Maybank IB Views

Malaysia: MIER Quarterly Indices
"Circumspect" is the word...

MIER releases 2Q2011 Consumer Sentiment Index (CSI) and Business Conditions Index (BCI). CSI recorded another quarter of decline (-0.3pt QoQ to 107.9), BCI posted another quarter of rise (+0.7pt QoQ to 114.0) as inflation dampen consumers amid external risks and domestic opportunities facing businesses. In addition, the expectations sub-index for both CSI and BCI were down 0.5pt and 16.1pts respectively. Overall, the indices point to further moderation in 2Q 2011 real GDP growth, with continued caution ahead.

SECTOR UPDATE
Oil & Gas: Overweight
Tide is turning

Domestic OSV market entering calmer waters. We upgrade the Offshore Service Vessels (OSV) segment to Neutral following a 8-37% correction in share price YTD. Operationally, we opine the worst is over for the sector and prospects are set to improve, albeit at a gradual pace over the next 24 months. Stocks wise, we have upgraded Alam, TOFF and Perdana Petroleum to a Hold (from Sell previously).

Technicals
The FBM KLCI inched lower by 0.83 points to close at 1,579.84 yesterday. Its resistance areas of 1,579 and 1,597 will cap market gains, whilst the weaker support areas are located at 1,560 and 1,574.

Trading Idea is a Take Profit call on Muhibah

Other Local News
Dialog: Buys 51% stake in Indian Company. Dialog Group’s unit is paying RM7.88m for a 51% stake in India-based outsourcing company Anewa Engineering Pte Ltd to further boost its engineering capabilities and talent pool. The investment provides access to new customers, including those in the Middle East and India. (Source: The Edge Financial Daily)

AirAsia: Tie-up with ANA likely. AirAsia is likely to have a joint venture with Japan's largest carrier - All Nippon Airways (ANA) - to set up a low cost airline likely to be called AirAsia Japan. The LCC will serve the domestic market and eventually regional markets. (Source: The Star)

DiGi: Set to seal two MVNO deals. DiGi.Com Bhd is expected to announce two mobile virtual network operator (MVNO) deals in the second half of the year. (Source: Business Times)

Tradewinds Plantation: Gets nod to buy Mardec for RM140m. Tradewinds Plantation Bhd has received the green light from its shareholders to acquire rubber processor Mardec Bhd for RM140m cash. The acquisition was part of Tradewinds Plantations' strategy to expand its rubber business into downstream activities, complementing its existing rubber plantation operations. (Source: The Star)

Oriental Pearl Harbour: Close to RM4.5b UAE port deal. Oriental Pearl Harbour Sdn Bhd (OPH), which is bidding for the privatisation of the Penang Port, is on the verge of concluding a contract to manage and operate a port in the Middle East in a deal estimated to be worth more than USD1.5b (about RM4.5b). (Source: The Malaysian Reserve)

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Maybank IB Views

ACQUISITIONS / DISPOSAL
PLUS Expressways RM4.60: Buy
Sense and sensibility Shariah-compliant

Shareholders to decide. PLUS' EGM tomorrow will proceed and shareholders will vote to either accept UEM-EPF's offer or adjourn the passing of resolutions which will give PLUS more time to evaluate Jelas Ulung's offer. As we have written yesterday, we are not comfortable with Jelas Ulung's offer - we are concerned on financial implications or recourse later. After a 5.5% share price gain yesterday, PLUS is trading at UEM-EPF's offer price and just a tinge away from our RM4.70 DCF-based target price. Our Buy call is now under review.


COMPANY UPDATE
KNM Group RM2.69: Buy
Doing a double; raising target price Shariah-compliant

Double joy on orders. We are bullish on the fabricators and have raised KNM's target price by 40% to RM4.35 as it has started to exhibit strong new job wins. The latest RM2.2b EPCC project win instantly doubles its backlog to RM4.6b and the growing momentum is set to sustain into 2011. We opine delivering consistent earnings and margin recovery will supersede market skeptics. Maintain Buy.


Lafarge Malayan Cement RM7.68: Buy
Bright prospects; upgrade to Buy Shariah-compliant

Liquidity and scarcity. Share price has outperformed its cement and steel peers by 3% and 11% YTD respectively and the stock now trades at 15.4x 2012 earnings, which we expect to be a peak demand year for cement in view of major infrastructure projects in Greater KL starting in 2011. Nonetheless, 2012 could mark the start of sustained demand for cement driven by the LRT, MRT, and government land development projects. On that scenario, 15.4x 2012 valuation is not too demanding.


Technicals
The FBM KLCI surged 9.30 points to 1,505.18 yesterday. Its resistance areas at 1,507 and 1,525 may cap market gains, whilst its obvious support areas are located at 1,493 and 1,505.
Trading idea for today is a SHORT TERM BUY call on TWSPLNT.


Other Local News
DRB-Hicom: In RM1b tie up with VW, keen to be VW's distributor in Malaysia. DRB-Hicom Bhd and Volkswagen AG (VW)'s has officially tied up in a collaboration worth RM1b. DRB-Hicom will assemble the Passat, Polo and Jetta models in Pekan. DRB-Hicom has expressed an interest to distribute VW's vehicles in Malaysia. (Source: The Star)

Conglo: Ex-CEO explains why Johor Corp wanted him out. Former Johor Corp CEO Tan Sri Muhammad Ali Hashim said that the reason for his removal is for to facilitate the sale of Johor Corp's assets, including the fast-food businesses. (Source: Business Times)

Amanah Saham Nasional Bhd: Declares 22% higher income payout. ASNB, the subsidiary of Permodalan Nasional Bhd (PNB) has declared an income distribution of 7.5 sen per unit and a bonus of 1.25 sen per unit for ASNB for the financial year ending Dec 31, 2010. The total payout is 22% higher than last year, at RM5.93b while bonus portion payment is RM603.34m. (Source: The Star)

MTD: In JV for jobs in S. Arabia. MTD Capital Bhd has formed a joint-venture (JV) company with ANC Holdings Pte Ltd to target engineering and infrastructure projects in Saudi Arabia. MTD would hold 51% in the JV while ANC would have the remaining 49%. (Source: The Star)

Agriculture: Government negotiating to raise price of Kenaf. The Ministry of Plantation Industries and Commodities is negotiating with a Pahang-based Japanese company to raise the price of kenaf to more than RM750/t to enable the jute-like plant to be commercially cultivated by former tobacco planters. (Source: Bernama)

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Maybank IB Views

SECTOR UPDATE
Automotive: Overweight
Can a forced marriage be a force?

A merger on the cards? Proton is eager. Perodua is not. While Newco could create size and realise value, the merger offers minimal operational synergies. An equity swap is unlikely unless Perodua is finely compensated and its partners agree to it. A loose collaboration without equity swap makes more sense. Local automakers need to look beyond the domestic market to remain relevant and competitive. Based on our analyses, MBM offers higher upside to a potential merger. We remain Buyers of Proton and MBM; Hold on UMW.

COMPANY UPDATE
KNM Group RM1.93: Buy
Momentum picking up Shariah-compliant

Fundamentals recovering. Management's tone at an analyst briefing post 3Q10 results suggests a sustained recovery outlook. A confluence of factors, i.e. steady oil price, higher capex spending in the sector translating into rising order and tender books, and margins recovery should stimulate growth over the next few years. Buy, with a RM2.20 target price based on 9x 2011 EPS, Current valuations reflect KNM's near bottom cycle valuations (below its historical mean).


Technicals
The FBM KLCI edged higher by 0.76 points at 1,501.74 on Monday. Its resistance areas at 1,505 and 1,525 may cap market gains, whilst its obvious support areas are located at 1,488 and 1,501.

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


Other Local News
Air Asia: To form Philippines unit. Air Asia plans to form a Philippines unit with Antonio Cojuanco, a former chairman of Philippine Long Distance Telephone Co by 1Q11. The domestic and overseas routes would be available in 2011. (Source: The Star)

Scomi Eng: Accepts RM494m price for monorail fleet expansion. Scomi Engineering via its subsidiary, Scomi Rail Bhd (SRB), has accepted the contract price of RM494m for the monorail fleet expansion project. SRB had received a letter from Syarikat Prasarana Negara Bhd (SPNB) on Dec 3 notifying SRB of the intent to award SRB the contract at the quoted price. (Source: The Star)

UEM Land: To buy land in Bangi for RM268m. UEM Land Holdings Bhd will acquire two parcels of freehold agricultural land in Bangi for RM268.5m from Inch Kenneth Kajang Rubber Public Ltd Co. UEM intends to develop a township with a gross development value of RM2.84b spanning 10 years. (Source: The Star)

NFO: Some 4 Digit prize payment reduction approved. Multi-Purpose Holdings Bhd’s unit, Magnum and another listed NFO operator received approval from the Finance Ministry to revise the special prizes of their 4 Digit Big Game from RM200 per RM1 bet to RM180 per RM1 bet. Both companies said the special prizes for the 4 Digit Big permutations would be revised proportionately. (Source: The Star)

Chemicals: Petronas, BASF mull RM4b joint venture. Petronas and Germany's BASF are considering a RM4b joint venture to produce specialty chemicals in Malaysia. The final scope of investments will be determined following the outcome of a joint feasibility study, which is targeted to be completed in 2011. (Source: The Star)

Banking: India's Religare seeks presence in Malaysia. Religare Enterprises Ltd, an Indian financial services group controlled by the Singh brothers, Malvinder and Shivinder, is planning to buy a mid-sized investment bank in Malaysia and Indonesia. Besides India, Religare has presence in Singapore and Hong Kong. (Source: Business Times)

Healthcare: Pantai plans RM500m expansion of hospital network. The Pantai Group plans to expand its network of hospitals in Iskandar Malaysia at an estimated cost of RM500m.The development of the project, which will bear the name Gleneagles Medini Hospital, will be done in phases and is slated to be one of the premium hospitals under Parkway Health. (Source: The Star)

Property: RM500m Azea latest project in Danga Bay. Imperial Marine Pte Ltd, Danga Bay Sdn Bhd and Pembinaan Sahabatjaya Sdn Bhd have formed a 30:37:33 joint venture to develop a RM500m high-end mixed development known as Azea Properties. The commercial project will be undertaken on a 1.7ha site in Danga Bay, one of the key flagship zones within Iskandar Malaysia. (Source: Business Times)

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Twsplnt reversal candlestick pattern?

Twsplnt Daily Chart

Candlestick pattern - hammer formed in Twsplnt in daily chart 3 last trading session. Then followed by two bullish candlestick patterns. But today the black candle occurred, failed to pass the 23.3% fibonacci retracement level. On the longterm, the Twsplnt is still in uptrend even though the overall market not performing very well. Will Twsplnt continue to the north direction?

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