Maybank IB Views

Construction: Overweight
LRT final packages go to Sunway, MRCB

Maintain Overweight. Sunway's RM569m win is a pleasant surprise after press reports of the Kelana Jaya Line Package B going to TRC Synergy. MRCB's RM1.33b win is also above the RM800m-RM900m estimates for the Ampang Line Package B. The LRT chapter, in terms of awards for the civil works portion, is coming to an end, with all eyes now to focus on the MRT which will enter the tendering stage for the elevated works portion – to be called in stages over Sept-Dec 2011. Our fair value for Sunway is RM3.85 while we are Not Rated on MRCB.

COMPANY UPDATE
Dialog Group RM2.67: Buy
New leg, new growth, new perspective Shariah-compliant

Bagging the Balai RSC is sentiment positive. Dialog is in good hands. RoC Oil and PCSB are reputable partners. Funding is not an issue. While Balai is expected to be more challenging than the Berantai project, the risk is mitigated as capex is fully recoverable under the RSC. We opine that the consortium will likely bag the next RSC (i.e. Belantara) to make it a more economical investment. Maintain Buy with an unchanged RM3.35 target price, based on sum-of-part valuations.

RESULTS REVIEW
Kuala Lumpur Kepong RM21.10: Hold
Big boost from FFB output recovery Shariah-compliant

Downgrade to Hold. 3QFY11 RM420m recurring net profit (+72% YoY,+85% QoQ) brings 9MFY11 recurring net profit to RM1,047m (+49% YoY), which met 78% and 74% of our and consensus full-year forecasts. The results were marginally above our forecast on a lower tax rate. We tweak up our 2011 forecast. The stock has outperformed the KLCI since we first upgraded our call on 24 Jun 2010, chalking up 29% in capital gain. We change our valuation methodology to PER (from SOP) pegging the stock to 16x FY12 based on an unchanged 2012 RM3,000/t CPO ASP assumption for the sector. Given limited upside to our new TP of RM21.60, we downgrade the stock to a Hold.

WCT RM2.87: Buy
Impacted by forex Shariah-compliant

Below forecasts. RM75m 1H11 net profit (+9% YoY) made up 41% of our full-year forecast of RM184m due to an unexpected RM13m forex loss from the stronger Ringgit. We have lowered our 2011-12 forecasts by 8-9%. Our new target price is RM3.50 based on SOP (unchanged 15x 2012 PER + 20sen value increment from KLIA2 retail concession). Share price has consolidated along the broader market with the stock trading at 12.9x one-year forward earnings. Maintain Buy.

JT International RM6.90: Buy
Momentarily weaker

Below expectations. JTI's 1H11 net profit of RM65m (-8.9% YoY) accounts for 45% and 47% of our and consensus full-year forecasts. The shortfall in earnings was due to higher than expected marketing costs and lower sales volumes, implying downside risk to our 2011 estimates. We maintain our earnings forecasts pending an analyst briefing today. Valuations are still low with the stock trading at 11.1x 2012 PER. Our DCF-based TP implies 13x 2012 PER.

Technicals
The FBM KLCI inched down by 1.50 points to close at 1,498.24 yesterday. Its resistance areas of 1,498 and 1,515 will cap market gains, whilst the weaker support areas are located at 1,454 and 1,486.Due to the US markets’ fall last night; we will see some volatile trading activities in the local bourse today. Some heavy profit-taking and liquidation activities will persist to depress the markets’ rebound from its recent 1,423.47 low. We see a longer-term decline for the local and foreign indices.

Trading Idea is a Take Profit call on TENAGA.

Other Local News
MPHB: Confirms talks to dispose of Menara Multi-Purpose. Multi-Purpose Holdings Bhd (MPHB) said it is in talks with various parties to dispose off its non-core assets including Menara Multi-Purpose. (Source: The Edge Financial Daily)

MAHB: Revises charges for airlines, passengers. Malaysia Airports Holdings Bhd (MAHB) would be implementing new international passenger service charges (PSC) as well as aircraft landing and parking charges at airports operated by the group on September 15. The government has given its approval and that it was in line with the Operating Agreement signed between the government and MAHB in February 2009. (Source: Business Times)

O&G: Gas Malaysia listing slated for 4Q. MMC Corp Bhd plans to list Gas Malaysia Sdn Bhd on the Main Board of Bursa Malaysia by the fourth quarter of this year. The company has appointed Maybank Investment to advise on the initial public offer exercise. (Source: Business Times)

Bina Puri: Wins RM470.3m contract. Bina Puri Holdings Bhd, via its wholly-owned unit Bina Puri Construction Sdn Bhd, has been awarded a contract worth RM470.3m for the proposed development of a tourist recreational and commercial development at KK Times Square (Phase II) in Kota Kinabalu, Sabah. (Source: Bursa Malaysia)

Read more...

Maybank IB Views

Construction: Overweight
MRT: Pro-gressing

Positive developments. Prasanara's release of the names of 28 companies shortlisted for the mass rapid transit (MRT), Sg Buloh-Kajang line elevated works portion is a positive move in buidling investors' confidence on the government's commitment in moving the project forward. The names are not totally new to us, except perhaps for the not listed ones. First works are expected in early-2012, we estimate. We maintain our Overweight call on the sector.

RESULTS REVIEW
Sunway REIT RM1.07: Buy
Short-term pain, long-term gain

Maintain Buy. SunREIT's RM167.3m FY11 core net profit came in within expectations. 6.6sen FY11 DPU was also in line. We do not expect significant contributions from the newly-acquired Sunway Putra Place (SPP) over the short-term as it would likely take 1-2 years for renovation works. We maintain our FY12-13 earnings forecasts and introduce FY14 estimates. Target price is RM1.18 (+3 sen) as we roll over our base year to 2012.

MBM Resources RM2.97: Hold
Less sanguine over outlook Shariah-compliant

The effect of the global supply chain disruption kicks in. 1H results are tracking expectation (47% of full-year forecast) on the back of a softer QoQ performance. Vehicle sales and earnings in 2Q, as forewarned, were affected by the global supply chain disruption post the Japan’s 11 March earthquake and tsunami. Going forward, we opine that this issue will continue to have an adverse effect on MBM's 2H performance. Maintain Hold with a RM3.10 target price.

Notion VTEC RM1.95: Buy
Earnings on track Shariah-compliant

Results in line. 9MFY11 net profit of RM34m (+17% YoY) made up 71% and 76% of our and consensus full-year forecast. We maintain our Buy call as valuation is inexpensive at 4.1x CY12 PER, backed by a solid growth trend (38% 2-year net profit CAGR). Our RM2.40 TP pegs NVB on 4.5x FY11 EV/EBITDA, reflecting regional peers' (ex-Japan) valuations. Our TP also indicates an undemanding forward PER of 5.1x, significantly below the 8x average for our small-cap universe.

Technicals
The FBM KLCI fell 4.06 points to close at 1,476.46 yesterday. Its resistance areas of 1,479 and 1,530 will cap market gains, whilst the obvious support areas are located at 1,423 and 1,475.

Trading Idea is YTLCMT

Other Local News
Construction: 28 firms shortlisted for MRT jobs. Syarikat Prasarana Negara Bhd has shortlisted 28 individual and joint-venture (JV) companies that are eligible to bid for various elevated civil works, stations and depot packages for its My Rapid Transit (MRT) project. Among the companies in the list are larger local players like IJM Construction Sdn Bhd, Ahmad Zaki Sdn Bhd, Sunway Construction Sdn Bhd and WCT Bhd. (Source: The Malaysian Reserve)

Aviation: Up to RM1.2b cost savings for MAS and AirAsia. The collaboration forged between Malaysia Airlines (MAS) and AirAsia Bhd on Tuesday can turn in up to RM1.2b in cost savings for both the airlines, said MAS newly appointed executive director Mohammed Rashdan Mohd Yusof. (Source: The Star)

MAHB: Board revamp at MAHB? A revamp of the boardroom of Malaysia Airports Holdings Bhd (MAHB) is next after the airline industry in Malaysia. Changes are afoot at MAHB but it would be more gradual than the wholesale changes seen at MAS. The idea behind the move to make changes to the board of MAHB is to infuse new blood and realign the interest of the shareholders by bringing people from diverse backgrounds and disciplines. (Source: The Star)

Bumi Armada: Signs FPSO contract. Bumi Armada Berhad’s jointly-controlled entity, Forbes Bumi Armada Offshore Limited (FBAOL) has signed a Floating Production, Storage and Offloading (FPSO) contract with Oil and Natural Gas Corporation Limited (ONGC) following the letter of award secured from ONGC referred to in the Prospectus of Bumi Armada. (Source: Bursa Malaysia)

Alam Maritim: Bags RM20m jobs. Alam Maritim Resources Berhad has clinched two offshore vessel leasing contracts from Petronas Carigali Sdn Bhd worth RM20m. The contract is for a duration of 138 days, with a maximum extension option of 30 days. (Source: Bursa Malaysia)

Catcha: Amends terms with Microsoft. Catcha Media Bhd announced substantial amendments to its strategic collaboration with US-based Microsoft. Changes in terms of the collaboration had prompted the company to reduce its four-year commercial target of up to RM90m for its online media operations by some 28% or RM25m. (Source: The Edge Financial Daily)

Sarawak Cable targets RM1b projects. Sarawak Cable Bhd (SCB) is pursuing potential projects worth more than RM1b and is looking to expand overseas, starting with Brunei and Kalimantan this year, followed by the Philippines. (Source: The Edge Financial Daily)

Read more...

AmResearch maintains Buy on WCT

KUALA LUMPUR: AmResearch has maintained its Buy call on WCT BHD with an unchanged fair value of RM3.85 after the company’s wholly-owned subsidiary WCT CONSTRUCTION Sdn Bhd secured an earthwork contract with Vale Malaysia Manufacturing Sdn Bhd.

In a note Friday, July 29, AmResearch said that this was the first major contract that WCT has secured this year.

The award is for Phase 1A (Stage 1) of Vale’s iron ore distribution centre and pelletisation plant project in Teluk Rubiah, Perak.

The total contract value is estimated at RM115mil – and is to be completed in April 2013. Scope of works includes earthwork, drainage, roads & pavement, slope protection works as well as temporary sedimentation ponds at Vale’s.

“We have maintained our earnings forecast for FY11F – as this new job forms part of our new orderbook assumptions of RM2 billion.

“Most importantly, we believe WCT’s early success would provide the impetus for the group to be in a competitive position to secure more jobs for Vale’s massive project,” it said.

Read more...

Maybank IB Views

RESULTS PREVIEW
WCT RM3.12: Buy
Awaiting the roll-outs Shariah-compliant

Maintain Buy. 2011 job win target remains at RM2b riding on a sizeable RM10b tender book; this will provide the lift to its RM3.4b outstanding order book. We retain our forecast for a 31% growth in 2011 net profit supported by strong property sales, completion of the 1Medini earthworks and good progress at the Qatar government building works. Our target price pegs the stock to sum-of-parts (15x 2012 PER plus 20sen value enhancement for KLIA2 retail concession).

Technicals
The FBM KLCI gained 9.49 points to close at 1,591.34 yesterday. Its resistance area of 1,591 may cap market gains, whilst the firm support areas are located at 1,577 and 1,590.

Trading idea is Short-term Buy on TCHONG

Other Local News
AirAsia: Order for A320neos to hit 300? Less than a month after AirAsia Bhd made a record-breaking order of 200 A320neo jets at the Paris Air Show, it has now reportedly increased this order by 100 jets. However, founder Tan Sri Tony Fernandes has declined to comment on the report. (Source: Business Times)

SapuraCrest: May buy Aussie business. SapuraCrest Petroleum Bhd may be acquiring Australia-listed Clough Ltd's marine construction business. The deal would allow it to grow its regional presence, expand its activities in the subsea and deepwater segments. (Source: Bursa Malaysia)

Dialog: Ink pact to develop terminal. Dialog Group Bhd's 51% owned subsidiary Pengerang Terminals Sdn Bhd (PTSB) has inked a shareholders' agreement with State Secretary, Johor to undertake the first phase portion of designing and developing of an independent deepwater petroleum terminal in Pengerang, Johor. (Source: Bursa Malaysia)

Tan Chong: To assemble Subaru vehicles here. Tan Chong Group has signed a MoU with Fuji Heavy Industries Ltd (FHI) for a consignment production contract for the assembly of Subaru vehicles in Malaysia. The contract for local assembly will begin in Oct 2012 with production capacity of 5,000 units per year. (Source: The Edge Financial Daily)

Boustead: Unlocks value of its unit. Boustead Holdings Bhd has proposed to distribute part of its stake in Pharmaniaga Bhd to its minority shareholders to help meet the required 25% free-float to stay listed and cut borrowings at the same time. To boost trading liquidity of its own share, Boustead also proposed a one-for-10 bonus issue after paring down its holding in Pharmaniaga. (Source: Bursa Malaysia)

Read more...

RHBInvest Research

Top Story: Benchmarking –

Market Update (published 27 May 2011)

• The review of the FBM indices will be based on 31 May share prices.
• YTD, the FBM KLCI has risen by just 1.4%. Looking ahead, notwithstanding concerns about the strength of US and EU economic growth, we believe the market will be driven by M&A, corporate restructuring and to some extent the follow-through from earlier-announced ETP projects. This is further supported by decent market earnings growth of 11.3% and 12.0% for 2011-2012.

Corporate Highlights

WCT :

Briefing Note

• Still Confident About RM2bn New Jobs In FY12/11
• Maintain Underperform. Fair value is RM2.37.

Petronas Chemicals :

Briefing Note

• Product Prices, Fertilisers And Methanol Division Capacity Utilisation Keep Earning Intact
• We maintain our Outperform call and RM9.02/share fair value.

MMHE :

News Update
Signing MOU For Sime Darby’s Pasir Gudang Yard Acquisition

Sime Darby :
3QFY11 Results/Briefing Note

• In 3QFY11, Sime recorded a net EI loss of RM7.9, comprising forex gain RM0.5m, the RM98.5m writeback for the Maersk Oil project, a RM73.9m impairment on biodiesel and bioganic assets and a RM33m impairment loss on a property project, bringing total EI for 9MFY11 to a loss of RM11m.

Fair value has been reduced slightly to RM10.60 (from RM10.70). Now that the sale of the O&G division has been announced, we believe Sime would need to gain further ground by being more focused on its other divisions to improve operational efficiencies, to improve its market value and standings in the different industries it operates in.

We maintain our Outperform recommendation on the stock.



IJM Land :

Results / briefing note
The value has yet to be fully appreciated
We maintain our Outperform call with an unchanged FV of RM3.28, IJMLD continues to be our top pick for the sector.



IJM:
FY03/11 Performance Weighed Down By Construction Losses In 4Q
Maintain Underperform. Fair value is RM6.12.Sime Darby :

3QFY11 Results/Briefing Note

• In 3QFY11, Sime recorded a net EI loss of RM7.9, comprising forex gain RM0.5m, the RM98.5m writeback for the Maersk Oil project, a RM73.9m impairment on biodiesel and bioganic assets and a RM33m impairment loss on a property project, bringing total EI for 9MFY11 to a loss of RM11m.
• Fair value has been reduced slightly to RM10.60 (from RM10.70). Now that the sale of the O&G division has been announced, we believe Sime would need to gain further ground by being more focused on its other divisions to improve operational efficiencies, to improve its market value and standings in the different industries it operates in.
• We maintain our Outperform recommendation on the stock.

IJM Land :

Results / briefing note

• The value has yet to be fully appreciated
• We maintain our Outperform call with an unchanged FV of RM3.28, IJMLD continues to be our top pick for the sector.

IJM:

• FY03/11 Performance Weighed Down By Construction Losses In 4Q
• Maintain Underperform. Fair value is RM6.12.

Read more...

Maybank IB Views

YTL Power International RM2.22: Buy
Great results tempered by poor dividends Shariah-compliant

Mixed signals. We are impressed that YTLP recorded earnings growth YoY despite start up losses at YES but disappointed that third interim net DPS remain subdued at 1.875 sen. We believe that this maybe due to it conserving cash ahead of its joint bid for the 2,000MW Pemalang IPP in Central Java. Maintain Buy call and RM2.70 DCF based target price pending a meeting with management.

KNM Group RM2.53: Buy
Soft 1Q, expects stronger quarters ahead Shariah-compliant

Weak results but hopes stay afloat. 1Q11 results were sub-par, underlying the margin compression effect from the low-yielding projects secured in the past. We maintain our forecasts for now. Top line recovery is visible but KNM needs to deliver its normalised margins and on bottom line to rerate. KNM remains a prospective long-term Buy.

Star Publications (Malaysia) RM3.35: Hold
Catalyst in M&As Shariah-compliant

Results delivered, M&As next. Star's 1Q11 results were within expectations. Our earnings estimates are marginally tweaked for higher adex growth assumption, offset by creeping staff costs. Maintain Hold with a marginally lower SOP-based target price of RM3.69 (-1%). The focus is now on further M&A activities enabled by the RM200m it recently drew down from its CP/MTN facility.

WCT RM3.04: Buy
No surprises Shariah-compliant

Reiterate Buy. 1Q11 net profit of RM37m made up 20% of our full-year forecast. The results were in line with house and street expectations. We maintain our earnings forecasts, expecting stronger quarters ahead to meet our 31% net profit growth projection for 2011. Target price is unchanged at RM3.75 based on sum-of-parts (15x 2012 PER plus 20sen value enhancement for KLIA2 retail concession).

Sunway City RM5.05: Hold
On track; expect stronger 2H Shariah-compliant

Accept offer. RM35m 1Q11 core net profit was in line. We maintain our earnings forecasts and RM5.10 TP (offer price for merger with Sunway Holdings). However, we downgrade SunCity to a Hold since its share price is approaching the offer price. We advocate shareholders to accept the SunCity-SunHoldings merger offer, which would result in a bigger entity with an e.RM3.6b market capitalisation and better liquidity. We estimate RNAV for the merged entity to be around RM3.70.

AEON Co RM6.45: Buy
2H has to catch up Shariah-compliant

Results in line. 1Q11 core net profit of RM35.7m (-13.3% YoY, -18.9% QoQ) was 20% of our and street estimates, after stripping off RM10.9m of insurance claims on its shopping centre in Melaka for a fire in 2009. We maintain our forecasts for now, expecting a stronger 2H to make up our full-year forecasts. 2H should strengthen with the reopening of the 1 Utama store, in time for the Raya and year-end festive seasons

Ann Joo Resources RM2.90: Buy
Seeing domestic cyclical growth Shariah-compliant

Back in the black. 1Q11 ex-forex net profit of RM34m (4Q10: RM3m net loss, 1Q10: RM42m net profit) was inline with expectations, making up 19% of our full-year forecast and 18% of consensus. Earnings growth momentum is likely to sustain on the commencement of big-ticket construction jobs (i.e. LRT Package A). Maintain Buy with a target price of RM3.30 (11x FD 2012 PER).

Technicals
The FBM KLCI gained 7.37 points to close at 1,540.94 yesterday. Its resistance areas of 1,542 and 1,555 will cap market gains, whilst the obvious support areas are located at 1,525 and 1,540.Due to the DJIA’s marginally firmer tone last night, we will see some benign trading activities today.

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

Other Local News
RHB Cap: Abu Dhabi bank to meet over stake sale. A decision on the sale of the 25% stake held by Abu Dhabi Commercial Bank (ADCB) in RHB Capital Bhd is expected after ADCB board meeting on May 31. (Source: The Star)

Ann Joo: Plans expansion. Steel maker Ann Joo Resources Bhd is looking at expanding its operations across South-East Asia via joint ventures (JVs) or mergers and acquisitions (M&As) in greenfields and small regional steel millers. (Source: The Star)

Wah Seong: Tipped for LNG pipe coating job. Wah Seong Corp Bhd is close to bagging a pipe coating job relating to the Australia Pacific liquefied natural gas (APLNG) project, valued at about RM122m (USD40m). The project is expected to be given out in the next one to two months. (Source: The Edge Financial Daily)

Property: Tycoon Li Kashing firm buying malls in Malaysia. Singapore-based ARA Asset Management Ltd, which is linked to Hong Kong tycoon Li Kashing, is in different stages of negotiation to buy between five and 10 malls throughout Malaysia. Its second Asia Dragon Fund has a fund size of USD1b to buy Asian assets. (Source: The Star)

Consumer: Govt to review subsidy if oil price hits USD110-120 per barrel. The government has decided to maintain the prices of RON95 petrol , diesel, and liquefied petroleum gas (LPG), but will review the fuel subsidy if oil price reaches between USD 110-120 per barrel. (Source: The Edge Financial Daily)

Read more...

JP Morgan maintains Overweight on IJM, WCT, Neutral on Gamuda

KUALA LUMPUR: JP Morgan Asia Pacific Equity Research maintains its overweight ratings on IJM Corp Bhd and WCT Corp Bhd and its neutral rating on GAMUDA BHD.

It said Malaysian CONSTRUCTION stocks have been beaten down on heightened risk aversion following the Middle east and North Africa (MENA) political turmoil.

“Gamuda, IJM and WCT are down 4.8%, 1.8%, and 4.3% YTD, in our view providing a good buying opportunity for IJM, our top pick in the construction space, and for WCT in the mid-cap space, as we think valuations have become more attractive, and they are trading well within mean and 1SD (one standard deviation),” it said in a research note issued on Friday, March 4.

In its analysis, JP Morgan Research said Gamuda’s exposure to MENA was small, at 1.7% of total outstanding construction order book, IJM’s is 2%, while WCT’s is the largest, at 42%.

The bulk of WCT’s exposure is to Qatar, where WCT’s management believes the risks are lower given that Qatar has the highest GNP per capita in the world.

Qatar’s proven natural gas reserves stood at approximately 896 trillion cubic feet as of Jan 1, 2011, and it holds almost 14% of total world natural gas reserves, the world’s third largest.

WCT’s major project in Qatar, the RM1.36 billion ministerial building (37% of outstanding order book) is buffered by advance payments, while all progress billings are on a monthly basis, mitigating risks further.

Gamuda’s share price was down 2.5% year-to-date in market capitalisation against a 0.9% sum of the parts (SoTP) exposure from MENA, IJM’s market capitalisation fell 7.3% against no SoTP exposure from MENA, while WCT fell 6.3% against SoTP exposure of 0.9% from Bahrain and 19.9% from Qatar.

“We remain positive on the construction sector, supported by rollout of projects under the Economic Transformation Progamme (ETP), and RM67 billion private-public partnership (PPP) projects under the 10th Malaysia Plan.

“Recent newsflow has turned even more positive for the sector, with the appointment of Gamuda-MMC as the project delivery partner for the RM36 billion mass rapid transit (MRT) project, slated to commence in July this year; and the letter of intent given to MRCB for the close to RM18 billion River of Life project, both part of the ETP.

“We expect positive construction order flows will be the driver of share price performance. Another project due for award soon is the second package of the RM7 billion LRT extension project, for which tenders will close by April,” it said.

Read more...

RHBInvest Research

Top Story: Maxis –Market Perform (down from OP)

4QFY10 Results/Briefing Note
To unveil new services soon
Fair value revised from RM5.75 to RM5.65.
Hence, we revise our call from outperform to Market Perform. Core earnings growth in FY11 is modest, but generous dividends will provide support to the stock.


Sector Call

Banks:
Jan ‘10 system data – Continuing momentum from 2010
No change to our Overweight stance on the sector.

Corporate Highlights

Kencana: Market Perform
New contract awards
Maintain our fair value on the stock at RM2.85/share and our Market Perform call on the stock.

Allianz: Market Perform

Briefing Note
2011 fundamentals remain intact
Allianz is still in early stages of its planned acquisition of MNRB’s (Outperform, FV=RM3.41) Takaful Ikhlas arm.
We maintain our Market Perform call on the stock. Our fair value is unchanged at RM5.34/share.

WCT:

Briefing Note
Still positive on the Gulf States, Bakun provision final
Fair value is RM2.52. Maintain Underperform.

EON Capital: Underperform (down from MP)

4QFY10 Results/Briefing Note
4Q10 results hit by pre-emptive provisioning
Fair value remains at RM7.30 (HL Bank’s offer price), our expected market return is significantly higher than the potential upside for the stock and hence, recommendation downgraded to Underperform.

Kurnia Asia: Underperform

4QFY10 Results/Briefing Note
FY10 results below expectations, but in the right direction
Maintain fair value at RM0.25 and Underperform call on the stock.

Read more...

RHBInvest Research

Top Story

VS Industry:

• Vibrant sales ahead
• Maintain forecasts and Outperform call with a fair value of RM2.24.

Sector Call


Telecom:

• Maxis to ride on TM’s HSBB network
• TM benefits from a higher utilisation rate of its HSBB network, which leads to more wholesale revenue.
• Expect Maxis to focus on providing content via bundling, instead of competing head-on with TM in offering high speed Internet access.
• No change to our Overweight call on the sector.

Corporate Highlights


KLK:
To subscribe for Yule Catto rights issue
Fair value is raised to RM24.75 (from RM24.50). Maintain Outperform.

KNM:

• Going to Sabah
• The company is establishing a JV with Petrosab Logistik for a total initial investment outlay of RM51k.
• Positive on the JV given that the tie-up will improve KNM’s success rate for any potential contracts in the state.
• Raised our FY11-12 core EPS by 15.1% and 12.5% respectively
• Maintain our Outperform call on the stock with an upgraded target price of RM3.09/share

WCT:

• A second property jv project in Iskandar
• Fair value is RM2.55. Maintain Underperform.

Hiap Teck:

• 1QFY07/11 in the red due to lower margins
• Fair value is maintained at RM1.18 based on 7x CY11 EPS of 16.9 sen.

Technical Highlights

Daily Trading Strategy:

• Our technical outlook on the FBM KLCI remains on a negative bias.
• Further supports are seen near the recent low of 1,474 and 1,450, while the overhead resistance is at 1,524 and 1,532.

Daily Technical Watch: AMMB

• Short-term upswing remains intact if it sustains at above RM6.50…
• Immediate Support = RM6.50
• Immediate Resistance = RM7.32

Read more...

Maybank IB Views

Proton Holdings RM4.90: Buy
Lotus burns cash

Lotus' £480m capex is higher than expected, and we do not share Proton's direction of spending for the F1 whilst most major automakers have already exited the circuit in recent years. The high capex will dent Proton’s war chest and affect cash flows, impacting its business and financial turnaround plans. We are placing Proton Under Review with downside bias pending outcome of the Proton-Perodua merger.


Technicals
The FBM KLCI advanced 2.51 points to 1,509.79 yesterday. Its resistance areas at 1,510 and 1,531 may cap market gains, whilst its firm support areas are located at 1,493 and 1,508.

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


Other Local News
O&G: M'sia and Brunei ink billion-ringgit oil and gas exploration pact. Malaysia has sealed a 40-year joint oil and gas exploration deal with Brunei which is expected to generate billions in revenue for both countries. The deal involves two deep water blocks - CA1 and CA2 - located within the two countries' commercial arrangement area along the Brunei-Sarawak maritime border near the Limbang division. Petronas will also be looking into possible joint ventures with Brunei National Petroleum Company Sdn Bhd (Petroleum Brunei) to explore oil and gas in a third country and development of downstream industries. (Source: The Star)

CIMB: Unit eyes USD100m in sales from Dublin funds. CIMB-Principal Islamic Asset Management Sdn Bhd(CPIAM) is targeting about USD100m in sales for its Dublin domiciled syariah funds by the end of next year. CIMB intends to launch three funds under the UCITS III structure, all of which can be freely marketed across Europe. (Source: The Star)

WCT: Eyes more jobs in Qatar. WCT sees opportunities in Qatar as more infrastructure projects are expected to be implemented in preparation for 2022's FIFA World Cup. Bloomberg has reported that Qatar would spend USD57b (RM178.4b) on infrastructure developments related to the World Cup over the next decade. (Source: The Edge Financial Daily)

KPJ: Enhances medical business with takeover. KPJ Healthcare Bhd has acquired the 28-year-old Sabah Medical Centre (SMC). SMC would be KPJ's second venture in Sabah after the company took over the Damai Medical Centre five years ago. (Source: The Star)

KYM: Secures jobs from Vale. KYM Holdings Bhd has been awarded a contract valued at RM0.6m by Vale International SA for the provision of consultancy services relating to Vale's land acquisition in Teluk Rubiah, Perak. (Source: The Star)

Conglo: JCorp is not selling assets to repay RM3.6b debt. Johor Corp (JCorp) will not be selling any of its assets to repay its RM3.6b bonds due on July 31, 2012. JCorp is planning to refinance the debt instead. CIMB Bank and Maybank Investment Bhd have been appointed as the financial advisor. (Source: The Star)

Gaming: Olympia said to be keen on Pan Malaysian Pools. Olympia Industries Bhd has expressed an interest to acquire Pan Malaysian Pools Sdn Bhd from Tanjong plc. However, no formal offer has been made yet. (Source: The Star)

Read more...

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)

Read more...

RHBInvest Research Highlight 22 Nov 2010

Top Story: Axiata

Outlook for regional cellcos is largely stable.
Earnings forecasts maintained.
We reiterate our Outperform call with SOP fair value of RM5.52

Sector Call

Telecom:
Yes unlikely to spark an all-out price war
No change to our Neutral stance on the sector.


Corporate Highlights

WCT:
Potential upside to integrated complex at KLIA2
Short-listed for the Durkhan Highway 2 project
Fair value is RM2.55. Maintain Underperform.


KFC:
Offer to buy all of QSR’s business
Fair value on the stock at KFCH at RM5.85.
We are downgrading our call on the stock to Underperform


Sunway:

• Secures RM15m piling works in Port Dickson

• Fair value is raised from RM2.35 to RM2.74
• Maintain Outperform.

Technical Highlights

Daily Trading Strategy:

• Near-term choppy trend expected
• It must still surpass the critical 10-day SMA near 1,511, and to remove the 1,524.69 level before it could return to bullishness, in our view.
• Given that the regional markets’ sentiment remains fragile, local market sentiment is likely to track the regional performance in the near term.

Daily Technical Watch: Tebrau Teguh

• Bargain hunters to return nearer to RM0.75
• Immediate Support RM0.765
• Immediate Resistance RM0.835

Read more...

Maybank IB Views 19 Nov 2010

MARKET COMMENTS

• FBMKLCI 30
• Out with the old, in with the new

New kid on the block. Petronas Chemicals (PetChem), to be listed on 26 Nov (tentative), will immediately feature as a FBMKLCI 30 stock. At a market value of RM41.6b on listing, it will be the 5th largest stock on Bursa. Financials will remain the largest sector, followed by plantations and telcos. Nestle may find its way back into the index this year-end, replacing Malaysia Airlines - but we think the possibility is remote at this juncture. The revised FBMKLCI 30 line-up (with PetChem) will have a positive impact on our present 2011 YE KLCI target of 1,660.


COMPANY UPDATE
KNM Group RM0.435: Buy
Exceeds RM2b internal job win target Shariah-compliant

Buy, cheap, laggard. The RM680m new order from Lukoil will take KNM's job wins YTD to RM2.2b, surpassing its RM2b internal target for 2010. This order book trend is positive and suggests that business is recovering. We are Buyers of KNM for its improving fundamentals, inexpensive valuations and being a laggard play to the recovering sector. While interest in this stock may only return when KNM starts to deliver on its earnings, downside is limited as most of the negatives having been priced in.


RESULTS REVIEW
IOI Corporation RM5.90: Hold
1QFY11: Downstream disappoints Shariah-compliant

Results below expectations. 1QFY11 recurring net profit of RM408m (-10.5% QoQ, +1.1% YoY) was 20% of our FY11 forecast. Upstream and property were in line, but downstream saw significant margin pressure, possibly from unexpected spikes in CPO prices. No dividends were declared this quarter. We retain our earnings forecasts pending a corporate update and maintain our Hold call on the stock.


WCT RM3.02: Buy
Looking beyond 2010 Shariah-compliant

Below expectations. RM99m 9M10 net profit (-13% YoY) made up 66-67% of house 2010 forecast of RM151m and street RM148m. The shortfall came from slower construction works recognition in 3Q10, partially offset by unexpected profits after the final accounts sign-off for overseas jobs. We downgrade our 2010 net profit forecast by 9%, but retain our 2011-12 forecasts and target price (15x 2011 PER target, plus a 20sen enhancement from the new KLIA2 retail concession). Buy.


Kossan Rubber Industries RM3.14: Buy
Good results; bird flu may raise interest Shariah-compliant

Results in line. 9M10 ex-EI net profit of RM89m (+13% YoY) made up 71% of our full-year forecast and 76% of consensus. Results are good considering the bellwethers (i.e. Top Glove, Supermax) reported 17-30% YoY earnings contraction. We maintain our Buy rating on Kossan (TP: RM3.60) as its share price has underperformed its peers and it is the cheapest large cap glove-maker. The sector could see a positive knee-jerk reaction to the new bird flu case in Hong Kong.


CB Industrial Product Holding RM3.55: Hold
Plantations take centre stage in 3Q10 Shariah-compliant

Results above, upgrade to Buy. 3Q10 recurring net profit of RM20m (+55% QoQ, +97% YoY) takes 9M10 net profit to RM45m (+65% YoY), 82% of our previous 2010 forecast. We raise earnings to reflect latest operating trends. CBIP now trades at just 5.5x 2011 earnings and 1sd below its mean PER - compellingly attractive in our view. We raise our target price to RM4.50 and upgrade the stock from 'Hold' to 'Buy'.


Technicals
The FBM KLCI fell 6.89 points to 1,496.65 yesterday. Due to the firm tone in the USA last night, we may see the FBM KLCI in a "gap-up" mode today too - with initial nibbling activities being trimmed today by pre-weekend profit-taking. Its resistance areas at 1,496 and 1,531 will cap market gains, whilst its weaker support areas are located at 1,487 and 1,495.


Other Local News
AirAsia: To open new Paris-KL route next year. AirAsia is flying to Paris, its second European destination after London, via its long-haul low fare affiliate AirAsia X. The four-times weekly direct flight will commence on Feb 14, 2011 between Paris-Orly International Airport and Kuala Lumpur International Airport's Low Cost Carrier Terminal (LCCT). The new route will be serviced by the Airbus A340 aircraft with a 327 passenger capacity, including 18 premium seats. (Source: The Edge Financial Daily)

Leong Hup, Emivest: Receive Rm426m takeover offer. Leong Hup Holding Bhd and Emivest Bhd have received a takeover offer totaling RM426m from a major shareholder, Emerging Glory Sdn Bhd, to acquire all their assets and liabilities. Leong Hup is a poultry and farming breeding firm while Emivest manufactures animal feed and feed additive premix in Malaysia and Vietnam This comes after the acquisition of Lay Hong Bhd by QL Resources Bhd, and suggests the industry is moving into a merger and acquisition mode. (Source: The Edge Financial Daily)

Alliance: Alliance Financial unit & AIA in tie-up. Alliance Financial Group Bhd's subsidiary Alliance Bank Malaysia Bhd has entered into an agreement with American International Assurance Bhd (AIA) to set up a joint-venture company, AIA AFG Takaful Bhd. Alliance Bank had a 30% stake in the joint venture to carry out family takaful business while AIA had 70%. It said the joint-venture company would be formed with an authorised capital of RM200m and paid-up capital of RM100m. The family takaful business is expected to begin operation in the first quarter of 2011. (Source: The Star)

IPO: XOX awaiting call. XOX Bhd is planning to raise about RM40m in its initial public offering (IPO), to be Malaysia's first full-fledged mobile virtual network operator (MVNO) listed on the local stock exchange. XOX targets the urban Chinese market and offers services through Celcom Axiata Bhd’s network. XoX has more than 250,000 customers, with customers spending an average of RM27 a month. (Source: Business Times)

Read more...

RHBInvest Research Highlights 21st October 2010

Top Story

Media:

• 9M10 print and tv adex up by 18.2% yoy
• Our Top pick is Media Prima (FV=RM2.75)
• We maintain Outperform call on Media Chinese (FV=RM1.21)
• Trading Buy call on Star (FV=RM4.34).
• Maintain Overweight for the sector.

Macro View

Economy:

• Leading index bounced back in Aug
• Pointing to resilient economic activities ahead.

Sector Call

Rubber Gloves:

• Still cautious on near-term outlook.
• Maintain Underperform call on Top Glove (FV=RM5.40)
• Market Perform call on Adventa (FV=RM2.47).
• As for Hartalega (FV=RM5.64), we downgrade our call to Market Perform.
• No change to our Neutral call on the sector.

Corporate Highlights

Puncak Niaga:

• Eyeing Hogenakkal water project in India .
• Fair value is RM3.01. Maintain Market Perform.

WCT:

• Secures RM1.36bn building job in Qatar and RM128m hospital project in Sabah .Fair value is raised to RM2.56 from RM2.30. Maintain Underperform.

Axis REIT:

• Quattro West started to contribute.
• Maintain Outperform call on Axis REIT with fair value of RM2.67.

BAT:

• Impact of less than 20’s ban cushioned by relaunch of Peter Stuyvesant.
• Fair value is thus raised to RM42.92 (from RM42.90 previously). Underperform.

Technical Highlights

Daily Trading Strategy:

• Recapturing the 10-day sma will renew upbeat sentiment.
• Further recovery to above the 10-day SMA today will attract further follow-through buying support in the near term.
• And once the recent high of 1,503.82 can be cleared, the short-term technical scenario will return to positive.
• On the downside, the solid medium-term support at 1,450 level and the 40-day SMA of 1,458 are expected to keep sellers at bay.

Daily Technical Watch: Alliance Financial Group

• Medium- to long-term uptrend remains largely intact.
• Immediate Support at RM3.10
• Immediate Resistance at RM3.30

Read more...

Views & News, Maybank IB (2010-10-21)

WCT RM3.11: Buy

Lands RM1.5b contracts Shariah-compliant

A much anticipated wait. Two newly secured jobs have lifted job wins for 2010-YTD to almost RM2.2b, and outstanding order book to RM4.3b, we estimate. The RM1.36b job in Qatar , one of the two wins, has been much anticipated. We retain our earnings forecasts for now, having imputed RM2b job wins for 2010. We remain positive on WCT benefiting further from major domestic infrastructure / construction spend. The stock remains our top pick in the construction sector.

Axis REIT RM2.18: Buy

Targets RM1.5b asset size by 2011 Shariah-compliant

Still a Buy. Axis REIT's (AXRB) 9M10 results were within expectations. Total asset size will increase to c.RM1.3b (+50% YoY) after 6 asset injections and revaluation gains. AXRB targets to hit a RM1.5b asset size by end-2011, which could enhance its earnings by 11%. We are raising our earnings forecasts by 6-32% to factor in the new assets worth RM260m. DCF-based TP is raised to RM2.60/sh.

The FBM KLCI was lower marginally by 1.87 points yesterday. Its resistance areas at 1,490 and 1,503 will cap market gains, whilst the support areas for the FBM KLCI are located at 1,469 and 1,486.

Local News

Construction: Contractors for LRT project to be shortlisted next month. Contractors shortlisted for the first phase of the RM7b light rail transit (LRT) extension will be announced by early next month said an industry source. The first phase of the extension or package A for both Kelana Jaya and Ampang Lines involved 9.2km and 7.39km of construction length respective. Syarikat Prasarana Negara Bhd held a pre-bid briefing with the pre-qualified contractors for package A on June 22. The contractors were requested to submit their tenders in August. It is understood the briefing was attended by 15 construction companies that included Sunway Construction Sdn Bhd, IJM Construction Sdn Bhd, Muhibbah Engineering Sdn Bhd, Gamuda Bhd, Bina Puri Holdings Bhd, Loh & Loh Corp Bhd and MRCB Engineering Sdn Bhd. (Source: The Star)

YTL Corp: Proposes gas-saving power technology. Power-giant YTL Corp Bhd hopes to submit a proposal to the Malaysian government to use a new technology which will save up to 20% of the gas used to generate power. MD Tan Sri Francis Yeoh said the use of the co-generation combined cycle technology at power plants would save government millions of ringgit spent on gas. "We have tried and tested this technology at our plant in Singapore and are more than willing to share this knowledge with Malaysia as well." "This 20% savings can translate to about RM400m in savings annually". (Source: The Star)

Property: PNB defends Warisan Merdeka project. Permodalan Nasional Bhd's (PNB) RM5b plan to redevelop the tract of land near Stadium Merdeka, which includes a 100-storey office block, is a move to diversify the investment group's asset portfolio, said its group CEO Tan Sri Hamad Kama Piah. He said PNB expects an annual return of 8% to 10% from the project, which he stressed was a well-thought investment decision. He also reiterated that PNB could finance the mega project solely from its profits. "We are not taking the government?s money (for the project)," he said. The new tower will cost RM2.5b to RM3b and is expected to be completed by 2015. (Source: The Edge Financial Daily)

Berjaya Corp: Granted vehicle manufacturing plant license. Berjaya Corp Bhd (BCorp) has been granted a manufacturing plant license by the International Trade and Industry Ministry (Miti) for the assembly of commercial vehicles, hybrid cars, electric cars and luxury passenger vehicles in Malaysia . The 100-acre plant would be based at Bukit Tagar, Selangor, the company told Bursa Malaysia yesterday. BCorp chairman and CEO Tan Sri Vincent Tan said in a statement that the manufacturing licence would provide the company with the opportunity to assemble commercial and passenger vehicles locally, giving it more flexibility and control in terms of quality and pricing of its vehicles. (Source: The Star)

Read more...

WCT eyes water concessions, expanding retail portfolio

WCT is eyeing water concessions, looking for the expansion existing retail and hotel portfolio. OSK fair value is at RM2.89 while TA put a target price (buy call) RM3.76.

Based on the weekly chart above, WCT is on the uptrend mode.

Read more...

WCT

WCT Weekly Chart 3rd April 2009

Volume traded recently on the WCT increased. RSI-14 weeks just quit from oversold area. Previous resistant already broken and and might goes higher and retest the 2nd resistant. The previous support seen at the RM0.925. WCT may increase in next week? We will see....

Read more...