Maybank IB Views

COMPANY UPDATE
Top Glove Corporation RM4.75: Hold
Tide is turning Shariah-compliant

Can't get any worse. We see limited downside from current level: (i) share price has fallen 22% since our downgrade in Sep '10 and is close to our old TP of RM4.70; (ii) earnings may bottom in 2QFY11 (expected to be flat QoQ) and sequentially, driven by new capacities in 2HFY11; (iii) latex cost has stabilised and is set to fall by May after the "wintering season". Our DCF-derived TP is lowered to RM4.55 (from RM4.70) after tweaking our FY11-12 forecasts (-5-11%). But, downside to our TP from current level is only 4%, hence we raise Top Glove to a Hold.


KNM Group RM2.53: Buy
Momentum rising Shariah-compliant

Earnings could surprise on the upside. We concur with KNM's industry perspective of an improving operating outlook. Post briefing, we cut 2011 EPS estimate by 13% but are keeping 2012-13 forecasts unchanged. There is room for upgrades, for our 2012 earnings forecast is 21% below guidance. KNM remains a Buy and we expect the stock to gain traction once it proves its ability to deliver on earnings.


Sunway Holdings RM2.20: Buy
Sunny skies: Another job win Shariah-compliant

Looking bright. The latest RM74m contract brings to total RM369m job wins for the year to date. We expect job win momentum to pick up, based on by a huge RM16b tender book. Sunway is a Buy with a fair value of RM2.85 (11x 2011 PER) and a merger offer price of RM2.60.


Technicals
The FBM KLCI slipped 6.87 points yesterday to close at 1,515.74. Its resistance areas of 1,515 and 1,530 will cap market gains, whilst the obvious support areas are located at 1,498 and 1,512.

Trading Idea is a Sell call on MAYBULK


Other Local News
Sime Darby: Plantation unit explores potential investment in vegetable oil plant in Europe. Sime Darby Plantation has identified the Languedoc-Roussillon region in France as a potential location to establish its multi-feedstock vegetable oil processing plant as part of its strategy to expand into key areas around the world. The proposed plant, to be located in the coastal town of Port-la-Nouvelle, will help to meet the growing demand for edible oil in Southern Europe and North Africa. (Source: Bursa Malaysia)

AirAsia: Thai AirAsia eyes at least USD150m from IPO. Thai AirAsia plans to raise at least USD150m (RM454.5m) from its initial public offering (IPO), which is targeted by the end of this year. Thai AirAsia has named Credit Suisse Securities (Thailand) Ltd, CIMB Securities (Thailand) Ltd and Thanachart Securities Public Co Ltd as its joint lead underwriters. (Source: Business Times)

Nestle Malaysia: Budgets up to RM120m for capex. Nestle Malaysia Bhd has budgeted RM100m to RM120m to expand its capacity this year. The increase in capacity allows the group to expand its export market, namely Indonesia and Philippines, as well as the domestic market. (Source: The Edge Financial Daily)

QSR: Sets up Cambodian unit. QSR Brands Bhd has incorporated a company in Cambodia, Integrated Poultry Industry (Kampuchea) Pte Ltd, for the purpose of operating a broiler and processing production in Phnom Penh. (Source: Bursa Malaysia)

FDI: Invest KL targets 10 MNCs annually. Invest KL, expected to be launched by end-April, is targeting to attract at least 10 multinational companies (MNCs) annually to invest in Kuala Lumpur and the Klang Valley. Invest KL had attracted two MNCs, Schlumberger and Vale, so far. (Source: The Star)

Transportation: Feasibility studies on high-speed KL-Singapore rail. The Government is currently undertaking feasibility studies on a high-speed rail connecting Kuala Lumpur and Singapore. The feasibility studies would take about eight weeks to complete. (Source: The Star)

Telco: P1 part of SK Telecom's larger plans. While investors may have turned sceptical towards loss-making WiMAX player Packet One Networks Sdn Bhd (P1), its new strategic partner SK Telecom (SKT) believes there is much value in P1's wireless business as a launchpad for SKT's aspiration to expand regionally in Southeast Asia. SKT said that either P1 or Green Packet could become part of SKT's expansion plans in Southeast Asia later. (Source: The Edge Financial Daily)

Economics: External reserves increased slightly in the second half of February 11 to RM338.6b (USD109.8b) as at 28 February 11 from RM338.0b (USD109.6b) on 15 February 11. The latest reserve amount is equivalent to 8.1 months of retained imports and 4.3 times short-term external debt. (Source: Bank Negara)

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Maybank IB Research

COMPANY UPDATE
WCT RM3.04: Buy
Earnings delivery in 2011 Shariah-compliant

Maintain Buy. We retain our earnings forecasts for WCT post analyst briefing on its 3Q10 results. Indications are that 2011 will be a good year in terms of earnings delivery - we forecast a 34% growth in net profit. We are also optimistic on job win momentum flowing into 2011, being the first year of the 10th Malaysia Plan implementation. Our target price pegs the stock to 15x 2011 earnings plus a 20sen increment from the new KLIA2 retail concession which will be inked this month-end.


RESULTS REVIEW
Tan Chong Motor Holdings RM5.62: Sell
Needs to unlock value regionally Shariah-compliant

As anticipated, 3Q results were sequentially weak. With most of the positives priced in, TCM's valuations are no longer cheap vis-a-vis its peers. With no near-term catalyst in sight, TCM is unlikely to excite and should underperform relative to market. Reiterate Sell with a RM5.00 target price, which is based on 12x 2011 EPS.


RCE Capital RM0.625: Buy
Surprises on the upside

Beats expectations. 1HFY11 RM55m net profit (+47% YoY) made up 56% of house RM98m FY11 forecast and 60% of street RM91m. Loan impairment loss was lower than expected. We raise our FY11 net profit forecast by 11% and FY12-13 by 5-7% p.a. Our new TP is RM1.10 (+8%) based on 7x 2011 PER (unchanged) and the market value of its investment in AmFirst REIT (35m units). For its strong delivery track record and growth potential, valuations are low at 4.2x earnings. Buy.


Technicals
The FBM KLCI rose 9.40-points last week. The obvious support areas for the FBM KLCI are located in the 1,462 to 1,500-zone. The key resistance areas of 1,507 and 1,531 will cap any rebound activity.

Trading idea for today is a SHORT TERM BUY call on KIANJOO.


Other Local News
QSR: Halim Saad eyes QSR. Tan Sri Halim Saad, the former boss at Renong/UEM Group has made an offer to acquire Pizza Hut restaurant operator QSR Brands Bhd's entire business that includes its controlling stake in KFC Holdings (M) Bhd. The board is in the midst of deliberating on the proposal and will make further announcements in due course. (Source: The Star)

CIMB: Opens in Cambodia. CIMB Bank Plc was officially launched after CIMB Group received its license to fully operate its 100%-owned subsidiary in Cambodia. CIMB received approval-in-principle to establish and operate in Cambodia six months ago to offer banking products and services to the nation of 14.5m people. (Source: The Star)

K-Star: Expands footprint in China. K-Star Sports Ltd's wholly owned subsidiary Fujian Jinjiang Dixing Shoes Plastics Co Ltd is expanding its footprint in China by setting up six new wholesale outlets in northern China. K-Star started developing the northern China market in the middle of this year and had set up 19 wholesale points, of which six were in Urumqi in Xinjiang province and the remaining in Russia. In China, Urumqi acts as a major export market as it is situated near neighbouring countries like Russia, Kazakhstan and the Middle East countries. (Source: The Star)

O&G: Total signs PSC, Gazprom buys stake in Gulf of Mexico project. French oil and gas company, Total has signed an agreement with Petroliam Nasional Bhd (Petronas) to acquire a 85% interest in Block SK317B, located about 100km offshore Sarawak. Under the agreement, Total will operate the block with its partner, Petronas Carigali holding the remaining 15% interest. Separately, Gazprom Neft, the oil arm of Russian energy company Gazprom, has signed a deal to acquire a 30% stake in a project operated by Petronas to explore and develop four offshore blocks in the Gulf of Mexico. (Source: Business Times)

E&U: Expansion in solar photovoltaic to generate RM200m in opportunities. The solar photovoltaic (PV) capacity in the country is expected to increase substantially to 11 mega watt (MW) in 2011, generating about RM200m in business opportunities for companies involved in installing solar power generation systems. AWC Bhd's MD, Azmir Merican said that the 11MW capacity would provide for the grid-connected market in the peninsula and the off-grid market in East Malaysia, following the implementation of the feed-in tariff scheme under the Renewable Energy Law next July. AWC set up a joint venture company with Solamas Sdn Bhd to provide solar power integrated services. (Source: The Star)

External reserves: Increased slightly in the first half of November 10. The external reserves has increased to RM326.5b (USD105.8b) as at 15 November 10 from RM324.9b (USD105.3b) on 29 October 10. The latest reserve amount is equivalent to 8.8 months of retained imports and 4.5 times short-term external debt. (Source: Bank Negara)

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