RHBInvest Research

Hektar REIT: No surprises Outperform

3QFY11 Results

¨ 3Q11 realised net profit (-1.2% yoy; +2.3% qoq) came within our and consensus estimates. Gross revenue grew 5.9% yoy and 3.3% qoq due to the improved rental contribution from its assets arising from the opening of earnings-accretive new retail space as well as the rental increase after asset refurbishment works. However, the higher interest expense incurred during the period has offset the higher revenue, causing the realised net profit margin in 3Q11 to contract slightly. A DPU of 2.5 sen was declared during the period, bringing total 9M11 DPU to 7.5 sen, on track to meet our forecast.



CSC Steel: 9MFY12/11 net profit declines by 49% yoy Underperform

3QFY11 Results

¨ 9MFY11 net profit came in below expectations. We believe the variance vs. our forecast largely came from worse-than-expected margin contraction in 3QFY11 as a result of lower selling prices of its steel products.

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RHBInvest Research

Top Story: Top Glove – Latex prices set to ease further Underperform

Visit Note

¨ Latex prices have corrected sharply, in tandem with other commodity prices (excluding precious metals) amid concerns of weaker-than-expected economic growth. As such, we have reduced our latex price assumption to RM8.59/kg for FY11 (from RM8.69/kg earlier). Our latex price assumptions of RM7.75-7.90/kg for FY12-13 remain intact.



Sector Call



Property: Vietnam – Good prospect but not an easy market Neutral

Sector Update

¨ Vietnam has been a tough market. This is well known to many investors. The high inflation and lending rate imply that the required rate of return/IRR of any development projects must be at least 30% to make it profitable. The unfavourable economic indicators and the under-developed mortgage market have largely explained why many Malaysian developers have not been aggressive in pushing their launches in Vietnam during the recent property upcycle, when regional property markets are booming.



Corporate Highlights


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Gamuda: Give me your best shot, comrades! Outperform

Visit Note

¨ MMC-Gamuda JV may have to settle for a low price for the tunnelling works if they have to match the ultra low winning bid from one of the two Chinese contractors, but we believe Gamuda could still optimise to improve profitability.



Notion Vtec: Shifting focus to camera and auto Underperform

Briefing Note

¨ Management appeared to have a more cautious tone on the industry outlook given the weaker-than-expected global economic growth. We understand although management has not witnessed any cut back in orders yet, the current environment poses a risk which could lead to slower-than-expected orders from customers. The HDD industry is not only facing weaker-than-expected IT spending for desktop PCs, it is also facing stiffer competition from tablets. Hence, we understand Notion will focus on the camera and automotive segments going forward.



SP Setia: Beranang? It’s far, but they will make it nearer Market Perform

News Update

¨ SP Setia entered into a SPA for the proposed purchase of a piece of 1,011-acre freehold land in Beranang for RM330m, or RM7.50 psf. The site is estimated to yield a GDV of RM3.5bn.The land is located midway between Semenyih, Bangi Old Town and Beranang. Travelling time is said to be about 40min to KL.



Evergreen Fibreboard: Going upstream into rubber plantation Underperform

News Update

¨ Evergreen has entered into a Mou with four individuals to purchase a 4,410-acre of land for RM37.8m. The land consists of tropical timber and approximately 1,730 acres of the area has been logged.



Dialog: On the mark Outperform

4QFY11 Results

¨ FY11 net earnings of RM152.4m were in line with expectations, rising 29% due to increased contribution from associate earnings (+23%) and better margins from core divisions of 13.4% (vs. 10.2% in FY10).



CSC Steel: 2QFY11 results dragged down by higher raw material costs Underperform

2QFY11 Results

¨ 1HFY11 net profit came in below expectations. We believe the variance against our forecast largely came from worse-than-expected margin contraction in 2QFY11 as a result of weak demand and significantly higher raw material costs.

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RHBInvest Research

Top Story: IJM Plantation – Short-term pain for long-term gain Market Perform

Visit Note
Key takeaways from our visit to IJMP’s estates and operations in Sandakan: 1) Heavy rainfall affected FFB production and OER; 2) Sold part of FY03/12 production forward; 3) Locked in 80% of fertiliser requirement for FY03/12; 4) Labour shortage of 10% currently; 5) Planted close to 9,000ha in FY03/11; and 6) Efficient facility, impressive long-term planning.



MMHE: Fair value unchanged at RM5.75 Underperform

Petronas unveiled plans for a US$20bn (RM61bn) refinery and petrochemicals complex in Pengerang, Johor last week.



Corporate Highlights

Dialog: Starting up the “Pengerang” engine Outperform

News Update
Dialog announced last week that the Johor state government had given the go ahead for the company to begin reclamation work for the proposed independent deepwater terminal in Pengerang. The total investment for the project is estimated at RM5bn over a 7-year period.

Kencana: Proposed acquisition to enter the subsea market Outperform

News Update
Kencana announced last week that it is looking to acquire Allied Marine & Equipment (AME), a company that specialises in subsea services for the oil and gas industry. The acquisition will cost RM400m, to be satisfied via the issue of 149.3m new shares at RM2.68 each.



DRB-Hicom: Keen to explore Bank Muamalat – Bank Islam merger Outperform

News Update
DRB-HICOM (DRB) issued a press release in a response to media reports that BIMB Holdings (BIMBH) had been approached to consider buying Bank Muamalat (BM).


CSC Steel: 1QFY11 net profit more than doubled qoq to RM24.0m Outperform

1QFY11 Results
1QFY11 net profit came in at 31% of our full-year forecast and 30% of the full-year market consensus. However, we consider the results within expectations as we expect lower margins in the next few quarters due to higher raw material cost.

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RHBInvest Research

Top Story

YTL Power –Market Perform (up from UP)

• Visit Note
• More to come from “Yes”. Expect two new Yes devices in Mar when YTL Comms launches the Samsung Buzz mobile phone (mobile voice and SMS) and the Zoom router (enabling and sharing an Internet connection within a premise).
• Raised our SOP-derived fair value on YLTP from RM2.20 to RM2.57.
• YTLP offers investors attractive gross dividend yields of around 7% p.a..

Corporate Highlights

CIMB: Outperform

Company Update

• CIMB Niaga posts strong finish to FY2010
• No change to forecasts. Fair value of RM9.80 and Outperform call maintained.

MBM: Outperform

• 4QFY10 Results
• Slower growth ahead
• No significant changes to forecasts. Outperform call retained on valuation grounds.
• FV lowered to RM3.95 (from RM4.96).

CSC Steel: Outperform

• 4QFY10 Results
• Weak 4QFY10 due to margin contraction
• We continue to like CSC Steel due to its undemanding valuations, strong balance sheet with a net cash of RM241.4m or 64sen/share (after 13sen dividend payout), and attractive dividend yield.
• Indicative fair value is reduced to RM2.01.

Daibochi: Market Perform

• 4QFY10 Results
• Full-year FY10 net profit of RM18.2m (-19.6% yoy) was within expectations
• For 2011, we believe Daibochi will continue to grow its revenues as it did in 2010 (+20.7% yoy) through continuous product innovations in both F&B and non-F&B segments.
• Our fair value is unchanged at RM2.95

Wah Seong: Underperform

• 4QFY10 Results
• FY10 weak but within expectation
• FY11 will be a better year for earnings as both the pipe-coating and engineering divisions have already started to post improvements in 4QFY10. Current order book and tender book stand at RM1.4bn and RM5.7bn respectively, with the pipe-coating division contributing about 50% to both numbers.
• Maintain forecasts, Underperform call and our RM2.02/share fair value at this juncture.

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RHBInvest Research Highlight 18 Nov 2010

Top Story

CI Holdings:
Thirst quenching prospects.
We value CIH at RM4.90. Initiate coverage with Outperform.

Corporate Highlights

CSC Steel:
Near-term outlook cloudy, but dividend may surprise to the upside.
Fair value cut to RM2.12. Maintain Outperform.

HL Bank:
Loan growth gained further traction.
Fair value raised to RM11.00, from RM10.70. Maintain Outperform.

Paramount:
Above expectation.
Maintain Outperform, with an unchanged fair value of RM6.20.

Faber:
Expect a weaker 4Q, concession pending renewal.
Fair value has been lowered to RM3.77 (from RM3.82). Outperform call on the stock.

Media Prima:
3Q Earnings boosted by continued recovery in adex.
Fair value is revised to RM2.82 from RM2.75. Reiterate Outperform.

MPI:
Lower contribution from higher margin packages.
Market Perform call with a fair value of RM6.35.

Technical Highlights

Daily Trading Strategy:

• Expect a knee-jerk reaction today.
• Trading sentiment is suspected to stay negatively biased in the near term.
• Given the recent sharp falls in the regional markets, and the negative news flows on more tightening measures in China to tame inflation, as well as the renewed debt crisis in Europe.
• Investors are expected to stay defensive in sessions ahead, in our view.
• The index should seek support at the 40-day SMA near 1,489.
• Losing 1,450 will be seen as a trigger to a major correction phase on the FBM KLCI.

Daily Technical Watch: Karambunai Corp

• Sentiment remains negatively biased
• Immediate Support at RM0.18
• Immediate Resistance at RM0.225

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RHBInvest Research Highlights

Top Story

First Resources

• Significant turnaround from.
• Fair value is trimmed to S$1.60 (from S$1.70). Maintain Outperform.

Corporate Highlights


Hua Yang

• In the right affordable housing segment.
• Fair value is RM1.16. Not rated.

Gamuda

• Penang issues stop-work order against double-tracking project.
• Fair value is RM4.51. Maintain Trading Buy.

Genting Bhd

• One-off gain of RM390m.
• Fair value for Genting is RM12.45 (from RM12.75). Maintain Outperform.

Parkson

• PRG 3QFY12/10 results slightly below expectations.
• Fair value is unchanged at RM7.72. Maintain Outperform.

Tan Chong

• Spreading its wings to the east.
• Maintain fair value at RM6.16. Market Perform.
  

Maybank

• Off to a decent start.
• Fair value is RM10.40. Maintain Outperform.

AMMB

• Another strong quarter.
• Fair value is RM7.26 (from RM6.95) Maintain Outperform.

CSC Steel

• 3QFY12/10 performance impacted by inventory write-down.
• Fair value is RM2.33. Maintain Outperform.

Technical Highlights

Daily Trading Strategy

• Cautious pending clearer regional performance.
• FBM KLCI’s bearish technical readings continued amid the bearish reversal in the regional markets that responded negatively to the China markets’ unexpected 5% plunge.
• If the index fails to recapture the psychological level of 1,500 and 10-day SMA of 1,513 soon, chances are high for it to continue heading downward to below the 40-day SMA near 1,488.
• Key support is at 1,450, while the resistance is seen at the 10-day SMA for this week
  

Daily Technical Watch: Genting

• Negative “double sells” signal on the indicators.
• Immediate Support at RM9.57
• Immediate Resistance at RM10.60

Weekly Trading Idea: Salcon

• A chance to accumulate near RM0.75
• Strategy: Buy on weakness at above RM0.75.
• Immediate Resistance at RM0.89
• Immediate Support at RM0.75
• Exit: Cut loss if it loses the 10-day and 40-day SMAs

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