OSK Research Sdn Bhd, which has selected Kencana Petroleum Bhd as its top pick in the oil and gas sector, has maintained the target price for the stock at RM2.06.
The target price was based on price to earnings ratio of 16 times earnings per share for the financial year 2011, the research house said in a statement today.
'We believe there is a potential share price re-rating on the stock in the event if Malaysia Marine and Heavy Engineering Holdings Bhd is listed at a high price earning valuation since both companies have a good track record in their fabrication business,' it said.
MISC Bhd's subsidiary, Malaysia Marine and Heavy Engineering Holdings, is expected to be listed end-October with an indicative initial public offering price of RM3.80 per share.
The research house said Kencana Petroleum's current orderbook still remained high at RM1.6 billion following some small job replenishment during the quarter. - BERNAMA
Thursday, September 30, 2010
Silk profit rises to RM12m in Q4
SILK Holdings Bhd has recorded a higher profit of RM12.4 million for its fourth quarter ended July 31, 2010, compared to RM6.6 million in the same period last year.
On a full-year basis, the company posted a profit of RM30.9 million, a marginal improvement over the RM30.6 million in the previous year, as adjusted to meet the requirements of FRS 3 following the acquisition of AQL Aman Sdn Bhd.
Revenue increased by eight per cent to RM223.9 million from RM206.7 million previously, Silk Holdings said in a statement today.
'The group has closed the financial year on a strong note,' said chairman Datuk Mohd Azlan Hashim.
'Bearing in mind that the comparative results reported have been adjusted to meet the requirements of accounting standards to reflect the acquisition of AQL Aman as part of the restructuring undertaken, the overall improvement for the financial year appears to be modest,' Mohd Azlan said.
'If, however, the performance is compared to the actual unadjusted performance of Silk, as reported to the shareholders previously, the improvement in performance for the financial year 2010 is even more significant. The current year results clearly indicate a successful turnaround of the group,' he said.
During the fourth quarter, the highway division reduced its after-tax losses to RM4.6 million from a loss of RM6.1 million in the preceding year's corresponding quarter, representing a 25 per cent decline in losses.
On a full-year basis, the division managed to reduce its after-tax losses by 27 per cent to RM26.2 million from RM35.7 million in previous year.
A steady increase in traffic flow during the period under review enabled the highway division to improve operational performance, the group said.
For the fourth quarter, the oil and gas support services division posted a lower profit of RM3.6 million compared with RM6.6 million in the preceding year's corresponding quarter.
However, on a full-year basis, the division recorded a higher profit of RM38.7 million compared with RM30.6 million in the preceding year, representing a 26 per cent increase in profitability. - BERNAMA
On a full-year basis, the company posted a profit of RM30.9 million, a marginal improvement over the RM30.6 million in the previous year, as adjusted to meet the requirements of FRS 3 following the acquisition of AQL Aman Sdn Bhd.
Revenue increased by eight per cent to RM223.9 million from RM206.7 million previously, Silk Holdings said in a statement today.
'The group has closed the financial year on a strong note,' said chairman Datuk Mohd Azlan Hashim.
'Bearing in mind that the comparative results reported have been adjusted to meet the requirements of accounting standards to reflect the acquisition of AQL Aman as part of the restructuring undertaken, the overall improvement for the financial year appears to be modest,' Mohd Azlan said.
'If, however, the performance is compared to the actual unadjusted performance of Silk, as reported to the shareholders previously, the improvement in performance for the financial year 2010 is even more significant. The current year results clearly indicate a successful turnaround of the group,' he said.
During the fourth quarter, the highway division reduced its after-tax losses to RM4.6 million from a loss of RM6.1 million in the preceding year's corresponding quarter, representing a 25 per cent decline in losses.
On a full-year basis, the division managed to reduce its after-tax losses by 27 per cent to RM26.2 million from RM35.7 million in previous year.
A steady increase in traffic flow during the period under review enabled the highway division to improve operational performance, the group said.
For the fourth quarter, the oil and gas support services division posted a lower profit of RM3.6 million compared with RM6.6 million in the preceding year's corresponding quarter.
However, on a full-year basis, the division recorded a higher profit of RM38.7 million compared with RM30.6 million in the preceding year, representing a 26 per cent increase in profitability. - BERNAMA
Jaks Resources reaps RM1.9m pre-tax profit
Apollo Food reports lower pre-tax profits
APOLLO FOOD HOLDINGS BHD reported a lower pre-tax profit of RM6.81 million for the first-quarter ended July 31, 2010 from RM8.9 million chalked up in the previous corresponding quarter.
Revenue, however, increased to RM43.52 million, during the quarter under review, from RM39.15 million registered in the same period last year. - BERNAMA
Revenue, however, increased to RM43.52 million, during the quarter under review, from RM39.15 million registered in the same period last year. - BERNAMA
Ahmad Zaki Resources gets hospital job
PUBLIC PRIVATE PARTNERSHIP UNIT in the Prime Minister's Department has awarded the proposed development of the International Islamic University Malaysia teaching hospital project in Kuantan to Ahmad Zaki Resources Bhd.
Ahmad Zaki Resources said it was subject to further negotiations on the concession agreement to be entered into with the federal government.
Project details, including its value and concession period, would be disclosed and announced upon the formal finalisation of the concession agreement, the company said in a filing to Bursa Malaysia today. - BERNAMA
Ahmad Zaki Resources said it was subject to further negotiations on the concession agreement to be entered into with the federal government.
Project details, including its value and concession period, would be disclosed and announced upon the formal finalisation of the concession agreement, the company said in a filing to Bursa Malaysia today. - BERNAMA
Fajarbaru Builder wins RM62m contract
FAJARBARU Builder Group Bhd's wholly owned subsidiary, Fajarbaru Builder Sdn Bhd, has been awarded a RM62.377 million contract by the East Coast Economic Region Development Council (ECERDC).
The contract is for the construction and completion of Package 1(110 acres) earthworks and infrastructure works for the development of Phase 2, Automotive Industrial Park, Pekan-Peramu, Pahang, Fajarbaru said in a statement today.
The contract is expected to contribute positively to the earnings and net assets of the group for the financial year ending June 30, 2011 and also 2012. - BERNAMA
The contract is for the construction and completion of Package 1(110 acres) earthworks and infrastructure works for the development of Phase 2, Automotive Industrial Park, Pekan-Peramu, Pahang, Fajarbaru said in a statement today.
The contract is expected to contribute positively to the earnings and net assets of the group for the financial year ending June 30, 2011 and also 2012. - BERNAMA
OSK keeps 'buy' call on Faber
OSK Research Sdn Bhd is maintaining a 'Buy' recommendation for Faber Group and has revised its target price to RM4.00 from RM3.58 previously.
The research house said the justification for the recommendation was based on the fact that Faber's 15-year concession for government hospital support services, which was due to expire in October 2011, would be renewed for another 15-years.
'The value for this business is RM716 million derived from a discounted cash flow valuation based on OSK Research's assumption,' it said in a research note today.
While examining other possible outcomes based on different scenarios, OSK Research said the concession was valued as low as RM285.2 million under the worst-case scenario and as high as RM905 million under the best scenario.
Faber's share price closed nine sen higher at RM3.22 with 638.8 million shares traded. -- Bernama
The research house said the justification for the recommendation was based on the fact that Faber's 15-year concession for government hospital support services, which was due to expire in October 2011, would be renewed for another 15-years.
'The value for this business is RM716 million derived from a discounted cash flow valuation based on OSK Research's assumption,' it said in a research note today.
While examining other possible outcomes based on different scenarios, OSK Research said the concession was valued as low as RM285.2 million under the worst-case scenario and as high as RM905 million under the best scenario.
Faber's share price closed nine sen higher at RM3.22 with 638.8 million shares traded. -- Bernama
AXIATA - Axiata's XL looking better
Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD
Research House: HWANGDBS
Axiata Group Bhd
(Sept 29, RM4.40)
Maintain buy at RM4.44 with higher target price RM5.10 (from RM4.95): Street projects 1H2010: 2H2010 earnings before interest, taxes, depreciation and amortisation (Ebitda) of 52:48 compared to 41:59 in 2009 and 50:50 in 2008. Competition peaked in 2H2008, and is unlikely to repeat in 2H2010. DBS Vickers projects 49:51 Ebitda for 1H2010: 2H2010, and estimates that XL's 2H2010 revenue could grow by 19% year-on-year (y-o-y), with Ebitda margin at 49%.
These may still be conservative against 1H2010 revenue growth of 35% y-o-y and 52% Ebitda margin.
With Telkomsel as quality leader in the market, XL and Indosat compete for price leadership. However, XL's focus on small screen data results against Indosat's focus on large screen data results in: (i) lower FY2010F capex-to-sales of 31% (against 44% for ISAT); and (ii) lower network costs as percentage of revenue of 31% (versus 36% for ISAT).
DBS Vickers raised XL's FY2010F to FY2012F net profit by 7% to 31%, and upgrades its fair value to IDR6,800 versus IDR5,900 previously.
We raise Axiata's FY2010F to FY2012F net profit by 2% to 7% after factoring in DBS Vickers' upgrades for XL. Axiata continues to do well in Malaysia, especially in the broadband segment, while it capitalises on economic recovery in Sri Lanka. In Bangladesh, Axiata has found an effective balance between subsidising and profit margin. ' HwangDBS Vickers Research, Sept 29
This article appeared in The Edge Financial Daily, September 30, 2010.
Company Name: AXIATA GROUP BERHAD
Research House: HWANGDBS
Axiata Group Bhd
(Sept 29, RM4.40)
Maintain buy at RM4.44 with higher target price RM5.10 (from RM4.95): Street projects 1H2010: 2H2010 earnings before interest, taxes, depreciation and amortisation (Ebitda) of 52:48 compared to 41:59 in 2009 and 50:50 in 2008. Competition peaked in 2H2008, and is unlikely to repeat in 2H2010. DBS Vickers projects 49:51 Ebitda for 1H2010: 2H2010, and estimates that XL's 2H2010 revenue could grow by 19% year-on-year (y-o-y), with Ebitda margin at 49%.
These may still be conservative against 1H2010 revenue growth of 35% y-o-y and 52% Ebitda margin.
With Telkomsel as quality leader in the market, XL and Indosat compete for price leadership. However, XL's focus on small screen data results against Indosat's focus on large screen data results in: (i) lower FY2010F capex-to-sales of 31% (against 44% for ISAT); and (ii) lower network costs as percentage of revenue of 31% (versus 36% for ISAT).
DBS Vickers raised XL's FY2010F to FY2012F net profit by 7% to 31%, and upgrades its fair value to IDR6,800 versus IDR5,900 previously.
We raise Axiata's FY2010F to FY2012F net profit by 2% to 7% after factoring in DBS Vickers' upgrades for XL. Axiata continues to do well in Malaysia, especially in the broadband segment, while it capitalises on economic recovery in Sri Lanka. In Bangladesh, Axiata has found an effective balance between subsidising and profit margin. ' HwangDBS Vickers Research, Sept 29
This article appeared in The Edge Financial Daily, September 30, 2010.
CARLSBG - Tobacco and breweries may get a blow from Budget 2011
Stock Name: CARLSBG
Company Name: CARLSBERG BREWERY MALAYSIA BHD
Research House: OSK
Tobacco and brewery sectors
Maintain neutral on both: The tobacco and brewery industries are referred to by some as the 'sin sector' (together with the gaming industry) in Malaysia. Like most parts of the world, these sectors are governed by tough government regulations and pay high excise duties. Our findings, which we elaborate in this report, are mainly focused on excise duty related to the sin sector.
Tobacco: From our recent channel checks, we sense that there is a possibility of cigarette pack prices being increased by about 30 sen to 60 sen per pack. This translates into a price increment of 1.5 sen to 3 sen per stick. Benchmarking against a premium 20s cigarette pack at RM9.30 (note that small 14s packs are no longer available), this could translate into pack prices potentially ranging from RM9.60 to RM9.90.
Although we did not manage to unearth the actual sum of the hike in tobacco excise duty, historically price increases have often involved a mark-up of 0.5 sen to 1 sen per stick above existing excise duty rates.
As such, the excise duty on cigarettes may go up by 1 sen to 2.5 sen per stick. All in all, we understand that the upward price adjustment in response to the excise duty rate hike will not breach the psychological level of RM10 per pack.
Brewery: We initially expected alcohol excise duties to be spared from a raise in the upcoming Budget 2011. However, the minister's remarks about a possible hike in alcohol excise duty would be negative for the sector. Although we are unable to gauge the amount of increase, we deem any hike from the current RM7.40 per litre level as 'damaging'. As a relative measure, alcohol-related duties and taxes account for some 48% of the retail price of beer. Adjusting for disposable income, alcoholic beverage prices in Malaysia may well be considered the highest in the world.
We see the companies in our 'sin sector' coverage being slapped by higher excise duties in Budget 2011.
For the tobacco sector, although we do not make any changes to our earnings for now, we downgrade British American Tobacco (M) Bhd (target price: RM40.12) to a 'sell' from 'neutral' previously, given that its stock price has rallied strongly in the past quarter, while keeping JT International Bhd as a 'buy' (TP:RM5.96) for its solid fundamentals, which will see it strongly positioned in the value-for-money cigarette segment, which is fast gaining popularity.
Brewers enjoyed a grace period from 2006 to 2009, when they were spared from hikes in alcohol excise duty.
However, the honeymoon seems to be over and we see an impending hike in Budget 2011 likely to scald sentiment.
We maintain our 'neutral' recommendation for Guinness Anchor Bhd (TP: RM7.90) and our 'buy' recommendation on Carlsberg Brewery Malaysia Bhd (TP: RM5.80). ' OSK Invesment Research
This article appeared in The Edge Financial Daily, September 30, 2010.
Company Name: CARLSBERG BREWERY MALAYSIA BHD
Research House: OSK
Tobacco and brewery sectors
Maintain neutral on both: The tobacco and brewery industries are referred to by some as the 'sin sector' (together with the gaming industry) in Malaysia. Like most parts of the world, these sectors are governed by tough government regulations and pay high excise duties. Our findings, which we elaborate in this report, are mainly focused on excise duty related to the sin sector.
Tobacco: From our recent channel checks, we sense that there is a possibility of cigarette pack prices being increased by about 30 sen to 60 sen per pack. This translates into a price increment of 1.5 sen to 3 sen per stick. Benchmarking against a premium 20s cigarette pack at RM9.30 (note that small 14s packs are no longer available), this could translate into pack prices potentially ranging from RM9.60 to RM9.90.
Although we did not manage to unearth the actual sum of the hike in tobacco excise duty, historically price increases have often involved a mark-up of 0.5 sen to 1 sen per stick above existing excise duty rates.
As such, the excise duty on cigarettes may go up by 1 sen to 2.5 sen per stick. All in all, we understand that the upward price adjustment in response to the excise duty rate hike will not breach the psychological level of RM10 per pack.
Brewery: We initially expected alcohol excise duties to be spared from a raise in the upcoming Budget 2011. However, the minister's remarks about a possible hike in alcohol excise duty would be negative for the sector. Although we are unable to gauge the amount of increase, we deem any hike from the current RM7.40 per litre level as 'damaging'. As a relative measure, alcohol-related duties and taxes account for some 48% of the retail price of beer. Adjusting for disposable income, alcoholic beverage prices in Malaysia may well be considered the highest in the world.
We see the companies in our 'sin sector' coverage being slapped by higher excise duties in Budget 2011.
For the tobacco sector, although we do not make any changes to our earnings for now, we downgrade British American Tobacco (M) Bhd (target price: RM40.12) to a 'sell' from 'neutral' previously, given that its stock price has rallied strongly in the past quarter, while keeping JT International Bhd as a 'buy' (TP:RM5.96) for its solid fundamentals, which will see it strongly positioned in the value-for-money cigarette segment, which is fast gaining popularity.
Brewers enjoyed a grace period from 2006 to 2009, when they were spared from hikes in alcohol excise duty.
However, the honeymoon seems to be over and we see an impending hike in Budget 2011 likely to scald sentiment.
We maintain our 'neutral' recommendation for Guinness Anchor Bhd (TP: RM7.90) and our 'buy' recommendation on Carlsberg Brewery Malaysia Bhd (TP: RM5.80). ' OSK Invesment Research
This article appeared in The Edge Financial Daily, September 30, 2010.
GAB - Tobacco and breweries may get a blow from Budget 2011
Stock Name: GAB
Company Name: GUINNESS ANCHOR BHD
Research House: OSK
Tobacco and brewery sectors
Maintain neutral on both: The tobacco and brewery industries are referred to by some as the 'sin sector' (together with the gaming industry) in Malaysia. Like most parts of the world, these sectors are governed by tough government regulations and pay high excise duties. Our findings, which we elaborate in this report, are mainly focused on excise duty related to the sin sector.
Tobacco: From our recent channel checks, we sense that there is a possibility of cigarette pack prices being increased by about 30 sen to 60 sen per pack. This translates into a price increment of 1.5 sen to 3 sen per stick. Benchmarking against a premium 20s cigarette pack at RM9.30 (note that small 14s packs are no longer available), this could translate into pack prices potentially ranging from RM9.60 to RM9.90.
Although we did not manage to unearth the actual sum of the hike in tobacco excise duty, historically price increases have often involved a mark-up of 0.5 sen to 1 sen per stick above existing excise duty rates.
As such, the excise duty on cigarettes may go up by 1 sen to 2.5 sen per stick. All in all, we understand that the upward price adjustment in response to the excise duty rate hike will not breach the psychological level of RM10 per pack.
Brewery: We initially expected alcohol excise duties to be spared from a raise in the upcoming Budget 2011. However, the minister's remarks about a possible hike in alcohol excise duty would be negative for the sector. Although we are unable to gauge the amount of increase, we deem any hike from the current RM7.40 per litre level as 'damaging'. As a relative measure, alcohol-related duties and taxes account for some 48% of the retail price of beer. Adjusting for disposable income, alcoholic beverage prices in Malaysia may well be considered the highest in the world.
We see the companies in our 'sin sector' coverage being slapped by higher excise duties in Budget 2011.
For the tobacco sector, although we do not make any changes to our earnings for now, we downgrade British American Tobacco (M) Bhd (target price: RM40.12) to a 'sell' from 'neutral' previously, given that its stock price has rallied strongly in the past quarter, while keeping JT International Bhd as a 'buy' (TP:RM5.96) for its solid fundamentals, which will see it strongly positioned in the value-for-money cigarette segment, which is fast gaining popularity.
Brewers enjoyed a grace period from 2006 to 2009, when they were spared from hikes in alcohol excise duty.
However, the honeymoon seems to be over and we see an impending hike in Budget 2011 likely to scald sentiment.
We maintain our 'neutral' recommendation for Guinness Anchor Bhd (TP: RM7.90) and our 'buy' recommendation on Carlsberg Brewery Malaysia Bhd (TP: RM5.80). ' OSK Invesment Research
This article appeared in The Edge Financial Daily, September 30, 2010.
Company Name: GUINNESS ANCHOR BHD
Research House: OSK
Tobacco and brewery sectors
Maintain neutral on both: The tobacco and brewery industries are referred to by some as the 'sin sector' (together with the gaming industry) in Malaysia. Like most parts of the world, these sectors are governed by tough government regulations and pay high excise duties. Our findings, which we elaborate in this report, are mainly focused on excise duty related to the sin sector.
Tobacco: From our recent channel checks, we sense that there is a possibility of cigarette pack prices being increased by about 30 sen to 60 sen per pack. This translates into a price increment of 1.5 sen to 3 sen per stick. Benchmarking against a premium 20s cigarette pack at RM9.30 (note that small 14s packs are no longer available), this could translate into pack prices potentially ranging from RM9.60 to RM9.90.
Although we did not manage to unearth the actual sum of the hike in tobacco excise duty, historically price increases have often involved a mark-up of 0.5 sen to 1 sen per stick above existing excise duty rates.
As such, the excise duty on cigarettes may go up by 1 sen to 2.5 sen per stick. All in all, we understand that the upward price adjustment in response to the excise duty rate hike will not breach the psychological level of RM10 per pack.
Brewery: We initially expected alcohol excise duties to be spared from a raise in the upcoming Budget 2011. However, the minister's remarks about a possible hike in alcohol excise duty would be negative for the sector. Although we are unable to gauge the amount of increase, we deem any hike from the current RM7.40 per litre level as 'damaging'. As a relative measure, alcohol-related duties and taxes account for some 48% of the retail price of beer. Adjusting for disposable income, alcoholic beverage prices in Malaysia may well be considered the highest in the world.
We see the companies in our 'sin sector' coverage being slapped by higher excise duties in Budget 2011.
For the tobacco sector, although we do not make any changes to our earnings for now, we downgrade British American Tobacco (M) Bhd (target price: RM40.12) to a 'sell' from 'neutral' previously, given that its stock price has rallied strongly in the past quarter, while keeping JT International Bhd as a 'buy' (TP:RM5.96) for its solid fundamentals, which will see it strongly positioned in the value-for-money cigarette segment, which is fast gaining popularity.
Brewers enjoyed a grace period from 2006 to 2009, when they were spared from hikes in alcohol excise duty.
However, the honeymoon seems to be over and we see an impending hike in Budget 2011 likely to scald sentiment.
We maintain our 'neutral' recommendation for Guinness Anchor Bhd (TP: RM7.90) and our 'buy' recommendation on Carlsberg Brewery Malaysia Bhd (TP: RM5.80). ' OSK Invesment Research
This article appeared in The Edge Financial Daily, September 30, 2010.
GAMUDA - Gamuda - all eyes on MRT
Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: CIMB
Gamuda Bhd
(Sept 29, RM3.85)
Maintain outperform at RM3.80 with higher target price RM4.96 (from RM4.78): Gamuda's FY7/10 core net profit made up 91% of our full-year forecast and 83% of consensus. Despite an improved earnings before interest and tax (Ebit) margin, which anchored the 45% year-on-year (y-o-y) growth in net profit, the results were below expectations as we had overestimated associates' contributions. We cut our FY2011/12 forecasts by 4% to 6% and introduce our FY2013 numbers.
This, plus the effects of rolling forward our valuation horizon to end-2011 and applying our revised 13.8 times target market PER (15 times previously) to our construction profit component raises our RNAV-based target price from RM4.78 to RM4.96.
We reiterate our 'outperform' call with main potential re-rating catalysts being more progress and eventual approval of the MRT project. The stock remains one of our top picks for the sector.
FY2010 revenue dipped 10% y-o-y, mainly due to depleting construction jobs and despite strong property sales of RM820 million, surpassing the targeted RM800 million. However, Ebit surged 49% y-o-y while Ebit margin expanded almost two percentage points to 8.9%, boosted by all segments. At the pre-tax profit level, the construction division chalked up a y-o-y doubling of pre-tax profit and contributed 21% of group pre-tax profit. Construction pre-tax margins stood at 4.5%, and are likely to further improve in the coming quarters. Pre-tax profit from the property, expressways, and water segments grew by 15% to 28% y-o-y and accounted for 78% of group pre-tax profit. Overall core net profit grew by 45% y-o-y. No dividends were declared, which was no surprise.
During the results briefing, management sounded more optimistic about the progress of the MRT proposal, reinforced by the key deliverables of the Economic Transformation Programme (ETP). The MRT proposal is still at the consultants' evaluation stage, which is expected to be completed by end-September. Management expects more details to be unveiled during the tabling of Budget 2011 on Oct 15, with likely Cabinet approval before end-2010. Clinching the RM13 billion to RM14 billion tunnelling works would bump up the current RM6 billion outstanding order book to over RM12 billion. ' CIMB Research, Sept 29
This article appeared in The Edge Financial Daily, September 30, 2010.
Company Name: GAMUDA BHD
Research House: CIMB
Gamuda Bhd
(Sept 29, RM3.85)
Maintain outperform at RM3.80 with higher target price RM4.96 (from RM4.78): Gamuda's FY7/10 core net profit made up 91% of our full-year forecast and 83% of consensus. Despite an improved earnings before interest and tax (Ebit) margin, which anchored the 45% year-on-year (y-o-y) growth in net profit, the results were below expectations as we had overestimated associates' contributions. We cut our FY2011/12 forecasts by 4% to 6% and introduce our FY2013 numbers.
This, plus the effects of rolling forward our valuation horizon to end-2011 and applying our revised 13.8 times target market PER (15 times previously) to our construction profit component raises our RNAV-based target price from RM4.78 to RM4.96.
We reiterate our 'outperform' call with main potential re-rating catalysts being more progress and eventual approval of the MRT project. The stock remains one of our top picks for the sector.
FY2010 revenue dipped 10% y-o-y, mainly due to depleting construction jobs and despite strong property sales of RM820 million, surpassing the targeted RM800 million. However, Ebit surged 49% y-o-y while Ebit margin expanded almost two percentage points to 8.9%, boosted by all segments. At the pre-tax profit level, the construction division chalked up a y-o-y doubling of pre-tax profit and contributed 21% of group pre-tax profit. Construction pre-tax margins stood at 4.5%, and are likely to further improve in the coming quarters. Pre-tax profit from the property, expressways, and water segments grew by 15% to 28% y-o-y and accounted for 78% of group pre-tax profit. Overall core net profit grew by 45% y-o-y. No dividends were declared, which was no surprise.
During the results briefing, management sounded more optimistic about the progress of the MRT proposal, reinforced by the key deliverables of the Economic Transformation Programme (ETP). The MRT proposal is still at the consultants' evaluation stage, which is expected to be completed by end-September. Management expects more details to be unveiled during the tabling of Budget 2011 on Oct 15, with likely Cabinet approval before end-2010. Clinching the RM13 billion to RM14 billion tunnelling works would bump up the current RM6 billion outstanding order book to over RM12 billion. ' CIMB Research, Sept 29
This article appeared in The Edge Financial Daily, September 30, 2010.
Bursa: Half-day trading on eve of Raya, CNY
BURSA Malaysia Bhd announced today that it will implement a half-day trading closure on the eve of Hari Raya Aidilfitri and Chinese New Year.
The broking industry had frequently requested for the trading closure to be implemented on the eve of these holidays, it said in a statement.
As such, after an assessment, the exchange made the decision to implement half-day trading closure for the securities and derivatives markets on the eve of the two holidays mentioned, with immediate effect.
The relevant office and trading closure announcements will be made as usual to the market closer to the holidays, Bursa Malaysia said. - Bernama
The broking industry had frequently requested for the trading closure to be implemented on the eve of these holidays, it said in a statement.
As such, after an assessment, the exchange made the decision to implement half-day trading closure for the securities and derivatives markets on the eve of the two holidays mentioned, with immediate effect.
The relevant office and trading closure announcements will be made as usual to the market closer to the holidays, Bursa Malaysia said. - Bernama
TGOFFS - OSK Research maintains Neutral on Tanjung Offshore
Stock Name: TGOFFS
Company Name: TANJUNG OFFSHORE BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Neutral recommendation on Tanjung Offshore and its target price is RM1.73 based on PER of 11x FY11 EPS after the company secured a contract extension valued at RM100 million.
'We continue to like the company for its diversified businesses ranging from the provision of offshore vessel services, drilling, production and platform services to supply of equipment, engineering and maintenance services,' it said on Thursday, Sept 30.
On Wednesday, Tanjung Offshore announced its unit Tanjung Offshore Services was awarded a contract extension by Petrofac (Malaysia PM-304) Ltd (Petrofac) to supply of mobile offshore production unit for Cendor Field, Block PM-304 for an extended period effective Sept 24, 2010 to the 2Q13.
OSK Research said the contract extension will reduce its reliance on a particular business segment in the event if there is a slowdown due to the delay in new contract awards.
'Going forward, we believe the recent emergence of Ekuinas as a substantial shareholder of the company holding 24% of its stake will further boost the profile of the company,' it said.
Company Name: TANJUNG OFFSHORE BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Neutral recommendation on Tanjung Offshore and its target price is RM1.73 based on PER of 11x FY11 EPS after the company secured a contract extension valued at RM100 million.
'We continue to like the company for its diversified businesses ranging from the provision of offshore vessel services, drilling, production and platform services to supply of equipment, engineering and maintenance services,' it said on Thursday, Sept 30.
On Wednesday, Tanjung Offshore announced its unit Tanjung Offshore Services was awarded a contract extension by Petrofac (Malaysia PM-304) Ltd (Petrofac) to supply of mobile offshore production unit for Cendor Field, Block PM-304 for an extended period effective Sept 24, 2010 to the 2Q13.
OSK Research said the contract extension will reduce its reliance on a particular business segment in the event if there is a slowdown due to the delay in new contract awards.
'Going forward, we believe the recent emergence of Ekuinas as a substantial shareholder of the company holding 24% of its stake will further boost the profile of the company,' it said.
Hai-O falls on weak 1Q earnings
KUALA LUMPUR: Shares of HAI-O ENTERPRISE BHD [] fell in morning trade on Thursday, Sept 30 after it posted a set of weak earnings for the first quarter ended July 31, 2010.
At 9.29am, it was down 25 sen to RM3.01 with 2.69 million shares done.
The FBM KLCI was up 0.22 of a point to 1,462. Turnover was 132.46 million shares valued at RM117.22 million. Gainers led advancers 152 to 106 while 164 stocks were unchanged.
Hai-O's net profit fell 57% to RM7.84 million in the 1Q from RM18.52 million a year ago as the multi-level marketing (MLM) division recorded lower revenue.
Pre-tax profit was RM10.79 million, down 59% from RM26.28 million a year ago while revenue fell 63% to RM54.75 million from RM148.57 million. Earnings per share were 3.91 sen versus 22.17 sen.
FABER - OSK Research upgrades Faber TP to RM4
Stock Name: FABER
Company Name: FABER GROUP BHD
Research House: OSK
KUALA LMPUR: OSK Research has upgraded the target price of FABER GROUP BHD [] to RM4.00 from RM3.58 and maintained its Buy recommendation.
It said on Thursday, Sept 30, with Faber's 15 year concession for government hospital support services (HSS)'' due for expiry in October 2011, it was looking at several possible outcomes related to the renewal.
These scenarios range from the worst case of 'No Concession Renewal' to the best case of '2% p.a. inflation adjusted Rate Revision'.
'As our Base Case is for the concession to be renewed at the similar terms as the existing one, we are imputing the DCF value of the concession based on this assumption into our SOP valuation as well as valuing its non-concession IFM business separately.
"Subsequently our TP has been upgraded to RM4.00 from RM3.58 previously. With the sizeable upside we maintain our BUY recommendation at the higher TP of RM4,' it said.
Company Name: FABER GROUP BHD
Research House: OSK
KUALA LMPUR: OSK Research has upgraded the target price of FABER GROUP BHD [] to RM4.00 from RM3.58 and maintained its Buy recommendation.
It said on Thursday, Sept 30, with Faber's 15 year concession for government hospital support services (HSS)'' due for expiry in October 2011, it was looking at several possible outcomes related to the renewal.
These scenarios range from the worst case of 'No Concession Renewal' to the best case of '2% p.a. inflation adjusted Rate Revision'.
'As our Base Case is for the concession to be renewed at the similar terms as the existing one, we are imputing the DCF value of the concession based on this assumption into our SOP valuation as well as valuing its non-concession IFM business separately.
"Subsequently our TP has been upgraded to RM4.00 from RM3.58 previously. With the sizeable upside we maintain our BUY recommendation at the higher TP of RM4,' it said.
KENCANA - OSK Research: Kencana results within expectations
Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD
Research House: OSK
KUALA LUMPUR: OSK Research said KENCANA PETROLEUM BHD []'s FY10 results were within expectations.
It said on Thursday, Sept 30 that although the 4QFY10 revenue was quite flattish on-quarter, the net profit was up 33% on-quarter contributed by the lower expenses incurred and better cost management as well as fabrication of higher margin product mix.
'Going forward to the next quarter, Kencana will have additional revenue contribution coming from the MKR-1. Maintain Buy on Kencana with a target price of RM2.06 based on PER of 16 times CY11 EPS,' it said.
Company Name: KENCANA PETROLEUM BHD
Research House: OSK
KUALA LUMPUR: OSK Research said KENCANA PETROLEUM BHD []'s FY10 results were within expectations.
It said on Thursday, Sept 30 that although the 4QFY10 revenue was quite flattish on-quarter, the net profit was up 33% on-quarter contributed by the lower expenses incurred and better cost management as well as fabrication of higher margin product mix.
'Going forward to the next quarter, Kencana will have additional revenue contribution coming from the MKR-1. Maintain Buy on Kencana with a target price of RM2.06 based on PER of 16 times CY11 EPS,' it said.
HLG Research sees short term stability for the market
KUALA LUMPUR: HLG Research said on Thursday, Sept 30, that technically, the positive crossover in the daily slow stochastic indicators could signal short term stability for the market and cushion more severe correction ahead.
In its market outlook, it said for the FBM KLCI to launch another rally above the year-to-date high of 1479.6 (Sept 21), the five-day SMA has to cross above the 10-day SMA.
"Given that the MACD indicator is still trending down with no signs of reversal yet, the index will continue to be stuck in consolidation mode for a while to neutralize current overbought positions," it said.
HLG Research said the immediate resistance is seen at the recent high of 1,479.6 pts (21 Sep), followed by 1,490 (Jan 8, 2008's intraday high), the 1,500 psychological hurdle and all-time high of 1,524.
The latter two should see heavier profit-taking capping upside. Immediate support levels are situated at 1,453 (20-day SMA), 1,445 (last week's low) and 1,433 (30-day SMA).
For Wall Street, key economic data for the rest of this week are weekly jobless claims (Thursday night), Sept Chicago PMI (Thursday night), Sept ISM and consumer sentiment (Friday).
Immediate resistance targets are 10,920 (May 12's high) and year-to-date high of 11,258 (April 26). Immediate supports are situated around 10,500 to 10,600.
Wednesday, September 29, 2010
Hwang-DBS profit surges 88pc
HWANG-DBS (Malaysia) Bhd recorded a 88 per cent higher pre-tax profit of RM85.7 million for the financial year ended July 31, 2010 from RM45.5 million registered previously.
The profit was achieved over a 17 per cent increase in revenue to RM346.9 million from RM295.8 million chalked up a year ago.
In a statement today, the company said that the growth momentum of the group's conventional and Islamic fund and asset management activities as well as its share financing and moneylending businesses were proceeding as planned.
'We are also developing the banking network of our overseas commercial banking business by targeting to open additional branches to tap into the vast clientele base,' it added.
The group is also confident that it has been well-positioned to exploit the financial markets and expects a satisfactory performance for the financial year ending July 31, 2011. -BERNAMA
The profit was achieved over a 17 per cent increase in revenue to RM346.9 million from RM295.8 million chalked up a year ago.
In a statement today, the company said that the growth momentum of the group's conventional and Islamic fund and asset management activities as well as its share financing and moneylending businesses were proceeding as planned.
'We are also developing the banking network of our overseas commercial banking business by targeting to open additional branches to tap into the vast clientele base,' it added.
The group is also confident that it has been well-positioned to exploit the financial markets and expects a satisfactory performance for the financial year ending July 31, 2011. -BERNAMA
Sapuracrest H1 pre-tax profit at RM212m
SAPURACREST Petroleum Bhd's pre-tax profit for its first half year financial period ended July 31, 2010 went up to RM211.5 million from RM175.9 million in same period last year.
Revenue, however decreased to RM1.568 billion from RM1.748 billion.
In its second quarter, the company posted a pre-tax profit of RM112.8 million compared to RM107.9 million in same quarter last year.
Its revenue declined to RM898.1 million from RM1.031 billion.
In a filing to Bursa Malaysia today, it attributed the improved pre-tax profit to higher contribution from installation of pipeline and facilities activities and from the drilling division.
Meanwhile, the lower revenue was due to lower activities in drilling and marine services divisions.
Going forward, the group expects to achieve satisfactory results for the financial year ending Jan 31, 2011. -- BERNAMA
Revenue, however decreased to RM1.568 billion from RM1.748 billion.
In its second quarter, the company posted a pre-tax profit of RM112.8 million compared to RM107.9 million in same quarter last year.
Its revenue declined to RM898.1 million from RM1.031 billion.
In a filing to Bursa Malaysia today, it attributed the improved pre-tax profit to higher contribution from installation of pipeline and facilities activities and from the drilling division.
Meanwhile, the lower revenue was due to lower activities in drilling and marine services divisions.
Going forward, the group expects to achieve satisfactory results for the financial year ending Jan 31, 2011. -- BERNAMA
Kencana registers RM171m profit
KENCANA Petroleum Bhd has posted a higher pre-tax of RM171.3 million for its financial year ended July 31, 2010, compared to RM152.8 million in the previous year.
Revenue, however, declined to RM1.089 billion from RM1.141 billion previously, the company said in a statement today.
For its fourth quarter, Kencana Petroleum's pre-tax profit rose to RM51.2 million from RM38.9 million in same quarter last year.
Revenue increased to RM278.2 million from RM258.1 million previously, mainly due to lower expenses incurred and better management of relevant costs, particularly from the offshore services segment.
Going forward, Kencana Petroleum expects demand for its core business of engineering and fabrication of oil and gas production facilities and other oilfield services to remain encouraging.
In addition, the company's extension in offshore services is expected to expand its earnings base and profit margin.
'Barring unforeseen circumstances, the company is reasonably confident that the prospect of the company remains positive,' it said. - BERNAMA
Revenue, however, declined to RM1.089 billion from RM1.141 billion previously, the company said in a statement today.
For its fourth quarter, Kencana Petroleum's pre-tax profit rose to RM51.2 million from RM38.9 million in same quarter last year.
Revenue increased to RM278.2 million from RM258.1 million previously, mainly due to lower expenses incurred and better management of relevant costs, particularly from the offshore services segment.
Going forward, Kencana Petroleum expects demand for its core business of engineering and fabrication of oil and gas production facilities and other oilfield services to remain encouraging.
In addition, the company's extension in offshore services is expected to expand its earnings base and profit margin.
'Barring unforeseen circumstances, the company is reasonably confident that the prospect of the company remains positive,' it said. - BERNAMA
E&O poised for next cycle of growth
MAIN market-listed Eastern and Oriental Bhd is well prepared and poised for its next cycle of growth after having achieved robust profits, increased revenue aand record sales, said Executive Director Eric Chan Kok Leong.
He said the financial year ended March 31, 2010 saw a remarkable turnaround in performance with the group returning to the black with a profit-after-tax of RM74.4 million against an after-tax loss of RM32.10 million recorded in the previous financial year.
The group continued to achieve a solid performance in the first-quarter of the current financial year ending March 31, 2011 with profit-after-tax increasing to RM12.1 million, up from RM5.7 million registered in the same period last year.
'The group's cash and gearing positions are very healthy at half a billion ringgit,' he told reporters in Kuala Lumpur today after the company's annual general meeting.
Chan said property development projects would contribute a major portion of its group revenue in years to come.
The company is also involved in two other core business activities of property investment and, hospitality and lifestyle.
He added with EandO's brand presence and balance sheet strength, the company would concentrate on the execution of eight projects and the development of its 520 hectares of prime landbank collectively amounting to RM4 billion in gross development value.
Chan also said this would include the construction of two recently-launched projects namely St Mary's Residences in Kuala Lumpur and Quayside Seafront Resort condominiums in Seri Tanjung Pinang, Penang.
Four projects, worth RM2 billion, would be located in Penang and the rest in the Klang Valley.
Chan said the company would remain focused on developing properties in the prime areas of the Klang Valley and Penang as regional markets were not the company's top priority for now. - BERNAMA
He said the financial year ended March 31, 2010 saw a remarkable turnaround in performance with the group returning to the black with a profit-after-tax of RM74.4 million against an after-tax loss of RM32.10 million recorded in the previous financial year.
The group continued to achieve a solid performance in the first-quarter of the current financial year ending March 31, 2011 with profit-after-tax increasing to RM12.1 million, up from RM5.7 million registered in the same period last year.
'The group's cash and gearing positions are very healthy at half a billion ringgit,' he told reporters in Kuala Lumpur today after the company's annual general meeting.
Chan said property development projects would contribute a major portion of its group revenue in years to come.
The company is also involved in two other core business activities of property investment and, hospitality and lifestyle.
He added with EandO's brand presence and balance sheet strength, the company would concentrate on the execution of eight projects and the development of its 520 hectares of prime landbank collectively amounting to RM4 billion in gross development value.
Chan also said this would include the construction of two recently-launched projects namely St Mary's Residences in Kuala Lumpur and Quayside Seafront Resort condominiums in Seri Tanjung Pinang, Penang.
Four projects, worth RM2 billion, would be located in Penang and the rest in the Klang Valley.
Chan said the company would remain focused on developing properties in the prime areas of the Klang Valley and Penang as regional markets were not the company's top priority for now. - BERNAMA
SapuraCrest Petroleum 2Q earnings slightly higher at RM53.24m
KUALA LUMPUR: SAPURACREST PETROLEUM BHD [] posted net profit of RM53.24 million in the second quarter ended July 31, 2010, which a marginal 1.68% increase from the RM52.36 million a year ago, due higher contribution from the installation of pipelines and facilities (IFP) and the drilling division.
It said on Wednesday, Sept 29 that revenue declined 12.8% to RM898 million from RM1.03 billion. Earnings per share were 4.17 sen versus 4.14 sen. It declared an interim dividend of three sen per share to be paid on Dec 15.
The second quarter results showed that trade and trade receivables increased to RM1.557 billion from RM1.163 billion as at Jan 31, 2010. Trade and other payables were RM1.564 billion compared with RM1.17 billion. Cash and bank balances declined to RM704.47 million from RM875.25 million.
For the first half, net profit rose 33.2% to RM103.94 million from RM78.02 million mainly due to higher contribution from IPF and drilling divisions. Revenue, however, slipped 10.2% to RM1.568 billion from RM1.747 billion mainly due to lower activities in drilling and marine services divisions.
It said on Wednesday, Sept 29 that revenue declined 12.8% to RM898 million from RM1.03 billion. Earnings per share were 4.17 sen versus 4.14 sen. It declared an interim dividend of three sen per share to be paid on Dec 15.
The second quarter results showed that trade and trade receivables increased to RM1.557 billion from RM1.163 billion as at Jan 31, 2010. Trade and other payables were RM1.564 billion compared with RM1.17 billion. Cash and bank balances declined to RM704.47 million from RM875.25 million.
For the first half, net profit rose 33.2% to RM103.94 million from RM78.02 million mainly due to higher contribution from IPF and drilling divisions. Revenue, however, slipped 10.2% to RM1.568 billion from RM1.747 billion mainly due to lower activities in drilling and marine services divisions.
BCorp 1Q net profit jumps to RM125.46m
KUALA LUMPUR: Berjaya Corp Bhd posted net profit of RM125.46 million in the first quarter ended July 31, 2010, up 214% from RM39.9 million a year ago. The better performance was also due to lower investment related expenses of RM17.62 million compared with RM83 million a year ago.
BCorp said on Wednesday, Sept 29 that revenue rose 8% to RM1.74 billion versus RM1.61 billion a year ago. Pre-tax profit was RM237.78 million, up 30% from RM182.81 million. Earnings per share were 2.88 sen versus 1.01 sen.
It said the higher revenue was mainly due to higher revenue contribution from the consumer marketing and distribution business.
"Positive operating results from the consumer marketing and distribution business contributed to the increase in pre-tax profits. The gains on disposal of a subsidiary company, Singer (Malaysia) Sdn Bhd, and an associated company, Singapore HealthPartners Pte Ltd, further improved the pre-tax profits," it said.
However, when compared with the fourth quarter ended 30 April 2010, revenue declined 8.6% from RM1.89 billion to RM1.74 billion. Pre-tax profit dropped 20.5% to RM237.78 million from RM299.21 million.
The drop in revenue was mainly due to lower revenue reported by the property development business from lower property sales. Its gaming business also reported a lower revenue mainly due to the preceding quarter recording seasonally higher sales during the Chinese Lunar New Year festive season during the month of February 2010.
BCorp said pre-tax profit was lower in the current quarter mainly due to lower profit contribution from gaming
business arising from lower sales coupled with the increase in Pool Betting Duty from 6% to 8% with
effect from June 1, 2010 despite a lower prize payout.
However, BCorp expected the consumer marketing business under Cosway (M) Sdn Bhd would improve while the gaming business under BERJAYA SPORTS TOTO BHD [] would remain resilient.
BCorp said on Wednesday, Sept 29 that revenue rose 8% to RM1.74 billion versus RM1.61 billion a year ago. Pre-tax profit was RM237.78 million, up 30% from RM182.81 million. Earnings per share were 2.88 sen versus 1.01 sen.
It said the higher revenue was mainly due to higher revenue contribution from the consumer marketing and distribution business.
"Positive operating results from the consumer marketing and distribution business contributed to the increase in pre-tax profits. The gains on disposal of a subsidiary company, Singer (Malaysia) Sdn Bhd, and an associated company, Singapore HealthPartners Pte Ltd, further improved the pre-tax profits," it said.
However, when compared with the fourth quarter ended 30 April 2010, revenue declined 8.6% from RM1.89 billion to RM1.74 billion. Pre-tax profit dropped 20.5% to RM237.78 million from RM299.21 million.
The drop in revenue was mainly due to lower revenue reported by the property development business from lower property sales. Its gaming business also reported a lower revenue mainly due to the preceding quarter recording seasonally higher sales during the Chinese Lunar New Year festive season during the month of February 2010.
BCorp said pre-tax profit was lower in the current quarter mainly due to lower profit contribution from gaming
business arising from lower sales coupled with the increase in Pool Betting Duty from 6% to 8% with
effect from June 1, 2010 despite a lower prize payout.
However, BCorp expected the consumer marketing business under Cosway (M) Sdn Bhd would improve while the gaming business under BERJAYA SPORTS TOTO BHD [] would remain resilient.
Hai-O 1Q earnings slump 57pct to RM7.84m
KUALA LUMPUR: HAI-O ENTERPRISE BHD []'s net profit fell 57% to RM7.84 million in the first quarter ended July 31, 2010 from RM18.52 million a year ago as the multi-level marketing (MLM) division recorded lower revenue.
It said on Wednesday, Sept 29 pre-tax profit was RM10.79 million, down 59% from RM26.28 million a year ago while revenue fell 63% to RM54.75 million from RM148.57 million. Earnings per share were 3.91 sen versus 22.17 sen.
"The effects of applying stringent rules on new members' recruitment and enhancement of stockists' management and professionalism since last financial year still need a longer time for the division and distributors to realign their business strategies," it said.
Hai-O said despite the increased external sales of the wholesale division, pre-tax profit was lower compared to the preceding year as a result of lower profit contribution from its inter-segment sales.
However, the group's operating profit margin in the current quarter increased by about 2% from a year ago, mainly due to higher margin products sales, the weakening of the US dollar against the ringgit which have contributed in reducing imported costs while operating efficiency improved.
It said on Wednesday, Sept 29 pre-tax profit was RM10.79 million, down 59% from RM26.28 million a year ago while revenue fell 63% to RM54.75 million from RM148.57 million. Earnings per share were 3.91 sen versus 22.17 sen.
"The effects of applying stringent rules on new members' recruitment and enhancement of stockists' management and professionalism since last financial year still need a longer time for the division and distributors to realign their business strategies," it said.
Hai-O said despite the increased external sales of the wholesale division, pre-tax profit was lower compared to the preceding year as a result of lower profit contribution from its inter-segment sales.
However, the group's operating profit margin in the current quarter increased by about 2% from a year ago, mainly due to higher margin products sales, the weakening of the US dollar against the ringgit which have contributed in reducing imported costs while operating efficiency improved.
F&N - F&N - hot-filling the gap
Stock Name: F&N
Company Name: FRASER & NEAVE HOLDINGS BHD
Research House: INTER PACIFIC
Fraser & Neave Holdings Bhd
(Sept 28, RM14.48)
Recommend neutral at RM14.70 with higher target price of RM14.90: We recommend 'neutral' on Fraser & Neave (F&N) based on FY2011's EPS of 80.7 sen with a PER of 18.5 times. We have adjusted our target price to RM14.90 (previously RM14.52). The potential drivers for F&N are: (i) equity ownership in Cocoaland Holdings Bhd (CHB); and (ii) sales and distribution of Red Bull, expected to fill the gap that will be created by Coke as Coca-Cola Company (CCC) is not extending its bottling and distribution agreement which will end on Sept 30, 2011, with F&N. The underpinning risks are: (i) rising raw material prices ' milk powder, sugar and aluminium; and (ii) the removal of government subsidies which could dampen consumer sentiment.
F&N's investment in Cocoaland is viewed positively. Its 23.08% stake in CHB, which it acquired for RM54.6 million (RM1.38 per share), will allow F&N to use the hot-filling facility it currently does not have. At the moment, CHB's capacity for hot-filling is 120 million bottles (one line) per year. Following the investment by F&N, it plans to step up its capacity to 360 million bottles per year by FY2012, with the opening of an additional three lines.
The synergy between F&N and CHB bodes well for both parties. While the latter will be able to capitalise on F&N's vast marketing and distribution strength, the former will benefit from CHB's know-how'' and its hot-filling capacity in polyethylene terephthalate (PET), used for bottling fruit/vegetable juices and tea products. F&N plans to launch 50 new products over the next 24 months, focusing on tea and fruit juices, capitalising on the increased production capacity of CHB's hot-filling lines.
Under the transition agreement with CCC, F&N is now free to launch new brands and products (except for cola and lemon & lime carbonates) for both the domestic and export markets. F&N was previously not allowed to export its own brand soft drink products in its agreement with CCC. The partnership with CHB will enable F&N to tap into CHB's export network, as 50% of CHB's products are exported.
The local juice industry is geared up for intensive competition driven by the rolling out of new brands and products by the current players, and the emergence of new players, taking advantage of the shift by local consumers to a healthier lifestyle. New products looking for a slice of the market pie include: (i) CCC's Minute Maid Pulpy (introduced June 2010); and (ii) F&N's Ambient Juices under the Fruit Tree brand'' (introduced August 2010). The market is currently dominated by C I Holdings' Tropicana (35%), Malaysia Milk's Marigold (30%), and F&N's Fruit Tree and Sunkist (13%).
F&N's equity interest in CHB marks its second partnership in FY2010. The first was with Red Bull in February. The popular Red Bull energy drink will complement its existing products and should bring in about 10% of F&N's beverage sales revenue. ' Inter-Pacific Research, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2010.
Company Name: FRASER & NEAVE HOLDINGS BHD
Research House: INTER PACIFIC
Fraser & Neave Holdings Bhd
(Sept 28, RM14.48)
Recommend neutral at RM14.70 with higher target price of RM14.90: We recommend 'neutral' on Fraser & Neave (F&N) based on FY2011's EPS of 80.7 sen with a PER of 18.5 times. We have adjusted our target price to RM14.90 (previously RM14.52). The potential drivers for F&N are: (i) equity ownership in Cocoaland Holdings Bhd (CHB); and (ii) sales and distribution of Red Bull, expected to fill the gap that will be created by Coke as Coca-Cola Company (CCC) is not extending its bottling and distribution agreement which will end on Sept 30, 2011, with F&N. The underpinning risks are: (i) rising raw material prices ' milk powder, sugar and aluminium; and (ii) the removal of government subsidies which could dampen consumer sentiment.
F&N's investment in Cocoaland is viewed positively. Its 23.08% stake in CHB, which it acquired for RM54.6 million (RM1.38 per share), will allow F&N to use the hot-filling facility it currently does not have. At the moment, CHB's capacity for hot-filling is 120 million bottles (one line) per year. Following the investment by F&N, it plans to step up its capacity to 360 million bottles per year by FY2012, with the opening of an additional three lines.
The synergy between F&N and CHB bodes well for both parties. While the latter will be able to capitalise on F&N's vast marketing and distribution strength, the former will benefit from CHB's know-how'' and its hot-filling capacity in polyethylene terephthalate (PET), used for bottling fruit/vegetable juices and tea products. F&N plans to launch 50 new products over the next 24 months, focusing on tea and fruit juices, capitalising on the increased production capacity of CHB's hot-filling lines.
Under the transition agreement with CCC, F&N is now free to launch new brands and products (except for cola and lemon & lime carbonates) for both the domestic and export markets. F&N was previously not allowed to export its own brand soft drink products in its agreement with CCC. The partnership with CHB will enable F&N to tap into CHB's export network, as 50% of CHB's products are exported.
The local juice industry is geared up for intensive competition driven by the rolling out of new brands and products by the current players, and the emergence of new players, taking advantage of the shift by local consumers to a healthier lifestyle. New products looking for a slice of the market pie include: (i) CCC's Minute Maid Pulpy (introduced June 2010); and (ii) F&N's Ambient Juices under the Fruit Tree brand'' (introduced August 2010). The market is currently dominated by C I Holdings' Tropicana (35%), Malaysia Milk's Marigold (30%), and F&N's Fruit Tree and Sunkist (13%).
F&N's equity interest in CHB marks its second partnership in FY2010. The first was with Red Bull in February. The popular Red Bull energy drink will complement its existing products and should bring in about 10% of F&N's beverage sales revenue. ' Inter-Pacific Research, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2010.
TOPGLOV - Top Glove expecting weaker earnings
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Research House: RHB
Top Glove Corp Bhd
(Sept 28, RM5.25)
Downgrade to underperform at RM5.25 with lower fair value of RM5.30 (from RM6.90): Top Glove is expected to announce its full-year results on Oct 6. While we expect weaker numbers quarter-on-quarter (q-o-q), for the full-year, we see year-on-year (y-o-y) growth of approximately 40% to 45% largely due to: (i) higher sales volume on the back of the new lines in F19 and F20; and (ii) y-o-y margin expansion resulting from better economies of scale.
We expect earnings to be weaker by 30% to 40% q-o-q on the back of: (i) weaker revenue largely due to lower sales volume as customers opt to run down their inventory levels due to the high latex price; and (ii) margin contraction largely due to the time lag in passing on the weakening US dollar against ringgit'' (-1.7% q-o-q).
According to management there are no plans for now to delay expansion plans. However, management will be monitoring the situation closely. Should demand remain weak for the next one or two quarters, the planned expansion at F23 could be pushed back. Currently, Top Glove's average utilisation rate stands at approximately 70% to 75%, which the group believes is at a comfortable level to take advantage of any potential surge in demand for its gloves.
The risks include: (i) sharp surge in raw material (latex) and/or energy (natural gas) prices, which may result in margin squeeze; (ii) an appreciating ringgit against the US dollar; (iii) execution risk from capacity expansion; and (iv) weaker than expected results from overseas operations.
We have kept our FY2010 earnings forecast unchanged for now. However, we have lowered our FY2011 and FY2012 earnings forecasts by 10.4% and 9.7% respectively after lowering our FY2011 and FY2012 capacity utilisation rate assumptions to 77.5% and 82.5% (from 85% and 90%) respectively.
Given the weaker earnings outlook, we have cut our target PER to 12.5 times from 15 times. Our revised target PER is based on one standard deviation below the stock's five-year average PER. Together with the earnings revision above, we have lowered our fair value to RM5.30 from RM6.90. In our view, Top Glove's near-term outlook appears challenging on the back of the high latex cost, strengthening ringgit (against the US dollar) as well as slowing orders, which, we believe, makes it harder for Top Glove to adjust prices for the higher costs. We'' therefore downgrade our call on the stock to 'underperform' from 'market perform'. ' RHB Research Institute, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2010.
Company Name: TOP GLOVE CORPORATION BHD
Research House: RHB
Top Glove Corp Bhd
(Sept 28, RM5.25)
Downgrade to underperform at RM5.25 with lower fair value of RM5.30 (from RM6.90): Top Glove is expected to announce its full-year results on Oct 6. While we expect weaker numbers quarter-on-quarter (q-o-q), for the full-year, we see year-on-year (y-o-y) growth of approximately 40% to 45% largely due to: (i) higher sales volume on the back of the new lines in F19 and F20; and (ii) y-o-y margin expansion resulting from better economies of scale.
We expect earnings to be weaker by 30% to 40% q-o-q on the back of: (i) weaker revenue largely due to lower sales volume as customers opt to run down their inventory levels due to the high latex price; and (ii) margin contraction largely due to the time lag in passing on the weakening US dollar against ringgit'' (-1.7% q-o-q).
According to management there are no plans for now to delay expansion plans. However, management will be monitoring the situation closely. Should demand remain weak for the next one or two quarters, the planned expansion at F23 could be pushed back. Currently, Top Glove's average utilisation rate stands at approximately 70% to 75%, which the group believes is at a comfortable level to take advantage of any potential surge in demand for its gloves.
The risks include: (i) sharp surge in raw material (latex) and/or energy (natural gas) prices, which may result in margin squeeze; (ii) an appreciating ringgit against the US dollar; (iii) execution risk from capacity expansion; and (iv) weaker than expected results from overseas operations.
We have kept our FY2010 earnings forecast unchanged for now. However, we have lowered our FY2011 and FY2012 earnings forecasts by 10.4% and 9.7% respectively after lowering our FY2011 and FY2012 capacity utilisation rate assumptions to 77.5% and 82.5% (from 85% and 90%) respectively.
Given the weaker earnings outlook, we have cut our target PER to 12.5 times from 15 times. Our revised target PER is based on one standard deviation below the stock's five-year average PER. Together with the earnings revision above, we have lowered our fair value to RM5.30 from RM6.90. In our view, Top Glove's near-term outlook appears challenging on the back of the high latex cost, strengthening ringgit (against the US dollar) as well as slowing orders, which, we believe, makes it harder for Top Glove to adjust prices for the higher costs. We'' therefore downgrade our call on the stock to 'underperform' from 'market perform'. ' RHB Research Institute, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2010.
PUNCAK - Tariff hike soon for Puncak Niaga?
Stock Name: PUNCAK
Company Name: PUNCAK NIAGA HOLDINGS BHD
Research House: MIDF
Puncak Niaga Holdings Bhd
(Sept 28, RM2.82)
Maintain trading buy at RM2.85 with target price of RM3.55: The Edge Financial Daily, quoting sources, says a 15% to 20% water tariff hike may be in the offing for Syarikat'' Bekalan Air Selangor Sdn Bhd (Syabas).
Such a rumour is not surprising given that the water tariff hike is long overdue. It'' was reported that the federal government has given the green light and is just waiting for the Selangor government to agree.
The'' 37% hike in the water tariff was scheduled for Jan 2009. Puncak received compensation from both state and federal governments totalling RM434 million last year. For 1H2010, the group received RM197 million (1H2009: RM109 million) in'' compensation. We do not expect much variation in the compensation for 2H2010.
In terms of overall earnings, the impact on the bottom line is very much neutral given that the compensation will offset the non-hike in tariff.
On the downside, compensation is given biannually, and this will create disruption to cash flow that would impact payments'' to water treatment players. Hence, the decision by rating agencies to downgrade Selangor water players ratings recently.
The outlook on the water asset consolidation is still sketchy. We maintain our view that, barring unexpected events, there could be a lengthy wait for the decision on this matter. It will'' boil down'' to'' political will.
Key risk factors are further delays in the implementation of the tariff ke and the decision on water asset consolidation.
We maintain our 'trading buy' call for those with a bigger appetite for risk with a'' unchanged target price of'' RM3.55. Numbers aside, speculation could persist over the issue of the transfer of Puncak Niaga's water assets, which may provide'' a near-term catalyst for price appreciation. We set our target price at RM3.55, a 30% discount to its NPV of RM5.10 per share. ' MIDF Research, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2010.
Company Name: PUNCAK NIAGA HOLDINGS BHD
Research House: MIDF
Puncak Niaga Holdings Bhd
(Sept 28, RM2.82)
Maintain trading buy at RM2.85 with target price of RM3.55: The Edge Financial Daily, quoting sources, says a 15% to 20% water tariff hike may be in the offing for Syarikat'' Bekalan Air Selangor Sdn Bhd (Syabas).
Such a rumour is not surprising given that the water tariff hike is long overdue. It'' was reported that the federal government has given the green light and is just waiting for the Selangor government to agree.
The'' 37% hike in the water tariff was scheduled for Jan 2009. Puncak received compensation from both state and federal governments totalling RM434 million last year. For 1H2010, the group received RM197 million (1H2009: RM109 million) in'' compensation. We do not expect much variation in the compensation for 2H2010.
In terms of overall earnings, the impact on the bottom line is very much neutral given that the compensation will offset the non-hike in tariff.
On the downside, compensation is given biannually, and this will create disruption to cash flow that would impact payments'' to water treatment players. Hence, the decision by rating agencies to downgrade Selangor water players ratings recently.
The outlook on the water asset consolidation is still sketchy. We maintain our view that, barring unexpected events, there could be a lengthy wait for the decision on this matter. It will'' boil down'' to'' political will.
Key risk factors are further delays in the implementation of the tariff ke and the decision on water asset consolidation.
We maintain our 'trading buy' call for those with a bigger appetite for risk with a'' unchanged target price of'' RM3.55. Numbers aside, speculation could persist over the issue of the transfer of Puncak Niaga's water assets, which may provide'' a near-term catalyst for price appreciation. We set our target price at RM3.55, a 30% discount to its NPV of RM5.10 per share. ' MIDF Research, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2010.
GENTING - Genting going global
Stock Name: GENTING
Company Name: GENTING BHD
Research House: OSK
Genting Bhd
(Sept 28, RM9.88)
Maintain buy at RM9.77 with higher target price of RM14.05 (from RM11.70): Genting group's Singaporean (Resorts World at Sentosa or RWS) and Malaysian gaming assets (Genting Malaysia) both performed above expectations in their 2QFY2010 quarterly results. This reinforces our view that the two new integrated resorts in Singapore have enlarged the region's gaming pie with minimal cannibalisation impact on Genting Malaysia's business. The group's relatively stable and expanding gaming business continued to form the bulk of its earnings at 85%, as at 1HFY2010, with Singapore already contributing 52% of the group's total revenue. We expect this to increase over time given the robust growth trajectory of its Singapore gaming operation.
The group's gaming assets (per share) alone are worth RM11.36 at the current market value, and RM13.33 based on our fair value versus Genting group's current market price of RM9.77. This implies that the stock is currently trading at a significant 33.6% discount to its sum-of-parts (SOP) valuation based on the current market value of the group's listed entities, and at an even steeper 40.8% discount based on our fair value of S$2.65 for Genting Singapore.
Following our recent earnings upgrade on Genting Singapore, we are raising our FY2010 and FY2011 earnings forecasts for the group by 19.9% and 8.3% respectively. Genting Bhd currently trades at an undemanding 14.6 times and 12.4 times FY2010 and FY2011 PER respectively, against its five-year historical average PER of 16.5 times. Its valuation is all the more undemanding if one considers its compelling three-year CAGR of 41%, largely driven by Genting Singapore's early cycle growth stage. Against the backdrop of such compelling growth, we think that the stock's current FY2010 and FY2011 EV/Ebitda valuations of 6.3 times and 5.2 times are indeed attractive.
The group's fast expanding global gaming footprint, covering gaming interests in Malaysia, Singapore, the UK, the Philippines and the US, is certainly not reflected in its below industry average valuations of 6.3 times and 5.2 times FY2010 and FY2011 EV/Ebitda. This compares with the likes of Las Vegas Sands and Wynn's, trading at a one-year forward 14 times and 12 times EV/Ebitda respectively despite their slower earnings growth and much higher gearing. Incorporating our recently revised target price for Genting Singapore, we are raising our SOP target price for Genting Bhd from RM11.70 to RM14.05, to which we have also pegged a 15% holding company discount. Its future catalysts include its ability to unlock the value of its power assets by potentially listing them. ' OSK Investment Research, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2010.
Company Name: GENTING BHD
Research House: OSK
Genting Bhd
(Sept 28, RM9.88)
Maintain buy at RM9.77 with higher target price of RM14.05 (from RM11.70): Genting group's Singaporean (Resorts World at Sentosa or RWS) and Malaysian gaming assets (Genting Malaysia) both performed above expectations in their 2QFY2010 quarterly results. This reinforces our view that the two new integrated resorts in Singapore have enlarged the region's gaming pie with minimal cannibalisation impact on Genting Malaysia's business. The group's relatively stable and expanding gaming business continued to form the bulk of its earnings at 85%, as at 1HFY2010, with Singapore already contributing 52% of the group's total revenue. We expect this to increase over time given the robust growth trajectory of its Singapore gaming operation.
The group's gaming assets (per share) alone are worth RM11.36 at the current market value, and RM13.33 based on our fair value versus Genting group's current market price of RM9.77. This implies that the stock is currently trading at a significant 33.6% discount to its sum-of-parts (SOP) valuation based on the current market value of the group's listed entities, and at an even steeper 40.8% discount based on our fair value of S$2.65 for Genting Singapore.
Following our recent earnings upgrade on Genting Singapore, we are raising our FY2010 and FY2011 earnings forecasts for the group by 19.9% and 8.3% respectively. Genting Bhd currently trades at an undemanding 14.6 times and 12.4 times FY2010 and FY2011 PER respectively, against its five-year historical average PER of 16.5 times. Its valuation is all the more undemanding if one considers its compelling three-year CAGR of 41%, largely driven by Genting Singapore's early cycle growth stage. Against the backdrop of such compelling growth, we think that the stock's current FY2010 and FY2011 EV/Ebitda valuations of 6.3 times and 5.2 times are indeed attractive.
The group's fast expanding global gaming footprint, covering gaming interests in Malaysia, Singapore, the UK, the Philippines and the US, is certainly not reflected in its below industry average valuations of 6.3 times and 5.2 times FY2010 and FY2011 EV/Ebitda. This compares with the likes of Las Vegas Sands and Wynn's, trading at a one-year forward 14 times and 12 times EV/Ebitda respectively despite their slower earnings growth and much higher gearing. Incorporating our recently revised target price for Genting Singapore, we are raising our SOP target price for Genting Bhd from RM11.70 to RM14.05, to which we have also pegged a 15% holding company discount. Its future catalysts include its ability to unlock the value of its power assets by potentially listing them. ' OSK Investment Research, Sept 28
This article appeared in The Edge Financial Daily, September 29, 2010.
M'sia GDP to grow 7.5pc in 2010: Maybank
MALAYSIA'S economy may grow by 7.5 per cent this year even though it may slow in the second half, Abdul Wahid Omar, chief executive officer of Malayan Banking Bhd told reporters in Kuala Lumpur today.
The country may achieve gross domestic product growth of 6.1 per cent next year, helped by some spillover from 2010 and new investment projects under the government's economic transformation program, he said. - Bloomberg
The country may achieve gross domestic product growth of 6.1 per cent next year, helped by some spillover from 2010 and new investment projects under the government's economic transformation program, he said. - Bloomberg
O&G sector 'overweight': MIDF
MIDF Research has maintained its 'overweight' recommendation on the oil and gas sector as it awaits further details on the entry point project (EPP) initiatives.
In a research note today, MIDF said the eight EPPs identified by thePerformance Management and Delivery Unit were positive as they were meant toprovide the impetus for a more robust development on the domestic oil and gas sector.
'Most of the companies under our oil and gas sector coverage are oil field services contractors that will most likely benefit from the increased activities particularly in the upstream oil and gas sector.
'The oil and gas initiatives which pertain to the upstream and downstream growth of the domestic oil and gas sector are mostly ongoing but nonetheless are now given more prominence with their inclusions in the EPP,' it said.
The research house, however, said the proposed strategic partnership and consolidation of the domestic fabricators and the efforts to attract global oilfield services companies to Malaysia were novel EPP ideas.
'They will help elevate the level of competencies and competitiveness of the local oil field service and equipment sector and turn Malaysia into the regional hub for oil field services,' it said. - Bernama
In a research note today, MIDF said the eight EPPs identified by thePerformance Management and Delivery Unit were positive as they were meant toprovide the impetus for a more robust development on the domestic oil and gas sector.
'Most of the companies under our oil and gas sector coverage are oil field services contractors that will most likely benefit from the increased activities particularly in the upstream oil and gas sector.
'The oil and gas initiatives which pertain to the upstream and downstream growth of the domestic oil and gas sector are mostly ongoing but nonetheless are now given more prominence with their inclusions in the EPP,' it said.
The research house, however, said the proposed strategic partnership and consolidation of the domestic fabricators and the efforts to attract global oilfield services companies to Malaysia were novel EPP ideas.
'They will help elevate the level of competencies and competitiveness of the local oil field service and equipment sector and turn Malaysia into the regional hub for oil field services,' it said. - Bernama
GAMUDA - RHB Research raises Gamuda fair value by 14% to RM4.51
Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: RHB
KUALA LUMPUR: RHB Research Institute raised its net profit forecasts for GAMUDA BHD [] for FY07/11-12 by 23% to 27% largely to reflect stronger property profits in Malaysia.
The research house said on Wednesday, Sept 29, the fair value was raised by 14% from RM3.96 to RM4.51.'' It maintained its Trading Buy call on the infrastructure-property company.
For the financial year ended July 31, 2010, Gamuda's earnings rose to RM280.69 million from RM193.69 million. Revenue was lower at RM2.45 billion compared with RM2.73 billion in FY09.
RHB Research said the FY07/10 net profit came in within its forecast and the market expectation.
Gamuda had said it was confident about securing the Cabinet approval for the RM36 billion MRT project 'before the end of the year'.'' It is optimistic that physical work can start as soon as by mid or late-2011.
Gamuda had also emerged one of the five final contenders for the RM1.5 billion Durkhan Highway 2 project in the Gulf states.
Gamuda is on track to launch the Tan Thang project in Vietnam in October 2010.'' However, the maiden launch of the Yenso Park project in Hanoi has been delayed to Feb 2011 from Aug 2010.
Company Name: GAMUDA BHD
Research House: RHB
KUALA LUMPUR: RHB Research Institute raised its net profit forecasts for GAMUDA BHD [] for FY07/11-12 by 23% to 27% largely to reflect stronger property profits in Malaysia.
The research house said on Wednesday, Sept 29, the fair value was raised by 14% from RM3.96 to RM4.51.'' It maintained its Trading Buy call on the infrastructure-property company.
For the financial year ended July 31, 2010, Gamuda's earnings rose to RM280.69 million from RM193.69 million. Revenue was lower at RM2.45 billion compared with RM2.73 billion in FY09.
RHB Research said the FY07/10 net profit came in within its forecast and the market expectation.
Gamuda had said it was confident about securing the Cabinet approval for the RM36 billion MRT project 'before the end of the year'.'' It is optimistic that physical work can start as soon as by mid or late-2011.
Gamuda had also emerged one of the five final contenders for the RM1.5 billion Durkhan Highway 2 project in the Gulf states.
Gamuda is on track to launch the Tan Thang project in Vietnam in October 2010.'' However, the maiden launch of the Yenso Park project in Hanoi has been delayed to Feb 2011 from Aug 2010.
PROTON - HLG Research: 6-month technical target price for Proton at RM6
Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: HLG
KUALA LUMPUR: HLG Research said PROTON HOLDINGS BHD []'s share price has been steadily picking up to as high as RM5.03 from a three-month low of RM4.35.
In a research note issued on Wednesday, Sept 29, it said the national car maker's share price gained seven sen to RM4.87 after the 20 sen final dividend went ex on Tuesday.
On the share price performance, it said the factors were:
(1) A strong 56% jump in its 1QFY11 earnings and aniticipating an equally good 2Q results ;
(2) Speculation of'' a consolidation in the auto industry has re-emerged;
(3) Ongoing speculation that Lotus might be sold to third parties, underscoring the company's inherent values;
(4) Strong domestic auto sales outlook;
(5) The replacement Waja as a potential catalyst for Proton, similar to the Exora which was released last year;
(6) Talks of strategic partners still ongoing after the VW deal fell through; and
(7) The completion of feasibility study on plant consolidation by year-end, as moving its production from Shah Alam to Tanjung Malim should also help trim costs, enhance operational efficiency and enable Proton to unlock the value of its 143-acre land in Shah Alam.
'At RM4.87, Proton is trading at 8.3x FY11 P/E (industry 9.2x) and 0.5x FY11 P/B (industry 1.3x). We expect the 9.8% P/E and 51% P/B discounts to the industry to narrow, underpinned by its improving fundamentals and strong net cash/share of RM2.64.
'Our 6-month technical target price for Proton is RM6, implying a 0.59x FY11 P/B, which is 15% discount to its 10-year average P/B of 0.7x,' it said.
Company Name: PROTON HOLDINGS BHD
Research House: HLG
KUALA LUMPUR: HLG Research said PROTON HOLDINGS BHD []'s share price has been steadily picking up to as high as RM5.03 from a three-month low of RM4.35.
In a research note issued on Wednesday, Sept 29, it said the national car maker's share price gained seven sen to RM4.87 after the 20 sen final dividend went ex on Tuesday.
On the share price performance, it said the factors were:
(1) A strong 56% jump in its 1QFY11 earnings and aniticipating an equally good 2Q results ;
(2) Speculation of'' a consolidation in the auto industry has re-emerged;
(3) Ongoing speculation that Lotus might be sold to third parties, underscoring the company's inherent values;
(4) Strong domestic auto sales outlook;
(5) The replacement Waja as a potential catalyst for Proton, similar to the Exora which was released last year;
(6) Talks of strategic partners still ongoing after the VW deal fell through; and
(7) The completion of feasibility study on plant consolidation by year-end, as moving its production from Shah Alam to Tanjung Malim should also help trim costs, enhance operational efficiency and enable Proton to unlock the value of its 143-acre land in Shah Alam.
'At RM4.87, Proton is trading at 8.3x FY11 P/E (industry 9.2x) and 0.5x FY11 P/B (industry 1.3x). We expect the 9.8% P/E and 51% P/B discounts to the industry to narrow, underpinned by its improving fundamentals and strong net cash/share of RM2.64.
'Our 6-month technical target price for Proton is RM6, implying a 0.59x FY11 P/B, which is 15% discount to its 10-year average P/B of 0.7x,' it said.
JTIASA - RHB Research keeps outperform on Jaya Tiasa, FV RM4.43
Stock Name: JTIASA
Company Name: JAYA TIASA HOLDINGS BHD
Research House: RHB
KUALA LUMPUR: RHB Research Institute is maintaining its Outperform recommendation on JAYA TIASA HOLDINGS BHD [] with an indicative fair value (FV) of RM4.43.
The research house said on Wednesday, Sept 29 the FV was based on 12 times CY11 timber and PLANTATION [] division earnings.
'We believe that Jaya Tiasa's prospects are looking up, given improving average selling prices of plywood and Japan housing starts. Earnings momentum is also supported by still strong demand for logs from China and India as well as the maturing age profile of Jaya Tiasa's plantation,' it said.
For the first quarter ended July 31, 2010, Jaya Tiasa's net profit was RM22.69 million versus only RM791,000 a year ago. Revenue rose 12% to RM185.5 million from RM166.3 million. Pre-tax profit jumped to RM30.1 million from RM2.1 million.
Better results in revenue and pre-tax profit were mainly due to improved proceeds from logs sales with 7% increase in average selling price; better margin of plywood sales with 16% reduction in costs of production due to higher production volume; and 66% increase in sales volume and 9% higher average selling price of fresh fruit bunches (FFB).
'The 1Q FY04/11 net profit of RM22.5 million came in at 31% and 40% of our and consensus forecast respectively. In line with our forecast as we expect Jaya Tiasa to record lower net profit in the next few quarters due to the strengthening of RM versus US dollar,' it said.
Company Name: JAYA TIASA HOLDINGS BHD
Research House: RHB
KUALA LUMPUR: RHB Research Institute is maintaining its Outperform recommendation on JAYA TIASA HOLDINGS BHD [] with an indicative fair value (FV) of RM4.43.
The research house said on Wednesday, Sept 29 the FV was based on 12 times CY11 timber and PLANTATION [] division earnings.
'We believe that Jaya Tiasa's prospects are looking up, given improving average selling prices of plywood and Japan housing starts. Earnings momentum is also supported by still strong demand for logs from China and India as well as the maturing age profile of Jaya Tiasa's plantation,' it said.
For the first quarter ended July 31, 2010, Jaya Tiasa's net profit was RM22.69 million versus only RM791,000 a year ago. Revenue rose 12% to RM185.5 million from RM166.3 million. Pre-tax profit jumped to RM30.1 million from RM2.1 million.
Better results in revenue and pre-tax profit were mainly due to improved proceeds from logs sales with 7% increase in average selling price; better margin of plywood sales with 16% reduction in costs of production due to higher production volume; and 66% increase in sales volume and 9% higher average selling price of fresh fruit bunches (FFB).
'The 1Q FY04/11 net profit of RM22.5 million came in at 31% and 40% of our and consensus forecast respectively. In line with our forecast as we expect Jaya Tiasa to record lower net profit in the next few quarters due to the strengthening of RM versus US dollar,' it said.
Press Metal rises on Sumitomo news
Press Metal Bhd, a Malaysia aluminum products maker, rose the most in a week in Kuala Lumpur trading after saying Japan's Sumitomo Corp will invest in its subsidiary which is building a smelter in Sarawak state.
Its shares gained 4.1 per cent to RM1.52 at 9:05 a.m. local time, set for their biggest increase since Sept. 20. -- Bloomberg
Its shares gained 4.1 per cent to RM1.52 at 9:05 a.m. local time, set for their biggest increase since Sept. 20. -- Bloomberg
Latecomers run to join Wall St's September rally
NEW YORK: U.S. stocks rose on Tuesday, Sept 28 as latecomers jumped onto the September bandwagon, buying up sectors that have outperformed during the month.
The S&P 500 has risen 9.4 percent so far in September, historically the worst month for stocks.
"When a month takes you by surprise like this, you tend to be underexposed to stocks and overexposed in cash and bonds. And as the quarter comes to an end, people are rushing to at least have ownership of the stocks that have performed well and have a good outlook. That's causing the aggressiveness in the market," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.
Sectors associated with improving economic growth have outperformed during this rally, and those stocks once again led Tuesday's advance. The Philadelphia semiconductor index rose 1.7 percent for the day and was up 13.8 percent for the month. The small-cap Russell 2000 gained 1.1 percent. Among the S&P 500's sectors, the consumer discretionary index was up 0.8 percent.
Boosting energy and commodity shares, spot gold prices surged to a fresh record at $1,310.10 an ounce.
The Dow Jones industrial average gained 46.10 points, or 0.43 percent, to end at 10,858.14. The Standard & Poor's 500 Index rose 5.54 points, or 0.49 percent, to 1,147.70. The Nasdaq Composite Index advanced 9.82 points, or 0.41 percent, to 2,379.59.
With only two days left in September, the Dow is up 8.4 percent for the month.
Walgreen Co, the biggest U.S. drugstore chain, reported higher-than-expected quarterly earnings, helped by strong prescription drug sales. Its shares jumped 11.4 percent to $33.81.
Continuing the spurt of recent M&A activity, Endo Pharmaceuticals Holdings Inc will buy private generics maker Qualitest Pharmaceuticals for about $1.2 billion, marking its second deal in as many months. Endo shares advanced 8.1 percent to $33.10.
TOO FAR, TOO FAST FOR TECH?
Shares of Apple Inc slid as much as 5.6 percent on rumors its No. 2 executive was departing for Hewlett-Packard Co, but the stock recovered as analysts dismissed the speculation.
Representatives from Apple and Hewlett-Packard declined to comment.
Apple shares shed 1.5 percent to $286.86.
HP shares closed up 0.9 percent at $41.63 amid speculation that the IT giant may announce a replacement for its former CEO at a financial analysts' meeting currently being held in Palo Alto, California.
With the Nasdaq up 12.6 percent for the month, some analysts noted that the TECHNOLOGY [] sector may be overbought on a short-term basis.
The sector broke out of its summer trading range last week, and was back above its 150-day moving average, outperforming both the wider market and defensive areas, Concept Capital said in a research note.
Wall Street had opened lower after data showed U.S. consumer confidence fell in September to its lowest level since February, but investors quickly brushed off the bad news.
"Consumer confidence numbers are a reflection of news that we already know. It's now all about how companies will be performing next quarter," Pado said. - Reuters
HDBSVR sees Bursa trading sideways
KUALA LUMPUR: Hwang DBS Vickers Research said on Wednesday, Sept 29 that although Wall Street was marginally up overnight, the Malaysian bourse would likely show a sideways performance with a downward bias.
On Wall Street, The Dow Jones industrial average gained 46.10 points, or 0.43 percent, to end at 10,858.14. The Standard & Poor's 500 Index rose 5.54 points, or 0.49 percent, to 1,147.70. The Nasdaq Composite Index advanced 9.82 points, or 0.41 percent, to 2,379.59.
The research house said Wall Street's key equity indices rose between 0.4% and 0.5% at the closing bell mainly lifted by consumer and health companies as well as speculations that the Federal Reserve might purchase more debt to boost the economy.
As for Bursa Malayasia, the profit-taking mood is likely to persist in the absence of fresh buying catalysts.
"On the chart, the benchmark FBM KLCI could be making its way towards the immediate support level of 1,435 ahead.
"Meanwhile, it has been relatively quiet on the corporate front too. Against this backdrop, Gamuda – which announced a good set of financial results last evening – may stand out as a favourite CONSTRUCTION [] play," it said.
Tuesday, September 28, 2010
Gamuda 4Q net profit surges 77% to RM76.6m
KUALA LUMPUR: GAMUDA BHD []'s earnings surged 77% to RM76.61 million in the fourth quarter ended July 31, 2010 from RM43.29 million a year ago, due to higher contributions from all divisions and expects to perform better in the next financial year.
It said on Tuesday, Sept 28 revenue however declined 24% to RM714.78 million from RM942.24 million a year ago. Earnings per share were 3.79 sen versus 2.16 sen.
For the financial year ended July 31, 2010, earnings rose to RM280.69 million from RM193.69 million. Revenue was lower at RM2.45 billion compared with RM2.73 billion in FY09.
"The increases in profit before tax for the current quarter and current year are due to higher contributions from all divisions," it said.
For the current quarter under review, the group's profit before tax of RM105.1 million was higher than the immediate preceding quarter's profit before tax of RM91.3 million.
"With the existing CONSTRUCTION [] projects progressing on schedule and the strong property sales recorded by the property division, the group is expected to perform better in the next financial year," it said.
On the electrified double track project, Gamuda said work progress was expected to accelerate in the next financial year.
On the new Doha International Airport project in Qatar, it said the project was progressing on schedule with 88% of the works completed.
"Collections from the Qatari Government continue to be on time. The project is scheduled for completion in the next financial year," it said.
On the Yenso Park and sewage treatment plant projects in Vietnam, Gamuda said work progress was on track and the projects were expected to be substantially completed in the next financial year.
"The group's property division continues to benefit from the improved market sentiments due to the strategic locations of our land banks and the higher demand for the products that were launched recently. The property development products in Hanoi (Yenso) and Ho Chi Minh City (Tan Thang) are expected to be launched in the next financial year," it said.
Results: Scientex profit rises to RM71m
# KIM LOONG RESOURCES BHD's pre-tax profit in its half year ended July 31, 2010, rose to RM39.992 million from RM38.286 million in same period last year.
Revenue increased to RM266.022 million from RM225.020 million previously.
In its second quarter, Kim Loong posted a lower pre-tax profit of RM19.1 million compared to RM22.7 million in same quarter a year ago.
Revenue increased to RM139 million from RM126 million previously.
# SCIENTEX BHD's pre-tax profit in its financial year ended July 31, 2010, increased to RM70.8 million from RM42.1 million in the previous year.
Revenue rose to RM694.8 million from RM509.7 million previously.
In the fourth quarter, the company's pre-tax profit went up to RM21.7 million from RM15.8 million in the same quarter a year ago.
Revenue increased to RM191.7 million from RM134.8 million previously.
# CRESCENDO CORPORATION BHD's pre-tax profit in its half year ended July 31, 2010, rose to RM21.3 million from RM14.8 million in same period last year.
Revenue increased to RM99.4 million from RM79.1 million previously.
In its second quarter, Crescendo posted a higher pre-tax profit of RM13.9 million compared to RM8.2 million in same quarter a year ago.
Revenue went up to RM54.7 million from RM42.8 million previously.
# POH KONG HOLDINGS BHD's pre-tax profit in its financial year ended July 31, 2010, went up to RM44.3 million from RM38.6 million in the previous year.
Revenue rose to RM561.2 million from RM541.6 million previously.
In the fourth quarter, the company's pre-tax profit was lower at RM9.6 million compared to RM11.7 million in the same quarter a year ago.
Revenue increased to RM131.9 million from RM124.1 million previously. -- Bernama
Revenue increased to RM266.022 million from RM225.020 million previously.
In its second quarter, Kim Loong posted a lower pre-tax profit of RM19.1 million compared to RM22.7 million in same quarter a year ago.
Revenue increased to RM139 million from RM126 million previously.
# SCIENTEX BHD's pre-tax profit in its financial year ended July 31, 2010, increased to RM70.8 million from RM42.1 million in the previous year.
Revenue rose to RM694.8 million from RM509.7 million previously.
In the fourth quarter, the company's pre-tax profit went up to RM21.7 million from RM15.8 million in the same quarter a year ago.
Revenue increased to RM191.7 million from RM134.8 million previously.
# CRESCENDO CORPORATION BHD's pre-tax profit in its half year ended July 31, 2010, rose to RM21.3 million from RM14.8 million in same period last year.
Revenue increased to RM99.4 million from RM79.1 million previously.
In its second quarter, Crescendo posted a higher pre-tax profit of RM13.9 million compared to RM8.2 million in same quarter a year ago.
Revenue went up to RM54.7 million from RM42.8 million previously.
# POH KONG HOLDINGS BHD's pre-tax profit in its financial year ended July 31, 2010, went up to RM44.3 million from RM38.6 million in the previous year.
Revenue rose to RM561.2 million from RM541.6 million previously.
In the fourth quarter, the company's pre-tax profit was lower at RM9.6 million compared to RM11.7 million in the same quarter a year ago.
Revenue increased to RM131.9 million from RM124.1 million previously. -- Bernama
Supermax expects RM1b sales this year
SUPERMAX Corporation Bhd expects to achieve close to RM1 billion annual sales by the end of its current financial year ending Dec 31, 2010.
Its executive chairman and group managing director Datuk Seri Stanley Thai, in stating this, said sales would be driven world demand and good marketing strategy.
'This will an increase of 20 per cent from the previous year's annual sales of RM800,000,' Thai said on the sidelines of the Fifth International Rubber Gloves Conference and Exhibition launch here today.
He said by December this year, the group's installed capacity should be able to produce 17.5 billion pieces of gloves.
Asked about the group's plans, Thai said the company was building its Glove City in Kapar, Klang, under a project costing RM400 million.
'Phase one of the project is expected to be commissioned by the second half of next year,' he said.
The project will be funded by internal sources and is expected to be completed by 2020, Thai said.
'Upon completion, Glove City will consist of six rubber glove manufacturing plants in which every plant can generate 4.1 billion pieces of gloves a year,' he said. - BERNAMA
Its executive chairman and group managing director Datuk Seri Stanley Thai, in stating this, said sales would be driven world demand and good marketing strategy.
'This will an increase of 20 per cent from the previous year's annual sales of RM800,000,' Thai said on the sidelines of the Fifth International Rubber Gloves Conference and Exhibition launch here today.
He said by December this year, the group's installed capacity should be able to produce 17.5 billion pieces of gloves.
Asked about the group's plans, Thai said the company was building its Glove City in Kapar, Klang, under a project costing RM400 million.
'Phase one of the project is expected to be commissioned by the second half of next year,' he said.
The project will be funded by internal sources and is expected to be completed by 2020, Thai said.
'Upon completion, Glove City will consist of six rubber glove manufacturing plants in which every plant can generate 4.1 billion pieces of gloves a year,' he said. - BERNAMA
SUNWAY - Sunway Holdings in Sri Lankan endeavours
Stock Name: SUNWAY
Company Name: SUNWAY HOLDINGS BHD
Research House: OSK
Sunway Holdings Bhd
(Sept 27, RM1.91)
Maintain buy at RM1.79 with target price RM2.52: Last Friday, Sunway announced on Bursa Malaysia that it had entered into a joint-venture agreement with Dasa Tourist Complex Private Ltd (Dasa) to undertake a mixed development in Colombo, Sri Lanka. The development will comprise at least 318,000 sq ft of net saleable areas comprising residential units and 60,000 sq ft of commercial units.
Sunway will have a 65% stake in the JV while Dasa will hold the balance of 35%. Dasa is a Sri Lankan incorporated company with its primary business being in the manufacture of textiles and garments.
It is estimated that the proposed mixed development will have a gross development value (GDV) of US$80 million (RM250 million). The development will comprise a 34-storey building consisting of 70 commercial and 180 residential units with an ocean view. It will be located roughly 5km from the central business district of Colombo. Colombo is the largest city in Sri Lanka (former capital) with an estimated population of 1.3 million. The central business district of Colombo is located 40km from the Bandaraneyake Airport.
Following the defeat of the Liberation Tigers of Tamil Eelam in May 2009, Sri Lanka is now enjoying political stability. The International Monetary Fund projects Sri Lanka's gross domestic product to grow by 5.5% in 2010 and 6.5% in 2011. Both economic growth and a stable political climate have spurred an uptrend in its property prices. Prices have also been supported by limited supply in both the residential and commercial segments.
Management expects the launch to take place in 2Q2011. Our estimates are, however, unchanged for now as we are unable to ascertain the potential take-up rate from this new venture. We have a three-year earnings CAGR forecast of 33.9%. Our RM2.52 target price continues to be based on 12 times partially diluted mid CY2011 EPS. Sunway remains one of our top sector picks for its undemanding valuation and strong earnings growth. ' OSK Investment Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2010.
Company Name: SUNWAY HOLDINGS BHD
Research House: OSK
Sunway Holdings Bhd
(Sept 27, RM1.91)
Maintain buy at RM1.79 with target price RM2.52: Last Friday, Sunway announced on Bursa Malaysia that it had entered into a joint-venture agreement with Dasa Tourist Complex Private Ltd (Dasa) to undertake a mixed development in Colombo, Sri Lanka. The development will comprise at least 318,000 sq ft of net saleable areas comprising residential units and 60,000 sq ft of commercial units.
Sunway will have a 65% stake in the JV while Dasa will hold the balance of 35%. Dasa is a Sri Lankan incorporated company with its primary business being in the manufacture of textiles and garments.
It is estimated that the proposed mixed development will have a gross development value (GDV) of US$80 million (RM250 million). The development will comprise a 34-storey building consisting of 70 commercial and 180 residential units with an ocean view. It will be located roughly 5km from the central business district of Colombo. Colombo is the largest city in Sri Lanka (former capital) with an estimated population of 1.3 million. The central business district of Colombo is located 40km from the Bandaraneyake Airport.
Following the defeat of the Liberation Tigers of Tamil Eelam in May 2009, Sri Lanka is now enjoying political stability. The International Monetary Fund projects Sri Lanka's gross domestic product to grow by 5.5% in 2010 and 6.5% in 2011. Both economic growth and a stable political climate have spurred an uptrend in its property prices. Prices have also been supported by limited supply in both the residential and commercial segments.
Management expects the launch to take place in 2Q2011. Our estimates are, however, unchanged for now as we are unable to ascertain the potential take-up rate from this new venture. We have a three-year earnings CAGR forecast of 33.9%. Our RM2.52 target price continues to be based on 12 times partially diluted mid CY2011 EPS. Sunway remains one of our top sector picks for its undemanding valuation and strong earnings growth. ' OSK Investment Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2010.
TCHONG - A festive drive home for auto industry
Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD
Research House: CIMB
Automotive sector
Maintain overweight: Total industry volume (TIV) in August advanced 14% year-on-year (y-o-y) and 3% month-on-month to 55,208 units, the third highest monthly sales in five years after October 2005's 56,695 units and March 2010's 56,139 units. Sales in August were largely buoyed by the rush for delivery before the Hari Raya Aidilfitri festive season. We maintain our 'overweight' call on the auto sector as major demand drivers such as the economic outlook, consumer sentiment, the availability of credit, and new models are intact. On the cost front, a stronger ringgit against the greenback and the recent intervention by the Japanese government to control the rising yen spell good news for auto players. Potential re-rating catalysts include: (i) the strong sales performance; (ii) a firming ringgit; and (iii) more accommodating policies.
We are keeping our 10% growth projection of 590,955 units. Although annualised year-to-date vehicle sales are 4% ahead of our expectations, we expect y-o-y sales growth to moderate in the subsequent months as the base of comparison is relatively higher, given that vehicle sales recovered towards 2H2009. We expect the festive-shortened September to be soft on a quarter-on-quarter basis. We are also keeping our 5% TIV growth assumption for 2011.
The sales of most major MPVs such as Proton Exora, Perodua Alza, Nissan Grand Livina, Honda Freed, Toyota Innova and even the flailing Toyota Avanza strengthened in August. We think more families may have opted for larger vehicles in the run-up to the festive season when they expected to travel more.
We retain our earnings forecasts, recommendations and target prices for Tan Chong ('outperform'; target price RM9.30), UMW ('outperform'; TP RM8.70), and Proton ('trading buy'; TP RM5.95).'' Tan Chong remains our top pick in the auto sector. Backed by its expansion plans and stronger industry fundamentals, Tan Chong boasts impressive earnings growth potential over the next three years, which should support our EPS CAGR projection of 47%. Catalysts would be: (ii) stronger earnings growth trajectory; (ii) new model pipeline; and (iii) strategic positioning which will help it gain market share and tap into regional demand. ' CIMB Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2010.
Company Name: TAN CHONG MOTOR HOLDINGS BHD
Research House: CIMB
Automotive sector
Maintain overweight: Total industry volume (TIV) in August advanced 14% year-on-year (y-o-y) and 3% month-on-month to 55,208 units, the third highest monthly sales in five years after October 2005's 56,695 units and March 2010's 56,139 units. Sales in August were largely buoyed by the rush for delivery before the Hari Raya Aidilfitri festive season. We maintain our 'overweight' call on the auto sector as major demand drivers such as the economic outlook, consumer sentiment, the availability of credit, and new models are intact. On the cost front, a stronger ringgit against the greenback and the recent intervention by the Japanese government to control the rising yen spell good news for auto players. Potential re-rating catalysts include: (i) the strong sales performance; (ii) a firming ringgit; and (iii) more accommodating policies.
We are keeping our 10% growth projection of 590,955 units. Although annualised year-to-date vehicle sales are 4% ahead of our expectations, we expect y-o-y sales growth to moderate in the subsequent months as the base of comparison is relatively higher, given that vehicle sales recovered towards 2H2009. We expect the festive-shortened September to be soft on a quarter-on-quarter basis. We are also keeping our 5% TIV growth assumption for 2011.
The sales of most major MPVs such as Proton Exora, Perodua Alza, Nissan Grand Livina, Honda Freed, Toyota Innova and even the flailing Toyota Avanza strengthened in August. We think more families may have opted for larger vehicles in the run-up to the festive season when they expected to travel more.
We retain our earnings forecasts, recommendations and target prices for Tan Chong ('outperform'; target price RM9.30), UMW ('outperform'; TP RM8.70), and Proton ('trading buy'; TP RM5.95).'' Tan Chong remains our top pick in the auto sector. Backed by its expansion plans and stronger industry fundamentals, Tan Chong boasts impressive earnings growth potential over the next three years, which should support our EPS CAGR projection of 47%. Catalysts would be: (ii) stronger earnings growth trajectory; (ii) new model pipeline; and (iii) strategic positioning which will help it gain market share and tap into regional demand. ' CIMB Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2010.
PROTON - A festive drive home for auto industry
Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: CIMB
Automotive sector
Maintain overweight: Total industry volume (TIV) in August advanced 14% year-on-year (y-o-y) and 3% month-on-month to 55,208 units, the third highest monthly sales in five years after October 2005's 56,695 units and March 2010's 56,139 units. Sales in August were largely buoyed by the rush for delivery before the Hari Raya Aidilfitri festive season. We maintain our 'overweight' call on the auto sector as major demand drivers such as the economic outlook, consumer sentiment, the availability of credit, and new models are intact. On the cost front, a stronger ringgit against the greenback and the recent intervention by the Japanese government to control the rising yen spell good news for auto players. Potential re-rating catalysts include: (i) the strong sales performance; (ii) a firming ringgit; and (iii) more accommodating policies.
We are keeping our 10% growth projection of 590,955 units. Although annualised year-to-date vehicle sales are 4% ahead of our expectations, we expect y-o-y sales growth to moderate in the subsequent months as the base of comparison is relatively higher, given that vehicle sales recovered towards 2H2009. We expect the festive-shortened September to be soft on a quarter-on-quarter basis. We are also keeping our 5% TIV growth assumption for 2011.
The sales of most major MPVs such as Proton Exora, Perodua Alza, Nissan Grand Livina, Honda Freed, Toyota Innova and even the flailing Toyota Avanza strengthened in August. We think more families may have opted for larger vehicles in the run-up to the festive season when they expected to travel more.
We retain our earnings forecasts, recommendations and target prices for Tan Chong ('outperform'; target price RM9.30), UMW ('outperform'; TP RM8.70), and Proton ('trading buy'; TP RM5.95).'' Tan Chong remains our top pick in the auto sector. Backed by its expansion plans and stronger industry fundamentals, Tan Chong boasts impressive earnings growth potential over the next three years, which should support our EPS CAGR projection of 47%. Catalysts would be: (ii) stronger earnings growth trajectory; (ii) new model pipeline; and (iii) strategic positioning which will help it gain market share and tap into regional demand. ' CIMB Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2010.
Company Name: PROTON HOLDINGS BHD
Research House: CIMB
Automotive sector
Maintain overweight: Total industry volume (TIV) in August advanced 14% year-on-year (y-o-y) and 3% month-on-month to 55,208 units, the third highest monthly sales in five years after October 2005's 56,695 units and March 2010's 56,139 units. Sales in August were largely buoyed by the rush for delivery before the Hari Raya Aidilfitri festive season. We maintain our 'overweight' call on the auto sector as major demand drivers such as the economic outlook, consumer sentiment, the availability of credit, and new models are intact. On the cost front, a stronger ringgit against the greenback and the recent intervention by the Japanese government to control the rising yen spell good news for auto players. Potential re-rating catalysts include: (i) the strong sales performance; (ii) a firming ringgit; and (iii) more accommodating policies.
We are keeping our 10% growth projection of 590,955 units. Although annualised year-to-date vehicle sales are 4% ahead of our expectations, we expect y-o-y sales growth to moderate in the subsequent months as the base of comparison is relatively higher, given that vehicle sales recovered towards 2H2009. We expect the festive-shortened September to be soft on a quarter-on-quarter basis. We are also keeping our 5% TIV growth assumption for 2011.
The sales of most major MPVs such as Proton Exora, Perodua Alza, Nissan Grand Livina, Honda Freed, Toyota Innova and even the flailing Toyota Avanza strengthened in August. We think more families may have opted for larger vehicles in the run-up to the festive season when they expected to travel more.
We retain our earnings forecasts, recommendations and target prices for Tan Chong ('outperform'; target price RM9.30), UMW ('outperform'; TP RM8.70), and Proton ('trading buy'; TP RM5.95).'' Tan Chong remains our top pick in the auto sector. Backed by its expansion plans and stronger industry fundamentals, Tan Chong boasts impressive earnings growth potential over the next three years, which should support our EPS CAGR projection of 47%. Catalysts would be: (ii) stronger earnings growth trajectory; (ii) new model pipeline; and (iii) strategic positioning which will help it gain market share and tap into regional demand. ' CIMB Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2010.
UMW - A festive drive home for auto industry
Stock Name: UMW
Company Name: UMW HOLDINGS BHD
Research House: CIMB
Automotive sector
Maintain overweight: Total industry volume (TIV) in August advanced 14% year-on-year (y-o-y) and 3% month-on-month to 55,208 units, the third highest monthly sales in five years after October 2005's 56,695 units and March 2010's 56,139 units. Sales in August were largely buoyed by the rush for delivery before the Hari Raya Aidilfitri festive season. We maintain our 'overweight' call on the auto sector as major demand drivers such as the economic outlook, consumer sentiment, the availability of credit, and new models are intact. On the cost front, a stronger ringgit against the greenback and the recent intervention by the Japanese government to control the rising yen spell good news for auto players. Potential re-rating catalysts include: (i) the strong sales performance; (ii) a firming ringgit; and (iii) more accommodating policies.
We are keeping our 10% growth projection of 590,955 units. Although annualised year-to-date vehicle sales are 4% ahead of our expectations, we expect y-o-y sales growth to moderate in the subsequent months as the base of comparison is relatively higher, given that vehicle sales recovered towards 2H2009. We expect the festive-shortened September to be soft on a quarter-on-quarter basis. We are also keeping our 5% TIV growth assumption for 2011.
The sales of most major MPVs such as Proton Exora, Perodua Alza, Nissan Grand Livina, Honda Freed, Toyota Innova and even the flailing Toyota Avanza strengthened in August. We think more families may have opted for larger vehicles in the run-up to the festive season when they expected to travel more.
We retain our earnings forecasts, recommendations and target prices for Tan Chong ('outperform'; target price RM9.30), UMW ('outperform'; TP RM8.70), and Proton ('trading buy'; TP RM5.95).'' Tan Chong remains our top pick in the auto sector. Backed by its expansion plans and stronger industry fundamentals, Tan Chong boasts impressive earnings growth potential over the next three years, which should support our EPS CAGR projection of 47%. Catalysts would be: (ii) stronger earnings growth trajectory; (ii) new model pipeline; and (iii) strategic positioning which will help it gain market share and tap into regional demand. ' CIMB Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2010.
Company Name: UMW HOLDINGS BHD
Research House: CIMB
Automotive sector
Maintain overweight: Total industry volume (TIV) in August advanced 14% year-on-year (y-o-y) and 3% month-on-month to 55,208 units, the third highest monthly sales in five years after October 2005's 56,695 units and March 2010's 56,139 units. Sales in August were largely buoyed by the rush for delivery before the Hari Raya Aidilfitri festive season. We maintain our 'overweight' call on the auto sector as major demand drivers such as the economic outlook, consumer sentiment, the availability of credit, and new models are intact. On the cost front, a stronger ringgit against the greenback and the recent intervention by the Japanese government to control the rising yen spell good news for auto players. Potential re-rating catalysts include: (i) the strong sales performance; (ii) a firming ringgit; and (iii) more accommodating policies.
We are keeping our 10% growth projection of 590,955 units. Although annualised year-to-date vehicle sales are 4% ahead of our expectations, we expect y-o-y sales growth to moderate in the subsequent months as the base of comparison is relatively higher, given that vehicle sales recovered towards 2H2009. We expect the festive-shortened September to be soft on a quarter-on-quarter basis. We are also keeping our 5% TIV growth assumption for 2011.
The sales of most major MPVs such as Proton Exora, Perodua Alza, Nissan Grand Livina, Honda Freed, Toyota Innova and even the flailing Toyota Avanza strengthened in August. We think more families may have opted for larger vehicles in the run-up to the festive season when they expected to travel more.
We retain our earnings forecasts, recommendations and target prices for Tan Chong ('outperform'; target price RM9.30), UMW ('outperform'; TP RM8.70), and Proton ('trading buy'; TP RM5.95).'' Tan Chong remains our top pick in the auto sector. Backed by its expansion plans and stronger industry fundamentals, Tan Chong boasts impressive earnings growth potential over the next three years, which should support our EPS CAGR projection of 47%. Catalysts would be: (ii) stronger earnings growth trajectory; (ii) new model pipeline; and (iii) strategic positioning which will help it gain market share and tap into regional demand. ' CIMB Research, Sept 27
This article appeared in The Edge Financial Daily, September 28, 2010.
HLB a step closer to EON takeover
HONG Leong Bank Bhd, Malaysia's sixth-biggest bank by market value, is a step closer to taking over EON Capital Bhd after yesterday's shareholder vote, Managing Director Yvonne Chia told reporters in Kuala Lumpur today.
EON's shareholders approved a RM5.06 billion takeover offer by billionaire Quek Leng Chan's Hong Leong, even though EON's biggest investor, Primus Pacific Partners Ltd, is trying to block the sale in court.
'It marks a very important step for Hong Leong,' Chia said. A successful takeover is a 'springboard for Hong Leong to achieve greater economies of scale.' - Bloomberg
EON's shareholders approved a RM5.06 billion takeover offer by billionaire Quek Leng Chan's Hong Leong, even though EON's biggest investor, Primus Pacific Partners Ltd, is trying to block the sale in court.
'It marks a very important step for Hong Leong,' Chia said. A successful takeover is a 'springboard for Hong Leong to achieve greater economies of scale.' - Bloomberg
PUNCAK - Puncak Niaga still a 'buy'
Stock Name: PUNCAK
Company Name: PUNCAK NIAGA HOLDINGS BHD
Research House: KENANGA
KENANGA Research has maintained its "buy" recommendation on Puncak Niaga Holdings, with an unchanged target price of RM3.74 despite the proposed water tariff hike.
It was reported in a local newspaper that the federal government has agreed in principle for 15 per cent to 20 per cent water tariff for Syarikat Bekalan Air Selangor Sdn Bhd (Syabas).
Nonetheless, the report stated that the decision has yet to get the approval from Selangor state government as per the concession agreement.
To recap, Syabas was supposed to get a 37 per cent tariff hike in the financial year 20009 which was delayed due to a consolidation tussle.
"We still like Puncak Niaga for takeover angle and the fundamental lies on its concession agreement which could provide some push factor to bid for higher price during the consolidation process," Kenanga said in a research note today.
The research house said it believed that the proposed tariff hike is initiated by the federal government to mitigate further downgrade in credit rating for the water related bonds.
Syabas is a 70 per cent owned by Puncak Niaga.
Kenanga said the proposed tariff hike is positive for the sector as a whole but this proposal is not expected to resolve Puncak Niaga's financial issue in the long run.
Both Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) and Konsortium Abbas Sdn Bhd made a claim for about RM250 million from Puncak Niaga for unpaid receiveable since late financial year 2008.
"We believe that should Syabas gets the tariff hike, it will add another RM18.5 million a month due to delay in tariff," Kenanga said.
Currently, the state's water assets are parked under four concessionaires comprising Puncak Niaga, Syabas, Splash and Konsortium Abbas. -- BERNAMA
Company Name: PUNCAK NIAGA HOLDINGS BHD
Research House: KENANGA
KENANGA Research has maintained its "buy" recommendation on Puncak Niaga Holdings, with an unchanged target price of RM3.74 despite the proposed water tariff hike.
It was reported in a local newspaper that the federal government has agreed in principle for 15 per cent to 20 per cent water tariff for Syarikat Bekalan Air Selangor Sdn Bhd (Syabas).
Nonetheless, the report stated that the decision has yet to get the approval from Selangor state government as per the concession agreement.
To recap, Syabas was supposed to get a 37 per cent tariff hike in the financial year 20009 which was delayed due to a consolidation tussle.
"We still like Puncak Niaga for takeover angle and the fundamental lies on its concession agreement which could provide some push factor to bid for higher price during the consolidation process," Kenanga said in a research note today.
The research house said it believed that the proposed tariff hike is initiated by the federal government to mitigate further downgrade in credit rating for the water related bonds.
Syabas is a 70 per cent owned by Puncak Niaga.
Kenanga said the proposed tariff hike is positive for the sector as a whole but this proposal is not expected to resolve Puncak Niaga's financial issue in the long run.
Both Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) and Konsortium Abbas Sdn Bhd made a claim for about RM250 million from Puncak Niaga for unpaid receiveable since late financial year 2008.
"We believe that should Syabas gets the tariff hike, it will add another RM18.5 million a month due to delay in tariff," Kenanga said.
Currently, the state's water assets are parked under four concessionaires comprising Puncak Niaga, Syabas, Splash and Konsortium Abbas. -- BERNAMA
TOPGLOV - RHB Research downgrades Top Glove to Underperform
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Research House: RHB
KUALA LUMPUR: RHB Research has downgraded Top Glove Corp Bhd to underperform from market perform based on the weaker earnings outlook.
The research house said on Tuesday, Sept 28 it had cut its target PER to 12.5 times from 15 times and lowered the fair value to RM5.30 (from RM6.90).
Top Glove is expected to announce its full-year results on Oct 6. While it expects weaker numbers on-quarter, for the full-year, it sees on-year growth of approximately 40%-45% largely due to higher sales volume; and'' margin expansion on the back of better economies of scale.
On-quarter,'' RHB Research expects earnings to be weaker on the back of weaker revenue; and margin contraction largely due to time lag in passing on weakening US dollar.
'We have kept our FY10 earnings forecast unchanged for now. However, we have lowered our FY11 and FY12 forecasts by 10.4% and 9.7% after lowering our corresponding capacity utilisation rate assumptions,' it said.
At 2.32pm, Top Glove shares are unchanged at RM5.25. There were 645,800 shares transacted at prices ranging from RM5.21 to RM5.31.
Company Name: TOP GLOVE CORPORATION BHD
Research House: RHB
KUALA LUMPUR: RHB Research has downgraded Top Glove Corp Bhd to underperform from market perform based on the weaker earnings outlook.
The research house said on Tuesday, Sept 28 it had cut its target PER to 12.5 times from 15 times and lowered the fair value to RM5.30 (from RM6.90).
Top Glove is expected to announce its full-year results on Oct 6. While it expects weaker numbers on-quarter, for the full-year, it sees on-year growth of approximately 40%-45% largely due to higher sales volume; and'' margin expansion on the back of better economies of scale.
On-quarter,'' RHB Research expects earnings to be weaker on the back of weaker revenue; and margin contraction largely due to time lag in passing on weakening US dollar.
'We have kept our FY10 earnings forecast unchanged for now. However, we have lowered our FY11 and FY12 forecasts by 10.4% and 9.7% after lowering our corresponding capacity utilisation rate assumptions,' it said.
At 2.32pm, Top Glove shares are unchanged at RM5.25. There were 645,800 shares transacted at prices ranging from RM5.21 to RM5.31.
HLBANK - Hong Leong Bank still a 'buy' at OSK
Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD
Research House: OSK
OSK Research Sdn Bhd is maintaining a "buy" call on Hong Leong Bank Bhd, saying, any share price weakness should be seen as an opportunity to accumulate.
OSK Research also said the completion of the deal with regard to the proposed takeover of EON Capital Bhd's assets and liabilities, would prompt it to raise the target price for HLBB to RM9.80.
"The acquisition will be EPS (earnings per share), ROE (return on equity) and book value-accretive to an enlarged HLBank, even without factoring in any merger synergies," OSK Research said in latest research note today.
It however, maintained a "neutral" call on EONCap shares.
EONCap yesterday received an approval of 97 per cent of the voting shares at an extraordinary general meeting (EGM) to consider the proposed acquisition of the group by HLBB for RM5.06 billion.
"The tabling of the offer at an EGM even before the court makes a decision, implies that the board is confident of securing the necessary majority support from shareholders, to see the deal through.
"It is also unfazed by Primus' pending legal suit, which would only serve to delay the deal," the research house said.
It said the completion of the HLBank-EONCap deal could only be ascertained and finalised by end-2010.
This is because the deal, is contingent on the final decision of the court hearing, which would only be made known by end-2010. - Bernama
Company Name: HONG LEONG BANK BHD
Research House: OSK
OSK Research Sdn Bhd is maintaining a "buy" call on Hong Leong Bank Bhd, saying, any share price weakness should be seen as an opportunity to accumulate.
OSK Research also said the completion of the deal with regard to the proposed takeover of EON Capital Bhd's assets and liabilities, would prompt it to raise the target price for HLBB to RM9.80.
"The acquisition will be EPS (earnings per share), ROE (return on equity) and book value-accretive to an enlarged HLBank, even without factoring in any merger synergies," OSK Research said in latest research note today.
It however, maintained a "neutral" call on EONCap shares.
EONCap yesterday received an approval of 97 per cent of the voting shares at an extraordinary general meeting (EGM) to consider the proposed acquisition of the group by HLBB for RM5.06 billion.
"The tabling of the offer at an EGM even before the court makes a decision, implies that the board is confident of securing the necessary majority support from shareholders, to see the deal through.
"It is also unfazed by Primus' pending legal suit, which would only serve to delay the deal," the research house said.
It said the completion of the HLBank-EONCap deal could only be ascertained and finalised by end-2010.
This is because the deal, is contingent on the final decision of the court hearing, which would only be made known by end-2010. - Bernama
ADVENTA - OSK Research maintains Buy on Adventa
Stock Name: ADVENTA
Company Name: ADVENTA BHD
Research House: OSK
KUALA LUMPUR: OSK Research maintains a Buy on Adventa with a target price of RM3.73.
It said on Tuesday, Sept 28, the glove maker's 3QFY10 results were within expectations.
Although this quarter's results were affected by continuously high latex prices and an unfavorable exchange rate, Adventa's 3QFY10 net profit leapt by 27.1% on-quarter, mainly contributed by the higher sales of surgical gloves, which fetch higher margin.
'Despite our recent downgrade on the rubber glove sector to Neutral, we continue to like the company's leadership in the surgical and dental gloves segment. Maintain Buy with a target price of RM3.73,' it said.
OSK Research said its target price of RM3.73 was based on a PER valuation of 12 times FY11 EPS. Although it was Neutral on the rubber glove sector, it continued to like the company's market leadership in surgical gloves as well as its niche in the dental glove segment.
'Currently, we observe that the higher end examination gloves have proven to be more resilient to normalization in demand, which we believe is the main factor hampering the performance of some of the listed rubber glove companies,' it said.
Company Name: ADVENTA BHD
Research House: OSK
KUALA LUMPUR: OSK Research maintains a Buy on Adventa with a target price of RM3.73.
It said on Tuesday, Sept 28, the glove maker's 3QFY10 results were within expectations.
Although this quarter's results were affected by continuously high latex prices and an unfavorable exchange rate, Adventa's 3QFY10 net profit leapt by 27.1% on-quarter, mainly contributed by the higher sales of surgical gloves, which fetch higher margin.
'Despite our recent downgrade on the rubber glove sector to Neutral, we continue to like the company's leadership in the surgical and dental gloves segment. Maintain Buy with a target price of RM3.73,' it said.
OSK Research said its target price of RM3.73 was based on a PER valuation of 12 times FY11 EPS. Although it was Neutral on the rubber glove sector, it continued to like the company's market leadership in surgical gloves as well as its niche in the dental glove segment.
'Currently, we observe that the higher end examination gloves have proven to be more resilient to normalization in demand, which we believe is the main factor hampering the performance of some of the listed rubber glove companies,' it said.
GAMUDA - HDBSVR reaffirms Buy on Gamuda, TP RM4.40
Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: HWANGDBS
KUALA LUMPUR: Hwang DBS Vickers Research reaffirms its Buy rating on Gamuda and sum-of-parts derived target price of RM4.40 following the recent developments in the Selangor water industry.
The Edge FinancialDaily reported on Tuesday, Sept 28 that Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) will likely receive a 15%-20% water tariff hike which has been agreed by the federal government.
The Edge FD also said the increment would be a lifesaver for the water treatment players, Syarikat Pengeluar Air Sungai Selangor Holdings Bhd (Splash) and Konsortium Abass Sdn Bhd, which are both on the verge of defaulting on their debt commitments.
Hwang DBS Vickers Research said the 15%-20% water tariff hike was however lower than the stipulated 37% as per its concesssion agreement it was supposed to receive early last year.
'The tariff hike has not been approved by the Selangor State government which was against it given that Syabas had not fulfilled the majority of the terms of its concession agreement,' it said.
The research house said while this piece of news will be positive for SPLASH, Gamuda's 40%-owned water concession, it may still be difficult to get the Selangor State Government's approval.
Company Name: GAMUDA BHD
Research House: HWANGDBS
KUALA LUMPUR: Hwang DBS Vickers Research reaffirms its Buy rating on Gamuda and sum-of-parts derived target price of RM4.40 following the recent developments in the Selangor water industry.
The Edge FinancialDaily reported on Tuesday, Sept 28 that Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) will likely receive a 15%-20% water tariff hike which has been agreed by the federal government.
The Edge FD also said the increment would be a lifesaver for the water treatment players, Syarikat Pengeluar Air Sungai Selangor Holdings Bhd (Splash) and Konsortium Abass Sdn Bhd, which are both on the verge of defaulting on their debt commitments.
Hwang DBS Vickers Research said the 15%-20% water tariff hike was however lower than the stipulated 37% as per its concesssion agreement it was supposed to receive early last year.
'The tariff hike has not been approved by the Selangor State government which was against it given that Syabas had not fulfilled the majority of the terms of its concession agreement,' it said.
The research house said while this piece of news will be positive for SPLASH, Gamuda's 40%-owned water concession, it may still be difficult to get the Selangor State Government's approval.
HLG Research: Consolidation should prevail
KUALA LUMPUR: HLG Research said the ability for FBM KLCI to close above the 10-day SMA is crucial for a short term revival to the Malaysian market.
It said on Tuesday, Sept 28 that Monday's index closing was still two points below the 10-day SMA, it remains cautious of the rebound and consolidation should prevail to neutralize current overbought positions.
"Despite anticipating near term volatility, the FBM KLCI mid to long term outlook remains bright as long as it stays above the uptrend line around 1,390, as well as supported by the ringgit strength," it said.
HLG Research said the market's immediate resistance is now seen at the recent high of 1,479.6 (Sept 21), followed by 1,490 (Jan 8, 2008's intraday high), the 1,500 psychological hurdle and all-time high of 1,524. The latter two should see heavier profit-taking capping upside.
For the Dow Jones Industrial Average, key economic data will be watched for further clues on whether the economic recovery is still on track and if the market's recent rally is justified. Major announcements are September consumer confidence (Sept 28), August consumer spending (Oct 1) and ISM index (Oct 1).
The research house said with positive technical readings after breaching the three-month high of 10,720, higher resistance targets are at 10,920 (May 12's high) and year-to-date high of 11,258 (April 26). Immediate supports are situated around 10,500-10,600.
OSK Research: Technical outlook for Petra Perdana firmly bearish
KUALA LUMPUR: OSK Research said the share price of Petra Perdana has been drifting lower on relatively low volume over the last three months.
In its technical outlook issued on Tuesday, Sept 28, it said the stock is approaching a major low situated at the RM1.03 level, below which the stock will reach its multi-year low.
"Should the RM1 psychological mark be violated, we would have to trace all the way back to 2003 to look for the next support levels," it said.
OSK Research said at below the RM1 level, the RM0.93 and RM0.74 level are the next support. To the upside, there is immediate resistance at the RM1.20 level, followed by the RM1.45-RM1.50 area. Both the immediate and mid-term technical outlooks of Petra Perdana are now firmly bearish.
Monday, September 27, 2010
ECM neutral on planters, overweight on O&G
ECM Libra Investment Research has maintained its 'neutral' review on the plantation sector.
In an investment note today, it said the crude palm oil (CPO) prices would likely remain range-bound into the end of the year with not much catalysts to bring them past RM3,000 per metric tonne.
It said the CPO futures were positive last week by rising up to two per cent.
ECM Libra said the events to watch for in the coming weeks were: September production to potential for stock level decline; ongoing harvesting activities in North America which would be seeing a record crop; and, weather developments in South America that may affect the commencement of planting activities.
Meanwhile, the research house has maintained its 'overweight' review on the oil and gas sector.
It said more specific contracts to be look out for in the near term included topside maintenance jobs that Dayang Enterprise Holdings Bhd was biding for as well as head platform jobs for Kencana Petroleum Bhd.
Its top picks included SapuraCrest Petroleum Bhd and Dayang.
It said local oil and gas players had a good week with the sector being under the spotlight sector under the Performance Management and Delivery Unit''s Economic Transformation Programme. -- Bernama
In an investment note today, it said the crude palm oil (CPO) prices would likely remain range-bound into the end of the year with not much catalysts to bring them past RM3,000 per metric tonne.
It said the CPO futures were positive last week by rising up to two per cent.
ECM Libra said the events to watch for in the coming weeks were: September production to potential for stock level decline; ongoing harvesting activities in North America which would be seeing a record crop; and, weather developments in South America that may affect the commencement of planting activities.
Meanwhile, the research house has maintained its 'overweight' review on the oil and gas sector.
It said more specific contracts to be look out for in the near term included topside maintenance jobs that Dayang Enterprise Holdings Bhd was biding for as well as head platform jobs for Kencana Petroleum Bhd.
Its top picks included SapuraCrest Petroleum Bhd and Dayang.
It said local oil and gas players had a good week with the sector being under the spotlight sector under the Performance Management and Delivery Unit''s Economic Transformation Programme. -- Bernama
Maybank Inv aims 50pc overseas revenue
Maybank Investment Bank Bhd (Maybank IB), which has set its sights on expanding into the Singapore, Indonesia and Hong Kong markets, expects to see 50 per cent revenue contribution coming from overseas in the next five years.
Its Chief Executive Officer, Tengku Datuk Zafrul Tengku Aziz, said the bank planned to start operations in Singapore, Indonesia and Hong Kong by June next year to support its clients in going regional.
For Indonesia, it may acquire a stockbroking firm, while applying a license to operate in Singapore, Zafrul said.
'After successfully penetrating these markets, we will expand to other countries where Maybank is currently operating,' he said during a media briefing on an agreement with Standard and Poor's to offer SandP Global Research Reports to its clients.
The collaboration would enable Maybank IB clients to receive SandP's research reports as part of the group's value added services. Covering more than 180 top listed corporations globally, the research would help local investors when expanding their portfolio abroad.
'Presently, such investors have limited access to reliable and internationally branded equities research reports for investment in overseas equities.
'For the first time now, our investors will have access to comprehensive quality information of top value overseas equities,' he added.
Zafrul said for the financial year ended June 2010, the value of overseas equities traded via Maybank IB, grew by 50 per cent compared with the previous year.
'With the recent realignment of the group's operations that encourages greater cross-border co-operation within Maybank, we are targeting to increase overseas equities value by another 30 per cent for this financial year.'
Maybank IB is also increasing the range of value added services that leverages on online technology to its regional retail clients.
It currently offers dealer-assisted access to foreign equities and is expanding its equity services by offering online access to six new markets beginning the later part of this month. - Bernama
Its Chief Executive Officer, Tengku Datuk Zafrul Tengku Aziz, said the bank planned to start operations in Singapore, Indonesia and Hong Kong by June next year to support its clients in going regional.
For Indonesia, it may acquire a stockbroking firm, while applying a license to operate in Singapore, Zafrul said.
'After successfully penetrating these markets, we will expand to other countries where Maybank is currently operating,' he said during a media briefing on an agreement with Standard and Poor's to offer SandP Global Research Reports to its clients.
The collaboration would enable Maybank IB clients to receive SandP's research reports as part of the group's value added services. Covering more than 180 top listed corporations globally, the research would help local investors when expanding their portfolio abroad.
'Presently, such investors have limited access to reliable and internationally branded equities research reports for investment in overseas equities.
'For the first time now, our investors will have access to comprehensive quality information of top value overseas equities,' he added.
Zafrul said for the financial year ended June 2010, the value of overseas equities traded via Maybank IB, grew by 50 per cent compared with the previous year.
'With the recent realignment of the group's operations that encourages greater cross-border co-operation within Maybank, we are targeting to increase overseas equities value by another 30 per cent for this financial year.'
Maybank IB is also increasing the range of value added services that leverages on online technology to its regional retail clients.
It currently offers dealer-assisted access to foreign equities and is expanding its equity services by offering online access to six new markets beginning the later part of this month. - Bernama
Malaysia sees 5-6pc GDP growth next year
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah expects Malaysia to register a Gross Domestic Product(GDP) of between five and six per cent next year.
He said the government has undertaken several new initiatives, including National Key Result Areas (NKRA), the Tenth Malaysia Plan and National Key Economic Areas (NKEA) to prop up the economy.
'Under the NKEA, seven projects are about to take off while another 12 are in the final stage and this alone will bring investments amounting to RM151 billion,' he told reporters at the World Capital Markets Symposium today.
Husni said the country's GDP growth in the second-half would be lower compared with the first-half following the weak global economy. - Bloomberg
He said the government has undertaken several new initiatives, including National Key Result Areas (NKRA), the Tenth Malaysia Plan and National Key Economic Areas (NKEA) to prop up the economy.
'Under the NKEA, seven projects are about to take off while another 12 are in the final stage and this alone will bring investments amounting to RM151 billion,' he told reporters at the World Capital Markets Symposium today.
Husni said the country's GDP growth in the second-half would be lower compared with the first-half following the weak global economy. - Bloomberg
KL Bourse may hit 1,550 points in 2011
The FTSE Bursa Malaysia KL Composite Index is expected to hit 1,550-level next year, says Maybank Investment Bank Bhd, citing positive domestic demand.
Its Executive Vice President, Head of Research, Equity Market, Andrew Lee said by year-end, the key index would likely hover between the 1,450 and 1,500 points level.
'The government had done a good job to stimulate domestic demand and attract foreign investments into the country.'
For the past two to three months, the market has seen better foreign inflows in the market, he said.
Turning to the ringgit, he said the local unit would likely strengthen at the current level of 3.10-3.15 against the US dollar by end of this year.
'Next year, the local currency will be stronger between 3.00-3.05 level against the U.S dollar,' he told reporters here today.
The country would also likely see another round of interest rate hike in November this year, Lee added. - Bernama
Its Executive Vice President, Head of Research, Equity Market, Andrew Lee said by year-end, the key index would likely hover between the 1,450 and 1,500 points level.
'The government had done a good job to stimulate domestic demand and attract foreign investments into the country.'
For the past two to three months, the market has seen better foreign inflows in the market, he said.
Turning to the ringgit, he said the local unit would likely strengthen at the current level of 3.10-3.15 against the US dollar by end of this year.
'Next year, the local currency will be stronger between 3.00-3.05 level against the U.S dollar,' he told reporters here today.
The country would also likely see another round of interest rate hike in November this year, Lee added. - Bernama
SUNWAY - Sunway Holdings still rated a 'buy'
Stock Name: SUNWAY
Company Name: SUNWAY HOLDINGS BHD
Research House: ECMLIBRA
ECM Libra Investment Research is maintaining a "buy" call on Sunway Holdings Bhd in anticipation of strong earnings growth and more landbank acquisitions in the pipeline.
In a research note here today, ECM Libra said, it has raised Sunway's estimates for financial year 2011 and 2012 by 0.7 per cent to 7.5 per cent respectively, as the company remains the top "buy" for the construction sector.
"This is premised on a strong earnings growth of 67.6 per cent in financial year 2010 and undemanding forward price to earnings (P/E) valuation of 7.8 times, more landbank acquisitions in the pipeline as well as strength in securing overseas construction contracts," it said.
ECM Libra's target price, which based on 10 times price to earning on mid financial year earnings per share (EPS), remains unchanged at RM2.61 as the impact on financial year earnings is negligible.
Last Friday, Sunway Holdings entered into a joint venture (JV) agreement with Dasa Tourist Complex Pvt Ltd to undertake a mixed development project in Colombo, Sri Lanka.
The project is on a piece of 0.46 hectares (1.14 acres) freehold land with an expected gross development value (GDV) of RM250 million.
The development is for a 34-storey building comprising 180 residential and 70 commercial development units.
Sharing the same view, OSK Research is also maintaining a "buy" call on Sunway Holdings with a target price of RM2.52.- Bernama
Company Name: SUNWAY HOLDINGS BHD
Research House: ECMLIBRA
ECM Libra Investment Research is maintaining a "buy" call on Sunway Holdings Bhd in anticipation of strong earnings growth and more landbank acquisitions in the pipeline.
In a research note here today, ECM Libra said, it has raised Sunway's estimates for financial year 2011 and 2012 by 0.7 per cent to 7.5 per cent respectively, as the company remains the top "buy" for the construction sector.
"This is premised on a strong earnings growth of 67.6 per cent in financial year 2010 and undemanding forward price to earnings (P/E) valuation of 7.8 times, more landbank acquisitions in the pipeline as well as strength in securing overseas construction contracts," it said.
ECM Libra's target price, which based on 10 times price to earning on mid financial year earnings per share (EPS), remains unchanged at RM2.61 as the impact on financial year earnings is negligible.
Last Friday, Sunway Holdings entered into a joint venture (JV) agreement with Dasa Tourist Complex Pvt Ltd to undertake a mixed development project in Colombo, Sri Lanka.
The project is on a piece of 0.46 hectares (1.14 acres) freehold land with an expected gross development value (GDV) of RM250 million.
The development is for a 34-storey building comprising 180 residential and 70 commercial development units.
Sharing the same view, OSK Research is also maintaining a "buy" call on Sunway Holdings with a target price of RM2.52.- Bernama
YTLCMT - YTL Cement target price revised to RM4.20
Stock Name: YTLCMT
Company Name: YTL CEMENT BHD
Research House: ECMLIBRA
ECM Libra has increased its target price for YTL Cement to RM4.20 from RM3.98 previously, maintaining a "hold" call for the cement producer.
Recently, the group had offered to acquire the remaining 35.16 per cent stake not already owned by it for RM200 million in Perak-Hanjoong Simen Sdn Bhd.
"The acquisition would allow YTL Cement to integrate in full, Perak-Hanjoong's operations and recognise a larger portion of its profits," ECM Libra said in a research note today.
It said, the cement industry is likely to see better demand next year, as building activity picks up from large infrastructure contracts like the new low cost carrier terminal and the light rail transit extension project.
With two plants in Padang Rengas, Perak and a production capacity of 3 million metric tonnes per annum for clinker, and 3.4 million metric tonnes annually for cement, Perak-Hanjoong is the second largest cement producer in the country.
It also has a cement depot and packing plant near Batu Caves, Selangor with an annual capacity of 600,000 metric tonnes. - Bernama
Company Name: YTL CEMENT BHD
Research House: ECMLIBRA
ECM Libra has increased its target price for YTL Cement to RM4.20 from RM3.98 previously, maintaining a "hold" call for the cement producer.
Recently, the group had offered to acquire the remaining 35.16 per cent stake not already owned by it for RM200 million in Perak-Hanjoong Simen Sdn Bhd.
"The acquisition would allow YTL Cement to integrate in full, Perak-Hanjoong's operations and recognise a larger portion of its profits," ECM Libra said in a research note today.
It said, the cement industry is likely to see better demand next year, as building activity picks up from large infrastructure contracts like the new low cost carrier terminal and the light rail transit extension project.
With two plants in Padang Rengas, Perak and a production capacity of 3 million metric tonnes per annum for clinker, and 3.4 million metric tonnes annually for cement, Perak-Hanjoong is the second largest cement producer in the country.
It also has a cement depot and packing plant near Batu Caves, Selangor with an annual capacity of 600,000 metric tonnes. - Bernama
TENAGA - Kenanga keeps 'buy' call on Tenaga
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: KENANGA
Kenanga Research is maintaining a "buy" call on Tenaga Nasional Bhd (TNB) with a fair value of RM10.47 based on a higher strong earnings forecast for financial year 2011.
The research company, in a statement today, said it maintained its forecast on TNB's net profit for the 2010 and 2011 financial years between RM3.46 billion and RM3.18 billion, respectively.
"However we do not expect overly significant contributions given the small stake," it said.
Kenanga said a potential tariff hike in Jan 2010 and an influx of foreign funds could lift TNB to a price earnings ratio (PER) of 15 times from its current FY10 and FY11 core PER of 13.5 times and 12.8 times.
It, however, maintained that any sharp re-rating would be short-lived unless a formalised formula for tariff was in place.
The research company said that it was pleased the utility company was actively using its excess funds to tap into new revenue streams.
"TNB can enjoy better returns given translation gains arising from the stronger Ringgit if the consortium takes out US dollar denominated debts.
The research note also said that TNB was currently discussing with an Egyptian conglomerate to set up a gas-fired power plant and hoped to complete negotiations before year-end. -- Bernama
Company Name: TENAGA NASIONAL BHD
Research House: KENANGA
Kenanga Research is maintaining a "buy" call on Tenaga Nasional Bhd (TNB) with a fair value of RM10.47 based on a higher strong earnings forecast for financial year 2011.
The research company, in a statement today, said it maintained its forecast on TNB's net profit for the 2010 and 2011 financial years between RM3.46 billion and RM3.18 billion, respectively.
"However we do not expect overly significant contributions given the small stake," it said.
Kenanga said a potential tariff hike in Jan 2010 and an influx of foreign funds could lift TNB to a price earnings ratio (PER) of 15 times from its current FY10 and FY11 core PER of 13.5 times and 12.8 times.
It, however, maintained that any sharp re-rating would be short-lived unless a formalised formula for tariff was in place.
The research company said that it was pleased the utility company was actively using its excess funds to tap into new revenue streams.
"TNB can enjoy better returns given translation gains arising from the stronger Ringgit if the consortium takes out US dollar denominated debts.
The research note also said that TNB was currently discussing with an Egyptian conglomerate to set up a gas-fired power plant and hoped to complete negotiations before year-end. -- Bernama
Auto sector rated ‘overweight’ by OSK
OSK Investment Research maintains 'overweight' on the automotive sector which, it predicts, will continue to remain favourable until next year.
In a research note today, OSK picked Tan Chong Motors Holdings Bhd as the top sector given the stock's sound fundamentals and earnings forecast for the next three years.
OSK said Tan Chong would transform into a regional player given its growing exposure in the Indochina market.
'We also like UMW Holdings Bhd and Proton Holdings Bhd given their model line-ups over the immediate term, with the former seeing some recovery in its oil and gas division,' OSK added.
The research company also maintained the total industry volume projection at 585,719 units for 2010 despite a strong 16.5 per cent growth, year to date, as it expected sales to weaken, going forward, due to seasonality.
'Despite the weaker quarter, we expect earnings to be cushioned by the strong ringgit which had reached a record 13-year high.
'The main beneficiaries of a stronger ringgit within our coverage are Tan Chong Motors and UMW Corporation Bhd,' it said. - Bernama
In a research note today, OSK picked Tan Chong Motors Holdings Bhd as the top sector given the stock's sound fundamentals and earnings forecast for the next three years.
OSK said Tan Chong would transform into a regional player given its growing exposure in the Indochina market.
'We also like UMW Holdings Bhd and Proton Holdings Bhd given their model line-ups over the immediate term, with the former seeing some recovery in its oil and gas division,' OSK added.
The research company also maintained the total industry volume projection at 585,719 units for 2010 despite a strong 16.5 per cent growth, year to date, as it expected sales to weaken, going forward, due to seasonality.
'Despite the weaker quarter, we expect earnings to be cushioned by the strong ringgit which had reached a record 13-year high.
'The main beneficiaries of a stronger ringgit within our coverage are Tan Chong Motors and UMW Corporation Bhd,' it said. - Bernama
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