Gamuda 4Q net profit down 38.3% at RM43.29m

Gamuda 4Q net profit down 38.3% at RM43.29m: "

Written by Joseph Chin
Tuesday, 29 September 2009 18:27

KUALA LUMPUR: GAMUDA BHD []'s net profit fell 38.3% to RM43.29 million in the fourth quarter ended July 31 compared with RM70.2 million a year ago due to sharply higher operating expenses.

Gamuda said on Tuesday, Sept 29 that revenue however rose 10.68% to RM942.24 million from RM851.3 million. Earnings per share were 2.16 sen compared with 3.50 sen.

For the financial year ended July 31, its net profit fell 40.4% to RM193.69 million from RM325.07 million primarily due to lower contributions from all divisions arising from the challenging economic environment. Revenue rose 13.4% to RM2.72 billion from RM2.4 billion.

On the 4Q results, Gamuda said its operating expenses rose to RM913.23 million compared with RM782.75 million a year ago. Income tax expenses were also lower at RM33.33 million compared with RM61.22 million.

On its CONSTRUCTION [] division, Gamuda said the electrified double tracking railway project was slightly behind schedule due to late handover of land by the authorities.

Under the terms of the contract signed by the project company and the Government of Malaysia, all land should be handed over to the project company early this year but, to-date, only 88% has been handed over.

'The progress is expected to pick up pace in the next financial year when the balance of the land is handed over,' it said.

On the new Doha International Airport project in Qatar, it said the Sinohydro-Gamuda-WCT joint venture was recently awarded RM740 million as additional works and settlement in respect of all the outstanding counter-proposals in respect of the variation orders, contractors' claims and scope changes.

'To-date the total contract value has now increased from the original contract sum of RM1.75 billion to RM3.27 billion,' it said.

On the Yenso Park and sewage treatment plant projects in Vietnam, it said the projects were progressing well on schedule.

As for the property division, Gamuda said the recent two quarters' results have improved compared to the first two quarters of the financial year.

'The property market is recovering well as product launches such as shop offices in Kota Kemuning and bungalows in Valencia were fully taken up. Stabilised by an improving economic outlook and affordable interest rate environment, the property sector is gaining momentum and is expected to perform better in the next financial year,' it said.

"

Not Just About Crude Oil Price

Not Just About Crude Oil Price: "♦ Crude oil price. Crude oil prices hovered in the US$65-74/barrel range in Aug-Sep period as expectations of an economic recovery and higher oil consumption in the future were weighed against weak current demand and high inventories. We believe the cushion (i.e. level of spare capacity) would remain at around 8% of global consumption in 4Q09 before narrowing marginally to 7% in 2010 given: 1) still weak demand from US and Europe; 2) gradual increase in supply due to stronger-than-expected Russian output; and 3) still high floating storage level. Hence, we believe crude oil price would likely hover around US$60-70/barrel in 4Q 2009 before rising to US$60-80 and US$80-100 in 2010-11 respectively.

♦ Sector outlook. With crude oil price remaining volatile, we believe E&P players may continue to defer lumpy capex for greenfield upstream projects. Furthermore, we believe there could be pressure on contract pricing as competition for regional and domestic jobs are likely to remain intense amidst still low contract flows from North America and Europe.

♦ Survival of the fittest. While we have highlighted that sizeable projects would be scarce and contracts would be priced at more competitive rates, we believe local players with strong recurrent earnings and conservative management (i.e. Dialog) as well as strong market position (i.e. Wah Seong) would fare better than others. We also favour companies with improving cost management (i.e. SapuraCrest after delivery of two new India jv vessels) and ability to move up the value-chain (i.e. fabrication of tender rigs for Kencana).

♦ Reiterate Overweight. We expect sustainable contract flows ahead as most of the conventional production-stage projects are able to proceed again at current oil price of above US$60/barrel. However, in the near term, we believe investors should focus on companies with stronger orderbook replenishment and good earnings visibility. As highlighted above, these include Wah Seong, Kencana and Dialog. Longer term, we reiterate our view that the continued shortage of offshore E&P assets (exacerbated by delays in E&P spending) will underpin the growth in E&P activity. Hence we maintain our Overweight stance on the sector. Our
top pick for the sector is Wah Seong.

By RHBinvest
Analyst: Wong Chin Wai

"

Parabolic SAR Selling Signal Appear ?

Parabolic SAR Selling Signal Appear ?: "

Well what do we think about our share market performance right now ? No volume to support the overall market movement and indeed the market just like a dead fish only. Only certain counters are performing very well. We only can make money if we really buy at the low and have to wait for certain days and timing then only we can really make some profit.

A quick check on the FBM-KLCI suggest that the trend might take a pause. There is a signal or an indicator showing that the Parabolic SAR already shown a selling signal after yesterday the FBM-KLCI move down. But looking at the FBM-KLCI still staying above the 1,200 points level, we can consider that the index is sitting quite comfortable at this level.

Yesterday also saw the FBM-KLCI touches its major strong supporting line, so we need to be well alert these few days whether the index still can stay at its uptrend channel. Any break down from the uptrend channel will signal that the trend might take a reversal pattern.

"

Spritzr- a not-so fizzy stock

Spritzr- a not-so fizzy stock: "Background

Spritzer Bhd ('Spritzr') is involved in the manufacturing and distribution of natural mineral water, sparkling natural mineral water, distilled drinking water, carbonated fruit flavoured water, carbonated fruit flavour isotonic water, teas, toothbrushes, preforms and packaging bottles.

Recent Financial Results

Spritzr has announced its results for QE31/8/2009. Its net profit increased by 54% q-o-q or 29% y-o-y to RM3.1 million while turnover increased 11% both q-o-q & y-o-y to RM31.2 million.


Table 1: Spritzr's 8 quarterly results

Over the past 13 quarters, Spritzr's quarterly turnover has risen from RM19 million to RM31 million. Quarterly net profit has risen slowly from about RM1.0 million to above RM3.0 million. Due to the increased demand, Spritzr has announced plan to "set up a new bottling plant in Shah Alam to facilitate its supply of bottled water to Klang valley and central Malaysia. The new plant is expected to commence operations in the fourth quarter of the current financial year. The strategic location of this plant will enable the Group to reduce delivery cost and boost its sales tremendously". Spritzr has already signed a S&P agreement to acquire a piece of land in Shah Alam costing RM32.5 million for this purpose.


Chart 1: Spritzr's 13 quarterly results

Valuation

Spritzr (clsoed at RM0.685 yesterday) is now trading at a trailing PE of 10 times (based on last 4 quarterly EPS of 6.8 sen). However, Spritzr should command a higher PE multiple in view of its steady growth rate & low base. Assuming we used a PE multiple of 12 times, Spritzr's fair value is about 82 sen.

Technical Outlook

Spritzr has a strong price run-up after breaking above its downtrend line at RM0.45 in early 2008. In a matter of 15 months, it gained 66% to reach its July 2009 high of RM0.75. The share price may pull back after this rally. A good entry level is about RM0.60-65.


Chart 2: Spritzr's daily chart as at Sept 28, 2009 (Source: Tradesignum)

Conclusion

Based on steady financial performance & positive technical outlook, Spritzr is a good stock for long-term investing. Accumulate on weakness at RM0.60-65 level.

"

GCorp- a value stock

GCorp- a value stock: "Background

General Corporation Bhd ('GCorp') is principally involved in construction, property development & investment, tyre manufacturing, shoe trading, confectionery manufacturing, hotel operation & quarrying. In the past few years, GCorp has benefited from strong contribution from its 52%-owned subsidiary, Low Keng Huat (Singapore) which experienced big jump in construction activities.

Recent Financial Results

GCorp has just announced its results for QE31/7/2009. Its net profit increased by 113% q-o-q or 438% y-o-y to RM24.5 million while turnover increased by 86% q-o-q or 134% y-o-y to RM418 million. The improved performance is attributable to increased contribution from Low Keng Huat (Singapore).


Table 1: GCorp's 8 quarterly results

I have appended below the chart of GCorp's top-line & bottom-line for the past 10 quarters which shows steady growth, except for a net loss attributable to the shareholders in QE31/1/2009 after netting off Minority Interest of RM21.2 million.


Chart 1: GCorp's 10 quarterly results

Valuation

GCorp (closed at RM1.10 at the end of the morning session) is now trading at PE of 8.1 times (based on last 4 quarters' EPS of 13.5 sen). As a mid-size diversified group with a good growth track record, GCorp deserves to be valued at a higher PE multiple, say 10-12 times. Assuming a PE multiple of 10 times, GCorp's fair value is about RM1.35.

The present market capitalization of GCorp is only RM327 million. This is derived at as follows: Outstanding share capital of 297.1 million units at RM1.10 per unit. Its 52%-stake in Low Keng Huat (Singapore) alone is worth RM343.5 million today. The present market capitalization of Low Keng Huat (Singapore) is S$269.7 million or RM660.7 million This is arrived at as follows: Outstanding share capital of 738.8 million units, valued at S$0.365 per unit and then converted to RM at an exchange rate of RM2.45:S$1.00. As such, GCorp is now trading at about the value of its stake in Low Keng Huat (Singapore), with no consideration given to its other businesses.

Technical Outlook

from the weekly chart below, we can see that GCorp has broken above its medium-term downtrend line at RM1.00 in July. Its immediate horizontal support is at RM1.10 while resistance is at RM1.20.


Chart 2: GCorp's weekly chart as at Sept 28, 2009 (Source: Quickcharts)

Conclusion

Based on steady financial performance, attractive valuation & positive technical outlook, GCorp is a good stock for medium-term investing.

"

Broker's Call - 29 September 2009

Broker's Call - 29 September 2009: ".
– Hubline (HUBL MK; RM0.315, SELL) – Hanging by a threat.
– Axiata Group (Axiata MK; RM3.14, SELL) – Limited upside potential.
– Heveaboard (HAVE MK; RM0.375, SELL) – Sell into strength.
______________________________________________________________________

Hubline (HUBL MK; RM0.315) – SELL
FY10P/E: N/A, P/BV: 0.8x

• Hubline broke out of its triangle pattern few days ago but buying momentum failed to carry through. It has since fallen back into the earlier congestion zone.
• The doji formation confirms that buying interest is waning. The deteriorating technical landscape also suggests more downside ahead. Support is weak at RM0.30 (30- & 50-day SMAs) and RM0.285.
• Traders should take profit on rally, especially when it bounces back towards the RM0.325 triangle resistance. A break below RM0.265 would mean that the uptrend since April has ended.

Hubline Berhad is an investment holding company. The company, through its subsidiaries, is involved in investment holding, shipping services, shipping agent, ship owning and chartering and the provision of marine cargo handling services.
_____________________________________________________________________

Axiata Group (Axiata MK; RM3.14) – SELL
FY10P/E: 16.4x, P/BV: 1.6x

• Despite our earlier SELL rating on Axiata on Sept 1, the stock held firm in its sideways consolidation trend. However, we still think upside maybe limited for now, with gains likely capped at RM3.27-RM3.35 resistance zone.
• Bearish divergences were seen in both its MACD and RSI indicators. This may suggest that buyers are not ready to push it higher. In fact, there could be some pullbacks for a short breather.
• We still advocate traders to lock in some profits towards the stipulated resistance zone. Immediate support is the 50-day SMA at RM3.05, followed by RM2.86 and RM2.72.

Axiata Group Berhad is a telecommunication company. The company's main activities are the establishment, maintenance, and provision of telecommunications and related services.
____________________________________________________________________

Heveaboard (HAVE MK; RM0.375) – SELL
FY10P/E: N/A, P/BV: 0.1x

• We saw a graveyard doji yesterday, which is typically a reversal pattern in any uptrend. Also, the long upper shadow means that selling pressures are mounting.
• Although there is a minor support at the trend line channel at RM0.365, we think it could be weak. While indicators are still pointing higher price action, we would rather be cautious. Trader looking to buy should wait for clearer signs before jumping onto the bandwagon.
• For now, we still keep to our sell-into-strength call, especially when it edges closer to the RM0.40 and RM0.43 resistances. Once RM0.365 fails to hold, next downside target is at RM0.34 and RM0.32.

Heveaboard Sdn Bhd produces particle board from rubber wood for use in panel furniture, speaker boxes, and doors. The company exports its products throughout the Asia Pacific region. Heveaboard produces ready-to-assemble furniture, and retails particle board and medium density fiberboard.

"

OilCorp Dispute May Bring Profit Opportunity

OilCorp Dispute May Bring Profit Opportunity: "






















OilCorp price was drop about RM0.24 since beginning of Sept due to announced that it had failed to meet its interest payment of RM1.64 million due and payable on Sept 17 and the reason for that is OilCorp said it did not have sufficient funds to settle the interest payment due as the receipt of certain large receivables had been delayed from is clients.

On Sept 15, it had written to Malaysian Trustees Bhd to seek an extension of up to one month from the interest payment date to remedy this matter.

If this matter setter the boss of OilCorp may push up back the company share so if buy now may be can make a huge profit but also huge risk. I just took the risk.

"

Berjaya Land 1Q net profit surges 76% to RM78.11m

Berjaya Land 1Q net profit surges 76% to RM78.11m: "

Written by Joseph Chin

Monday, 28 September 2009 20:19

KUALA LUMPUR: BERJAYA LAND BHD []'s first quarter net profit surged 76% to RM78.11 million for the period ended July 31, 2009 from RM44.36 million a year ago, boosted by the writeback of impairment in value of investments in associated companies and its Toto betting operations.

However, it cautioned that its hotels and resorts business may continue to be affected by the current global outbreak of Influenza A(H1N1) but it expected its gaming business under Berjaya Sports Toto to remain resilient.

BLand said on Sept 28 that revenue slipped slightly to RM952.63 million from RM963.91 million a year ago. Pre-tax profit was RM119.9 million compared with RM83.76 million. Earnings per share were 2.34 sen versus 0.05 sen.

'The lower revenue was mainly due to the lower revenue reported by the hotels and resorts division that was adversely affected by the outbreak of Influenza A(HINI) as well as the prevailing global economic crisis,' it said.

As for the higher pre-tax profit, this was mainly due to the higher profit contribution from the gaming business arising from lower prize payout and significant net investment related income in spite of the lower profit contribution from the hotels and resorts division.

Toto betting operations accounted for RM824.9 million of the revenue of RM952.63 million.

The 1Q revenue, when compared with the fourth quarter ended April 30, 2009, showed the revenue declined to RM952.63 million from RM971.7 million but pre-tax profit rose to RM119.9 million from RM83.76 million.

'The decrease in revenue was mainly due to the lower revenue contribution from the gaming business when compared to the preceding quarter which was partly mitigated by the higher revenue reported by the hotels and resorts division.

'The higher pre-tax profit in this current quarter under review was mainly attributed to the investment related income as well as higher profit contribution from the hotels and resorts division compared to the preceding quarter where the group incurred impairment loss on its quoted investments, certain of its property, plant and equipment and investments in associated companies and jointly controlled entities,' it said.

On the prospects, BLand said given the prevailing global economic conditions, the property market continues to remain soft and the hotels and resorts business may continue to experience setback from the current global outbreak of Influenza A(H1N1). However, it expected the gaming business under BToto to remain resilient.

'With this backdrop and barring unforeseen circumstances, the directors are of the view that the group's operating performance for the remaining quarters of the financial year ending 30 April 2010 will remain satisfactory,' it said.

"

Glomac 1Q net profit at RM8.34m

Glomac 1Q net profit at RM8.34m: "

Written by Joseph Chin

Monday, 28 September 2009 19:18

KUALA LUMPUR: GLOMAC BHD [] posted net profit of RM8.34 million for the first quarter ended July 31, 2009, up from the RM7.8 million a year ago.

The company said on Sept 28 that on a pre-tax level, it was up 57% at RM16.47 million versus RM10.5 million a year ago. Revenue slipped to RM58.98 million from RM79.54 million. Earnings per share were 2.99 sen versus 2.73 sen.

'The lower group revenue was mainly due to the completion of Suria Stonor, the group’s high-end residential condominium project. Profits were substantially higher due to stronger contributions from Glomac Tower. The stronger profits in the quarter also included the recognition of fair value gain of RM4.9 million from its investment PROPERTIES [],' it said.

Glomac group executive chairman, Tan Sri F.D. Mansor said: “Overall, the group has had a good start to the current financial year' and the group's balance sheet would continue to improve upon the completion of the sale of two of its investment properties.

He said the sale of the two properties would enable it to undertake more exciting development projects and seek out new development landbank.

'Glomac’s financial performance in FY2010 will be supported by substantial unbilled sales of RM333 million as at end-July 2009, and new sales on recently launched projects.

'The group’s new flagship development, Glomac Damansara, comprising of shop offices, office towers, serviced apartments and retail suites, has a total estimated GDV (gross development value) of RM800 million,' he said, adding the first phase, comprising of five and eight-storey shop offices with a total GDV of RM53 million, achieved a take-up rate of 70% over the initial six-month launch period.

"

Broker's Call - 28 September 2009

Broker's Call - 28 September 2009: ".
– KLCI Index Futures – Underlying momentum since early September is weak.
– Crude oil futures – May build a based-pattern near US$65.
– CPO futures – Still trapped in a bearish course.
– Salcon (SALC MK; RM0.54, BUY) – Waiting for a breakout.
– Malaysian Merchant Marine (MMM MK; RM0.20, BUY) – Based-pattern seen.
– Mudajaya Group (MDJ MK; RM3.73, SELL) – Stuck in a consolidation mode.
______________________________________________________________________

Salcon (SALC MK; RM0.54) – BUY
FY10P/E: 10.2x, P/BV: 0.8x

• Salcon edged above its key SMAs and test the channel resistance last Friday. This may be an early sign of more upswings ahead. Resistance is seen at RM0.565-RM0.575 and RM0.61.
• Technical landscape is improving. MACD is about to turn positive while the RSI is rising towards the upper band of the neutral zone.
• Traders may start to nibble now to capitalise on this uptrend rally. However, always keep stop tight if it breaks below RM0.52.
Salcon Berhad designs, builds, operates, and maintains municipal potable water, sewerage, and industrial waste water facilities. The company also designs, builds and commissions palm oil mills, as well as provides mechanical and electrical engineering services for general industries and investment holding.
______________________________________________________________________

Malaysian Merchant Marine (MMM MK; RM0.20) – BUY
FY10P/E: N/A, P/BV: N/A

• The stock has been holding firm above RM0.185 over the past few months. Hence, we think there is little risk to the downside. The resurgent buying interest could see the stock climb to retest RM0.22 and possibly even the August highs of RM0.26.
• After recent consolidation, its technical landscape looks decent. The MACD is slowly picking up while its RSI is also rising.
• Aggressive traders may want to buy now but a stop at RM0.17 is a must, as next downside target is weaker at RM0.15 and RM0.115.

Malaysian Merchant Marine Berhad is an investment holding company which provides ship management services. Through its subsidiaries, the company provides transportation of goods by sea.
______________________________________________________________________

Mudajaya Group (MDJ MK; RM3.73) – SELL
FY10P/E: 8.7x, P/BV: 4.6x

• The stock was stuck in a consolidation mode after recent spike up. Unless it can run above the 52-week high of RM3.92, we think upside is limited for now.
• MACD shows a bearish divergence while its RSI has also retraced from its peak. The immediate support is at RM3.51, followed by RM3.23 next.
• Investors may want to take some profit off the table and buy back later, preferably near the stipulated support levels. If RM3.92 is taken out, next upside target is at RM4.08 and RM4.15. Sell into strength.

Mudajaya Group Berhad is an investment holding company. The company, through its subsidiaries, provides civil engineering and building construction, leases plant and machinery, and operates property management and development. Mudajaya also manufactures concrete products, precast concrete, and building materials.

"

FBM-KLCI Correction Could Be In The Horizon

FBM-KLCI Correction Could Be In The Horizon: "






















As we near the end of 3Q09, FBM KLCI likely to move sideways, even after rising 13% since end-Jun. Base on some report statistic, this rates KLSE stock exchange as the third worst performing market among the 11 Asian markets that report tracked, better than only Japan (+3%) and China shares listed in Hong Kong (+10%).

The top winners in the current quarter are Korea (up 22% quarter-to-date), Thailand (+21%) and Indonesia (+21%). On a year-to-date basis, we have fared even worse – at the second lowest rung (up 39%) just ahead of Japan (+16%) – way behind the best performers like Indonesia (up 80% so far this year), India (+73%) and Thailand (+60%). This statistic show that foreign investor is not going to invest into Malaysia like as before economic crisis. I think Malaysia goverment have note this early by change KLCI index base on 100 share to 30 share and FBM-KLCI index can be control by top 5 share out of 30 component share so that the index will not drop a lot compare with other 11 Asian markets.

How worst Malaysia economic in real I think only government will know. However the Malaysia government need to keep the index in good shape even how worst it is due to political reason so I think profit still can get in ours share market. Forward to domestic themes ahead, focusing on specific events like the 2010 Budget, the announcement of a National Automotive Policy (NAP, likely in Oct) and the impending listing of mobile telecommunication heavyweight Maxis (by year-end) will likely to give some energy to the index.

Closer on the calendar, on Wednesday (30 Sep), the monthly banking statistics for Aug will be out. And this Friday (2 Oct), an update on the business transformation plan by Malaysian Airline System – a laggard among the index component stocks – is scheduled to be held.





















Meanwhile base on HwangDBS report, supposing that the FBM KLCI has already plotted a fresh (temporary) peak on the chart last week, a correction could be in the horizon. Still, if recent history repeats itself, any market pullback is expected to be shallow (down by less than 7%) and short (extending fewer than seven days). Essentially, the benchmark index’s uptrend pattern – as guided by a rising channel comprising higher highs and higher lows – seems set to stretch on.
Technically speaking, should our market slide the first and second support lines are seen at 1,190 and 1,160, respectively. Beyond the consolidation phase, we reckon the FBM KLCI will get back in position to overcome 1,230 (the immediate resistance barrier) before sizzling its way towards 1,255 (its next resistance target).

"

Weekly Summary

Weekly Summary: "

KLCI Weekly Chart

A short 3-day week. Bluechips have stopped moving. The attention now is on the small caps. Looks like weakness is coming into KLCI. Most probably it will correct. Summary for the various sectors:

Malaysia	Monthly	Weekly	Daily	Note
FBM KLCI	Up	Up	Up	R=1.3k, S=1.15k. Overbought
Finance	Up	Up	Up	R=10k, S=9k
Construction	Up	Up	Up	R=250, S=220
Plantation	Up	Up	Up	Broke out of downtrend.
Property	Up	Up	Up	R=820, S=760
FBM ACE	Up	Neutral	Neutral (+)	Consolidation.

"

KNM Group -Poised for new tank terminal job from Kedah

KNM Group -Poised for new tank terminal job from Kedah: "

Share price: RM0.805
Fair value: RM0.80
Call: HOLD (unchanged)

* KNM Group Bhd (KNM) appears poised to secure contracts up to RM500mil in Kedah from its joint-venture vehicle- Verwater Industrial Services (Malaysia) Sdn Bhd (VISM). KNM subscribed for a 50% equity stake in VISM for a token sum of RM100.

* Currently, VISM is privately owned by Verwater Paul Antonius - owner of Verwater Group of Companies based in the Netherlands. The Verwater Group are specialists in storage tanks and terminals design, construction and maintenance for almost 90 years in the Netherlands, Belgium, France, Singapore and Nigeria.
* In June this year, the Verwater Group signed a contract with UK-based Lenstar Investment Ltd to build an oil storage terminal in Yan, Kedah with a storage capacity of 1 million cu metre costing 220 million euro (RM1.1bil). We understand that Verwater could award contracts up to 180 million euro to VISM of which, KNM could secure 50%.

* In April this year, Lenstar signed a memorandum of understanding with Pristine Oil (M) Sdn Bhd to build storage tanks for holding up to 1.5 million barrels of oil and a 22km pipeline from Gurun to Yan, plus an 18km offshore pipeline to facilitate uploading of oil from vessels to tanks. Lenstar holds an 85% stake in the joint venture with Pristine. Newspaper reports claim that Lenstar has already purchased a 100ha piece of land and obtained the necessary permits to build the new tank farm and the pipelines.

* We understand that Verwater's project involves the US$10bil refinery project being proposed by Merapoh Resources Corp Sdn Bhd (Merapoh). In July this year, Merapoh and the Kedah state government signed a memorandum of agreement to revive the development of a refinery in Yan, Kedah. Project comprises development of a two-train refinery in the Sungai Limau Hydrocarbon Hub with a total capacity of 350,000 barrels per day.

* The Merapoh project - which is planned to be built over five years together with a 20 km pipeline going towards offshore Kedah for offloading of crude oil and loading of refined oil - involves reclamation of offshore land totalling 340 hectares and the use of 40 hectares on-shore land and building.

* We are sceptical of the viability of these projects due to: (1) Lack of an established track record from the local promoters of the project; (2) Potential delays in land acquisition for both pipeline and refinery projects as the states involved are controlled byopposition parties; (3) Absence of Petronas's participation, which could have lowered execution and financing risks; and (4) technical difficulties involving different grades of crude oil.

* If KNM secures the Verwater project, we estimate that the group's outstanding order book could rise from RM2.4bil to RM2.9bil- translating to 1.2x FY09F revenues. We maintain our FY09F-11F for now pending further clarification from management. As the stock currently trades at a fully valued FY10F PE of 11x vis-a-vis the oil & gas industry's 10x, we reiterate our HOLD call.

"

Bursa Malaysia

Bursa Malaysia: "Buy
Price: MYR7.83
12-Month Target Price: MYR9.30

• Bursa’s proposed partnership with CME Group Inc. is aimed at globalizing the Malaysian crude palm oil futures (FCPO) market. The proposed collaboration involves CME Group taking a 25% stake in Bursa Malaysia Derivatives for MYR55.6 mln. Bursa will receive MYR1.9 mln in cash and 76,427 CME Group shares.

• CME will have the right to use the settlement prices of the MYRdenominated CPO futures contract to develop USD-denominated cash-settled CPO futures contracts for listing on the CME Globex trading platform. This listing is expected to take place in mid-2010 and Bursa is expected to list all its derivatives products on the CME Globex trading platform in 2H10.

• While the new product may cannibalize Bursa’s existing derivative business initially, we expect Bursa to benefit from the proposed tie-up in the long term from a wider reach. The benefits include: (i) more arbitraging activities with other futures contracts available on CME Globex (such as soy oil) and (ii) the wider network of one million dealers on CME Globex compared to Bursa’s 600 dealers. Management expects the new trading system for derivatives to potentially double the daily volume from the current average of 26,000 contracts in three years’ time. Trading revenue in derivatives accounted for 14.9% of Bursa’s operating revenue in 1H09.

• We maintain our Buy recommendation with a higher 12-month target price of MYR9.30 (from MYR8.50). The raised target price reflects higher peer valuations. Our positive view on the stock is also premised on its relative underperformance compared with its regional peers. Singapore Exchange (SGX SP, SGD8.62, Not Ranked) and Hong Kong Exchanges and Clearing (HKEx) (00388, HKD149.20, Hold) are both trading at the average of their historical highs.

• We value Bursa on 32x (from 29x) projected 2010 EPS. The assigned PER is in line with the HKEx and represents a 30% discount from Bursa’s average historical high. We feel a discount is warranted, given our view that the current equity market recovery is somewhat fragile.

• Risks to our recommendation and target price include a drop-off in trading activity if markets turn against investors following the strength of the recent rally. This may be triggered by inflation concerns and slower-than-expected recovery in corporate earnings.

• We expect limited earnings impact in the near term so we leave our 2009 and 2010 net profit forecasts unchanged. Earnings should be driven primarily by a pick-up in trading activity. 2008-2010 EPS CAGR of 19% comes on our assumption for daily turnover value to reach MYR1.5 bln and MYR1.8 bln in 2009 and 2010, respectively.

Summary: Bursa Malaysia (Bursa) operates the only exchanges in Malaysia. The exchanges comprise Bursa Malaysia Securities, Bursa Malaysia Derivatives and the Labuan International Financial Exchange. The stock is a component of the FBM70 and FBMEMAS.

By Standard & Poors
Analyst: Ai Lien Ng

"

Broker's Call - 25 September 2009

Broker's Call - 25 September 2009: ".
– UEM Land Holdings (ULHB MK; RM1.60, BUY) – Waiting for a breakout.
– Zelan (ZELN MK; RM0.935, BUY) – Still holding firm within its consolidation triangle.
– Scomi Group (SGB MK; RM0.605, BUY) – Hovered in a base-building formation.
______________________________________________________________________
UEM Land Holdings (ULHB MK; RM1.60) – BUY
FY10P/E: 57.1x, P/BV: 2.7x

• UEM Land’ share prices have corrected and have been trading very much in a sideways manner for the past 2 months or so. It has formed a triangle pattern in the process.
• After recent consolidation, its technical landscape looks decent. MACD is still in positive territory while the RSI is hovering at the neutral zone.
• Risk takers may start to nibble now, as a break out above its key triangle resistance at RM1.66 would probably lift the stock towards RM1.76 and RM1.80 next. Cut loss however if it falls below RM1.54.

UEM Land Holdings Bhd is a real estate investment and development company. The company's activities include property development and land sales. The Company develops a range of projects including industrial, commercial, residential, healthcare and mixed used properties, government offices, universities, and others.
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Zelan (ZELN MK; RM0.935) – BUY
FY10P/E: 16.4x, P/BV: 0.9x

• Zelan is still holding firm within its consolidation triangle. Yesterday’s pick up in trading volume probably suggest that the bulls are trying to push out of this consolidation pattern. A breakout above the RM0.96 resistance is bullish for the stock.
• RSI is neutral at 54 while MACD has just confirmed its golden cross. It also closed above its 30-day and 50-day SMA yesterday, which could see a further pick up in buying momentum.
• Aggressive trader may want to buy now but be prepared to cut losses if prices fall below RM0.85. A breakout could see the stock climb to retest RM1.05 and possibly even the June highs of RM1.12.

Zelan Berhad is an investment holding company. The company, through its subsidiaries, operates civil engineering and building turnkey contracting services.
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Scomi Group (SGB MK; RM0.605) – BUY
FY10P/E: 6.3x, P/BV: 0.6x

• On the daily chart, it appears that Scomi is also in a base-building formation called a triangle after hitting a high of RM0.825 in June. It is currently trading near the triangle support. As long as prices do not fall below RM0.57, the triangle pattern is still valid.
• Therefore, there could be some scalping opportunities. Risk takers may start to nibble now, hoping for an upswing that could probably take out the resistance at RM0.65. The next resistance is at RM0.72-0.74.
• The indicators are still weak, probably suggesting that it is still consolidating. Placing a stop below RM0.57 is a must. Immediate support is at RM0.60.

Scomi Group Berhad sells drilling mud and chemical products, provides drilling fluids materials, equipment, and services, manufactures and fabricates road transport equipment and material handling equipment, operates marketing agent for road transport equipment, and provides leasing on motor vehicles.

"

Ingress to test the strong resistance at RM0.90?

Ingress to test the strong resistance at RM0.90?: "On September 17, Ingress announced that its 70% subsidiary, Ingress Technologies Sdn Bhd (ITSB) has won a RM196 million contract from Perodua Manufacturing Sdn Bhd (PMSB) for the supply of components comprising rear modules, door surrounding modules and fuel lids to PMSB for the new model starting in the first half of the financial year ending Jan 31, 2012, for five years. The investment in equipment and toolings for this project was estimated to total RM17.7 million.

Following the announcement, Ingress' share price broke to the upside of its symmetrical triangle formation at the RM0.40 on the same day. We still saw Ingress made a high of RM0.815 this morning- four days after the aforesaid announcement. How much profit can the PMSB project contribute? Based on a gross profit margin of 14% (as per its quarterly results for QE31/7/2009), we can expect a profit contribution of RM28 million over five years or RM5.6 million per annum. With generous tax incentive available, I believe that the whole amount could be added to the net profit; thus adding 7.3 sen to its EPS.

However, Ingress' results for FY2008 & FY2007 are fairly disappointing as it recorded net losses of RM40 million & RM11 million, respectively. The huge net loss for FY2008 was attributable to write-down of RM45.6 million in the Automotive division due to a change in depreciation methods & impairment of tooling equipment in order to comply with FRS 108. In addition, its Other division also wrote off RM9.8 million for provision for bad debts & impairment of equipment. Ingress' 1H2010 results has been more encouraging as it reported a net profit of RM3.5 million- giving a 6-mth EPS of 4.6 sen or a full-year EPS of 9.2 sen. Thus, Ingress (closed at RM0.81 at the end of the morning session) is now trading at PE of 8.8 times. This is fair value for stock in the Automotive sector. For example, Tan Chong which closed at RM2.10 this morning, is now trading at 9 times its annualized EPS 23.2 sen. Many would prefer Tan Chong to Ingress since they are both trading at the same PE multiple.


Chart 1: Ingress' daily chart as at Sept 24, 2009_11.00am (Source: Quickcharts)

From the weekly chart, Ingress' upside will be severely tested soon as it approaches the horizontal resistance at RM0.90 & thereafter at RM1.10 & RM1.30. It is advisable to take some profit at the RM0.90 level.


Chart 2: Ingress' weekly chart as at Sept 24, 2009_11.00am (Source: Quickcharts)

"

Broker's Call - 24 September 2009

Broker's Call - 24 September 2009: ".
– Gamuda (GAM MK; RM3.29, BUY) – Accumulate on pullback.
– Hubline (HUBL MK; RM0.335, BUY) – Triangle breakout. Buy on weakness.
– Heveaboard (HAVE MK; RM0.355, SELL) – Signs of exhaustion.
______________________________________________________________________

Gamuda (GAM MK; RM3.29) – BUY
FY10P/E: 19.9x, P/BV: 2.1x

• Gamuda shows some resilience amid continuing decline in mid August. Buying interest always popped up near its 50-day SMA and this has kept the bulls afloat.
• The improving technical landscape also supports the positive tone on the stock. Resistance is seen at RM3.44-RM3.50 zone and RM3.90.
• Traders should buy during pullbacks, preferably near the RM3.16 and RM2.96 support levels. Always keeps stop tight at below RM2.90.

Gamuda Berhad is an investment holding and civil engineering construction company. Through its subsidiaries, the company provides earthwork construction, manufactures and supplies road surfacing materials, and operates quarry and road laying projects. Gamuda also has operation in hiring and rental of plant and machinery, develops properties, and manufactures and sells paper.
_____________________________________________________________________

Hubline (HUBL MK; RM0.335) – BUY
FY10P/E: N/A, P/BV: 0.9x

• Hubline broke out of the triangle resistance yesterday. As triangle is usually seen as a continuation pattern, expect further upswing towards the RM0.36-RM0.375 resistances.
• MACD is slowly gaining strength but its overbought RSI is a near-term setback. Expect volatility to rise amid this uptrend.
• Buy on weakness, especially near the RM0.325 support trend line. Cut losses however if it breaks below RM0.29 as it would signal the end of this uptrend.

Hubline Berhad is an investment holding company. The company, through its subsidiaries, is involved in investment holding, shipping services, shipping agent, ship owning and chartering and the provision of marine cargo handling services.
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Heveaboard (HAVE MK; RM0.355) – SELL
FY10P/E: N/A, P/BV: 0.1x

• The stock is now hanging over the cliff. If it fails to take out the RM0.365 resistance trend line, expects profit taking activities to accelerate and pushes it lower.
• Its MACD shows a bearish divergence, suggesting that buying momentum is slowing down. Meanwhile, RSI is overbought at 70.
• If the RM0.365 resistance stays firm over the next few days, traders may want to lock in some profits on upticks, as it would signal that the stock is likely near-term peaked. Support is at RM0.34 and RM0.30.

Heveaboard Sdn Bhd produces particle board from rubber wood for use in panel furniture, speaker boxes, and doors. The company exports its products throughout the Asia Pacific region. Heveaboard produces ready-to-assemble furniture, and retails particle board and medium density fiberboard.

"

Maxis IPO shares may trade RM5 to RM6.20

Maxis IPO shares may trade RM5 to RM6.20: "

Written by Joseph Chin
Wednesday, 23 September 2009 14:13

KUALA LUMPUR: Maxis Bhd's share price under its initial public offer (IPO) may trade around RM5 and RM6.20 assuming a price-to-earnings (PE) multiple range of between 16 times and 20 times based on ECM Libra Research's FY10 earnings per share (EPS) estimate.

'However, we believe Maxis will likely trade at around RM5.60 based on a PE multiple of 18 times, taking into account its mobile market leadership thus deserving premium valuation over DiGi (16 times), but a discount to TM’s fixed-line and broadband monopoly (20 times,' it said in a research note issued on Sept 23.

ECM Libra Research said at a prospective RM5.60 per share, Maxis would generate minimum dividend yields of 4.2% in FY10. It added such yields were lower than its estimates for DiGi and TM, but perhaps investors might overlook this to have a stake in a blue-chip company that may fetch a market capitalisation of RM42 billion.

A draft prospectus lodged with the Securities Commission on Sept 17 outlined that Maxis Communications Bhd (MCB) would re-list only its Malaysian operations under an IPO involving 2.25 billion shares (30% of its paid-up share capital), of which 2.075 billion shares will be offered to institutional investors and the remaining 174.795 million shares to the public.

ECM Libra Research said the final IPO price however had not been fixed with news reports, quoting sources indicating the IPO was estimated to raise US$2 billion to US$2.5 billion (RM7 billion to RM9 billion) which implied an IPO price of RM3.11 to RM4. Other reports said the IPO shares may fetch as high as RM5 to RM6 each.

On Sept 17, a draft prospectus lodged with the Securities Commission which outlined that Maxis Communications Bhd's (MCB) decision to relist only Maxis Bhd, which comprised of its Malaysian operations.

The IPO involved 2.25 billion shares (30% of its paid-up share capital), of which 2.075 billion shares will be offered to institutional investors and the remaining 174.795 million shares to the public.

'What is clear however is that no new shares will be issued, implying Maxis will not receive a single sen from the IPO exercise. Instead, the proceeds will go to the shareholders looking to trim their stakes through the IPO exercise. This is perhaps not too surprising as the Indian and Indonesian operations which need the funds most are kept private for now, suggesting separate listing exercises in the future.

'However, MCB did manage to squeeze RM5 billion from Maxis via a prelisting restructuring exercise, which we believe will be used to fund the heavy capex of its foreign subsidiaries,' ECM Libra Research said.

"

MIDF buy on KNM

MIDF buy on KNM: "

MIDF Research has reiterated its buy call on KNM GROUP BHD [] at 80.5 sen with an unchanged target price of RM1 as it viewed the company’s strategic acquisition of a 50% equity stake in Verwater Industrial Services (M) Sdn Bhd (VISM) positively.

It said the acquisition was timely from the perspective of order book replenishment.

VISM is principally involved in relocating and jacking of tanks, catalyst change out and chemical cleaning works. It is privately owned by the owner of Verwater Group of Companies, which is based in the Netherlands.

MIDF Research said the Verwater Group was recently awarded a project to develop a one million tonne oil storage terminal in Malaysia for €220 million (RM1.12 billion) by Lenstar Investment Ltd.

“We suspect the main motive for the acquisition is to capture the said project.

“We believe that KNM will be executing the engineering, procurement, CONSTRUCTION [] and commissioning (EPCC) and fabrication portion, which amounts to circa RM560 million, which will be positively reflected in the group’s FY10-11 earnings,” it said.

Actual works are expected to be initiated by November, and according to KNM, the company might be awarded the project management portion.

MIDF Research said that KNM had indicated that the margin to be expected from the fabrication and EPCC portion was about 20%, noting that the research house considered this to be rather high.

“The contract will span over 1.5 to two years,” it said.

The research house said the execution of the contract could grow earnings per share (EPS) for 2010 by 8% to 12.67 sen and for 2011 by 0.92 sen to 12.81 sen. However, it had yet to factor the earnings potential from this contract into KNM’s FY10 earnings.

KNM’s current order book stood at RM3.2 billion (including the RM560 million EPCC job), while its current tender book was estimated at RM14 billion.

The research house said it was confident that KNM could capture 20% of bid jobs based on the group’s track performance and historical success rate.

“Currently, the counter is still trading at 8.1 times EPS 2009, which is still attractive relative to its local peers’ PER (price-earnings ratio) 2009 of 10 times and regional peers’ 19.5 times. KNM has gained 85% year to date and outperformed the KLCI by 48.8 percentage points,” it said.

Last Friday, KNM fell 1.5 sen to close at 79 sen.

"

FBM-KLCI Still Moving Up But No Market Leaders ?

FBM-KLCI Still Moving Up But No Market Leaders ?: "

Well after two days of holiday, we are back to the share market. Current sentiment is a bit active with most of the share prices still hovering around their share prices. I would still prefer the volume done in the market to increase or there will be someone becomes the market leader.

Right at these moments, we still can't find if there is any potential counters would become the market leader. We still have few more days left in the month of September before we are entering in the month of October. As usual in the month of October, DJIA always perform very badly. Usually we call it BLACK OCTOBER. I don't like to behave negatively but rather be cautious ahead in the month of October.

There are still some counters or particular counters that still can moves. It is just that we need to search and eyeing our favourite counters whether they can move or not? These few days the Dow Jones Industrial Averages performing quiet well with the DJIA moving towards the 10,000 points level. Looking at the world sentiment, we can say the equities market are heading up with the lead from the DJIA. It seems that there isn't any bad news to stop the share market from moving up.

Speculate wisely and we can gain something out of it.

"

Health Care

Health Care: "

Since the first H1N1 case was reported in April this year, the virus has been rapidly spreading across the globe, infecting more than 270,000 people and causing 3200 deaths so far. The rising death toll has raised concerns that the pandemic may be more severe than initially expected. Although we cannot quantify the impact of the pandemic on economies and the equity markets, we do not discount the possibility of the pandemic becoming a serious threat to the global economy. As a follow up to our July 9, 2009 report on the H1N1 pandemic, we are in this report providing an update on the situation and its impact on the healthcare sector to date. On the Malaysian front, we believe healthcare companies such as CCM Duopharma, KPJ and Faber may experience incremental profit from the current development.

Spillover impact on healthcare players. Despite the general perception that healthcare sector will thrive in times of pandemics such as H1N1 due to high demand, the impact on the healthcare sector has been rather incremental than phenomenal, which is in line with our stand in our earlier report. Nevertheless, pharmaceutical companies such as CCM Duopharma (BUY, TP RM3.10) have been experiencing higher sales driven by a slight increase in off-take in normal flu-related pharmaceutical products such as paracetamol and vitamins. Meanwhile, private healthcare providers such as KPJ (BUY, TP RM4.39) have seen higher utilisation rates, particularly for its outpatient segment. As for hospital support services providers such as Faber (BUY, TP RM1.24), the higher level of activities at government hospitals will eventually require more support services, which could potentially translate into a slight increase in revenue. We maintain NEUTRAL on the sector largely due to its low liquidity. Nevertheless, we believe the sector is a good choice for portfolio balancing supported by its relatively defensive business nature as well as steady dividend payout.

"

Market Focus Report From HwangDBS

Market Focus Report From HwangDBS: "Expect lower deficit.
The 2010 Budget will be presented in Parliament on 23 October amidst a challenging economic
environment. The Prime Minister will need to steer the economy towards robust economic growth while keeping the lid on a ballooning fiscal deficit. We expect a lower deficit in 2010 at 6.8% of nominal GDP versus 8.5% this year on lower operating expenses. In our opinion, there is a possibility of incremental corporate tax cut and a timeframe for Goods and Services Tax (GST) implementation in the future.

Higher development expenditure.
In terms of development expenditure, we expect a record allocation of RM55b-RM58b from
RM53.7b in 2009. As pump-priming remains a cornerstone to drive economic growth, there will likely be renewed emphasis on the upcoming mega projects such as the LCCT, LRT extension and Interstate Water Transfer – which should start latest by next yearend. The focus should be on implementation of these key projects and as such, we do not expect many other new mega projects. In our opinion, there is good chance of higher excise duty for cigarette makers. Historically, the government increased sin taxes for the tobacco sector in eight out of the past eleven years.

Positive on banks, construction, property.
Among the heavyweights on the index, the banking sector is trading at relatively low PE
multiples with

1. Public Bank (TP: RM11.10),
2. AMMB (TP: RM5.20),
3. Hong Leong Bank (TP: RM8.00) and
4. CIMB (TP: RM12.10)

trading at 12-13x forward earnings while the KLCI is at historical average levels of 15x earnings (and 1.7x book).
We also remain optimistic on the construction sector and expect upside for share prices for select
stocks as projects are awarded over the next 12 months. Our picks are

1. IJM Corp (TP: RM7.00) and
2. Gamuda (TP: RM4.25).

For property, we expect positive newsflow and potential upside in margins in the sector to lift valuations. We like large cap sector leader

1. SP Setia (TP: RM5.00) and niche developers
2. E&O (TP: RM2.10) and
3. DNP (TP: RM2.60).

We remain contrarians on large cap laggard MISC (Buy; TP: RM9.60).

HwangDBS Large Cap Buys










HwangDBS Small-mid Cap Buys

"