which includes a new 200km pipeline.

Petronas said the project comprises nine discovered gas fields within Blocks PM301 and PM302 and in the Bergading contract area, about 300km off the coast of the peninsula. “It will also involve the development of a new 200km pipeline to transport gas from the fields to Kerteh, Terengganu. The project is estimated to cost RM15 billion,” it said.

IJM Land Bhd expects local property market to remain resilient this year, underpinned by stronger demand as younger people were also buying property.

IJM Land's current unbilled sales is just over RM1 billion which would last the group two years. It plans to launch RM2 billion worth of projects in FY2012.

DIGISTAR CORPORATION BHD []’s net proft surged 425% to RM6 million from RM1.14 million a year ago and expected the momentum to continue into the next quarter as it expands its customer base in the provision of IPTV services to hospitals. Revenue slipped 30.9% to RM24.85 million from RM35.98 million. Earnings per share were 2.88 sen compared with 0.62 sen.

For the first half ended June 30, Digistar's net profit jumped 616% to RM15.02 million from RM2.09 million while revenue increased 15.5% to RM75.99 million from RM65.75 million.

Al-'Aqar KPJ REIT reported earnings of RM11.03 million in the second quarter ended June 30, 2011, which was just 0.8% higher that the RM10.94 million a year ago. Revenue rose 14.1% to RM19.82 million from RM17.21 million while earnings per share were 1.90 sen compared with 1.89 sen.

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Maybank IB Views

MISC RM7.10: Sell
Brace for further impact Shariah-compliant

Poor visibility. We cut our 2012 EPS forecast by a further 19% post analyst briefing for Apr-Jun 2011 results. Visibility continues to be poor, extending up to 2013. We do not see a recovery in the liner, chemical and petroleum divisions, hit by supply overhang and depressed rates. This offsets positives from the other divisions: heavy engineering, offshore, and LNG shipping. Our TP of RM6.44 remains unchanged, based on a 15% discount to our SOP valuation.

Malaysia Airports Holdings RM6.45: Buy
Higher charges, finally

Positive surprise. MAHB has confirmed that it has been granted the approval to impose higher charges on: (1) international passengers (passenger service charge or PSC); (2) landing for aircraft; and (3) parking for aircraft. This will take effect on 15 September 2011 and will positively impact future earnings. MAHB is our top aviation pick as it is well placed to enjoy the longer term growth in air travel. Maintain Buy, with an unchanged target price of RM7.55/share DCF-based.

Hock Seng Lee RM1.46: Buy
A new water job Shariah-compliant

Small replenishment; maintain Buy. HSL's RM45.7m job win will lift its outstanding order book to RM1.15b, and contribute RM5.5m in net profit into 2012, we estimate. We maintain our earnings forecasts having imputed job win assumptions earlier. We are still positive on HSL for an exposure to Sarawak construction. Our target price is unchanged at RM2.30 based on 12x 2012 PER. Share price has fallen back to single digit valuations alongside the weak broader market; the stock is looking more attractive at current levels.

RESULTS PREVIEW
AirAsia RM3.64: Hold
Challenging 2Q11 Shariah-compliant

Yields, fuel and Firefly. We expect AirAsia's 2Q11 to show a marginal YoY profit growth buoyed exclusively by its Thai associate. We expect the Malaysian and Indonesian operations to exhibit profit drop due to 28% rise in fuel prices and soft yield environment, consistent to the industry and further exacerbated by Firefly’s jet operations services to East Malaysia. We maintain our Hold call at RM3.36 target price, based on 9.0x 2011 PER which is 10% discount to global LCCs’ PER.

Malaysian Airline System RM1.66: Buy
2Q11: Expect losses

Yields, fuel and Japan. MAS will release its 2Q11 results on 23 Aug. 2Q11 is expected to be loss-making due to the impact of 28% higher fuel price YoY and some impact from the MENA civil unrest and Japanese natural disasters. Despite this negative environment, we advice investors to overlook this quarter as the Company’s future is much better now with stabilizing fuel price, new aircraft benefits and the tie-up with AirAsia. We maintain our Buy recommendation with a target price of RM2.70, pegged to 9.0x 2012 PER - on par with global peers.
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RESULTS REVIEW
UMW Holdings RM7.22: Hold
O&G sees red, auto loses traction Shariah-compliant

Challenging mid-term prospects. UMW's 2Q underperformance validates our contrarian view and concerns over its O&G and auto operations. Issues like the supply chain from Japan's March earthquake and tsunami and anti-dumping effect will persist in 2H. Maintain Hold with a RM7.20 target price, based on 12x 2011 EPS.

TSH Resources RM3.15: Buy
Windfall harvest Shariah-compliant

Outperformed. TSH's 1H11 net profit of RM60m (+165% YoY) accounted for 59% and 54% of our and consensus full year estimates respectively. TSH outperformed expectations backed by higher than expected FFB production. We raise our 2011 earnings forecast by 7.1% but trimmed 2012-13 forecasts by 0.6-0.7% on higher wages assumption by RM200 per month for Malaysian plantation workers. We maintain our Buy call with an adjusted TP of RM3.81 (15x 2012 PER; previously RM3.84) on the lowered earnings.
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Eversendai Corporation RM1.68: Buy
Buy ahead of job-flows Shariah-compliant

Results show strong growth. 1H11 net profit of RM57m was 46% of our full-year forecast and 49% of consensus. We initiate coverage on Eversendai with a Buy and TP of RM2.17 (based on 12x CY12 PER). Key attributes: (i) job-flow prospects are bright and we expect major wins in the next 6 months; (ii) Eversendai has built itself an above-industry margin business franchise yet valuation of 9x 2012 PER is at a 30% discount to big-cap peers; (iii) our belief that pump-priming is an obvious and politically easy tool in addressing macro-economic slump.

ACQUISITIONS / DISPOSAL
Star Publications (Malaysia) RM3.39: Hold
Revises terms of disposal for Section 13 land Shariah-compliant

More favourable terms. Star's new agreement with JAKS Island Circle (JIC) to raise the consideration for its Section 13 land sale by RM24m to RM135m is positive. The land disposal will add 14 sen/sh in value by end-2014. We however maintain our earnings estimates as the timing for the gain recognition is beyond our estimates horizon. We also maintain our Hold call and RM3.54 DCF-based TP.

Technicals
The FBM KLCI added a meagre 0.31-points and closed at 1,483.98 last Friday. The weaker support areas for the FBM KLCI are located in the 1,423 to 1,477-zone. The next resistance levels of 1,483 and 1,597 will see heavy selling and liquidation activities.

Trading Idea is Tenaga

Other Local News
SunCity and Sunway: To be delisted. The shares of Sunway City Bhd (SunCity) and Sunway Holdings Bhd would be delisted from the Main Market of Bursa Malaysia on Aug 23. The new entity would be known as Sunway Bhd. (Source: Bursa Malaysia)

MMHE: Secures RM952m contracts. Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) has secured two contracts worth RM952m from MISC Bhd for topsides fabrication, marine repair and conversion of two energy vessels. (Source: Bursa Malaysia)

Crescendo: Plans RM2.5b township. Crescendo Corp Bhd (CCB) is set to launch its new mixed development property project, Bandar Cemerlang township in Mukim Tebrau, Johor Baru with a gross development value (GDV) of RM2.5b by year-end. The completion of the Johor Baru-Kota Tinggi highway in June this year has improved accessibility and connectivity to its project. (Source: The Star)

Green technology: Green loans. Commercial banks, which are currently shying away from lending to green companies, may have to set aside an allocation to finance green technology projects. Malaysian Green Technology Corp (MGTC) CEO Dr Nazily Mohd Noor said this was one of the suggestions made during a discussion at the Green Technology and Climate Change Council, chaired by the Prime Minister Datuk Seri Najib Razak, two weeks ago. (Source: Business Times)

Property: Foreigners not shying away from prices. Malaysia property products are currently hot on the radar of international investors and property buyers, in view of the domestic real estate market potential to see a steady growth in prices. (Source: The Malaysian Reserve)

EPF: Confirms buying London office block for RM740m. The Employees' Provident Fund (EPF) has confirmed that it has purchased an office block in St James's Square, London, where one of the tenants has one of London's highest rents, for RM740m. This marks EPF's fourth property investment in London since announcing an allocation of RM1b for British property purchases about a year ago. Including this latest purchase, it has spent RM634m. (Source: The Star)

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RHBInvest Research

Top Story: MNRB – Slower premium growth, claims ratio to remain stable Outperform

Briefing Note

¨ We expect gross premiums for MNRB’s main subsidiary, Malaysian Re, to continue growing underpinned by our gross premium growth estimate for the general insurance industry of 7-8% p.a.. However, due to the weaker global economic outlook, we have trimmed our FY03/12-14 gross premium growth estimates for Malaysian Re to 13% p.a. (from 15% previously).



Corporate Highlights



MAS: Underlying assumptions may be too simplistic Market Perform

Briefing Note

¨ MAS struggled to defend its decision to put an end to its low-cost jet operation under Firefly and we feel that it has failed to dispel the perception that the decision was a “concession” made to AirAsia/Tune Air.



Amway: Weaker consumer sentiment expected in 2HFY11 Outperform

Briefing Note

¨ We understand that Amway plans to convert a few more Regional Distribution Centres (RDC) to shops by the end of FY11, although they did not reveal any targets as to how many shops will be converted.



AMMB: Good start but management cautious of outlook ahead Outperform

1QFY12 Results / Briefing Note

¨ AMMB reported a strong set of 1QFY03/12 results, with net profit of RM441.5m (+19.9% yoy; +39.6% qoq) accounting for about 28.5% of our and consensus full-year estimates. The results were helped by gains from the disposal of AFS securities and low loan impairment allowances, both of which more than offset the sharp NIM contraction, but should “normalise” ahead.



Affin: Loan growth picked up pace Market Perform

2QFY11 Results

¨ 2Q11 net profit of RM134m (+20% yoy, +26.5% qoq) brought 1H11 net profit to RM240m (-2.7% yoy), in line with our and consensus expectations.



ILB: Start-up losses weigh down on 1HFY12/11 performance Outperform

2QFY11 Results

1HFY12/11 net profit came in below our expectations at only 10% of our full-year forecast largely due to start-up losses from its new operations in Chongqing and Xiamen, China.

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Maybank IB Views

Multi-Purpose Holdings RM2.77: Buy
Buy now or forever hold your piece

Great long term play. We initiate coverage on Multi-Purpose Holdings (MPHB) with a Buy call and RM3.60 TP (10% discount to RM4.00 SOP/sh). Its current share price reflects only Magnum Corporation's value without any value ascribed to its other businesses. We expect 14% 3-year forward earnings CAGR with 100% ownership of Magnum Corporation. A major re-rating catalyst is the gradual disposal of non-core assets which could enable it to pay up to 44 sen in special DPS and 20 sen in recurring net DPS, offering a whopping 7% net yield.

RESULTS REVIEW
AMMB Holdings RM6.48: Buy
Treasury gains support momentum

Maintain Buy. While 1QFY12 results were slightly above expectations our forecasts are lowered marginally. AMMB remains a Buy for: (i) its decent valuations, (ii) its ongoing portfolio rebalancing, (iii) ongoing investment in business line expansion under ANZ, and (iv) its position as a beneficiary of the Economic Transformation Programme. Our target price is trimmed to RM7.40 (-10sen) on an unchanged FY13 P/B target of 1.8x (ROE: 14.3%), which we believe is reflective of fundamentals.

Technicals
The FBM KLCI rose 16.07 points to close at 1,499.74 yesterday. Its resistance areas of 1,501 and 1,530 will cap market gains, whilst the obvious support areas are located at 1,454 and 1,499.Due to the US markets’ rebound last night; we will see some volatile trading activities in the local bourse today. Some heavy profit-taking and liquidation activities will emerge later to depress the markets’ rebound from its opening “gap up” move.

Trading idea is a Short-Term Buy call on BRDB

Other Local News
Sunway: No plans to postpone listing. The listing of Sunway Bhd, the merged entity of Sunway Holdings Bhd and Sunway City Bhd, will proceed as planned despite recent turbulence in the stock market. The shares of Sunway Bhd are scheduled to be floated on Bursa Malaysia on August 23 and expected to have a market capitalisation of over RM3.5b. (Source: Business Times)

AirAsia: New AirAsia Philippines vows to be 'substantially' cheaper. AirAsia launched a new affiliate in the Philippines yesterday, promising to undercut its rivals on regional and domestic routes. To minimise costs and avoid Manila's crowded terminals, AirAsia Philippines will fly out of a former US air base that had been turned into an industrial zone in Clark about 90 minutes' drive north of the country's capital. (Source: The Star)

MAHB: In talks with BA and Qantas on using KLIA. Malaysia Airports Holdings Bhd (MAHB) is still in talks with British Airways and Qantas Airways on the possibility of both airlines mounting flights to KL International Airport (KLIA), a decade after these airlines suspended flights to KLIA owing to a lack of network connectivity here. Both airlines were considering the possibility of flying into KLIA, following Malaysia Airlines (MAS) joining the Oneworld alliance. (Source: The Star)

Parkson: Hires HSBC for Singapore listing. Parkson Holdings is spinning its retail operations in Malaysia, Indonesia, Vietnam and Cambodia in a separate listing in Singapore soon. HSBC has been hired to apply for the corporate exercise and the Singapore's listing. (Source: The Sun)

Dijaya: JV plans property development with GDV RM2.8b. Dijaya Corp Bhd’s joint venture with Iskandar Waterfront Sdn Bhd, Magical Heights Sdn Bhd (MHSB), plans to undertake property projects near Johor Baru with a gross development value (GDV) of RM2.8b. The projects would be built on two pieces of land which MHSB has proposed to acquire from Trident World Sdn Bhd for RM220m. Dijaya and Iskandar Waterfront Sdn Bhd each has a 50% stake in MHSB. (Source: Bursa Malaysia)

Iskandar: Gets RM95b pledges. Iskandar Malaysia attracted about RM95b in committed investments from January to June 2011. This was more than double the cumulative RM47b target for the five years up to 2010. From 2011 to 2015, Iskandar Malaysia is targeted to achieve RM73b in investments. (Source: The Star)

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Maybank IB Views

Plantation: Neutral
Short term fundamentals improved

Maintain Neutral, for now. Amidst the financial chaos in the past week which led to a 6% correction in CPO price to below RM3,000/t (3M Futures), we expect some short term relief as fundamentals improved on lower July inventory, rising exports over 1-10 Aug period, and lower production productivity during the fasting month. US' pledge to maintain interest rate at near-zero through mid-2013 would help to support commodity prices, CPO price inclusive. But do expect short term price volatility. Maintain Neutral on the sector. Our top Buys are SOP and TSH which offer single-digit valuations (for SOP) and strong +16 to +20% 3-year forward production CAGR.

RESULTS PREVIEW
Petronas Chemicals RM6.19: Buy
Maintenance shutdowns dampener Shariah-compliant

2Q11 will be beset by maintenance shutdowns. PCHEM is expected to release its 2Q11 results on 24 August. 2Q will be bogged down by major maintenance shutdowns and nationwide gas curtailment during the period. Product volumes will be lower but fortunately the higher product margin will help to offset this. Maintain Buy, with an unchanged TP of RM8.15 based on 13.5x 2012 PER, in line with global peers.

ECONOMICS
Industrial Production Index (IPI), Jun '11
Rebound after two months of declines

Industrial production index (IPI) rebounded in June '11 after two months of declines i.e. +1.0% YoY (revised May '11: -5.6% YoY) and +3.5% MoM (revised May '11: -1.4% MoM). Manufacturing output growth gained momentum as the Japan supply-chain effect diminished, but mining production - especially crude oil - remained a drag. Industrial output however shrank -1.6% YoY in 2Q 2011 (1Q 2011: +2.4% YoY) and -1.6% QoQ (1Q 2011: -0.3% QoQ), implying further deceleration in GDP growth. Our 2011-year real GDP growth forecast was revised downward to +5.1% at the start of 2H 2011 versus +5.5% at the start of the year. Our imputed 2Q 2011 growth was correspondingly trimmed to +3.9% YoY from +4.7% YoY. 2Q01 real GDP data will be out on 17 Aug.

Technicals
The FBM KLCI rose 8.38 points to close at 1,480.52 yesterday. Its resistance areas of 1,480 and 1,530 will cap market gains, whilst the weaker support areas are located at 1,423 and 1,472.Due to the US markets’ plunge last night; we will see some volatile trading activities in the local bourse today. Some heavy profit-taking and liquidation activities on any rebound.

Trading idea is AIRASIA.

Other Local News
Mah Sing: To buy potential lands yielding RM7b GDV. Mah Sing Group Bhd is targeting land acquisitions which could potentially yield RM5b to RM7b in gross development value (GDV) compared to 10 landbanking transactions in 2010 with combined GDV of approximately RM4b. (Source: The Malaysian Reserve)

AirAsia: AirAsia X picks IPO adviser. AirAsia X has chosen Morgan Stanley as its adviser for its proposed initial public offering (IPO) for which listing plans, targeted for next year, were underway. Khazanah Nasional Bhd's proposed plan to take up a 10% stake in AirAsia X would be executed "very quickly" with issuance of new shares in AirAsia X. (Source: The Star)

Maxis: Partners Alcatel-Lucent to deploy first 100G core transmission network in Asia Pacific. Maxis Bhd, with Alcatel-Lucent as a strategic supplier, will be deploying the first 100G single carrier with optical coherent energy network solution commercially deployed in the Asia Pacific. With that, Maxis will be able to address growing bandwidth requirements and data usage driven by smartphones, tablets, modems and fiber-to-the-premises services. (Source: Bernama.com)

Aviation: Airport tax hike. Malaysian Airports Holdings Bhd (MAHB) is raising tax to cover rising operating costs and finance airport expansion. The airport operator has proposed that the tax at the country's 39 airports it manages, excluding low cost carrier terminals (LCCT), be raised by RM14 for international travelers from Sept 15. The travelers will have to pay RM65 from RM51 (RM45 for airport tax and RM6 for security charge) now. (Source: The Sun)

Plantation: Planters see minimal impact by pay rise. The cost of production (COP) and profit margins among oil palm plantation companies will be minimally affected by the Malayan Agricultural Producers Association's (MAPA) decision to increase the wages of some 157,270 general plantation workers nationwide. (Source: The Star)

Construction: RM2b cable car link. The country's first proposed mainland-to-island cable car will be built in Port Dickson as part of the RM2b PD Waterfront project. The cable car project, spanning 750m, will link the new PD Waterfront township with Pulau Arang, an uninhabited island to boost tourism. (Source: The Star)

Read more...

Stocks to watch: AirAsia, Petronas Dagangan, Shell, MSC, Amway

KUALA LUMPUR: Regional markets including Bursa Malaysia are expected to see heavy downside pressure on Thursday, Aug 11 after the overnight rout on Wall Street, sending it down more than 4.6%.

Reuters reported the S&P 500 to another 4 percent decline, triggered by worries that Europe's debt crisis could engulf French banks and spill onto the U.S. financial sector.

For a fifth straight day, the Dow Jones industrial average fluctuated in a range of more than 400 points.

The DJIA lost 519.83 points, or 4.62 percent, to 10,719.94. The S&P 500 fell 51.77 points, or 4.42 percent, to 1,120.76. The Nasdaq Composite dropped 101.47 points, or 4.09 percent, to 2,381.05.

Wednesday's drop came a day after stocks rallied on the Federal Reserve's pledge to keep interest rates near zero for at least two more years.

Although regional markets showed some slight recovery yesterday, backed by encouraging economic data from China and Japan, the already fragile investor sentiment would easily be shattered by another sharp fall at Wall Street.

On Bursa Malaysia, AIRASIA BHD [] could extend its losses.

The company, which inked a tie-up with MALAYSIAN AIRLINE SYSTEM BHD [] (MAS), was actively traded and fell 41 sen to RM3.54 with 90.5 million shares done.

UOBKayHian downgraded it to Sell with a lower target price of RM3.50 (from RM4.60).

The research house said that while an alliance between AirAsia and MAS would benefit Khazanah Nasional Bhd, it did not see AirAsia getting any benefit.

PETRONAS DAGANGAN BHD [] posted net profit RM208.73 million on the back of revenue RM7.54 billion for the three months ended June 30, 2011.

It declared a gross interim dividend of 15 sen per share for the three months ended June 30, 2011 totaling RM111.76 million, payable on Sept 22.

Shell Refining Company (Federation of Malaya) Bhd posted net loss RM27.71 million in the second quarter ended June 30, 2011 compared to net loss RM46.78 million a year earlier, due to weak refining margins and lower production as a result of the major statutory turnaround.

Revenue for the quarter fell to RM1.62 billion from RM2.71 billion a year earlier. It declared a gross interim dividend of 20 sen per share.

MALAYSIA SMELTING CORPORATION [] Bhd’s net profit for the second quarter ended June 30, 2011 surged to RM36.3 million from RM7.98 million a year earlier due mainly to better results from its Butterworth smelting operations and investments in KM Resources Inc.

MSC declared a gross interim dividend of 12 sen per share to be paid on Sept 28.

Amway (Malaysia) Holdings Bhd’s net profit for the second quarter ended June 30, 2011 dipped 12.2% to RM18.99 million from RM21.64 million a year earlier due mainly to higher advertising and promotional expenses coupled with higher operating cost arising from investment in consumer access driven strategies.

Amway declared a second interim single tier dividend of 9.0 sen net per share for the financial year ending Dec 31, 2011.

Read more...

RHBInvest Research

Top Story: Strategy – Rising fears of a “double dip”

Strategy Update

¨ While the massive sell-off in global equities was triggered by an unconvincing debt deal in the US, escalating debt issues in Italy and Spain, and the continued sharp downtrend in the Jul Purchasing Managers Index (PMI) numbers worldwide, a deterioration in consumer and business confidence could potentially result in a protracted economic slowdown or at worst, tilt the global economy into a “double-dip” recession. This is despite softening commodity prices and the normalisation of global supply chains that should provide a boost to economic activities in the months ahead.



Sector Call



Plantation: Valuation targets trimmed on higher market risk Neutral

Sector Update

¨ Malaysia’s CPO production was relatively flat on a mom basis in Jul, falling by a slight 0.1% mom, while exports rose by 9.1% mom. Closing CPO stock levels fell for the first time in six months, by 2.8% mom to just below the 2m tonne mark at 1.996m tonnes in Jul (from 2.05m tonnes in Jun). Stock/usage ratio in Jul fell to 10.8% (from 11.6% in Jun), still significantly above the 9-year average of 9.1%.



Corporate Highlights



AirAsia - Tony: “My job is AirAsia” Market Perform

Briefing Note

¨ There is a concern on the reduction in Tune Air’s stake in AirAsia from 23% to 13% pursuant to the deal with Khazanah Nasional.

¨ Tan Sri Tony Fernandes said that Khazanah had decided to source a 10% block from Tune Air as it was difficult for it to accumulate such a large stake from the open market. Also, a private placement of new AirAsia shares was not considered as AirAsia did not need any fresh capital.



Amway: Expecting a stronger 2H11 Outperform

2QFY11 Results

¨ Amway’s 1HFY12/11 net profit of RM39.3m (+2.2% yoy) was below ours but above consensus estimates, accounting for 38% and 44% of our and consensus earnings forecast respectively. The main variance to our forecasts was the weaker-than-expected revenue growth in the 2Q.

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RHBInvest Research

Top Story: AirAsia – 2QFY12/11 results to trail consensus Market Perform

Results Preview

¨ We expect 2QFY12/11 results to meet our forecast but trail the market expectations.

¨ We expect 2QFY12/11 core PBT to come in at RM90-100m, down 21-29% yoy, on the back of an estimated 33% jump in average jet fuel cost and a 2.8% sequential drop in average passenger revenue, partially offset by an actual 3.6% sequential increase in the number of passengers carried.





Sector Call



Transport : Khazanah to own Tune Air, Tune Air to own MAS? Neutral

Sector Update

¨ The Edge Malaysia reported that MAS will rope in Tony Fernandes via Tune Air subscribing a stake in MAS of up to 20%. This is conditional upon Khazanah acquiring from Tony & Co a stake in Tune Air.

¨ The deal, if materialises, is positive to AirAsia as: 1) It is done at the shareholder level that means AirAsia’s P&L and balance sheet are intact; and 2) Reduced competition with MAS will mean higher yields to AirAsia.





Telecoms: Roaming in Singapore gets cheaper Overweight

SectorUpdate

¨ U Mobile is stepping up competition in the Malaysia-Singapore roaming market by enticing travelers with much lower roaming charges priced at local Singapore rates. Based on the rates gathered early this month, U Mobile is pricing its roaming charges at 30-80% for voice and 60% for SMS of the incumbents’ pricing.





Corporate Highlights



Fajarbaru : Acquiring 6.8-Acre land in Puchong Kinrara area for RM39.9m Outperform

News Update

- Fajarbaru is acquiring a piece of 6.8-acre freehold agricultural land zoned for residential development between Bandar Kinrara and Bukit Jalil for RM39.9m cash.

- Fajarbaru intends to build residential properties on the land with an estimated GDV of RM300-400m.

Read more...

RHBInvest Research

Top Story: TNB – Badly burned by massive oil and distillate fuel costs Market Perform (down from OP)

3QFY11 Results / Briefing Note

¨ Excluding forex gains of RM102m, TNB’s 9MFY11 results were below expectations with core net profit of RM801m (-62.4% yoy) accounting for 36% and 33% of our and consensus FY11 net profit estimates respectively. TNB recorded a RM460m loss in 3QFY11, due to significantly higher oil and distillate fuel costs arising from gas supply disruption.



Corporate Highlights



CI Holdings: Selling Permanis to Asahi for RM820m Trading Buy

News Update

¨ CIH announced that it has entered into a conditional share sale agreement for the disposal of its entire equity interest in Permanis to Asahi for RM820m in cash

¨ Post-disposal of Permanis, CIH would be left with only its tap-ware and sanitary ware business (under Doe Industries). As management has stated its intention to maintain CIH’s listing status, CIH would need to acquire a new core business and/or distribute some of the cash proceeds to shareholders to avoid becoming a PN16 (cash) company, given Doe’s small asset base and profit contribution



SEGi: INVITE-ing more foreign students Outperform

News Update

¨ SEGi has been appointed by the Government as Project Leader for a new initiative – SkillsMalaysia International Technical Education & Vocational Training Programme, which is expected to begin in 2012.

¨ The objective of SkillsMalaysia INVITE is to create and provide a new dimension of learning skills to non-academically inclined foreign school leavers and adult learners to pursue their training in Malaysia. Upon completion of the programme, the trainees will be awarded an internationally recognised qualification from UK or Australia, as well as certification from the Malaysian Government.



AirAsia: To set up a low-cost carrier in Japan Market Perform

News Update

¨ AirAsia is setting up a low-cost carrier in Japan via a 49:51 JV called AirAsia Japan Co Ltd with All Nippon Airways Co Ltd (ANA).

¨ The new airline is expected to take to the skies in Aug 2012, with a fleet of 3-4 A320 aircraft by the end of its first year of operations.



Hiap Teck: China Shougang roped in as contractor for blast furnace and shareholder Underperform

News Update

¨ Eastern Steel Sdn Bhd, a 55%-owned subsidiary of Hiap Teck, has entered into an EPC contract worth approximately RM650m with China Shougang International Trade and Engineering Corporation.

¨ A supplement agreement was also entered into where Hiap Teck will issue 32.2m new shares (9.8% of current share base) to China Shougang at an agreed price. China Shougang has the right to terminate the EPC contract if the shares are not issued by 30 November 2011.



VS Industry: Fully focus on EMS Overweight

Company Update

¨ VSI had announced on 19 Jul the disposal of its 53%-owned subsidiary, PT. GY Plantation Indonesia (PGP) for US$4.1m to PT Karya Manunggal Sawitindo. In addition, PGP will also sell a 6,450 ha piece of land (undeveloped) to PT Bumitama Gunajaya Agro for US$2.2m, which will flow to PGP’s existing shareholders (VSI’s portion amounts to US$1.2m). In total, VSI will receive US$5.3m (RM16.1m) from the abovementioned transactions, which management has earmarked for working capital.

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Maybank IB Views

Tenaga Nasional RM6.52: Hold
Still not out of the woods yet Shariah-compliant

Worst quarter ever. RM786m 9MFY11 core net profit (-68% YoY) was 53% of our full-year forecast and 38% of consensus. 3QFY11 was exceptionally weak due to shutdowns of natural gas facilities for repairs, high coal price and extra cost incurred by burning oil and distillates. We have lowered our FY11-13 earnings forecasts to take into account this quarter's results and changes to revenue and cost assumptions. Maintain Hold, with a lower TP of RM6.60 (from RM7.05) based on unchanged 13x FY12 PER.

British American Tobacco RM46.20: Sell
Gloom-soaked cigarette

Cautious mode persists. 1H11 net profit accounted for 48% and 50% of our and consensus full-year forecasts respectively. We maintain our Sell call on BAT (RM42.50 DCF-based target price) due to declining sales volume and exacerbated by weaker margins. Valuation, at 17.5x 2011 PER, appears pricey relative to its lackluster earnings growth (2.5% 3-year forward net profit CAGR).

TH Plantations RM2.10: Buy
Strong production recovery in 2Q Shariah-compliant

No earnings surprises. 1H11 net profit accounted for 49% of our full-year estimate, and are within consensus expectations. THP’s current valuation at 9.3x 2011 PER offers a good buying opportunity as it trades at a 41% discount to industry peers’ average of 15.8x. This is further supported by attractive net dividend yields of 5.5%. We reiterate our Buy call with an unchanged TP of RM2.50 (11x 2012 PER).

Technicals
The FBM KLCI rose 3.22 points to close at 1,565.81 yesterday. Its resistance areas of 1,569 and 1,580 will cap market gains, whilst the obvious support areas are located at 1,552 and 1,565.

Trading idea is TENAGA

Other Local News
MAS: Sees no need to raise cash. Malaysian Airline Systems Bhd (MAS) sees no need to raise capital against a backdrop of weakening travel demand. Poor quarterly results have raised concern over cash depletion at the national carrier, which is expecting at least four more aircraft to be delivered this year. (Source: The Edge Financial Daily)

AirAsia: Expands in Japan. AirAsia Bhd has tied up with All Nippon Airways Group (ANA) to form AirAsia Japan Co Ltd. AirAsia will hold 49% stake in AirAsia Japan, which will be the first low-cost carrier (LCC) to be based at the Narita International Airport. (Source: The Edge Financial Daily)

TM: The latest MVNO? Telekom Malaysia Bhd may be the latest player in the MVNO (mobile virtual network operator) space. It has signed a MoU with Celcom Axiata Bhd to cooperate strategically in providing complete fixed and mobile solutions. (Source: The Edge Financial Daily)

CI Holdings: Asahi buys Permanis for RM820m. CI Holdings Bhd (CIH) is selling its entire 70m shares in Permanis Sdn Bhd to Japan's Asahi Group Holdings Ltd for RM820m in cash. CIH is making a net gain of RM677.1m from the disposal based on its audited financial statements for the financial year ended June 30 2010. Permanis is PepsiCo Inc's bottler in the country. (Source: Business Times)

Hiap Teck: Unit in steel mill deal. Hiap Teck Ventures Bhd’s 55% owned subsidiary Eastern Steel Sdn Bhd has entered into an engineering and procurement contract and a construction contract with China Shougang International Trade and Engineering Corp for the design, procurement and construction of the first phase of an integrated steel mill in Teluk Kalung, Kemaman, Terengganu. The contract value for the engineering and procurement contract is RM417.83m, while the construction contract is RM232m. (Source: The Star)

Kurnia Asia: Gets nod to start acquisitions talk. Kurnia Asia Bhd (KAB) has received the green light from Bank Negara to commence preliminary negotiations with relevant interested parties for the acquisition of an equity stake in its wholly owned subsidiary, Kurnia Insurans (M) Bhd (KIMB). (Source: The Star)

Read more...

Maybank IB Views

Malaysia: MIER Quarterly Indices
"Circumspect" is the word...

MIER releases 2Q2011 Consumer Sentiment Index (CSI) and Business Conditions Index (BCI). CSI recorded another quarter of decline (-0.3pt QoQ to 107.9), BCI posted another quarter of rise (+0.7pt QoQ to 114.0) as inflation dampen consumers amid external risks and domestic opportunities facing businesses. In addition, the expectations sub-index for both CSI and BCI were down 0.5pt and 16.1pts respectively. Overall, the indices point to further moderation in 2Q 2011 real GDP growth, with continued caution ahead.

SECTOR UPDATE
Oil & Gas: Overweight
Tide is turning

Domestic OSV market entering calmer waters. We upgrade the Offshore Service Vessels (OSV) segment to Neutral following a 8-37% correction in share price YTD. Operationally, we opine the worst is over for the sector and prospects are set to improve, albeit at a gradual pace over the next 24 months. Stocks wise, we have upgraded Alam, TOFF and Perdana Petroleum to a Hold (from Sell previously).

Technicals
The FBM KLCI inched lower by 0.83 points to close at 1,579.84 yesterday. Its resistance areas of 1,579 and 1,597 will cap market gains, whilst the weaker support areas are located at 1,560 and 1,574.

Trading Idea is a Take Profit call on Muhibah

Other Local News
Dialog: Buys 51% stake in Indian Company. Dialog Group’s unit is paying RM7.88m for a 51% stake in India-based outsourcing company Anewa Engineering Pte Ltd to further boost its engineering capabilities and talent pool. The investment provides access to new customers, including those in the Middle East and India. (Source: The Edge Financial Daily)

AirAsia: Tie-up with ANA likely. AirAsia is likely to have a joint venture with Japan's largest carrier - All Nippon Airways (ANA) - to set up a low cost airline likely to be called AirAsia Japan. The LCC will serve the domestic market and eventually regional markets. (Source: The Star)

DiGi: Set to seal two MVNO deals. DiGi.Com Bhd is expected to announce two mobile virtual network operator (MVNO) deals in the second half of the year. (Source: Business Times)

Tradewinds Plantation: Gets nod to buy Mardec for RM140m. Tradewinds Plantation Bhd has received the green light from its shareholders to acquire rubber processor Mardec Bhd for RM140m cash. The acquisition was part of Tradewinds Plantations' strategy to expand its rubber business into downstream activities, complementing its existing rubber plantation operations. (Source: The Star)

Oriental Pearl Harbour: Close to RM4.5b UAE port deal. Oriental Pearl Harbour Sdn Bhd (OPH), which is bidding for the privatisation of the Penang Port, is on the verge of concluding a contract to manage and operate a port in the Middle East in a deal estimated to be worth more than USD1.5b (about RM4.5b). (Source: The Malaysian Reserve)

Read more...

RHBInvest Research

Top Glove – Easing latex prices to help drive recovery – Underperform call based on PER of 15x

• Management expects latex prices to ease from RM9.30/kg to RM7.00/kg, in the next 3-4 months ahead due to seasonal factors
• Given the current situation where latex prices are higher than nitrile prices, Top Glove intends to increase its nitrile glove production mix from 13% to 16-17% by end-CY11.

AirAsia: Places order for 200 new A320 Neo aircraft - Market Perform (up from UP)

• AirAsia has placed an order with Airbus SAS for 200 A320 Neo aircraft with a list price of US$18.2bn (RM54.6bn), to be delivered in 2016-2026.
• The new A320 Neo aircraft will result in 15% fuel savings.
• We are raising AirAsia’s FY12/12-13 net profit forecasts by 12% each

Gamuda: 9MFY07/11 net profit grows 27% yoy - Market Perform

• Gamuda expects the Government to officially call for the tender for the tunnelling works for MRT in 4Q2011 while the award of contract is expected in 1Q2012 with physical work only in full swing by mid-2013.
• FY07/11 net profit forecast is raised by 6% largely to reflect higher property margins. Fair value is raised from RM4.03 to RM4.13.

Glomac: In a sweet spot - Market Perform

• 4QFY11 net profit of RM15.0m, Full year FY11 revenue and net profit surged commendably by 90% and 54%, respectively. A 5 sen final dividend was declared. Together with the 4.5 sen interim dividend, full year dividend amounted to 9.5 sen, upped from 8.5 sen in FY10.
• We raise our FY13 earnings forecast by 11% as management guided RM1bn GDV (vs. RM800m previously) for the Puchong project. We also introduce our FY14 estimate with a growth of 9%.

Jaya Tiasa: A strong finish to FY04/11 - Outperform

• FY04/11 net profit jumped significantly, Key variance was higher FFB production volume for its plantation division.
• We raised our FY04/12-13 net profit forecasts by 5.1-6.2%, after adjusting for higher FFB production volume on the back of higher yields. We introduce our FY04/14 forecast.

Read more...

Maybank IB Views

COMPANY UPDATE
Gamuda RM3.74: Buy
Entering an exciting phase Shariah-compliant

Check points ahead. The earnings uptrend should continue with 3Q results expected to track towards expectations. Property sales has again, shot past the internal target, reaching RM1b in just 9 months. The next few months will be exciting as pre-qualification for the MRT underground works have started. Yenso will see its maiden launch in Sept with a stronger indication on the demand momentum by end-2011. We are still positive; Buy (RNAV based TP: RM4.45)

RESULTS REVIEW

Exciting year ahead. FY11 results were in line; net DPS of 21 sen was a marginal 1 sen above forecast. These results are now academic in light of the recently introduced 4D Toto Jackpot which will not only lift lotto but non-lotto revenue. BST remains a Buy; our DCF based TP implies a fair 15.6x 2012 PER for its defensive qualities. At the current share price, the stock still offers attractive net dividend yield of 5.3%.

Technicals
The FBM KLCI lost 4.24 points and ended at 1,559.19 yesterday. Its resistance areas of 1,560 and 1,576 will cap market gains, whilst the obvious support areas are located at 1,533 and 1,558.Due to the US markets’ rebound tone last night, we will see some initial low volume buying activities in the local bourse today.

Trading idea for today is a Short-Term Buy call on SCIENTX.

Other Local News
AirAsia: AirAsia X gests approval for new key routes. Long-haul low-cost carrier AirAsia X Sdn Bhd gets the green light from the Transport Ministry to fly to Istanbul, Beijing, Shanghai, Osaka and Jeddah, sources close to the ministry said. A number of these flights may start as early as August this year. (Source: The Edge Daily)

AirAsia: AirAsia, CAE International plan aviation academy. AirAsia Bhd is teaming up with CAE International Holdings Ltd to set up an aviation academy and has set its sights to be the largest of its kind in Asean. The academy would provide training services for pilots, cabin crew, engineers, ramp handlers, guest services and aviation management. (Source: Bursa Malaysia)

Energy: No subsidy to IPPs. Energy, Green Technology and Water Minister Datuk Seri Peter Chin Fah Kui reiterated yesterday that the government has never allocated any form of subsidies for gas sold by Petronas to Independent Power Producers (IPPs). Instead, the lower price for gas sold to IPPs by Petronas is part of its foregone revenue, in line with the government's initiative to ensure that IPPs can maintain a low tariff rate. (Source: The Sun)

Tradewinds Crop: RM60m refurbishment. Tradewinds Corp Bhd is forking out about RM60m to refurbish its hotels to improve its branding and inject a fesh new look. It expects an increase in room rates after the refurbishment in three years time. (Source: The Star)

Transport: 60,000 daily traffic volume seen for new highway. LATAR Expressway (KL-Kuala Selangor Expressway), to be open to the public before the month ends, will see an initial average daily traffic volume of over 60,000 vehicles. The concessionaire of the highway is jointly owned by Bina Puri Holdings Bhd and Arena Irama Sdn Bhd. (Source: The Star)

UEMLand: Sets up Singapore subsidiary. The new subsidiary, Sunrise MS Pte Ltd is to provide consultancy, advisory and technical services relating to project development in Singapore. (Source: Bursa Malaysia)

Read more...

Stocks to watch: BToto, Time Engineering, TimeCom, AirAsia

UALA LUMPUR: Berjaya Sports Toto will be in focus on Tuesday, June 21 following the announcement of its full year financial year results, which were lower than the previous year.

Other counters which could see trading interest are TIME ENGINEERING BHD, TIME DOTCOM BHD, AIRASIA BHD and Muhibbah Engineering Bhd.

BERJAYA SPORTS TOTO BHD’s net profit rose 28.8% to RM104.18 million in the fourth quarter ended April 30, 2011 from RM80.89 million a year ago, boosted by strong record sales.

Revenue rose 5% to RM901.30 million from RM858.29 million while earnings per share were 7.79 sen versus 6.05 sen. It declared tax exempt dividend of three sen per share compared with eight sen a year ago.

For the financial year ended April 30, 2011, the net profit declined by 9.2% to 348,098 from the previous financial year’s RM383.50 million. Revenue inched up 1.28% to RM3.433 billion from RM3.392 billion. The total dividends were 21 sen compared with 57.5 sen a year ago.

Time Engineering fixed the renounceable offer for sale of up 626.18 million shares of Time dotCom Bhd at 53 sen.

Time Engineering said the offer price of 53 sen was 33.75% below the five-day volume weighted average market price up to June 17. Based on Monday’s closing price of 79 sen, this was a discount of 26 sen or 29%.

AirAsia Bhd is teaming up with CAE International Holdings Ltd to set up an aviation academy to provide training services for pilots, cabin crew, engineers, ramp handlers, guest services and aviation management.

The JV company to run the academy will have a paid-up capital of RM165.56 million of which AirAsia’s 50% share, being its capital and investment outlay in the JV shall be satisfied through its assets contribution.

RAM Rating Services Bhd says MUHIBBAH ENGINEERING (M) BHD’s RM130 million Islamic bonds are not affected on the recent news about the receivership status of the owner of the Tanjung Bin petroleum hub project.

It said the group’s stand-alone credit profile was affected by its weaker-than-expected profit performance, balance sheet and debt coverage ratios, as well as its tight liquidity profile.

RAM Ratings said Muhibbah’s outstanding order book of RM2.9 billion as at May19 will sustain the group over the next two years.

It added Muhibbah also derives earnings diversity, from its involvement in the CONSTRUCTION , cranes and shipyard segments. It also enjoys recurring dividend income from its associate stakes in the concessionaire for road-maintenance work in Malaysia and an operator and concession holder for three international airports in Cambodia.

SAAG CONSOLIDATED (M) BHD fixed the issue price for the sixth tranche of the placement of 15 million new shares of 10 sen each under the proposed private placement at an issue price of 10 sen each.

The placement price of 10 sen is 40.85% above the five-day weighted average market price of SAAG shares up to and including June 17 of 7.1 sen per share.

Meanwhile, at Tradewinds PLANTATION Bhd’s AGM, the Minority Shareholders Watchdog Group (MSWG) wants to raise a question about the proposed acquisition of Mardec Bhd which was reduced from RM150 million to RM140 million taking into account Ernst & Young appraisal of the fair value of Mardec group using the hybrid methodology.

MSWG will also query the company about the five-year financial performance of Mardec, including latest results.

At Ho Hup Construction Co Bhd’s AGM, the MSWG will ask the board to explain the implication of the auditors’ continued disclaimer of opinion.

The MSWG also wants to know how confident is the board that the proposed PN17 regularisation plan would eliminate the accumulated losses and turn around the group.UALA LUMPUR: Berjaya Sports Toto will be in focus on Tuesday, June 21 following the announcement of its full year financial year results, which were lower than the previous year.

Other counters which could see trading interest are TIME ENGINEERING BHD, TIME DOTCOM BHD , AIRASIA BHD and Muhibbah Engineering Bhd.

BERJAYA SPORTS TOTO BHD []’s net profit rose 28.8% to RM104.18 million in the fourth quarter ended April 30, 2011 from RM80.89 million a year ago, boosted by strong record sales.

Revenue rose 5% to RM901.30 million from RM858.29 million while earnings per share were 7.79 sen versus 6.05 sen. It declared tax exempt dividend of three sen per share compared with eight sen a year ago.

For the financial year ended April 30, 2011, the net profit declined by 9.2% to 348,098 from the previous financial year’s RM383.50 million. Revenue inched up 1.28% to RM3.433 billion from RM3.392 billion. The total dividends were 21 sen compared with 57.5 sen a year ago.

Time Engineering fixed the renounceable offer for sale of up 626.18 million shares of Time dotCom Bhd at 53 sen.

Time Engineering said the offer price of 53 sen was 33.75% below the five-day volume weighted average market price up to June 17. Based on Monday’s closing price of 79 sen, this was a discount of 26 sen or 29%.

AirAsia Bhd is teaming up with CAE International Holdings Ltd to set up an aviation academy to provide training services for pilots, cabin crew, engineers, ramp handlers, guest services and aviation management.

The JV company to run the academy will have a paid-up capital of RM165.56 million of which AirAsia’s 50% share, being its capital and investment outlay in the JV shall be satisfied through its assets contribution.

RAM Rating Services Bhd says MUHIBBAH ENGINEERING (M) BHD ’s RM130 million Islamic bonds are not affected on the recent news about the receivership status of the owner of the Tanjung Bin petroleum hub project.

It said the group’s stand-alone credit profile was affected by its weaker-than-expected profit performance, balance sheet and debt coverage ratios, as well as its tight liquidity profile.

RAM Ratings said Muhibbah’s outstanding order book of RM2.9 billion as at May19 will sustain the group over the next two years.

It added Muhibbah also derives earnings diversity, from its involvement in the CONSTRUCTION, cranes and shipyard segments. It also enjoys recurring dividend income from its associate stakes in the concessionaire for road-maintenance work in Malaysia and an operator and concession holder for three international airports in Cambodia.

SAAG CONSOLIDATED (M) BHD fixed the issue price for the sixth tranche of the placement of 15 million new shares of 10 sen each under the proposed private placement at an issue price of 10 sen each.

The placement price of 10 sen is 40.85% above the five-day weighted average market price of SAAG shares up to and including June 17 of 7.1 sen per share.

Meanwhile, at Tradewinds PLANTATION Bhd’s AGM, the Minority Shareholders Watchdog Group (MSWG) wants to raise a question about the proposed acquisition of Mardec Bhd which was reduced from RM150 million to RM140 million taking into account Ernst & Young appraisal of the fair value of Mardec group using the hybrid methodology.

MSWG will also query the company about the five-year financial performance of Mardec, including latest results.

At Ho Hup Construction Co Bhd’s AGM, the MSWG will ask the board to explain the implication of the auditors’ continued disclaimer of opinion.

The MSWG also wants to know how confident is the board that the proposed PN17 regularisation plan would eliminate the accumulated losses and turn around the group.

Read more...

Maybank IB Views

Star Publications (Malaysia) RM3.39: Hold
Diversifying media assets Shariah-compliant

Near-term catalysts yet to emerge; maintain Hold. On the positive side, indications thus far are that the recent electricity tariff hike has had little impact on ad spend. Furthermore, circulation appears to be leveling off after five years of slippage. Nevertheless, current valuations are reflective of its near-term outlook on tapering single digit earnings growth after a strong rebound last year. We maintain our earnings estimates and RM3.69 SOP TP which implies 12.6x 2012 PER.

Technicals
The FBM KLCI lost 1.95 points and ended at 1,554.24 yesterday. Its resistance areas of 1,555 and 1,576 will cap market gains, whilst the obvious support areas are located at 1,533 and 1,553. Due to the US markets’ mixed tone last night, we will see some initial low volume buying activities in the local bourse today.

Trading idea is a Take Profit call on MUHIBAH.

Other Local News
Perodua: 10,000 orders for new Myvi so far, New Myvi to make Indonesian debut. Perodua has received about 10,000 orders for the new Myvi since booking was opened on June 4 and it expects between 8,000 and 8,500 units to be sold monthly. Separately, the new Perodua Myvi will soon make its debut in the Indonesian market, marking Perodua's first foray there. 500 units of the new Myvi will be shipped to Indonesia this month, while the official launch there will take place next month. (Source: Business Times)

MAS: May boost fleet to tap Oneworld network. Malaysia Airlines' entry into the Oneworld airline alliance may see it ordering more planes. MAS will be attending the Paris Air Show next week, and an announcement on new orders is largely expected. (Source: Business Times)

AirAsia: To announce aircraft orders at Paris Air Show. AirAsia is aiming to conclude negotiations soon so that it can make a landmark aircraft order to double its fleet at the Paris Air Show. (Source: The Star)

UEM Land: Targets RM5b GDV in 2011. UEM Land Holdings Bhd is planning to launch projects with a total gross development value (GDV) of RM5b this year, as it aspires to see its revenue grow by 50%. (Source: The Edge Financial Daily)

KPJ: To build specialist centre in Iskandar. KPJ Healthcare Bhd has received approval for zoning from the Health Ministry to set up a new specialist hospital at Bandar Dato Onn in a collaboration with Johor Land Bhd. (Source: The Star)

Plantation: Malaysia wins case against Aussie palm oil labeling Bill, Malaysia is largest producer of certified, sustainable palm oil. Malaysia has won its case against Australia's proposed Truth in Labelling - Palm Oil Bill. The Community Affairs Legislative Committee of the Australian Senate in Canberra has recommended that the Bill not be passed. Separately, Malaysia is now the world's largest producer of certified and sustainable palm oil, accounting for half of the 4.2m tonnes of globally certified and sustainable palm oil to date carried out by the Roundtable on Sustainable Palm Oil (RSPO). (Source: Business Times)

Read more...

Maybank IB Views

QL Resources RM3.34: Buy
Good start for the 2nd decade of listing Shariah-compliant

Another good year. 4QFY11 net profit of RM31.6m (-4.8% YoY; +19.3% QoQ) took QL's FY11 net profit to RM124.5m (+16.5% YoY), which was within our forecast and consensus. FY11 marks the 10th straight year of double-digit net profit growth since its listing in FY00. We expect another year of strong earnings growth (+30%) premised on the new surimi lines in Surabaya, maturing plantation in Eastern Kalimantan and its palm pellet project. We maintain our Buy call and target price of RM3.75.

Technicals
The FBM KLCI tumbled 12.05 points to close at 1,528.98 yesterday. Its resistance areas of 1,528 and 1,550 will cap market gains, whilst the weaker support areas are located at 1,510 and 1,526.Due to the DJIA’s much weaker tone last night, we will see some heavy liquidation activities today. We expect the FBM KLCI to remain under heavy selling today, as the global market malaise takes hold.

Trading idea is a Take profit call on HAPSENG.

Other Local News
AirAsia: To go bigger and may place big order for Airbus. Datuk Seri Tony Fernandes signalled ambitious plans for AirAsia as he closed in on a potentially massive deal to buy Airbus aircraft, which could rival a recent USD16b, 180-plane deal as one of the world's largest. (Source: The Star)

TM: VADS partners Cisco in telepresence service. VADS Bhd, a subsidiary of Telekom Malaysia Bhd (TM), is hopeful of double-digit growth over the next few years for its upcoming telepresence service. (Source: Business Times)

Puncak Niaga: Forays into oil and gas, secure water supply project. Puncak Niaga Holdings Bhd has acquired 40% equity in Global Offshore (Malaysia) Sdn Bhd (GOM) and KGL Ltd (KGL) respectively for a cash consideration of USD8.4m (RM25.2m) and USD15.2m (RM5.6m) respectively. Separately, a consortium consisting of a 40:60 unincorporated JV between Quality Concrete and Puncak Niaga has secured a RM667.3m contract for a rural water supply project in Sarawak. (Source: Bursa Malaysia)

TNB: Cabinet to decide on Wednesday on tariff increase for TNB. The Cabinet is expected to decide on Wednesday, May 25 if there should be a tariff increase for Tenaga Nasional Bhd. (Source: The Edge Financial Daily)

E&U: First block of Kimanis 100MW Plant to be completed in 2013. The first generation block of 100 MW of the proposed 300MW Combined Cycle Gas Turbine Power Plant in Kimanis is expected to be completed in Dec 2013. The power plant and its related projects, costing about RM1.6b is expected to supplement Sabah’s increasing demand for electricity. (Source: Bernama News)

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