Maybank IB Views

Construction & Property: Overweight
First MY Rapid Line (MRT) launched

Overweight Construction. Prime Minister Najib's launch of the Sg Buloh-Kajang (SBK) mass rapid transit (MRT) line last Friday cement scepticisms on the execution of the country's largest infrastructure project, which forms a critical component of the Greater KL/KV National Key Economic Area (NKEA) under the Economic Transformation Programme (ETP). We expect full construction works to start next year. We remain Overweight on the sector with Gamuda as our top pick.

COMPANY UPDATE

Malaysia Airports Holdings RM6.50: Buy
Airports still flying high

Thriving under adversity. MAHB's May 2011 traffic statistics reveal a strong 14.6% YoY passenger growth (5M 2011: +13.3% YoY). This is way ahead than regional and global growth rates which underpins our positive stance for MAHB. Cargo volumes shrunk by 7.1% YoY (5M 2011: -2.6% YoY) due to the severe downturn of the electrical & electronics industry in Malaysia. Maintain Buy; no change to our earnings forecasts and RM7.12/share DCF-based target price.

Technicals
The FBM KLCI gained 11.80-points and closed at 1,594.74 last Friday. The local market remained quite firm on a firm global market tone. Despite BNM’s MPC meeting SRR interest rate rise from 3% to 4% last Thursday, the market rose further. The firm support areas for the FBM KLCI are located in the 1,576 to 1,594-zone. The next resistance level of 1,595 may see token selling activities.

Trading Idea is a Short-Term Buy on AFG

Other Local News
Latexx: Due diligence on YTY almost over. Latexx Partners Bhd is poised to complete a due diligence on YTY Industry Holdings Sdn Bhd by as early as next month. Latexx is proposing to take over YTY for RM1.25b by paying 30% in cash, with the balance of the assets being swapped for Latexx shares. (Source: Business Times)

Ivory: Surges on hope of land award. Ivory Properties Group Bhd's share price has surged on anticipation that the Penang state government will decide this week if it is to award the company the rights to help develop 40ha of land in Bayan Mutiara. (Source: Business Times)

Dijaya: TAEL One buys more shares. TAEL One Partners Lts, a Cayman Islands-incorporated private equity firm, has raised its stake in Dijaya Corp Bhd to 7.25% after acquiring another 10.3m shares last Friday. (Source: The Sun)

Media: Catcha Media sees a big catch in online advertising. Catcha Media Bhd, one of the country's largest new media companies, is planning to launch websites for all its magazines as part of its plan to grow online advertising business. The company operates all of Microsoft's online properties in Malaysia, including the MSN portal, and has exclusive sales rights for leading Malaysian website Lowyat.net. It also publishes 14 magazines such as Clive, HomePride, Juice, Mint, Stuff and Prestige, among others. (Source: Business Times)

O&G: OM to build RM210m plant in Q4. OM Holdings Ltd (OMH) expects to start construction of its proposed USD70m (RM210m) manganese smelting and sintering plant in Tanjung Langsat Industrial Complex, Johor Baru in the fourth quarter this year. The Australian public-listed company said land clearing works for the project site is now carried out by Johor Corp. (Source: The Star)

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Maybank IB Views

Oil & Gas: Overweight
PETRONAS FY11 report card: Quest and request

Balancing aspiration and obligation. We laud PETRONAS' request for a fairer dividend distribution in its quest for growth while keeping its financial discipline. O&G is a capital intensive business and much of the retained earnings is to be essentially set out for new hydrocarbon resources. Higher capex simply translates into higher growth opportunities for the local O&G players. We continue to Overweight the sector. Dialog, Kencana, PGas and SapCrest are our choiced picks.

Technicals
The FBM KLCI closed marginally lower by 0.10 points and ended at 1,551.79 yesterday. Its resistance areas of 1,554 and 1,568 will cap market gains, whilst the obvious support areas are located at 1,537 and 1,551. We expect the FBM KLCI to remain quiet today, as it there may be a spill over of the boring US and regional markets.

Daily trading idea is a Short-Term BUY call on YINSON

Other Local News
TNB: Buys power from Singapore to ensure supply security. Tenaga Nasional Bhd (TNB) is buying power from Singapore-based PowerSeraya Ltd, a unit of YTL Power International Bhd, due to a shutdown of Petroliam Nasional Bhd-owned gas production platforms for maintenance and dwindling gas supply. (Source: The Star)

BJTOTO: May roll out new game on this weekend. Berjaya Sports Toto Berhad is expected to introduce a new game which is believed to be something similar to the 4D Jackpot introduced by Magnum 4D in September 2009. It is likely to help the company to grow its sales and expand its market share. (Source: Business Times)

Latexx: Accepts revised offer from YTY. Rubber gloves maker Latexx Partners Bhd's board has accepted a revised offer of RM1.25b (initially RM1.35b) on its proposed merger with YTY Industry Sdn Bhd. (Source: Bursa Malaysia)

Dijaya: Buys land for RM385m. Dijaya Corp Bhd has acquired 88.5 acres of freehold land in Pekan Country Heights, Selangor, from Chunghwa Picture Tubes (Malaysia) Sdn Bhd for RM385.5m. The land would be transformed into a mixed development comprising residential and commercial elements with an expected gross development value (GDV) of RM2.5b. (Source: The Edge Financial Daily)

MYEG: Set for Kazakh e-services venture. MY E.G. Services Bhd (MYEG) is set to collaborate with Kazakhstan company National Information Technologies JSC (NIT) to introduce e-government services to the republic this year in its first overseas venture. (Source: The Star)

AmFirst: To buy 2 Cyberjaya buildings. AmFirst Real Estate Investment Trust is expected to sign a deal to buy two commercial buildings in Cyberjaya with a combined estimated value of over RM130m. It currently has 6 assets worth RM1.02b. The properties, which are a couple of years old, were identified as Prima 9 and Prima 10. They are both located within the Prima Avenue II development in Cyberjaya. (Source: Business Times)

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Stocks to watch: Banks, plantations, Rimbunan Sawit, REDtone

KUALA LUMPUR: The Malaysian stock market saw a total of RM28.10 billion erased from its market capitalisation during the Feb 7-11 period, aggravated by foreign selling of mostly banks and PLANTATION stocks with high foreign shareholdings as they shifted part of their funds to developed markets including the US.

Market capitalisation was reduced from RM1,302.61 billion to RM1,274.51 billion while the 30-stock FBM KLCI fell 2.67% or 41.08 points from 1,535.60 to 1,494.52. The FBM 100 fell 2.42% or 250.05 points from 10,300.05 to 10,050.00 while the broader FM Emas shed 2.34% or 248.44 points from 10,601.25 to 10,352.81.

According to Credit Suisse Research, global emerging markets recorded US$11.5 billion of outflows in funds, of which almost half were from China and Brazil, in the past three weeks,

MIDF Research head Zulkifli Hamzah told theedgemalaysia.com that as expected, the selldown by foreign investors continued on Friday and it will probably take a couple more days for the selling to unwind before price stabilises.

“On some technical angle, such as the RSI, the market is already in the oversold territory. However, this can persist for a while which is a good opportunity to accumulate in our opinion. There was strong buying by local institutions on Friday and that should mitigate further downside in the market,” he said.

“We do not think that it is a case of foreigners cashing out of Malaysia en bloc. Amidst the selling, some foreign investors have been picking up good stocks at depressed prices. Indeed, gross purchases by foreigners had been evenly matched until Wednesday, and peaked on Thursday. These came after China’s decision to raise interest rates. Foreign investors dumped Malaysian banking stocks fearing that the local authority may follow suit and tighten monetary condition via the SRR (statutory reserve ratio), rather than the OPR (Overnight Policy Rate) route,” he said.

Stocks to watch include banks and plantations which had been oversold in the recent weeks. CIMB Equities Research said it was downgrading the regional plantation sector from Trading Buy to Neutral.

The downgrade was because most of the planters have outperformed the market since its sector upgrade; spot CPO price has done better than expected, is close to its peak and should head south in the second half. CIMB Research also said the sector valuations are broadly in line with market price-to-earnings. But this is balanced by the bright earnings outlook in the current year and M&A potential.

“We raise our CPO price forecasts by 16% to US$1,100 (RM3,200) for 2011 and by 5% to US$1,000 (RM2,900) for 2012 given the smaller-than-expected supply.

Meanwhile, AmResearch remained positive on the banking sector and it sees minimal impact of any possible increase in the statutory reserve requirement (SRR) by Bank Negara.

It said the SRR is currently at a historically low level of 1%. Its sensitivity analysis indicates a –0.3% to –2.2% downgrade to net earnings, based on an SRR rate hike of 1%.

“The ones which may be affected the most would be EON Cap (-2.2%), Alliance Financial Group (-2.1%), Maybank (-2.1%) and Public Bank (-1.4%).

“We estimate every one percentage points increase in SRR rate to reduce the amount available for lending by RM7.65 billion just for eight local banks alone. Nonetheless, we remain positive about the banking sector. Our buys are CIMB, Maybank, Hong Leong Bank and RHB Cap,” it said.

Other stocks to watch include RIMBUNAN SAWIT BHD, REDTONE INTERNATIONAL BHD, LATEXX PARTNERS BHD and RHB CAPITAL BHD.

Rimbunan Sawit Bhd’s subsidiary, R.H. Plantation Sdn Bhd is buying 4,857 hectares of oil palm plantation in Niah for RM118 million. It had entered into a memorandum of understanding with Sheba Resources Sdn Bhd to purchase the land. Sheba Resources is the registered owner of the land which has been charged to Agro Bank Malaysia Bhd for RM145.69 million.

The Edge weekly reports that with REDtone’s Malaysian operations in the red, the telco is looking to prepaid shopping cards in China to innovate its way to profitability.

In Latexx Partners Bhd, Lembaga Tabung Haji acquired 2.69 million sahres on Feb 7 to 9, raising its shareholding to 6.97% or 15.38 million shares.

On Jan 31, fund management company Navis Asia VI Management Company Ltd has offered RM852.03 million to acquire all the assets and liabilities of Latexx Partners or RM3.10 per share. At Friday’s closing price of RM2.83, there is upside for investors to pick up the shares.

In RHB Capital Bhd, its single largest shareholder, the Employees Provident Fund disposed of 5.88 million shares on Feb 7 and 8, reducing its stake to 46.6% or 1.003 billion shares.

Network Guidance Sdn Bhd (NGSB) has withdrawn claims for damages totaling RM400 million and loss of profit of RM500 million against TELEKOM MALAYSIA BHD and TM Net Sdn Bhd over an alleged breach of contract.

In the re-amended claim, NGSB sought a declaration that both parties had entered into an agreement for a joint-venture project but TM breached the agreement.

As a result of the breach of agreement, NGSB suffered loss and damages. NGSB said it is now claiming special damages totalling RM23.95 million.

AIRASIA BHD has signed an agreement with Airbus S.A.S to revise the delivery dates of 10 Airbus A320 aircraft from 2012 to 2015. The move was to allow some flexibility to switch from its current order of the classic A320 to a new generation A320 aircraft which is more fuel efficient when such aircraft come into production in the near future.

With the deferment, the delivery of 24 aircraft in 2012 would be reduced to 14 aircraft, while the number of deliveries in 2015 will be increased from nine aircraft to 19 aircraft, it said.

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Bought Uchitec at RM1.32

Our stock market currently in bullish mode. Bought Uchitec yesterday at RM1.32.

Last week I sold my Pelikan at RM1.25 and Eksons at RM1.02. Tried to decrease the quantity of my stock portfolio. After this I will avoid the penny stock such Saag and Hubline. The cheap stock is much easy to be manipulated.

Current my stock portfolio are as follow:

Ranhill at RM0.855
Saag at RM0.125
Latexx at RM3.65
Annjoo at RM2.65
Hubline at RM0.24
Uchitec at RM1.32

I am not monitor closely my share actually since I trade it in longer timeframe. But if the stock price exceed 10% just trading for a few days, I will take partial profit. 10% for me is good enough than nothing. Am I right? How about you?

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