RHBInvest Research

Top Story: Earnings Review –

Strategy Update

• The External headwinds; rising cost and margin pressures on earnings
• Overall, it has resulted in a downgrade of our 2011 EPS projection for the FBM KLCI to 12.6%, vs. +16.3% two months ago. Whilst this suggests a downward revision to our end-2011 FBM KLCI target of 1,700, we are inclined to maintain it at this juncture given that it is still supported by bottom-up valuation methodology.
• We expect the market to go through a bumpy ride in the immediate term .Nevertheless, beyond the short-term volatility, we believe there is still room for the market to move higher in the 2H of the year.
• The current market weakness may persist into the 2Q, we believe market conditions would likely improve from the 2H as investors look forward to a brighter economic prospect in 2012. We reiterate our view that any market pullback would present an opportunity for investors to accumulate fundamentally-robust stocks on weakness as value re-emerges.

Corporate Highlights

MAS: Underperform

• Briefing Note
• Growing yields the priority in FY11
• Fair value is RM1.91. Maintain Underperform.

First Resources: Outperform

• 4QFY10 Results/Briefing Note
• A record year in 2010, with more to come
• Our fair value is reduced slightly to S$1.65 (from S$1.75).

Proton: Underperform

• News Update
• MOU with Nissan
• Maintain Underperform call and RM4.00 fair value for now pending the outcome of the MoU. Costs and expenses from the Lotus Turnaround Plan will continue to cloud Proton’s medium-term earnings prospects.

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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.

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