Maybank IB Views

US Economy
Blast from the (distant & recent) past

Waiting for Bernanke's speech at the Federal Reserve Annual Symposium...Low expectations of an announcement or hint of a third round of asset purchase programme (QE3) with a more likely outcome to be a complement to the FOMC announcement on 9 August to keep the 0%-0.25% federal fund rate until mid-2013 with the same commitment to maintain the current size of Fed's balance sheet.

Malaysia
2Q 2011 Balance of Payments

FDI net inflows in 1H 2011 after four consecutive years of net outflows. Portfolio investment net inflows surged to RM48.055b in 2Q 2011 (1Q 2011: RM8.375b) and to RM56.430b in 1H 2011 (1H 2010: RM26.684b). Sustained current account surplus of RM23.397b in 2Q 2011 (1Q 2011: RM25.894b) and RM49.292b in 1H 2011 (1H 2010: RM44.082b).

RESULTS REVIEW
Maxis RM5.40: Hold
A defensive proposition Shariah-compliant

Hold maintained. 1H11 results were decent but marginally below expectations at 45% of our full-year forecast and consensus, the miss primarily being slower-than-expected voice revenue growth, though this is expected to pick up in the 2H. Positively, margins were preserved. Maxis provides for defensive yields but the extent of margin erosion from the launch of its home broadband services remains an uncertainty to earnings. Our DCF-derived TP of RM5.50 is maintained on WACC of 7.5% and 1% terminal growth assumptions.


Sunway Bhd RM2.29: Buy
One-off costs hit earnings

Below expectations. Sunway's 1H11 RM132m core net profit accounted for 40% of our and consensus full-year estimates. We lower our 2011-13 earnings forecasts by 9-15% and RNAV-based TP to RM3.78 (-7sen). Sunway continues to trade at a steep 40% discount to our RNAV. Buy. Positive re-rating catalysts include potential MRT job wins. During times of uncertainties, stable rental/dividend/manager fees from investment properties would provide the cushion to its earnings.

AEON Co. (M) RM6.95: Buy
The Bandar Utama impact

Weaker 1H within expectation. 1H11 recurring net profit of RM64.5m, after excluding the fire insurance proceeds of RM10.9m received in 1Q11, was 36% of our full-year forecast and consensus. We look to a stronger 2H with renewed contributions from renovated Jusco Bandar Utama (JBU). Our Buy call and RM7.90 TP are maintained.

BIMB Holdings RM2.00: Buy
Still as liquid as ever

Buy maintained. What BIMB continues to offer is a turnaround story of what is now a well-capitalized commercial bank (15.6% core capital ratio) with a very liquid balance sheet (net financing/deposit ratio of just 54%), a well-managed and profitable composite insurance outfit as well as a potential M&A story, given the possibility of shareholding changes. Our Buy call is maintained with a SOP-derived target price of RM2.40.

Carlsberg Brewery (M) RM6.85: Buy
The desired taste

16.5% YoY growth in 1H11 net profit to RM80m, which was 52% of our and consensus full-year forecasts. Results were within our expectation and we maintain our Buy call on the stock while our RM8.00 TP is unchanged. Valuations are decent at current levels, with the stock trading at a prospective 2012 PER of 12.9x against a historical mean of 16.7x, with gross yields of 4.9%. Near term, however, we expect sentiment toward the stock be cautious ahead of Budget 2012 with uncertainties over possibly higher duties.

Media Chinese International Limited RM1.14: Hold
Paper cuts from higher newsprint prices Shariah-compliant

Higher newsprint prices and slower adex growth looms. Media Chinese International Limited's (MCIL) 1QFY12 results were within expectations. That said, higher newsprint prices have had an adverse impact on earnings. Furthermore, we understand that adex growth will decelerate further into 2HFY12. We trim our FY12-14 earnings estimates by 2%-6% and TP from RM1.40 to RM1.14 (-19%).

Sarawak Oil Palms RM4.20: Buy
Too good to ignore Shariah-compliant

Explosive 2Q. SOP's RM69m 2Q11 net profit (+132% YoY; +24% QoQ) exceeded our and market expectations, boosted by high FFB production and low all-in cost of production. We raised our 2011 earnings by 6% and reiterate our Buy call with unchanged RM6.80 TP (13x 2012 PER). With 42.5% of estates still immature, SOP offers robust 16% 3-year CAGR in FFB production, 21% 3-year CAGR EPS, and yet trades at 8x 2012 PER. Its traded EV/planted ha of RM32,000 is cheap relative to recently transacted prices exceeding RM50,000/ha.

Wah Seong Corporation RM2.14: Buy
In line; orders set to kick-in Shariah-compliant

Maintain Buy. 1H11 results tracked expectations despite a weaker QoQ performance. We retain our forecasts and anticipate more new contracts in 2H. WSC remains a Buy with a RM3.10 target price (14x 2012 EPS). The stock now trades at just 10x one-year forward PER, one standard deviation below mean, which we think, underscores its near-term job wins and earnings potential. Meanwhile, the board has decided to delay Wasco’s listing exercise, citing weak market condition.

Hock Seng Lee RM1.48: Buy
Constructive growth Shariah-compliant

On track for 23% full-year growth. 1H11 net profit of RM38.6m (+22% YoY) met 43% of our full-year forecast and 42% of consensus. We expect a stronger 2H, leading to a sizeable 23% expansion in core net profit for 2011. We remain positive on HSL benefiting from the expected strong work flows in Sarawak. We reiterate our Buy call with a RM2.30 target price based on 12x multiple on 2012 earnings.

CB Industrial Product RM3.84:Buy
Catalyst from cash Shariah-compliant

Maintain Buy. CBIP's RM24m 2Q11 net profit (+86% YoY; 9.7% QoQ) brings 1H11 net profit to RM46m (+84% YoY), within our expectation but ahead of consensus. Its recent strategic proposed disposal of two plantation subsidiaries for RM268m cash could add 9.5% to our present TP. Future plans to utilize disposal proceeds also act as a catalyst to share price. We maintain our forecasts and TP of RM4.75 based on 7x 2011 EPS pending further clarity on cash utilisation. Still a Buy.

Eastern Pacific Industrial Corp RM3.05: Accept Offer
Inline; just awaiting GO completion Shariah-compliant

1H earnings inline; GO determines the price now. 1H11 net profit of RM27m was in-line at 49% of our full year forecast. In-light of the impending Mandatory General Offer (MGO), no dividend was declared. We maintain our Hold call and leave our RM3.10 TP unchanged, pegged at the RM3.10 offer price, implying 1.6% upside.

Technicals
The FBM KLCI fell 4.41 points to close at the 1,464.74 yesterday. Its resistance areas of 1,464 and 1,488 will cap market gains, whilst the weaker support areas are located at 1,423 and 1,454. Due to the US markets’ weaker tone last night; we will see a softer for the local bourse today. Some pre-Hari Raya holiday liquidation activities may persist to depress the markets’ rebound from its recent 1,423.47 low.

Trading idea is a Take Profit call on Axiata.

Other Local News
MAS: New managing director found? It is learned that the executive committee decided on the new MD after a meeting yesterday. Ahmad Jauhari Yahya, the former CEO of power producer Malakoff Bhd, has been offered the job to lead the embattled national airline. (Source: Business Times)

Megasteel: Dissapointed with Miti’s decision. Megasteel Sdn Bhd says its disappointed that the Ministry of International Trade and Industry (Miti) has decided against implementing the 35% safeguard duty on the import of hot-rolled coil (HRC) the steel giant had petitioned for in June. (Source: The Edge Financial Daily)

SDB: To launch RM1b projects in next 12 months. Selangor Dredging Bhd (SDB) has in its pipeline property launches worth almost RM1b in GDV in Malaysia and Singapore by the end of 2012. The group expects contribution from Singapore to be at par with Malaysia’s in two years. (Source: The Edge Financial Daily)

LTKM: Counts on it recession proof sector. LTKM Bhd is planning to maintain its current level of egg production, as it looked to capitalise on the recession-proof nature its business. LTKM currently produces an average of 1.4m eggs per day. (Source: The Edge Financial Daily)

Read more...

Stocks to watch: CIMB, Mudajaya, AirAsia, MAS

KUALA LUMPUR: CIMB Group Holdings Bhd will be among the heavyweights stocks to watch on Wednesday, Aug 24 following the release of its second quarter results which was a record.

Other stocks which could be in focus are MUDAJAYA GROUP BHD [], Axiata Group Bhd and also airlines AIRASIA BHD [] and MALAYSIAN AIRLINE SYSTEM BHD [], which reported a sharp difference in results.

Oil and gas companies would continue to see interest, including pipe manufacturers Wah Seong Corp Bhd following plans for a 200km pipeline off Terengganu.

CIMB’s earnings rose 9.1% to a record RM970 million in the 2Q ended June 30 from RM889 million a year ago, underpinned by the local consumer banking operations and continued high growth at CIMB Niaga. Its earnings rose 5.8% from 1Q.

For the first half, its net profit rose 9.3% to RM1.887 billion which was equivalent to net earnings per share (EPS) of 25.4 sen.

Mudajaya could see strong trading interest after a 11.2% increase in earnings of RM60.29 million in 2Q from RM54.22 million a year ago, mainly due to more activities. Revenue increased by 70.6% to RM356.11 million from RM208.63 million.

Mudajaya declared a second interim single tier dividend of 12.5% or 2.5 sen per share of 20 sen each.

Axiata's net profit rose 14.94% to RM663.05 million in 2Q from RM576.82 million a year ago, mainly due to higher contribution from XL, Idea and Multinet, as well as lower depreciation, amortisation and impairment charges.

Revenue rose to RM4.05 billion from RM3.85 billion. Earnings per share were 8.0 sen compared with 7.0 sen. It declared an interim tax exempt dividend of 4.0 sen per share for FY ending Dec 31, 2011.

However, net profit fell 19% to RM1.21 billion in the first half from RM1.49 billion a year ago. Revenue increased by 4.2% to RM7.99 billion from RM7.66 billion.

AirAsia reported earnings of RM104.25 million in the second quarter ended June 30, 2011 as its operations were affected by higher fuel costs, which rose 31%.

Earnings fell 47.5% from the RM298.93 million a year ago. It declared its maiden dividend of 3.0 sen a share. The low-cost carrier said fuel costs increased by 31% to an average US$140 per barrel from US$106 a year ago.

MAS’ net loss for the second quarter ended June 30, 2011 narrowed to RM526.68 million compared with net loss of RM534.73 million a year ago as it continued to be impacted by the high fuel prices.

Its revenue was RM3.485 billion compared with RM3.213 billion a year ago. Loss per share was 15.76 sen compared with 16 sen. Its derivatives loss was lower at RM56.08 million, a sharp decline from the RM217.16 million a year ago.

However, for the six months ended June 30, MAS’ net loss widened substantially to RM769.02 million from net loss RM224.68 million in 2010.

Petroliam Nasional Bhd and its production sharing partners are embarking on a RM15 billion project to extract gas from fields off Peninsular Malaysia which includes a new 200km pipeline.

Petronas said the project comprises nine discovered gas fields within Blocks PM301 and PM302 and in the Bergading contract area, about 300km off the coast of the peninsula. “It will also involve the development of a new 200km pipeline to transport gas from the fields to Kerteh, Terengganu. The project is estimated to cost RM15 billion,” it said.

IJM Land Bhd expects local property market to remain resilient this year, underpinned by stronger demand as younger people were also buying property.

IJM Land's current unbilled sales is just over RM1 billion which would last the group two years. It plans to launch RM2 billion worth of projects in FY2012.

DIGISTAR CORPORATION BHD []’s net proft surged 425% to RM6 million from RM1.14 million a year ago and expected the momentum to continue into the next quarter as it expands its customer base in the provision of IPTV services to hospitals. Revenue slipped 30.9% to RM24.85 million from RM35.98 million. Earnings per share were 2.88 sen compared with 0.62 sen.

For the first half ended June 30, Digistar's net profit jumped 616% to RM15.02 million from RM2.09 million while revenue increased 15.5% to RM75.99 million from RM65.75 million.

Al-'Aqar KPJ REIT reported earnings of RM11.03 million in the second quarter ended June 30, 2011, which was just 0.8% higher that the RM10.94 million a year ago. Revenue rose 14.1% to RM19.82 million from RM17.21 million while earnings per share were 1.90 sen compared with 1.89 sen.

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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)

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RHBInvest Research

Top Story : KFC

Visit Note
Toning down Malaysia ’s store openings
Fair value is reduced slightly to RM3.78 (from RM3.85).We downgrade our call on the stock to Underperform.

Corporate Highlights

Kencana:

News Update
Securing Kebabangan’s substructure EPC works. The contract is expected to be delivered to KPOC within the 3QCY12.
Our fair value of RM3.50 is unchanged and implies an upside of 30.6% to the current share price. Maintain Outperform.

Wah Seong:

News Update
The company has entered into JVs with companies controlled by Insituform Technologies for a consideration of US$1k (RM3k).
We are positive on the turn of events as it has been Wah Seong’s long-standing aim to enter the “Deepwater Golden Triangle” (i.e. Gulf of Mexico , Brazil and West Africa ). There was no guidance on capex for this venture, but we note that the previous deepwater facility cost around US$20m (RM61m).
Maintain Underperform and fair value of RM2.02/share until the company starts to secure actual wins.

CIMB:

Company Update
CIMB Niaga’s 1QFY11 net profit rises 39% yoy
No change to forecasts. Fair value of RM9.80and Outperform call maintained.

MPI:

3QFY11 Results
Hurt by stronger RM and higher costs
Our fair value is reduced to RM4.95/share. We downgrade our call on the stock to Underperform (from market perform).

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Maybank IB Views

SECTOR UPDATE
Oil & Gas: Overweight
ODS-Petrodata's perspective

Broad-based views. ODS-Petrodata expects an improved outlook for the offshore fabricators and shipyard operators in 2011. The vessel market remains in an overbuilt state but charter rates have hit rock bottom. Management believes the overall recovery is progressing but the volatile oil price is a concern. We are of the same opinion. We remain Buyers of Dialog, KNM, Kencana, PGas, SapCrest and Wah Seong. We are placing Alam, Petra Perdana and TOFF (all presently Sell calls) under review as we re-assess the vessel market outlook.

ECONOMICS
External Trade, February 2011
Exports beat street but "Japan factor" looms on the road ahead...

Exports growth in Feb' 11 surprised on the upside as it grew by +10.7% YoY (revised Jan ‘11: +4.6 YoY; Maybank IB: +1.8%) while imports sustained double-digit growth as it rose by +11.5% YoY (Jan ’11: +13.5% YoY; Maybank IB: +13.7% YoY). MoM, exports and imports contracted by -5.5% and -12.6% respectively as the short working month effect was amplified by Chinese New Year holidays. For the first two months of 2011, exports and imports gained by +7.5% YoY and +12.6% YoY respectively vs. 27.6% YoY and 29.5% YoY in Jan-Feb 2010. No change in our full-year forecasts i.e. 8.3% export growth, 8.9% import growth and RM122.6b trade surplus.

Technicals
The FBM KLCI closed lower by 2.41 points to 1,553.07 yesterday. Its resistance areas of 1,556 and 1,576 will cap market gains, whilst the obvious support areas are located at 1,529 and 1,554.

Trading idea for today is a Buy call on MHC.

Other Local News
Maxis: To raise non-voice revenue to 50% by 2012. Maxis Bhd aims to raise its non-voice revenue to 50% next year from 41.5% currently boosted by the launch of the Maxis Integrated Partner in Education (MIPE) programme. (Source: The Edge Financial Daily)

TM: Gets SC nod to raise up to RM2b. Telekom Malaysia Bhd (TM) has received approval from the SC to raise up to RM2b via commercial papers and medium term note programmes to meet capital expenditure requirements. (Source: Bursa Malaysia)

Pos: Khazanah board to meet this week on Pos. Khazanah Nasional Bhd's nine-member board is scheduled to meet this week to finalise bids made for Pos Malaysia. (Source: Business Times)

Press Metal: Plans expansion. Press Metal Bhd proposed the phase-2 expansion of its aluminium smelting operation that would be located at the new Samalaju Industrial Park, Bintulu, Sarawak. (Source: Bursa Malaysia)

Iskandar: Two probes into Iskandar Investment last year. There were two separate probes done within Iskandar Investment Bhd (IIB) last year following complaints of how contracts were awarded. The investigations found cases of mismanagement, criminal breach of trust, procedures that were not followed and leaks of confidential information. (Source: Business Times)

Banking: Market to dictate number of banks. The market will determine the number of banks in the country, which are currently well-capitalised. Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said banks have reached a "minimum size and are well-capitalised with quality capital that has enabled them to take advantage of economies of scale". (Source: The Star)

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Maybank IB Views

Gamuda RM3.79: Buy
Earnings uptrend intact Shariah-compliant

Above our expectations. 1HFY11 results included a RM16m positive accounting adjustment at SPLASH post-IC12 implementation, which was not reflected in our forecast. RM183m net profit (+20% YoY) made up 51% of our pre-revision RM355m full-year forecast. We raise our FY11-13 net profit forecasts by 8-9% p.a. to reflect this adjustment. Being non-cash in nature, our DCF valuation for SPLASH is unchanged and this too, has no impact on our RM4.45 RNAV-based target price for Gamuda. The stock remains our top pick in construction. Maintain Buy.

Technicals
The FBM KLCI rose marginally by 1.87 points to 1,513.84 yesterday. Its resistance areas of 1,515 and 1,529 will cap market gains, whilst the obvious support areas are located at 1,497 and 1,513. Due to the DJIA’s rebound tone last night, we will see the FBM KLCI in a slightly firmer mode today.

Daily Trading idea is a Short-Term Buy call on PCHEM.

Other Local News
Wah Seong: To make fans, blowers. Wah Seong Corp Bhd will set up a joint venture with PT Agrindo Prima Lestari (PTA) to manufacture industrial fans and blowers for the palm oil industry and other industries utilizing similar products in Indonesia. (Source: Bursa Malaysia)

SEGi: Plans 50% dividend payout. SEG International Bhd (SEGi) has announced a dividend policy to distribute a minimum of 50% of its group net profit to shareholders with effect from the financial year ending Dec 31, 2011. (Source: The Edge Financial Daily)

Transmile: Gets RM200m from aircraft sale. Transmile Group Bhd has completed the disposal of four of its aircraft to Federal Express Corp for USD67m (RM200m), paving way for the company to pare down its long term borrowings that totaled RM531.6m as at Dec 31, 2010. (Source: The Edge Financial Daily)

Autos: Toyota to restart hybrid vehicle output in Japan. Toyota Motor Corp would restart production of three hybrid models (Prius, Lexus HS250h and CT200h) on Monday after a massive earthquake this month disrupted output across the industry. (Source: The Edge Financial Daily)

SCORE: Nine companies investing RM20b in Score so far. Nine companies have to date confirmed investments totalling RM20b in the Sarawak Corridor of Renewable Energy (Score). This does not include the RM2b investment by a Taiwanese company in the halal industry hub. (Source: The Star)

Plantation: 'Abolish windfall tax' call. Four national oil palm associations which represents over 80% of the country's oil palm fraternity has submitted a joint memorandum to the Prime Minister, urging the Government to seriously re-consider abolishing or reviewing the imposed crude palm oil (CPO) windfall profit tax (WPT) for the sector. (Source: The Star)

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Maybank IB Views

SECTOR UPDATE
Oil & Gas: Overweight
East Coast Spotlight; WSC raised to Buy

5 companies, 2 states, 1 objective. We visited 5 oil & gas and chemical companies based in Terengganu and Pahang last week to track their respective development and progress. We covered Petronas Gas, Petronas Chemicals and Eastern Pacific Industrial Corp (EPIC) in Kerteh and Kemaman (both in Terengganu) and visited Wah Seong and KNM's operations in Gebeng (in Pahang). Wah Seong is now a Buy on improving prospects for its pipe coating operations.

Technicals
The FBM KLCI fell 0.27 points yesterday to close at 1,495.35. Its resistance areas of 1,495 and 1,529 will cap market gains, whilst the obvious support areas are located at 1,474 and 1,493.

Trading idea for today is a Buy call on MEDIAC.

Other Local News
SP Setia: More medium-cost apartments in Setia Alam. SP Setia Bhd plans to launch at least another 300 units of medium cost apartments in its Setia Alam township in the near future to benefit from the government's "My First Home Scheme". (Source: The Edge Financial Daily)

TM: Unit gets a further 10-year concession deal on Menara KL. Telekom Malaysia Bhd's (TM) subsidiary Menara Kuala Lumpur Sdn Bhd (MKLSB) has signed a 10-year concession agreement worth RM50m with the Government. (Source: Bursa Malaysia)

TDM: To build private specialist hospital in Kuantan. Terengganu Development Management (TDM) Bhd will build a RM120m private specialist hospital in Kuantan. The construction is expected to be completed by next year. (Source: The Edge Financial Daily)

Cocoaland: Buys Rawang land. Cocoaland Holdings Bhd is acquiring two pieces of industrial land in Rawang for RM7.85m from Riviera Properties Sdn Bhd. The lands are acquired for the construction of a factory and warehouse. (Source: Bursa Malaysia)

George Kent: To invest up to RM100m to expand ops. George Kent (M) Bhd plans to invest up to RM100m in the next three to four years to expand its meter and original equipment manufacturing (OEM) businesses. (Source: The Star)

APFT: Public subscription over subscribed. APFT Bhd's 15m shares allocated for public subscription has been oversubscribed by 12x. The company will be listed on the Main Market of Bursa Malaysia on March 18. (Source: The Star)

Benalec: Gets Melaka reclamation works. Benalec Holdings Bhd has entered into an agreement with Yayasan DMDI (DMDI) to undertake reclamation works at the coast of Kawasan Kota Laksamana in Bandar Melaka. (Source: Bursa Malaysia)

Property: Axis Global REIT IPO priced at RM1-RM1.05. The IPO of Malaysia's Axis Global Industrial REIT has set an indicative price range of RM1-RM1.05 a unit. The share base of about 2b units prices the IPO between RM2b-2.1b, will make it the second largest REIT in Malaysia after Sunway REIT's RM2.4b IPO last year. (Source: The Edge Financial Daily)

Plantation: Only 10 biodiesel plants operating. The government has issued 60 biodiesel manufacturing licences as at end-February 2011 but only less than one fifth has started production. This is due to the lack of demand for biodiesel exports and high palm oil prices in the 2H10. (Source: Business Times)

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RHBInvest Research Sector Call

Sector Call

Oil & Gas: Petronas 3QFY11 Results
Overweight

Petronas Chemicals: Fair value at RM7.27
Outperform

Dialog: Fair value at RM2.82
Outperform

Petronas Gas: Fair value at RM13.76 Outperform

SapuraCrest: Fair value at RM4.37 Outperform

KNM: Fair value at RM3.45 Outperform
RH Petrogas: Fair value at S$1.55
Outperform

Dayang: Fair value at RM2.60 Outperform

Petra Perdana: Fair value at RM1.16

• Outperform

Kencana: Fair value at RM2.85

• Market Perform
  

Wah Seong: Fair value at RM2.0

• Underperform
• Maintain Overweight as we expect the domestic sector to remain vibrant.

Corporate Highlights

SP Setia: Outperform

• Showing presence in Cyberjaya
• Maintain Outperform. However, in view of the prevailing weakening equity market sentiment, we take a more prudent valuation and lower our fair value to RM7.30.

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RHBInvest Research

Top Story

YTL Power –Market Perform (up from UP)

• Visit Note
• More to come from “Yes”. Expect two new Yes devices in Mar when YTL Comms launches the Samsung Buzz mobile phone (mobile voice and SMS) and the Zoom router (enabling and sharing an Internet connection within a premise).
• Raised our SOP-derived fair value on YLTP from RM2.20 to RM2.57.
• YTLP offers investors attractive gross dividend yields of around 7% p.a..

Corporate Highlights

CIMB: Outperform

Company Update

• CIMB Niaga posts strong finish to FY2010
• No change to forecasts. Fair value of RM9.80 and Outperform call maintained.

MBM: Outperform

• 4QFY10 Results
• Slower growth ahead
• No significant changes to forecasts. Outperform call retained on valuation grounds.
• FV lowered to RM3.95 (from RM4.96).

CSC Steel: Outperform

• 4QFY10 Results
• Weak 4QFY10 due to margin contraction
• We continue to like CSC Steel due to its undemanding valuations, strong balance sheet with a net cash of RM241.4m or 64sen/share (after 13sen dividend payout), and attractive dividend yield.
• Indicative fair value is reduced to RM2.01.

Daibochi: Market Perform

• 4QFY10 Results
• Full-year FY10 net profit of RM18.2m (-19.6% yoy) was within expectations
• For 2011, we believe Daibochi will continue to grow its revenues as it did in 2010 (+20.7% yoy) through continuous product innovations in both F&B and non-F&B segments.
• Our fair value is unchanged at RM2.95

Wah Seong: Underperform

• 4QFY10 Results
• FY10 weak but within expectation
• FY11 will be a better year for earnings as both the pipe-coating and engineering divisions have already started to post improvements in 4QFY10. Current order book and tender book stand at RM1.4bn and RM5.7bn respectively, with the pipe-coating division contributing about 50% to both numbers.
• Maintain forecasts, Underperform call and our RM2.02/share fair value at this juncture.

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RHBInvest Research

Top Story

• The spike in volume and value of trades indicates that there is still ample liquidity in the market.
• Expect continued anticipation in terms of news flow for new projects, contracts, M&A. However, focus will shift more to actual award of contracts or projects, as well as to delivery and execution, potentially causing disappointment.
• The news flow for some sectors (in particular the oil & gas sector) appears to be going strong, and will continue to be the catalyst in the near term.
• In our view, the market will remain a trading market as we believe share prices cannot veer too far from fundamental valuations.

Sector Call


Plantation:

• 2010 production a disappointment, what of 2011?
  
• Should there be another disappointment in production in 2011, CPO prices could potentially remain at high levels of above RM3,500/tonne for the entire year.
• We maintain our CPO price assumptions at RM3,100/tonne for 2011 and RM2,900/tonne for 2012.
• No change to our Overweight rating on the sector

Oil & Gas:

Dialog:

• Fair value raised to RM2.82
• Outperform

Sapuracrest:

• Fair value maintained at RM3.86 Outperform

KNM:

• Fair value maintained at RM3.78 Outperform

Dayang:

• Fair value maintained at RM3.36 Outperform

Petronas Gas:

• Fair value maintained at RM13.51 Outperform

Kencana:

• Fair value raised slightly to RM2.89
• Market Perform (Down from OP)

Petra Perdana:

• Fair value raised to RM1.29 using P/NTA methodology
• Market Perform (Up from UP)

Wah Seong:

• Fair value maintained at RM2.02
• Market Perform

We are reiterating out Overweight call on the sector.


Corporate Highlights

PLUS: Underperform (down from TB)

• It all ends with a whimper.
• With the latest news, it is now very likely that UEM-EPF will stick to their existing RM4.60 offer. With no firm competing bids, UEM-EPF has no compelling reason to raise their offer.
• PLUS yesterday confirmed only UEM-EPF remitted the RM50m cash deposit.
• We downgrade PLUS from Trading Buy to Underperform with a fair value of RM4.60 (previously RM5.20) to reflect the offer price by UEM-EPF.

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Maybank IB Views

Wah Seong: Disposal of shares in Drilbits and Driltools. Wah Seong disposed its 60% equity stakes in Drilbits International Private Limited (DrilBits) and Driltools International FZCO (Driltools) for USD2.7m (RM8.4m) and USD4.8m (RM14.9m) cash respectively. This Proposed Disposals of DrilBits and DrilTools are part of the WSC Group's strategy to streamline and rationalise its core businesses and to divest non-core business. DrilBits is principally involved in manufacturing and trading of oilfield tools and equipment while Driltools is in marketing and provision of oilfield and water well supplies and services related to the oil and gas industry. (Source: Bursa Malaysia)

CIMB: Completes restructuring of Thai unit’s NPL. CIMB Group Holdings Bhd. has completed the restructuring of non-performing loans (NPLs) under the 93.15%-owned subsidiary CIMB Thai Bank plc. The restructuring involved the transfer of CIMB Thai's 2.5m shares held in Sathorn Asset Management Co Ltd for RM23.5m to a wholly-owned subsidiary of CIMB Group, Mutiara Makmur Ventures Sdn. Bhd. as well as the transfer of NPL portfolio of RM297.9m from CIMB Thai to Sathorn for RM297.9m cash. (Source: Bursa Malaysia)

Hartalega: Allegations cost company millions. Hartalega Holdings Bhd, said allegations against the company had caused damages running into "millions of ringgit". The allegations that were related to environmental concerns over its operations in Bestari Jaya, Ijok had come despite its total compliance with all regulations. (Source: The Edge Financial Daily)

PLUS: Jelas Ulung not planning to seek extension for concession. Jelas Ulung Sdn Bhd is not planning on asking the Government for an extension of PLUS Expressways Bhd's tolled-highway concessions post-2038 in its proposal to take over the company. Jelas Ulung believed that its business model works well within the concession period until 2038, as it would have realized its investment by then. (Source: The Star)

Sime Darby: To build bioethanol demo plant in S'gor. Sime Darby Plantation Sdn Bhd will construct and operate a bioethanol demonstration plant in collaboration with Mitsui Engineering Shipbuilding Co Ltd. The plant that would be built at Bestari Jaya, Selangor, will be able to convert oil palm empty fruit bunches (EFB) into bioethanol. (Source: The Edge Financial Daily)

MSC: Secondary listing approved. Shareholders of Malaysia Smelting Corp Bhd (MSC) has approved the secondary listing of the company on the main board of the Singapore Exchange Securities Trading Ltd (SGX-ST). MSC plans to list on the Singapore stock exchange by end of January 2011. (Source: The Edge Financial Daily)

Construction: Benalec targets regional growth. Integrated marine construction firm Benalec Holdings Bhd, en route to list on the local bourse on Jan 17 next year, is gearing up for regional expansion while looking to increase its strength in Malaysia. Benalec will focus on larger-scale marine construction projects and plans to diversify the geographical locations of its projects to Penang. Benalec is eyeing the land-reclamation work for the 24-km long Penang Second Bridge project. (Source: The Edge Financial Daily).

O&G: Petronas gets invite from Bangladesh. Bangladesh has invited some of the world's leading state-owned gas giants to help explore its Chittagong hill tracts region. The companies invited encompass Petronas, Gazprom of Russia, CNOOC of China, PTTEP of Thailand and ONGC of India. (Source: Business Times)

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RHB Invest Highlights

Top Story

Oil & Gas:
More room for growth?

• Dialog: Fair value raised to RM1.94. Outperform (up from MP)
• Sapuracrest: Fair value raised to RM3.34. Outperform
• Kencana: Fair value raised to RM2.60. Outperform
• KNM: Fair value maintained at RM0.58. Outperform
• Dayang: Fair value maintained at RM3.86. Outperform
• Petronas Gas: Fair value maintained at RM13.51. Outperform
• Wah Seong: Fair value maintained at RM2.21. Market Perform
• Petra Perdana: Fair value maintained at RM0.44. Underperform
• We upgrade our call on the market to Overweight (from neutral previously).
• Our top pick at this juncture is Kencana, while our longer-term pick is Dialog.

Corporate Highlights

Allianz:

• On track to meet our full-year forecast.
• Maintain Outperform with fair value of RM5.34.
  

KFC:

• Another offer to buy QSR; KFCH could be privatized.
• We maintain our fair value for KFC at RM3.85.
• We also maintain our Underperform call, pending further developments.

MISC:

• Acquisition of VTTI completed, minor news flow from the LNG segment expected
• Indicative fair value is RM8.14. Maintain Underperform.

Technical Highlights


Daily Trading Strategy:

• Removing the 10-day SMA will boost sentiment.
• If the FBM KLCI is still unable to penetrate the 10-day SMA today and the daily turnover fails to improve from the current 1.0bn shares mark, selling activities may increase ahead of the weekend.
• In contrast, a removal of the 10-day SMA with a higher daily trading volume will likely boost the short-term trading sentiment, in our view.
• Nonetheless, the speculative interests are expected to drive share prices on the mid to lower-cap stocks, while mild profit-taking activities on the core defensive heavyweights may continue.
  

Daily Technical Watch: KNM Group

• Follow-through buying support if it surpasses RM0.50 soon.
• Immediate Support at RM0.44
• Immediate Resistance at RM0.50Top Story

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RHBInvest Research Highlights 02nd November 2010

Top Story

China Plays:

• Customer, supplier, partner.
• Our China picks are Parkson, Unisem, KLK, and ILB.

Sector Call

O&G:

• Sector Riding On Positive News Flow and “Hot Money”
• We maintain our Neutral stance on the sector.

Sector Update:

• Dialog: Fair value raised to RM1.47. Outperform
• Dayang Enterprise: Fair value raised RM3.01.Outperform
• Sapuracrest: Fair value raised to RM2.97.Outperform
• Petronas Gas: Fair value raised to RM13.51.Outperform
• Kencana: Fair value raised to RM2.03.Market Perform
• Wah Seong: Fair value maintained at RM2.21.Market Perform

Semiconductor:

• Chip sales up stronger moo but continues to narrow yoy
• Remain cautious on the sector and reiterate our Neutral call

Corporate Highlights

MAHB:

• Racing to be the Asean hub: MAHB vs. AOT .
• Fair value remains unchanged at RM7.72. Outperform

KFC:

• Acquisition of four companies from JCorp.
• Fair value is RM3.85.Trading Buy call on the stock.

Technical Highlights

• Daily Trading Strategy:
• Cautious sentiment to continue.
• Positively, we keep our bullish projection based on the Fibonacci Projection method at 1,668 for the medium term.
• Outcome of the US FOMC meeting, the US mid-term election and the local by-elections in Kelantan and Sabah this week remain the key potential issues

Daily Technical Watch: Dialog:

• Revisiting UTL near RM1.30 to reassess Monday’s breakout momentum.
• Immediate Support at RM1.30
• Immediate Resistance at RM1.50

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RHBInvest Research Highlights 25th October 2010

Top Story

QL:

• Expansions to start contributing from FY12 onwards.
• Fair value is RM5.50. Maintain Outperform.

Corporate Highlights

Wah Seong:

• Gladstone/Curtis LNG projects gets environmental green light
• Market Perform while our fair value is raised to RM2.21

Hunza Properties:

• Headline net profit skewed by EIs.
• Fair value is RM1.58. Maintain our Market Perform call.

Technical Highlights

Daily Trading Strategy:

• Short-term outlook remains optimistic.
• FBM KLCI may risk more profit-taking activities in the immediate term.
• Investors should view this as an opportunity to collect value stocks for further positive push ahead.
• FBM KLCI is expected to retest the 1,500 psychological level and the recent high of 1,503.82 soon.
• Beyond that, sentiment will turn even more bullish and it will lift the index towards the all-time high of 1,524.69 next.

Daily Technical Watch: TSH Resources

• Uptrend is likely to be maintained going forward.
• Immediate Support at RM2.17
• Immediate Resistance at RM2.58

Weekly Trading Idea: LBS Bina

• Removing the recent high will spell more rallies ahead.
• Strategy: Bargain Buy for a breakout of RM0.64 soon.
• Immediate Resistance at RM0.64
• Immediate Support at RM0.52
• Exit: Cut loss if it falls below the 10-day SMA near RM0.57

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