Stocks to watch: SP Setia, YTL Corp, Proton, SEGi

KUALA LUMPUR: Stocks on Bursa Malaysia may consolidate on Friday, April 15 following the mixed overnight performance on Wall Street while on the local front, the pullback on Thursday and political concerns over Sunday’s polls in Sarawak could see investors staying on the sidelines.

On Wall Street, stocks that outperform in a weak economy helped the Dow and S&P 500 eke out gains on Thursday as concerns about faltering growth and inflation prompted investors to seek out less volatile names.

The Dow industrials' top percentage gainers were Coca-Cola Co, up 1.5 percent, Kraft Foods Inc, up 1.7 percent and Merck & Co, up 1.2 percent. Energy shares also rallied as U.S. crude oil futures gained more than 1 percent to trade above $108 a barrel.

The Dow Jones industrial average rose 14.16 points, or 0.12 percent, to end at 12,285.15. The Standard & Poor's 500 gained 0.11 of a point, or 0.01 percent, to 1,314.52. The Nasdaq Composite dropped 1.30 points, or 0.05 percent, to 2,760.22.

At Bursa, stocks to watch out for are SP SETIA BHD, YTL Corp, PROTON HOLDINGS BHD and SEG INTERNATIONAL BHD.

The Edge FinancialDaily reports that SP Setia Bhd is making its maiden venture into Singapore. The developer has proposed the purchase of 27 strata units in Leong Bee Court for S$65 million (RM159 million) with the plan to redevelop the property, currently comprising flats, into residential apartments.

Having missed the opportunity to pick up assets at basement prices during the global financial crisis, YTL Corp Bhd's Tan Sri Francis Yeoh Sock Ping believes a second chance at a shopping spree could be knocking on YTL's door.

Proton Holdings Bhd’s unit Lotus Cars Ltd will sign an agreement on syndicated financing with CIMB Bank, Maybank, OCBC, EON Bank, Exim Bank and Affin on Friday.

SEG International Bhd is teaming up with Chung Cheong University in South Korea to train and place nurses and allied health professionals in the US, Canada and Europe.

SEGi said the academic collaboration was expected to contribute an increase in earnings of approximately 4% to the group for FY ending Dec 31, 2011.

IJM Land Bhd’s additional 229.88 million new shares will be granted listing and quotation with effect from 9am on Monday, April 18. The new shares arose from the conversion of RM400 million nominal value of 10 year 3% coupon redeemable convertible unsecured loan stocks (RCULS)by IJM Corp Bhd.

NAIM HOLDINGS BHD disposed of two million shares in DAYANG ENTERPRISE HOLDINGS BHD on April 13, reducing its stake to 34.17% or 187.94 million shares.

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RHBInvest Research

Top Story: ILB

• Visit Note
• Full-steam ahead in China, Dubai warehouse opens for business in 2012
• Fair value is RM1.40. Maintain Outperform.

Market View

Government Measures:

Market Update

• Fourth ETP update.
• The nine EPP projects are under six NKEAs including tourism, healthcare, agriculture, palm oil & rubber, electronics & electrical, and oil, gas & energy.
• We believe the Government and Pemandu will have a difficult time keeping the momentum going on the ETP
• Longer-term positive outlook is likely to prevail and in our view, ETP projects related to the Greater KL and oil, gas and energy NKEAs will continue to draw attention from investors.

Sector Call


Plantation:

Sector Update

• Day 1 of POC: Most in agreement for weaker second half
• Maintain Overweight on the plantation sector.
• We reiterate our Outperform calls on KLK, Sime Darby, TH Plantations and on SGX-listed First Resources, and our Market Perform call on IOIC, Genting Plantations and IJMP.

Oil & Gas:

Sector Update

• Another oil & gas project under the ETP.RG
• Gas and Chemicals will invest RM1bn over three years in an integrated oil and gas hub on Pulau Daat, Labuan.
• Maintain our Overweight stance.
• Our top pick for the East Malaysia space is Dayang Enterprise.

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RHBInvest Research Sector Call

Sector Call

Oil & Gas: Petronas 3QFY11 Results
Overweight

Petronas Chemicals: Fair value at RM7.27
Outperform

Dialog: Fair value at RM2.82
Outperform

Petronas Gas: Fair value at RM13.76 Outperform

SapuraCrest: Fair value at RM4.37 Outperform

KNM: Fair value at RM3.45 Outperform
RH Petrogas: Fair value at S$1.55
Outperform

Dayang: Fair value at RM2.60 Outperform

Petra Perdana: Fair value at RM1.16

• Outperform

Kencana: Fair value at RM2.85

• Market Perform
  

Wah Seong: Fair value at RM2.0

• Underperform
• Maintain Overweight as we expect the domestic sector to remain vibrant.

Corporate Highlights

SP Setia: Outperform

• Showing presence in Cyberjaya
• Maintain Outperform. However, in view of the prevailing weakening equity market sentiment, we take a more prudent valuation and lower our fair value to RM7.30.

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RHBInvest Research

Plantation:

Sector Update

• Looking to the sky for guidance
• We reiterate our view that our CPO price assumptions of RM3,100/tonne for 2011 and RM2,900/tonne for 2012 would be maintained as long as the weather normalises and La Niña ends within the next few months, resulting in “normal” production levels in 2H2011. However, if La Niña persists, CPO prices could potentially remain high at above RM3,500/tonne for the entire year.
• No change to our Overweight rating on the sector.

Macro View

GDP:

Economic Outlook (published 10 Feb 2011)

• Slower economic growth in 4Q 2010, but momentum is building for a rebound in 2H 2011.
• Going forward, the global economy, though will likely expand at a slower pace in 1H 2011.We expect the country’s real exports to expand at a slower pace in 2011, after returning to positive growth in 2010.
• On the local front, domestic demand will likely be resilient in sustaining the country’s economic growth going forward, albeit at a more moderate pace. As a whole, we expect real GDP growth to normalise to 5.0% in 2011, from +7.0% estimated for 2010.

IPI:

• Economic Highlights (published 10 Feb 2011)
• Moderated To 4.2% in Dec, translating to slower GDP growth in 4Q 2010
• As a result, we estimate that real GDP growth is likely to have moderated to 4.3% yoy in 4Q, from +5.3% in 3Q and a peak of +10.1% in 1Q.

Corporate Highlights


Dayang: Market Perform

• News Update
• Wins topside maintenance contract
• Maintain Market Perform call, with an unchanged fair value of RM2.60/share.

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Maybank IB Views

ECONOMICS
Industrial Production Index, Dec'10
Hovering around low single-digit growth level for now…

Dec '10 industrial production growth was below expectation at +4.2% YoY (vs revised Nov '10: +5.4% YoY; Maybank IB: +5.6% YoY; Consensus: +5.0% YoY). Highlight from the data was the further pickup in manufacturing production. Total output growth was weighed down by lower mining output and slower growth in the power sector.


MARKET COMMENTS
Market Strategy
Succumbing to regional selling pressure Shariah-compliant

Succumbed. The KLCI 30 was down 32 pts (2.1%) yesterday to close below the 2010 year-end close of 1,519 for the first time this year. Malaysian equities finally succumbed to selling pressure, in step with regional markets which have weakened since early this year. YTD, the KLCI is down 1%, but on relative terms, it has still "outperformed" regional indices STI (-2.7%), SET (-7.9%) and JCI (-8.9%). Rising food and commodity prices stoke inflation fear, and in turn, rising interest rate concerns across the region. China, Indonesia and Thailand have raised their benchmark interest rates by 25 bps each this year.


RESULTS PREVIEW
WCT RM3.34: Buy
2010 to finish strong; positives ahead Shariah-compliant

Potential upside surprise. 2010 final quarter results, to be released on 25 Feb, may surprise on the upside, despite a possible provision for Bakun CW2. There is no change to our net profit forecasts for now; we anticipate a 33% growth in 2011 and 13% in 2012. 2011 will be a record earnings year. Our target price is unchanged at sum-of-parts RM3.75 after rolling over our valuation period, but based on fully diluted EPS with e.158m new warrants coming on stream. WCT stays a Buy.


RESULTS REVIEW
Eastern Pacific Industrial Corp RM2.35: Hold
In line, Tanjung Agas poses competition Shariah-compliant

Maintain Hold, no near-term catalysts. We now expect a tapered 3-year forward net profit CAGR of 4%, which forms the basis of our concern. Also, the proposed Tanjung Agas development in Pahang will pose a stiff competition to EPIC in the long term. Maintain Hold with a raised RM2.55 target price (+6%) based on unchanged 8x 2011 PER target, but after raising our 2011-12 net profit forecasts by 5-10%.


Technicals
The FBM KLCI tumbled 32.08 points to 1,503.99 yesterday. Its resistance areas of 1,503 and 1,533 will cap market gains, whilst the weaker support areas are located at 1,474 and 1,500.

Other Local News
Dayang: Wins RM802m Petronas Carigali contract. Dayang Enterprise Holdings Bhd's (DEHB) wholly owned subsidiary Dayang Enterprise Sdn Bhd (DESB) has received a contract worth RM802mil from Petronas Carigali Sdn Bhd. The contract involved the provision of topside structural maintenance services in Sarawak, Sabah and Peninsular Malaysia. (Source: Bursa Malaysia)

MTD Cap: Suitors up offer for MTD Cap to RM11 a share. The major shareholders of MTD Capital Bhd (MTD Cap) that had proposed to take over the company for RM9.50 cash per share previously, have revised their offer to RM11 cash per share. The revised offer values MTD Cap at RM3.03b, RM430m higher than the previous valuation of RM2.6b. (Source: The Edge Financial Daily)

O&G: Petronas confident oil business won't be affected by split in Sudan. Petroliam Nasional Bhd (Petronas) is confident its oil business in Sudan would not be affected after the people of Southern Sudan, where the oil fields are sited, voted for independence last month. (Source: The Star)

Plantation: FTA with India will boost Malaysia palm oil sector. Next week's free trade agreement (FTA) signing between Malaysia and India will be a further boost for the country's palm oil sector and Sabah, in particular, stands to benefit. India would be reducing duties on palm oil as part of the FTA, which will make it easier for Malaysian palm oil players to export to India. (Source: The Star)

Plantation: January CPO output lowest in 12 months. Malaysian crude palm oil (CPO) output fell 14.18% or 174,791 tonnes to 1.057m tones in January, from 1.232m tones in December 2010, according to Malaysian Palm Oil Board (MPOB). This represents the lowest in 12 months. (Source: The Edge Financial Daily)

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RHBInvest Research

KLK:
Extreme weather = Lower production but higher prices
Reduced fair value for KLK to RM25.95 (from RM27.35), but maintain our Outperform rating.

Corporate Highlights

Dayang:
Dayang’s 1-for-4 bonus and rights issues went ex yesterday.
New ex-all fair value is RM2.60/share (from RM3.54 previously). While we still like the company, we downgrade our call on the stock to Market Perform (from outperform)

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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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Maybank IB Recommended Stocks

As recommended by our analyst, can look into Boustead and DAYANG.

The support, resistance and targets are show on the charts.
Stop-loss for Dayang is RM1.77 and Boustead is RM5.07.

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RHBInvest Research

Dayang: Outperform
Maintaining the edge
Our new fair value is RM3.54/share (from RM3.36/share).
We thus maintain our Outperform call on the stock.


Commodity Corner


Crude Oil:
WTI crude oil price fell to US$87.70/barrel
Dialog (OP, FV = RM2.82) remains our top pick for the sector


Corporate Highlights


Glomac:
Buying 90-acre land in Puchong
Our indicative fair value is hence revised up to RM2.19 from RM2.15.
Maintain Outperform.

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RHBInvest Research

Top Story

• The spike in volume and value of trades indicates that there is still ample liquidity in the market.
• Expect continued anticipation in terms of news flow for new projects, contracts, M&A. However, focus will shift more to actual award of contracts or projects, as well as to delivery and execution, potentially causing disappointment.
• The news flow for some sectors (in particular the oil & gas sector) appears to be going strong, and will continue to be the catalyst in the near term.
• In our view, the market will remain a trading market as we believe share prices cannot veer too far from fundamental valuations.

Sector Call


Plantation:

• 2010 production a disappointment, what of 2011?
  
• Should there be another disappointment in production in 2011, CPO prices could potentially remain at high levels of above RM3,500/tonne for the entire year.
• We maintain our CPO price assumptions at RM3,100/tonne for 2011 and RM2,900/tonne for 2012.
• No change to our Overweight rating on the sector

Oil & Gas:

Dialog:

• Fair value raised to RM2.82
• Outperform

Sapuracrest:

• Fair value maintained at RM3.86 Outperform

KNM:

• Fair value maintained at RM3.78 Outperform

Dayang:

• Fair value maintained at RM3.36 Outperform

Petronas Gas:

• Fair value maintained at RM13.51 Outperform

Kencana:

• Fair value raised slightly to RM2.89
• Market Perform (Down from OP)

Petra Perdana:

• Fair value raised to RM1.29 using P/NTA methodology
• Market Perform (Up from UP)

Wah Seong:

• Fair value maintained at RM2.02
• Market Perform

We are reiterating out Overweight call on the sector.


Corporate Highlights

PLUS: Underperform (down from TB)

• It all ends with a whimper.
• With the latest news, it is now very likely that UEM-EPF will stick to their existing RM4.60 offer. With no firm competing bids, UEM-EPF has no compelling reason to raise their offer.
• PLUS yesterday confirmed only UEM-EPF remitted the RM50m cash deposit.
• We downgrade PLUS from Trading Buy to Underperform with a fair value of RM4.60 (previously RM5.20) to reflect the offer price by UEM-EPF.

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RHB Invest Highlights

Top Story

Oil & Gas:
More room for growth?

• Dialog: Fair value raised to RM1.94. Outperform (up from MP)
• Sapuracrest: Fair value raised to RM3.34. Outperform
• Kencana: Fair value raised to RM2.60. Outperform
• KNM: Fair value maintained at RM0.58. Outperform
• Dayang: Fair value maintained at RM3.86. Outperform
• Petronas Gas: Fair value maintained at RM13.51. Outperform
• Wah Seong: Fair value maintained at RM2.21. Market Perform
• Petra Perdana: Fair value maintained at RM0.44. Underperform
• We upgrade our call on the market to Overweight (from neutral previously).
• Our top pick at this juncture is Kencana, while our longer-term pick is Dialog.

Corporate Highlights

Allianz:

• On track to meet our full-year forecast.
• Maintain Outperform with fair value of RM5.34.
  

KFC:

• Another offer to buy QSR; KFCH could be privatized.
• We maintain our fair value for KFC at RM3.85.
• We also maintain our Underperform call, pending further developments.

MISC:

• Acquisition of VTTI completed, minor news flow from the LNG segment expected
• Indicative fair value is RM8.14. Maintain Underperform.

Technical Highlights


Daily Trading Strategy:

• Removing the 10-day SMA will boost sentiment.
• If the FBM KLCI is still unable to penetrate the 10-day SMA today and the daily turnover fails to improve from the current 1.0bn shares mark, selling activities may increase ahead of the weekend.
• In contrast, a removal of the 10-day SMA with a higher daily trading volume will likely boost the short-term trading sentiment, in our view.
• Nonetheless, the speculative interests are expected to drive share prices on the mid to lower-cap stocks, while mild profit-taking activities on the core defensive heavyweights may continue.
  

Daily Technical Watch: KNM Group

• Follow-through buying support if it surpasses RM0.50 soon.
• Immediate Support at RM0.44
• Immediate Resistance at RM0.50Top Story

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RHBInvest Research Highlights 09th November 2010

Top Story

Timber:

• Looking good.
• Overweight stance on the sector.

Ta Ann: Fair value revised to RM5.92, from RM5.12. Outperform (up from MP)
Jaya Tiasa: Fair value revised to RM5.31, from RM4.73. Outperform
WTK: Fair value revised to RM1.64, from RM1.60. Outperform

Corporate Highlights

Digi:

• Prepared to hold its ground.
• Maintain Outperform call on DiGi with fair value of RM26.35

AirAsia:

• Price war looming.
• Fair value is cut from RM3.01 to RM2.10. Downgrade to Underperform from outperform.

MAS:

• To expand Firefly into a full-fledged low-cost carrier.
• Maintain Underperform. Fair value is RM1.91

Dayang:

• Jumped significantly in 2QFY10.
• Fair value raised to RM3.86/share (from RM3.01 previously), Maintain Outperform.

Technical Highlights

Daily Trading Strategy:

• A potential removal of 1,524.69 today.
• A penetration to above 1,524.69 will induce another wave of fresh buying momentum, in our opinion.
• Potentially, the FBM KLCI could head higher towards our medium-term upside projection target at 1,668 over the longer tem.
• In fact, even if it fails to take out 1,524.69, the current robust sentiment is likely to persist amid strong rotational plays and robust trading volume of late.

Daily Technical Watch: DNP Holdings

• Likely to push for further gains toward RM2.12 and RM2.37
• Immediate Support at RM1.80
• Immediate Resistance at RM2.12

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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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