RHBInvest Research

Top Story: Penang Property Update

• Sector Update
• Property sector is the key beneficiary of all the infra developments and strong capital investment flow in Penang.
• IJM Land and E&O, which are the prime beneficiaries of the upcoming major infra developments and strong capital investment flows into the Penang state.
• Our estimated fair value for E&O is RM1.91,we maintain our Overweight stance on the sector. Our top picks are IJM Land and Mah Sing.

Sector Call

Banking:

Sector Update

1QCY11 report card
Low loan impairment allowances provides relief to slow start
No change to our Overweight stance on the sector.

Media:

Sector Update 1Q11

1. Apr Adex For TV and Print Grew 17.8% YoY
2. Media Prima remains our preferred pick given its position as the largest integrated media player in Malaysia. In addition, we believe there is still scope for further synergies to be unlocked across its different platforms.
3. No change to our Overweight call on the sector.

Building Material:

Sector Update

• Impact of electricity and natural gas tariff review
• Maintain Underweight for the sector.

Corporate Highlights

TNB:

Briefing Note

• TNB’s outlook received a boost after receiving an average tariff hike of 7.12% effective 1 Jun and the formalisation of a fuel cost pass-through (FCPT) formula.
• Fair value raised to RM8.00 (previously RM5.60). Upgrade to Outperform from Underperform.

CBIP:

Results / Visit Note

• Benefitting from plantation arm
• Raise target price to RM4.90 (from RM4.65), after updating for CBIP’s latest net debt figure.
• No change to our Market Perform recommendation on CBIP.

MCIL:

Results Note

• FY11 Ends On A High Note
• Fair value is raised to RM1.43 (from RM1.38), which is based on unchanged target CY11 PER of 13x.
• We reiterate our Outperform call on the stock.

Petronas Gas:

News Update

• Minimal Impact From Government’s Gas Price Hike
• We maintain our RM13.95/share fair value and Outperform call on the stock.

Petronas Chemicals:

News Update

• Minimal Impact From Government’s Gas Price Hike
• Fair value for the stock decreases slightly to RM8.92/share (from RM9.02/share previously). We maintain our Outperform call on the stock.

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Maybank IB Views

IJM Corporation RM6.20: Hold
Kitchen sinking, losses in 4Q Shariah-compliant

Maintain Hold. 4QFY11 fell into a loss due to provisions and project losses at the construction business. Totalling RM124m, the amount was much larger than the anticipated RM70m. Nonetheless, we retain our FY12-13 earnings forecasts, expecting these to be one-off. Share price has stay flat (-0.1%) since we downgraded the stock on 24 Feb. It could remain there for a while as the market digests the poor 4Q results, while upcoming RM5b potential contract flows from the WCE and NPE extension have been partially priced in. No change to our RM6.50 RNAV-based TP for now, which implies 20x CY2012 PER.

Alam Maritim Resources RM1.05: Sell
Still a struggle Shariah-compliant

Results were below expectations. Alam suffered its third consecutive quarterly loss, with a RM7m net loss in 1Q11. We cut 2011 forecast by 18% but place our recommendation and RM0.79 (1x book) target price under review pending an update with management. We think the worst is over for the domestic vessel charter industry, which would trigger a re-rating for the vessel operators.

Amanah Raya REIT RM0.95: Buy
On track; new assets boosted earnings

Maintain Buy. AAREIT's RM10.9m 1Q11 net profit (+29% YoY) came in within expectations. 1Q DPU of 1.8 sen (95% payout) was also in line. We like AAREIT for its good 8.7% 2012 yield (compared to 8.1% M-REIT sector). In our view, the yield is sustainable as the majority of AAREIT's leases are long-term with step-up features. We maintain our earnings forecasts and RM1.12 DCF-based TP.

Technicals
The FBM KLCI gained 7.75 points to close at 1,548.69 on Friday. Its resistance areas of 1,550 and 1,565 will cap market gains, whilst the obvious support areas are located at 1,527 and 1,548. We expect the FBM KLCI to remain range bound today.

Weekly trading idea is a Short-Term Buy on ESSO.

Other Local News
MAHB: Strong interest to jointly develop 50 acres near KLIA2. Twenty companies have collected request for proposal (RFP) documents to partner Malaysia Airports Holdings Bhd (MAHB) to develop 50 acres near KLIA2 in Sepang. The RFP is for the privatisation of the 50-acre commercial development that would comprise premium factory outlets centre, a food and beverage centre and an auto city. (Source: The Star)

Bina Puri: Bids for RM400m Negri job. Bina Puri Holdings Bhd has bid for a contract worth over RM400m for associated civil works to extend a 1,000MW power plant in Negri Sembilan with Japan's Mitsui & Co. (Source: Business Times)

Property: UOA's final retail price fixed at RM2.52. UOA Development Bhd’s institutional price has been fixed at RM2.60 per share while the retail price is RM2.52 per share, which was below the indicative retail price of RM2.90. (Source: The Edge Financial Weekly)

Stockbroking: More licences for foreign stockbroker. Securities Commission Malaysia is offering two new licences to foreign stockbroking houses, specifically for the retail side of the business. Singapore based Phillip Securities Pte Ltd is one of the investment firms eyeing the licence. (Source: The Edge Financial Weekly)

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