Stocks to watch: Plantations, TRC, RHB, OSK, SP Setia

KUALA LUMPUR: PLANTATION []s could continue to be in focus in the week ahead, starting Monday, Oct 17, as sentiment would be underpinned by a positive export outlook which saw CPO futures closing at a two-week high on Friday.

The CPO for December delivery closed RM62 higher at RM2,906 a tonne. Reuters reported a positive export outlook and expectations of Chinese soy re-stocking, offset economic uncertainty.

“Supporting prices this week has been strong export data, which came at a time of positive demand expectations ahead of re-stocking efforts in Pakistan and Indian buying ahead of Diwali at the end of the month,” it said.

UOB Kay Hian Malaysia Research upgraded the plantation sectors to market weight as the production peak is over and it expects better CPO price support once the supply risk eases.

“We also see value emerging in selected stocks after the recent sell-down,” it said, maintaining its CPO assumption for 2012 and 2013 at RM2.700 per tonne. “But we think CPO prices for 2012 could be higher because of lower supply, depending on the severity of the coming La Nina and potential return of El Nino is late 2012 or 2013,” it said.

UOB Kay Hian Research said it preferred upstream players with younger age profit and larger immature areas coming on stream as they would benefit the most in a rising trend,” it said.

Hence, it preferred Singapore and Indonesia-listed plantations which had relatively cheaper valuations than their Malaysian-listed peers.

Other stocks to watch would be TRC SYNERGY BHD [], RHB CAPITAL BHD [], OSK HOLDINGS BHD [], S P Setia Bhd and BOON KOON GROUP BHD [].

TRC and its partner have clinched a RM318.90-million contract from the Brunei authorities to modernise the Brunei International Airport terminal.

TRC’s unit Trans Resources Corporation Sdn Bhd had received the letter of acceptance from the Brunei Economic Development Board for the project. The project was tendered by the unit and partner Swee Sdn Bhd.

RHB Capital and OSK are expected to see strong continued interest, with more upside after both financial institutions received the central bank’s approval for them to start talks for a possible merger.

As for S P Setia, the Securities Commission has approved Permodalan Nasional Bhd’s (PNB) takeover offer for S P Setia.

The property developer said on Friday it had received the notice that the SC “has approved the offer under the equity requirement for public companies vide its letter dated Oct 13”.

PNB had on Sept 28 served a takeover notice on S P Setia after its shareholding reached 33.16% or 590.502 million shares..

Most importantly, UOB Kay Hian Malaysia Research said the market was awaiting S P Setia's Tan Sri Liew Kee Sin’s decision on PNB’s general offer proposal.

“The upcoming two weeks are crucial as the decision could be made anytime from now till Oct 28 when SP Setia’s independent adviser (IA) is expected to release its recommendation to shareholders on whether they should accept PNB’s GO,” it said.

S P Setia and PNB had recently issued a joint statement that it was PNB’s desire to retain Liew and S P Setia’s management, while PNB’s involvement would only be through board representation.

“We explore two outcomes: a) Liew stays on and does not sell any shares, and b) he stays on but sells part/all of his entire 11.3% stake. We reckon the market would be pricing a steeper discount to the share price if the second outcome materialises,” it said.

Meanwhile, RAM Rating Services had said should PNB continue to leave the strategic planning and daily operations in the capable hands of SP Setia’s present management, the group’s strategic lineage may pave the way for additional business opportunities through PNB’s vast land bank, or put it in the running for more attractive government projects.

However, the ratings services said S P Setia’s longer term business profile may face negative implications if Liew decides to sell his entire stake or if PNB’s involvement and control over the group extends beyond board representation, thus inhibiting the agility of the management team.

Meanwhile, Boon Koon resumes trading on Monday after selling selling a 75% stake in its hire purchase financing unit First Peninsula Credit Sdn Bhd to Japan’s Hitachi Capital Corp for RM9 million cash.

Boon Koon said the price tag was equivalent to RM4 per sale share and it was a premium of RM1.84 or 85.18% above the audited net asset per share of RM2.16 as at March 31, 2011 and a net price earnings multiple of 36.8 times .

More importantly for Boon Koon, the partnership will enable it to leverage on the partnership to expand the existing market and venture into new markets.

Read more...

RHBInvest Research

Top Story: Plantation – Back in La Niña territory Overweight

Sector Update

¨ Despite the festive Hari Raya season, Malaysia’s CPO production rose by a surprisingly strong 12.1% mom in Sept, while exports fell by 8.8% mom. On a yoy basis, production rose by 19.6% yoy, while exports rose by 5.1% yoy. As a result of the larger mom increase in production vis-a-vis exports, closing CPO stock levels rose by 12.4% mom to 2.12m tonnes in Sep (from 1.89m tonnes in Aug). We believe the strong production numbers seen in Sep despite the festive period may indicate that production in Malaysia could have reached its peak earlier than expected, and that production may not necessarily surpass these levels in the remaining months of the year. Should production continue to be strong and exports weak, we believe price weakness for CPO could remain for the short term. As a result of the higher CPO stock levels, the stock/usage ratio in Sep rose to 11.1% (from 9.96% in Aug), above the 9-year average of 9.1%.



Corporate Highlights



Parkson: PRA listing aims to raise S$115m Market Perform

Company Update

¨ In its circular to shareholders, we highlight: 1) PRA will issue new shares of up to 18.9% of its enlarged share capital and expects to raise a minimum of SG$115m or RM281m in proceeds; and 2) PHB will offer up to 13.1% of the enlarged share capital and expects to raise a minimum of SG$56m or RM137m.



SP Setia: Some clarity on management’s direction Market Perform

News Update

¨ A joint statement was issued by Tan Sri Hamad Kama Piah Che Othman (President and Group Chief Executive of PNB) and Tan Sri Liew that PNB has given its reassurance that it wants to work with the existing management of SP Setia. Tan Sri Liew will continue to lead the company as CEO. PNB’s involvement in its investee companies is mainly through board representation.



Proton: Sale of Lotus Stake? Market Perform (up from UP)

News Update

¨ According to Autosport UK, speculation was circulating during last weekend’s Japanese Grand Prix, that Genii Capital could be buying a stake in Group Lotus.

Read more...

Maybank IB Views

RESULTS PREVIEW
Top Glove RM4.26: Sell
Short term rally, but fundamentals weak Shariah-compliant

Maintain Sell. Upcoming 4QFY11 results is likely to disappoint by 33%. Though share price has rebounded on the weaker Ringgit vis-à-vis US dollar (still down 30% from its low in Aug '11), we would continue to avoid Top Glove as the negative impact of lower demand for its latex glove (70% of capacity) outweighs the positive impact of a stronger US dollar, and do not foresee latex cost to come off significantly. Additionally, its CY12 PER valuation is expensive at 19x. We cut FY11-13 EPS forecasts by 9-19% and lower DCF-derived TP to RM3.40 (-23%), indicating 15x CY12 PER.

Technicals
The FBM KLCI fell 6.14-points to close at 1,361.38 yesterday. Its resistance areas of 1,361 and 1,403 will cap market gains, whilst the weaker support areas are located at 1,310 and 1,339. Despite the US markets’ rebound tone last night, we may see a volatile tone for the index today. Some persistent foreign liquidation activities will depress the markets’ today.

Trading Idea is a Take Profit call on AIRPORT.

Other Local News
SP Setia: MSWG disagrees with SP Setia. SP Setia Bhd will need to get approval from shareholder for its recent proposed Semenyih land purchase in line with the current takeover and merger ruling. This is because the land transaction coincides with a conditional takeover offer. (Source: The Edge Financial Daily)

YTLP: Yusli appointed to YTL Power board. Former Bursa Malaysia Bhd CEO Datuk Yusli Mohamed Yusoff has been appointed to the BOD of YTL Power International Bhd. He was appointed to the boards of Mulpha International Bhd and listed associate Mudajaya Group Bhd in mid-July. (Source: The Star)

DiGi: Teams up with McAfee to offer security software. DiGi Telecommunications Sdn Bhd has collaborated with software security company, McAfee, to offer McAfee Internet Security and McAfee® Family Protection software. Currently, DiGi has over 5.5m mobile Internet users, of which 300k uses mobile broadband. Digi expect a double-digit growth in our mobile Internet users by year-end. (Source: The Star)

Rubber: Thailand to cut rubber supply. Thailand, the world's biggest rubber producer and exporter, plans to cut annual rubber supply by 120,000 tonnes and would ask other major producers to take action to prop up prices, senior government and industry officials said. Thailand aim to cut rubber supply to push up prices by encouraging farmers to cut down and replant rubber trees on 400,000 rai (64,000ha), starting from now, and would ask for cooperation from Indonesia and Malaysia to take similar action. (Source: The Star)

E&E: Japanese investments in E&E sector keep flowing in. There has been no let-up in interest among Japanese investors in Malaysia's electrical and electronics (E&E) sector. There continues to be interest either by way of reinvestments or interest by those companies which intends to relocate their businesses here. (Source: Business Times)

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Stocks to watch: S P Setia, TPC, Huat Lai, Wijaya Baru

KUALA LUMPUR: The Malaysian stock market was battered on the first trading day in October, sending the FBM KLCI down 1.41% or 19.61 points to close at 1,367.52.

All key regional markets and European bourses fell after Greece's admission that it will miss its deficit targets for this year. Hong Kong’s Hang Seng Index tumbled 4.38%, Thailand’s SET Index down 5.12% and Jakarta’s Composite 5.64%.

OSK Research said “there is downside to the KLCI although with non-GLICs supposedly close to maximum cash levels and GLICs supposedly not aggressively supporting the market up till now, further downside maybe somewhat less than our recession market bottom of 1,086”.

The research house said it did not see any clear market moving catalyst from the Budget 2012 proposals, which would be announced on Friday.

Instead, it would focus on the 1,300 level, beyond which it would recommend more aggressive bottom fishing.

“Sticking to defensives for now and our September Top Buys which have outperformed the KLCI. Bottom fishing stocks such as Genting, Parkson and Dialog which will be attractive if the KLCI falls below 1,300,” it said.

Among the stocks to watch on Tuesday, Oct 4 following the fresh corporate developments are S P Setia Bhd, TPC PLUS BHD [], HUAT LAI RESOURCES BHD [] and WIJAYA BARU GLOBAL BHD [].

S P Setia Bhd plans to undertake a mixed township project with a gross development value of RM4 billion in Semenyih, Selangor.

Tthe development would be carried out on 673 acres of land which it is acquiring from Spektrum Megah (M) Sdn Bhd.

S P Setia said it had entered into a sale and purchase agreement with Spektrum Megah to acquire the 673.27 acres of freehold land out of the 737.87 acres in Semenyih, Ulu Langat, for RM381.259 million or RM13 per square foot.

Huat Lai Resources Bhd plans to launch a takeover offer of poultry company TPC Plus Bhd after it acquires a 33.65% stake in TPC from London Biscuit Bhd.

Huat Lai had signed a sale and purchase agreement with London Biscuit to acquire the stake, comprising 26.91 million TPC shares, for RM8.075 million or an average 30 sen a share. The share price rose 2.5 sen to close at 27 sen.

Wijaya Baru is making its foray into Indonesia’s logging sector with the proposed acquisition of two companies for US$80 million or RM255.2 million which have logging rights in Papua, which it planned to later venture into oil palm cultivation.

OCTAGON CONSOLIDATED BHD [] has awarded a US$22 million (RM70.18 million) contract to KNM GROUP BHD [] to build an advanced thermal gasification reactor.

Octagon said its unit Green Energy and TECHNOLOGY [] Sdn Bhd (GreenTech) had sealed a contract with KNM Process Systems Sdn Bhd for the reactor. The contractor would undertake the manufacturing, engineering, installation and pre-commission of the reactor.

Read more...

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


no
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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Maybank IB Views

S P Setia RM3.85: Buy
"Setia Alam" in the making Shariah-compliant

Leading the new trend. SPSB is spearheading a new relatively untapped trend i.e. affordable housing via its latest sizeable land acquisition in Semenyih (south of KL CBD). The 1,011-acre land, which has been earmarked for affordable housing, would provide steady bread-and-butter sales and support SPSB’s long-term growth. The land could turn out to be another highly successful "Setia Alam" given SPSB's expertise and track record in township development. No change to our earnings forecasts and RM5.00 TP (10% premium to RM4.53 RNAV). Reiterate Buy.

Dialog Group RM2.52: Buy
Above par performance, optimism remains Shariah-compliant

Buy for earnings and dividends potential. Results were ahead of our expectation, on the back of a strong 4Q. We have raised our FY12-13 earnings forecasts by up to 28% (with further upside potential) and we remain optimistic on its long term growth prospect. Dialog remains among our preferred Buys in O&G with an unchanged RM3.35 target price (sum-of-part valuations). We continue to like its business model, focused management and steady dividend payments.

Technicals
The FBM KLCI tumbled 40.76-points and closed at 1,483.67 last Friday. The local market remained very weak due to the global equity indices’ malaise. The volatile global equity rout last week also adversely affected the local market. The weaker support areas for the FBM KLCI are located in the 1,423 to 1,480-zone. The next resistance levels of 1,483 and 1,597 will see heavy selling and liquidation activities.

Trading Idea is a Take Profit call on BURSA.

Other Local News
Aviation: Airlines to pay higher landing, parking charges. Malaysia Airports Holdings Bhd is looking at a possible 30% hike in landing and a 64% increase in parking charges. MAHB is still holding discussions with airlines on whether the increase should be done on a staggered basis or at one go. In a dialogue with foreign airlines last Wednesday, MAHB said it had received the go ahead to raise airport tax for passengers as well as parking and landing charges for airlines. Minister of Transport Datuk Seri Kong Cho Ha has since confirmed the hike in passenger service charge. (Source: Business Times)

HLB: May sell MIMB Investment Bank licence. Hong Leong Bank Bhd (HLB) may sell MIMB Investment Bank Bhd's investment licence which it got following the acquisition of EON Capital's assets and liabilities. HLB has a choice of selling it to Hong Leong Investment Bank or other suitors who might be interested. (Source: The Star)

MISC: May bid for Maersk's LNG vessels. MISC Bhd may put in a bid for a fleet of eight liquefied natural gas (LNG) ships owned by AP Moller Maersk. The bids are understood to be due by end-August, with initial estimates valuing the fleet at USD1.3b (RM3.9b) to USD1.7b. (Source: The Edge Financial Daily)

MPHB: MCA in talks to buy Menara Multi-Purpose. The Malaysian Chinese Association (MCA) is said to be keen on buying Multi-Purpose Holdings Bhd's (MPHB) Menara Multi-Purpose, located near Dang Wangi in Kuala Lumpur. The price tag could in the range of RM350m to RM400m. (Source: The Edge Financial Weekly)

Biotech: ECER gets RM2b boost. South Korea's CJ CheilJedang Corp and France's Arkema SA have announced a RM2b joint venture (JV) to build the world's first bio-methionine plant to produce animal feed in Malaysia. Both companies would commit the amount to be invested over a 10-year period. The plant together with Asia's first thiochemical platform would be located in Terengganu's Kertih Polymer Park in the East Coast Economic Region's (ECER) special economic zone. (Source: The Star)

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Stocks to watch: SP Setia, Dialog, BHIC, Dataprep

KUALA LUMPUR: Markets would continue to be cautious in the week ahead, starting Monday, Aug 15, after the volatile week which saw RM42.18 billion erased from the local market.

The FBM KLCI is down 40.78 points or 2.67% from 1,524.43 on Aug 5 to close at 1,483.67 on Friday, Aug 12. However, the FBM 100 sustained greater losses, declining 304.17 points or 2.96% from 10,267.75 to 9,963.58.

Selling pressure on Bursa Malaysia eased on Friday but buying was still cautious due to external worries from the US and Europe. Analysts said investors were not ready to go on bargain hunting for battered stocks, but there was some evidence of local fund support for the 30-stock KLCI.

On Wall Street, the Dow Jones Industrial Average had on Friday closed 125.71 points, or 1.13% higher, to 11,269.02. The Standard & Poor's 500 Index added 6.17 points, or 0.53%, to 1,178.81. The Nasdaq Composite Index rose 15.30 points, or 0.61%, to 2,507.98.

According to Reuters, it was the first two-day rally on the broader S&P 500 since July 21-22. For the week, the Dow fell 1.5% and the Nasdaq lost 1%. The S&P 500 fell on 11 of the past 15 days, dropping 12.4% in three weeks.

At Bursa Malaysia, stocks to watch include SP SETIA BHD [], DIALOG GROUP BHD [], BOUSTEAD HEAVY INDUSTRIES CORP []oration Bhd (BHIC), DATAPREP HOLDINGS BHD [] and Sarawak Cable Bhd.

SP Setia Bhd plans to undertake a mixed residential township development project in Ulu Langat with an estimated gross development value of RM3.5 billion.

It said the project would be carried out on 1,010.5 acres of freehold land which it is purchasing from Ban Guan Hin Realty Sdn Bhd for RM330.13 million or RM7.50 per square foot.

Dialog Group Bhd’s earnings rose 45.2% to RM44.87 million in the fourth quarter ended June 30 from RM30.89 million a year ago, boosted by its engineering and CONSTRUCTION [] and also plant maintenance services.

Revenue increased by 37.8% to RM374.88million from RM271.95 million. Earnings per share were 2.28 sen compared with 1.56 sen. It proposed a final single tier dividend of 18% or 1.8 sen per 10 sen share.

For the FY ended June 30, its earnings rose 24.2% to RM152.29 million from RM118.29 million while revenue increased by 6% to RM1.208 billion from RM1.139 billion. Its cash pile increased to RM274.32 million as at June 30 fromRM258.07 million a year ago.

BHIC’s net profit for the second quarter ended June 30, 2011 fell to RM1.39 million from RM15.8 million earlier due to escalation in costs to complete its current projects.

Its revenue for the quarter rose to RM120.76 million from RM104.47 million. Earnings per share were 0.56 sen while net assets per share was RM1.71.

For the six months ended June 30, BHIC’s net profit fell to RM11.47 million from RM31.47 million, on the back of revenue RM237.45 million.

The Edge weekly highlights Dataprep which is reinventing its business model. Newly-appointed CEO Ahmad Rizan Ibrahim fully expects the company to be back in the black this year, premised on its healthy order book of over RM100 million in projects from government-linked entities and the fact that it has paid off most of its debts and has some RM31 million in cash

The weekly also reported that electricity jobs are expected to boost Sarawak Cable Bhd.

The power cable maker's shares could be worth watching, considering its improving earnings prospects with the Sarawak government spending more on infrastructure projects, including electricity transmission.

Read more...

RHBInvest Research

Top Story: MRCB – A little patience for RRI land Trading Buy

Visit Note

¨ MRCB expects Kwasa Land Sdn Bhd to make some decisions with regards to the RRI land re-development project by the end of the year, with physical works only expected to commence in 2012.

¨ The flow of new construction jobs should improve in 2H2011 and into 2012, underpinned by potential jobs from the LRT line extension project, Penang Sentral and the River of Life project.



Corporate Highlights



TH Plantation: Planting for posterity Outperform

Briefing Note

¨ An interesting point to note from the briefing is that THP achieved an admirable FFB yield at its newly-matured Sarawak estates. Where most other oil palm plantations only achieve an FFB yield of 8-9t/ha in its first full year of maturity, THP managed an FFB yield of 7.6t/ha in just half a year in one of its Sarawak estates. Annualised, this estate could yield about 16t/ha, double that of other oil palm estates in its first year of maturity. This is in line with management’s own targets of achieving an FFB yield of at least 15t/ha for its plantations in the first year of maturity.



Sime Darby: RM43.4m writeback for marine project Outperform

News Update

¨ Sime Darby’s subsidiary has, on 20 Jul, entered into a yard settlement agreement and release agreement with its JV partners for the refund of a cash amount of US$21.63m (RM63.6m) in return for the release of its claims, rights and interests over the Marine Project (involving the construction of two tug boats and a derrick lay barge for the Maersk Oil Qatar (MOQ) project). Of this amount, US$16.63m (RM48.9m) has been received, with the balance US$5m (RM14.7m) payable on 17 Nov, if there are no further claims made. Based on Sime’s announcement, of the refund total of US$21.6m, it will receive up to US$14.75m (RM43.4m), based on its stake.



SP Setia: Full equity interest in KL EcoCity Market Perform

News Update

¨ SP Setia announced that its proposed acquisition of the remaining 40% equity interest in KL Eco City S/B (KLEC) from Yayasan Gerakbakti Kebangsaan (YGK) for a total consideration of RM75m is to be satisfied through the issue of 19.38m new SP Setia shares at RM3.87 per share. KLEC was previously the JV company for the RM6bn KL EcoCity project.



KNM: HOA with GAP for petrochemical facility in Teluk Ramunia Underperform

News Update

¨ KNM announced yesterday that it, together with Zecon has entered into a Heads Of Agreement (HOA) with Gulf Asian Petroleum to undertake EPCC contracts for projects worth around USD5.7bn (RM17bn) in Teluk Ramunia, Johor. The two projects involve a petroleum refinery, a polypropylene unit and petroleum product storage terminal facility with capacity of 2.3m cubic meters).

Read more...

Maybank IB Views

Public Bank RM13.36: Hold
Competitive pressures remain

Little excitement. 1H11 results were broadly within expectations, with net profit of RM1.71b (+20% YoY) accounting for 51% of our full-year forecast and 50% of consensus. Our forecasts are maintained with higher NIM contraction estimates offset by lower provisions. Consumer loan demand continues to show resilience at the group but we do expect this to taper off from 2H11 onwards. Pricing is fair at this stage ( (prospective 2012 P/BV of 2.7x, ROE: 23.5%). Hold call and TP of RM14.10 maintained, pegged to a 2012 P/BV of 2.8x.

Axis REIT RM2.62: Buy
Results in line; more acquisitions soon Shariah-compliant

Maintain Buy. AXRB’s RM31.8m 1H11 core net profit (+33% YoY) came in as expected. Its 4.5 sen 2Q11 DPU was also in line. Share price has performed well thanks to a switch in preference to defensive stocks. No change in our earnings forecasts but we raise our TP to RM2.75 (+15 sen) as we roll over our base year to 2012. A lower beta assumption has also contributed to the upgrade in TP. With a 12% total return, AXRB remains as our top pick for the M-REITs sector.

COMPANY UPDATE
S P Setia RM3.92: Buy
Reaping full benefit of KL Eco City Shariah-compliant

An attractive booster to earnings and RNAV. We are excited on SP Setia's purchase of the remaining 40% stake in KL Eco City (KLEC). This non-cash acquisition will immediately boost SPSB's earnings by 0.6-1% and RNAV/sh by 8 sen. All it would cost SP Setia is 19.4m new shares, which is a mere 1.1% increase of its existing share base. We upgrade our forecasts by 0.3-1.9%. Reiterate Buy with a higher RM5.00 target price (+24 sen; 10% premium to RM4.53 RNAV).

RESULTS PREVIEW
Malaysia Airports Holdings RM6.50: Buy
2Q11: Expect good result

Strong momentum continues. MAHB will release its 2Q11 results on 28 July. 2Q is seasonally the weakest quarter for the year. Based on the operating statistics published, we expect a core net profit (less forex translation and all other non-cash items) of RM110.5m (+24.5% YoY, -1.4% QoQ). Maintain Buy, with a higher DCF-based target price of RM7.55, after imputing for a higher passenger growth of 10% in 2011 (previously 8%). Our new TP offers undemanding 15.2x 2012 earnings.

Technicals
The FBM KLCI fell 5.46 points to close at 1,559.60 yesterday. Its resistance areas of 1,559 and 1,574 will cap market gains, whilst the obvious support areas are located at 1,543 and 1,552.

Trading idea today is YTL

Other Local News
KNM: Secure RM17b project with Zecon. KNM Group Bhd and Zecon Bhd have entered into two heads of agreement with Gulf Asian Petroluem Sdn Bhd (GAP) to construct a petroleum refinery and a petroleum product storage terminal facility for a combined contract of RM17b in Teluk Ramunia. (Source: The Edge Financial Daily)

Tan Chong: Sets 20% sales target for Sabah, Sarawak. Edaran Tan Chong Motor Sdn Bhd (ETCM) is eyeing to raise the sales contribution from Sabah and Sarawak to 20% of that nationwide in three years time. Sales in the two states at the moment represented 10 percent of the national total for Nissan vehicles. (Source: The Star)

KPJ: To triple education revenue. KPJ Healthcare Bhd's education arm has been granted university college status by the Higher Education Ministry. KPJ plans to invest RM120m in the physical expansion of its education facilities and hopes to triple revenue from its education unit to RM100m annually from RM30m in 2010. (Source: The Edge Financial Daily)

Ivory: Wins Penang land rights. Ivory Properties Group Berhad (IVORY) won the rights to develop 102.56 acres of land located at Bayan Mutiara, North East District, Penang of which approximately 67.56 acres are existing land and 35 acres are to be reclaimed for a proposed mixed development. (Source: Bursa Malaysia)

Perwaja: Makes cash call to Kinsteel. Debt-laden Perwaja Holdings Bhd is making cash call to its major shareholder Kinsteel Bhd to raise RM280m under a planned restricted issue of redeemable convertible unsecured loan stocks (RCULs). Perwaja is also proposing an issue of free warrants on the basis of one free warrant for every two existing shares held. The gross proceeds will be used to finance the working capital needs of Perwaja. (Source: The Edge Financial Daily)

O&G: Qatar to sell liquefied natural gas to Malaysia. Qatar's state-run Qatargas says it has agreed to sell 1.5m tons of liquefied natural gas annually to Malaysia, locking in its first major customer in Southeast Asia. The company says it signed a preliminary agreement with Malaysia's Petronas LNG on Sunday in the Qatari capital, Doha. The supply deal is expected to start in 2013 and last for two decades. (Source: The Star)

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Stocks to watch: IOI Corp, UOA REIT, MAHB, SP Setia

KUALA LUMPUR: Stocks on Bursa Malaysia may see more downside pressure in the week ahead, starting July 18 due to external headwinds, mainly from the US.

On Wall Street, US stocks ended the week lower. For the week, the S&P 500 ended down 2.1%, while the Dow lost 1.4% and the Nasdaq fell 2.5%.

Mounting uncertainty about the government's ability to reach a debt-reduction deal may keep investors at bay in the coming week, Reuters reported.

Next week's U.S. data including the Philadelphia Fed survey would provide a crucial update on the state of the world's biggest economy after a disappointing set of data in recent weeks, especially last week's monthly jobs report, it said.

At Bursa Malaysia, the FBM KLCI fell 17.49 points to 1,577.25 from the week before while the marker capitalisation was reduced by RM14.07 billion to RM1.342 trillion.

Year-to-date, the KLCI is up 3.84%, making it the fifth best performing market in the key regional markets. At 1,577, the KLCI is trading at a trailing price-to-earnings of 16.82 times.

Two companies which are due to be listed in the week ahead are Inarai Bhd and Catcha Media Bhd.

Inari Bhd posted net profit RM2.6 million for the third quarter ended March 31, 2011 on the back of revenue RM35.8 million. For the nine months ended March 31, the company’s net profit was RM14.7 million on the back of revenue RM77 million.

Catcha Media reported that in the first quarter ended March 31, 2011, it recorded revenue and pre-tax profit of about RM5.728 million and about RM12,000 respectively.

It said the pre-tax profit was mainly due to the lower revenue achieved in the current quarter as a result of the seasonality associated with media business, significant increase in headcounts and associated payroll expenses in both publishing and online media business in anticipation of the growth of revenue in the future as well as the listing expenses incurred in the current quarter under review.

Stocks to watch on Monday include IOI Corp Bhd. UOA Real Estate Investment Trust (UOA REIT), Malaysia Airports Holdings Bhd (MAHB) and SP SETIA BHD [].

The Edge weekly reports executive chairman Tan Sri Lee Shin Cheng as saying that going by its present growth rate, the company's property business could grow to three times its present size and become a distinct and substantial core business for the group.

UOA REIT’s net profit rose 62% to RM10.68 million in the second quarter ended June 30, 2011, from RM6.59 million a year ago.

Its revenue increased by 88% to RM20.28 million from RM10.78 million. Earnings per share were 2.53 sen compared with 2.68 sen.

MAHB’s decision not to install aerobridges at the new Low Cost Carrier Terminal, or KLIA 2, will save the company up to RM104 million.

Its chairman Tan Sri Aris Othman said the amount was for 80 aerobridges, costing RM1.3 million each. Although aerobridges could provide convenience, it would be a waste if airlines would not use it.

SP Setia share price closed 12 sen lower to RM3.89 on Friday after hitting an intra-day low of RM3.84 the lowest since early March as analysts downgraded it to underperform.

CLSA Asia-Pacific Research had downgraded SP Setia to Underperform from Outperform with a revised target price of RM4.30, based on a 10% discount to RNAV of RM4.80. It said this was in line with the discount applied to other property names under its coverage.

“Given that SP Setia is a pure property developer play, we believe that the 10% discount is justified from zero discount previously. We do not see any compelling reason for SP Setia to be valued at a premium compared to the rest of the property companies given that the visibility of the physical property market has been reduced by the mixed signals,” it said.

However, CLSA said it did not change its earnings estimates for FY11 and FY12 as these will continue to be supported by the strong unbilled sales recorded at RM1.8billion as at FY10, which had subsequently increased to RM3billion as at H111.

“For FY13 earnings estimates, we see potential downside risk if the mixed signals above tilted towards more negative outlook. Another potential headwind could be the change in government policy in tightening the lending requirement, which at this stage, still unclear as it remains at the proposal stage,” it said.

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RHBInvest Research

Top Story: Insurance – Malaysian Takaful Industry Neutral

Sector Update
Since 2003, general Takaful and family Takaful new contributions have grown at a CAGR of 18.8% and 26.1% respectively. Comparatively, the general insurance and life insurance new business premiums only grew by a CAGR of 6.3% and 8% respectively during the same period but from a larger base.

Corporate Highlights

SP Setia: Expect a stronger 2HFY11 Outperform

Results Note
SP Setia’s 2QFY11 core net profit came in marginally below our expectation and market consensus. Headline net profit of RM92.2m was skewed by a one-off gain from the disposal/transfer of Tenby School complex from Setia Alam to Eco Park amounting to about RM30m.

UEM Land: First foray into retail development Market Perform

News update
A 55:45 JV between ULHB and Iskandar Harta Holdings (IHH) will undertake a mixed development project known as “Lifestyle Retail Mall and Residences @ Medini North” on 2 parcels of land measuring 35 acres in Pulai, Johor. Concurrently, NLSB had also entered into a Lease Agreement with IHH, being the registered owner of the 2 parcels of Medini land, for 99-year lease. Based on a total GFA of 2m sqf and lease consideration of RM100m, this translates into a land cost of RM50 psf.

Parkson – Indonesia Deal Completed Market Perform

Company Update
Parkson announced that it has completed the acquisition of PT Tozy Sentosa (TS) at a total consideration of RM38.7m. As previously highlighted in our report dated 14 Apr, PHB would pay Mitra Samaya (MS), the vendor, RM38.7m for TS, and MS would in turn subscribe to 9.9% of Parkson Asia’s shares for the same consideration of RM38.7m.

RCE: Kowaja issue finally resolved, but with conditions Outperform

News update
RCE announced yesterday that Koperasi Wawasan Pekerja-Pekerja Berhad (Kowaja) has received approval from Suruhanjaya Koperasi Malaysia (SKM) to obtain funding from RCE.

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Maybank IB Views

COMPANY UPDATE
Malaysia Airports Holdings RM6.53: Buy

Thriving under adversity. MAHB's April 2011 traffic statistics reveal a strong 16.3% YoY passenger growth (4M 2011: +13.0% YoY). This is above industry average and makes MAHB's 2011 guidance of 8% traffic growth look like a pushover target. Cargo volumes shrunk by 6.2% YoY, consistent with the global collapse of the freight market. Maintain Buy; no change to our earnings forecasts and RM7.12/share DCF-based target price.

ECONOMICS
Industrial Production Index (IPI), Apr '11
Unexpected decline to be short-lived…

April's industrial production (IP) growth unexpectedly fall 2.2% YoY (revised Mar '11: +2.9% YoY; Maybank IB: +2.2% YoY; Consensus: +2.5% YoY) as the MoM drop of 7.6% MoM was more than our estimate of a 3% MoM decline. Malaysia joined Singapore and Thailand in posting lower IP in Apr on Japan's supply chain effect, with E&E and auto industries being the drag. However, indicators like Japan's PMI, imports of intermediate goods and manufacturing loans statistics point to a "short-lived" dip.

RESULTS REVIEW
S P Setia RM4.10: Buy
Earnings uptrend continues Shariah-compliant

Reiterate Buy. SPSB's RM121m 1HFY11 core net profit (+35% YoY) track expectations. YTD sales at RM1.7b has also met 55% of its RM3b target for FY11. Including e.RM1.5b sales/bookings from KL Eco City (KLEC), YTD sales would be c.RM3.1b (beats full-year target by 5%). We are bullish on SPSB's 2H performance, driven by strong sales at KLEC and potential RM8-10b GDV worth of new landbank. We maintain earnings forecasts and RM4.75 RNAV-based TP.

Technicals
The FBM KLCI closed marginally lower by 0.90 points and ended at 1,550.89 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 the initial gains (following the American markets’ rise last night) could be curtailed by the pre-weekend profit-taking activities in the latter part of the day.

Daily trading idea is a Short-Term Buy call on MWE.

Other Local News
MAS: Final assembly of MAS A380 planes begins. The first Malaysia Airlines' (MAS) A380 has entered the Airbus final assembly line in Toulouse, France, for the final production phase. MAS has six A380s on order with deliveries due to begin in 2012. (Source: The Star)

UEM: In RM850m Nusajaya development project with Iskandar. UEM Land Holdings Bhd is collaborating with Iskandar Investment Bhd to develop retail and residential units in Nusajaya, Johor with a gross development value of RM850m. UEM Land owns 55% equity interest in that company while the remaining is under Iskandar. (Source: The Star)

Benalec: Unit target Mid-east investment with OIC Today. Benalec Bhd subsidiary has formed a strategic alliance with OIC Today magazine to attract investment from the Middle East for a proposed mixed commercial and tourism project in Klebang, Melaka. (Source: Business Times)

O&G: Perak approves RM5.8b investment in LNG project. The Perak government has approved a 60-ha site in Tanjung Hantu, Manjung for a liquefied natural gas (LNG) project involving an investment of RM5.8b that would be undertaken by Atigas Technology Sdn Bhd. The government is expected to save RM2b in subsidy a year because Atigas will sell the gas at the same subsidized price. (Source: The Edge Financial Daily)

Banking: Bank Mualamat still in merger mood. Bank Muamalat Malaysia Bhd is still keen to merge with a rival to build a mega Islamic bank, despite its failed attempt at courting Bank Islam Malaysia Bhd. The bank's pursuit of Bank Islam was driven by its largest shareholders' need to pare its stake in the bank and the desire by both its shareholders to create a bigger entity that is more relevant in the market. (Source: Business Times)

Market: MMHE to replace MAS in index. Malaysia Marine and Heavy Engineering will replace Malaysia Airlines in the FTSE Bursa Malaysia KLCI following the semi-annual review of the FTSE Bursa Malaysia Index Series. (Source: The Star)

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XOX, SP Setia, Favelle Favco, Berjaya Food

KUALA LUMPUR: Stocks which could see trading interest on Friday, June 10 include XOX Group Bhd, which will make its debut on the ACE Market.

Other companies which could see trading interest are SP SETIA BHD, FAVELLE FAVCO BHD, Berjaya Food Bhd and MAA HOLDINGS BHD.

Meanwhile, investors are expected to be cautious also because of the weaker than expected industrial data announced on Thursday. Malaysia’s industrial production index contracted 2.2% on-year in April, the first time in 17 months and CIMB Economics Research said this suggesting a soft patch going into 2Q.

“The contraction was a surprise as we expected an increase of 1.6% while consensus projected 2.5%. In January-April, factory output rose 1.5%,” it said.

CIMB Research said the soft patch in the manufacturing sector, which accounted for 27.6% of total GDP, would weigh on 2Q GDP growth, which it estimated to expand 4% to 4.5%.

“Even though the manufacturing sector has pulled back sharply from its rapid pace, domestic non-tradable sectors, namely the services and CONSTRUCTION sectors, should continue to keep the economy rolling along decently.

“Domestic demand should still call the shots, supported by the stepping up of private investment growth under the Economic Transformation Programme (ETP). As such, we maintain our GDP growth estimate of 5.5% for this year and 6.0% for 2012,” it said.

As for XOX, the mobile virtual network operator reported net loss of RM1.66 million in the quarter ended March 31 mainly due to the selling and distribution expenses which were necessary in creating brand awareness for XOX’s services.

It recorded revenue of RM12.68 million on the back of about 391,000 subscribers. It recorded an average revenue from sales of recharge of approximately RM30 per user per month.

The offer price of the shares is 80 sen. It received 6,652 applications for 106.5 million shares with a total value of RM85.2 million, for the public tranche of 7.5 million shares.

Meanwhile, SP Setia said it was confident that its 2011 sales target of RM3 billion would be met after the company recorded sales of RM1.66 billion in the first seven months of the year.

Net profit for the second quarter ended April 30, 2011 surged 80% to RM92.22 million from RM51.21 million a year earlier, due including to gain from the disposal of an investment property.

Revenue for the quarter rose to RM496.75 million from RM409.07 million a year earlier. Earnings per share were 5.55 sen while net assets per share was RM1.78. It declared a gross interim dividend of five sen per share.

Favelle Favco received four contracts to supply cranes and spare parts totaling more than RM70.3 million. Three of the orders were to supply cranes and the fourth was to supply the spare parts.

Berjaya Food’s net profit slipped 14.2% to RM2.505 million in the fourth quarter ended April 30, 2011 compared with RM2.92 million a year ago due to higher advertising and promotional expenses.

Revenue rose 9% to RM17.75 million from RM16.28 million. Earnings per share were 1.77 sen versus 2.07 sen a year ago. It proposed dividend of three sen a share.

For the financial year ended April 30, 2011, its net profit rose 22% to RM10.59 million from RM8.68 million while its revenue increased by 19% to RM71.94 million from RM60.41 million.

FOCUS DYNAMICS TECHNOLOGIES [] Bhd’s new 144.58 million shares issued under the rights issue with warrants and 96.39 million warrants will be listed and quoted on Friday.

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Maybank IB Views

ECONOMICS
External Trade, Apr 2011
A mixed bad of data

Exports growth in Apr '11 accelerated to +11.1% YoY (Mar '11: +4.1% YoY; Maybank IB: +14.8% YoY; Consensus: +11.3% YoY) while imports growth moderated to +9.4% YoY (Mar '11: +12.1% YoY; Maybank IB: +13.9% YoY; Consensus: +10.8% YoY) resulting in RM11b trade surplus. From the previous month, both exports and imports fell by 6.6% MoM and 7.4% MoM respectively.

SECTOR UPDATE
Construction: Overweight
Reasons to be patient

Maintain Overweight. The construction sector has yet to perform (KLCON: +0.2% YTD vs. KLCI: +2.7%) on slow award flows. Although frusfrating, we believe the critical issue is timing rather than project cancellations. The Klang Valley light rail transit (LRT) extension Package B is at the final stage of award which should provide some cheers soon. Also, last week's game changer in the signing of Bakun's electricity sale brings clarity in new infrastructure works in Sarawak. Our top pick is Gamuda, followed by WCT and Hock Seng Lee (HSL).

Technicals
The FBM KLCI closed higher by 1.81 points to close at 1,559.85 last Friday. Its resistance areas of 1,562 and 1,576 will cap market gains, whilst the support areas are located at 1,539 and 1,559. Due to the world markets’ poor tone last Friday; we will see some volatility in the local bourse today.

Daily trading idea is a SHORT-TERM BUY call on SOP.

Other Local News
MAS: Confident despite escalating fuel price. Malaysia Airlines (MAS) has recorded 18% higher international pre-loads this year compared with 2010. Overall, when combined with the domestic sector, its pre-load factor was up by 10% YoY. (Source: The Star)

SP Setia: Plans RM2.8b projects. SP Setia Bhd will redevelop the Sri Johor, Sri Pulau Pinang and Sri Melaka low-cost apartments and the Taman Ikan Emas low cost homes in Bandar Tun Razak, Cheras at a total development value of RM2.8b. (Source: The Star)

Nestle: Not ruling out expansion of coffee plant. Nestle (Malaysia) Bhd will not rule out the possibility of expanding its coffee manufacturing facility in Malaysia as it expects surging demand for coffee. (Source: Business Times)

Scomi: Bags RM2.6b Brazilian monorail deal with partners. Scomi Engineering Bhd and its consortium partners have clinched a RM2.6b contract to build a monorail line in Sao Paulo, Brazil. Its scope of work in the consortium involved the supply of rolling stock, the vehicle management system, design for switches, system integration, system assurance as well as testing and commissioning. (Source: Bursa Malaysia)

Mudajaya: Gets letter of intent for RM720m job. Mudajaya Group Bhd has received a letter of intent to undertake subcontract works worth RM720m for Manjung Power Plant. (Source: Bursa Malaysia)

Eversendai: RM270m from its IPO for CAPEX. The listing of Eversendai Corp Bhd on the Main Market of Bursa Malaysia on July 1 will raise RM270m for the company for capital expenditure. Its founder Datuk A.K. Nathan will realise a gain of RM130m for selling 30% of the company he pioneered 27 years ago. (Source: The Star)

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RHBInvest Research

SP Setia:

Company Update

• More strategic landbank to come
• We maintain our Outperform call on SP Setia. Our fair value is adjusted to RM4.88.

Public Bank:

• 1QFY11 Results
• Starting off strongly
• No change to forecasts. Fair value of RM15.40 and Outperform call maintained.

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RHBInvest Research

Top Story: DRB Hicom

• New Coverage
• Slumbering Giant
• DRB has solid financials with significant balance sheet capacity to fund new businesses.
• We initiate coverage on DRB with an Outperform recommendation.
• Our sum-of-parts derived valuation of its various businesses amounts to RM4.20/share. After ascribing a 25% holding company discount, we arrive at our fair value for the stock of RM3.15/share.

Corporate Highlights
Lafarge:

• Visit Note
• Increase in domestic sales to drive earnings growth in 2011
• Rising cost of production remains a key concern. Nevertheless, we believe Lafarge will be able to pass on the higher costs given that domestic cement demand is expected to be robust.
• No changes to our earnings forecasts. Indicative fair value is RM7.87

SP Setia: Outperform

• News update
• Making its foray to Singapore
• Our fair value is raised to RM7.20, Maintain Outperform.

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Maybank IB Views

COMPANY UPDATE
RHB Capital RM8.62: Buy
Robust loan growth targets

Valuations still justify a BUY. RHB Capital continues to offer value in terms of valuations, with the stock trading at a prospective 2012 PER of just 10.3x or a 16% discount to the average for the other four large banks of 12.3x. On a P/BV basis, it trades at a prospective 2011 P/BV of 1.64x versus a peer average of 2.3x and 1.7x for AMMB Holdings (Hold, TP:RM6.80), despite a higher prospective ROE of 15.1% vs 13.1% for AMMB. Our RM9.50 target price is maintained.

COMMENTS ON NEWS
S P Setia RM6.50: Buy
First foray into the "lion city" carries an important role Shariah-compliant

Maintain Buy. We are positive on SPSB's latest acquisition of Leong Bee Court in Singapore given its strategic location and fair pricing. Despite minimal impact to earnings and RNAV, this project is important as it will strengthen SPSB's brandname in Singapore and showcase its development capabities and this in turn, will boost demand for SPSB's properties in Malaysia by Singaporeans. We fine-tune our FY11-13 forecasts for the acquisition and raise RNAV by 1 sen. Our new TP is RM7.13 (10% premium to RM6.48 RNAV; ex-bonus TP is RM4.75).

Technicals
The FBM KLCI gave up Wednesday’s rebound gains as it lost 9.79 points to close at 1,525.80 yesterday. Its resistance areas of 1,525 and 1,550 will cap market gains, whilst the weaker support areas are located at 1,500 and 1,517.

Trading Idea for today is a Take profit call on CMSB.

Other Local News
KL Kepong: Is world's No. 1 nitrile latex supplier. Kuala Lumpur Kepong Bhd (KLK) is now the world's biggest synthetic latex producer, via its 19% British unit Yule Catto & Co plc. The business is also growing and it plans to build another plant at a yet-to-be decided location in Asia. (Source: The Star)

MAS: Eyes 15% fall in costs from fleet renewal. Malaysia Airlines (MAS) expects its costs to fall by 15% by 2015 from its fleet renewal programme that reduces fuel usage and maintenance cost. (Source: Bernama.com)

SEGi: In nurse training deal with S. Korea varsity. SEG International Bhd is partnering South Korea's Chung Cheong University to set up a nursing faculty at its Kota Damansara campus in Selangor. The academic collaboration is expected to contribute an increase in FY11 earnings of approximately 4% to the Group. (Source: Bursa Malaysia)

YTL: On the M&A trail. YTL Corp is looking for sizeable merger and acquisition (M&A) opportunities as highly geared companies may soon find themselves in hot water as the economic recovery brings inflationary pressures. (Source: The Edge Financial Daily)

Transportation: Final project on railway project to be ready. The East Coast Economic Region Development Council (ECERDC) is in the process of completing its final report on the proposed east coast railway project linking Kuala Lumpur-Tumpat, a distance of 550km. The route includes five districts- Bentong, Bera, Temerloh, Maran and Kuantan. (Source: The Edge Financial Daily)

Plantation: Boilermech expects revenue to jump by a fifth. Boilermech Holdings Bhd, soon to be listed on the ACE Market boiler maker for biomass power plants, expects profit after tax and revenue to rise by as much as a fifth this year, driven by existing contracts. (Source: The Star)

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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: Century Logistics

• New Coverage
• Riding on improving trade activity
• Fair value is RM2.70. Initiate coverage with Outperform call.

Sector Call


Motor:

Sector Update

• Expected seasonal weakness
• MAA expects sales in March to recover given the normal working month and ongoing marketing promotions by auto distributors.
• No change to our TIV forecasts and Neutral sector stance.

Corporate Highlights

SEGI International:

Visit Note

• Leading education provider
• Our fair value for the stock is RM4.44.
• The premium is fair given SEGI’s superior net profit margin, the wider array of courses offered and its larger market cap.

SP Setia:

News Update

• Placement issue price fixed
• Maintain Outperform. As the proceeds raised from placement are lower than our expectations.
• Our fair value is reduced to RM7.17.
• For the property sector, we prefer Mah Sing, due to its cheaper valuations as well as 25% earnings growth over the next two years.

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Maybank IB Views

SECTOR UPDATE
Automotive: Neutral
On course, no pick-up ...

Maintain Neutral; in search of catalysts. Tepid sales in the Jan-Feb period concurs with our and market's assessment of Malaysia's auto growth trend for 2011. We remain Neutral on the sector, anticipating a mere 2-3% TIV growth as market reaches saturation. Stock-wise, we have upgraded Proton to a Hold following a 15% fall in share price post-our Sell call downgrade in Feb. MBM and TCM remain a Buy on inexpensive valuations whilst UMW is still a Hold.

COMPANY UPDATE
Petronas Chemicals Group RM6.74: Buy
Strong February Shariah-compliant

It only gets better. PCHEM's product margin in Feb 2011 was USD1,122/ton (+27.8% YoY, +10.5% MoM), we estimate. The year-to-date product margin of USD1,062/ton is 23.1% higher YoY and above our 2011 estimate of USD1,027/ton. Things are looking very positive for PCHEM to deliver record profits in 2011. Maintain Buy; there is no change to our earnings forecasts and target price of RM8.00.

S P Setia RM6.15: Buy
A golden opportunity to buy Shariah-compliant

FY11 to be a record year. The recent sell down on S P Setia (SPSB) shares represents a golden opportunity to buy the stock given SPSB's excellent sales performance and earnings growth prospects. SPSB will very likely exceed its RM3b sales target for FY11, a new record, given strong bookings and responses to its KL Eco City (KLEC) offices and residential tower. We fine-tune our earnings forecasts and tweak down our TP to RM7.10 (-1%) based on unchanged 10% premium to our new RM6.47 RNAV post-placement. SPSB stays our top buy for the sector.

ECONOMICS
Japan: Aftermath of 3/11
Hope vs Fear...

The casualties and damages of the Tohoku quake-tsunami on 11 Mar make it teh worst in Japan's modern history. Still, the hope is that of a localised and transitory effect, affecting growth in 1Q and/or 1H before recovery in 2H on rebuilding and resumption of business and industrial activities. The fear is that of a broader and prolonged impact due to the additional dimension of the disaster arising from the damaged nuclear power plant, risking radtioan leaks and contamination. Japan is Malaysia key trading partner and major source of FDI. Most immediate and visible impact is likely on commodities such as natural gas, timber and oil, and on manufacturing industries such as automotive and E&E.

Technicals
The FBM KLCI was marginally higher by 0.22 points to 1,509.10 yesterday. Its resistance areas of 1,510 and 1,529 will cap market gains, whilst the obvious support areas are located at 1,490 and 1,508. Due to the DJIA’s softer tone last night, we will see the FBM KLCI in lack lustre mode today.

Trading Idea for today is a Short-Term Buy call on PETDAG

Other Local News
TNB: To build gas-fired power plant in Sabah. Tenaga Nasional Bhd (TNB) plans to build a 300MW gas-fired power plant in Sabah. TNB has received in-principle approval to build the plant. The plan to build a gas-based plant comes after Malaysia's federal and Sabah state governments scrapped a plan to build a coal-fired power plant. (Source: Business Times)

Genting Plantations: ACGT Aims to Reduce Oil Palm Breeding cycle by 50%. ACGT Sdn Bhd, a unit of Genting Plantations Bhd, aims to reduce oil palm long breeding cycle by 50% to six years from 12 years via its genomics-based marker-assisted selection technology. The breakthrough would accelerate development and commercial release of oil palm seeds without any genetic modification. (Source: Bernama.com)

MAHB: Penang airport upgrade going smoothly. The RM250m upgrade of the Penang International Airport is 15.7% complete, while the target date for the whole project to be completed remains June next year. (Source: Business Times)

Benalec: Beachfront land for sale. Benalec Holdings Bhd is shaping up to be a major landowner and developer, as it will receive some 177.3 acres of land in Melaka in exchange for reclamation works. (Source: The Edge Financial Daily)

Ta Ann, Jaya Tiasa: To increase plywood output. Ta Ann Holdings Bhd and Jaya Tiasa Holdings Bhd, will increase plywood production by 15% and 50% respectively after winning orders from Japan to help with the country's reconstruction following its earthquake and tsunami. (Source: Business Times)

Utilities: Syabas invests in new pipe network. Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) has invested around RM115m in the alternative pipe network system to cope with rising demand for water supply. The new network would connect the water distribution system to the Sungai Semenyih and Sungai Langat water treatment plants and the first, second and third phases of the Selangor water distribution plant. (Source: The Star)

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