5 Strategies For Earning Passive Income

by Mark Riddix

I recently wrote a post on the importance of adding passive income to your income stream. Passive income can make your life a whole lot easier by increasing the amount of money that you earn and decreasing your dependency on your work income. A passive income stream can even shave years off your active working years until retirement. Today, I would like to take a look at a couple of strategies for generating passive income. Remember, passive income is money you make even when you’re sleeping and not doing anything. Some people like to think of freelance work as “passive income.” That’s not true, it would be considered an alternative stream of income, not passive income. These ideas are ones that will be making you money even when you’re not doing anything:

1. Dividend Investing
One of the easiest ways to generate passive income is by investing in high yielding dividend paying stocks. You can buy high yielding stocks like Verizon or AT&T which are currently paying almost 7% in dividends. Real estate investment trusts (REIT) are also great income producing investments. REIT’s are required by law to pay out 90% of their earnings back to shareholders. REIT’s like Hatteras Financial are yielding nearly 15%.

2. Rental Properties
It was quite popular to buy a property and rent one out during the early 2000s. Many property speculators left the market after the real estate market tanked in 2007. Now is a great time to invest in a rental property. With federal regulators tightening up lending regulations, it will be difficult for potential homebuyers to obtain financing for a home. The real estate market will be overrun with individuals looking to rent a house in the future. The rental payments will be a nice income stream for the shrewd investor.

3. Royalties
You can earn royalties for life off of any creative work that you develop. If you are a skilled writer, write a book or a play. Submit your finished work to a publisher or sell it independently. If you are a great singer then you can record a CD. You can market it to a major label or sell it yourself online. Once you have finished your masterpiece, you can collect your royalties. Royalty payments are typically based on sales volume. Remember to obtain a copyright or patent on your work. This entitles you to receive residual income for years into the future.

4. Website
Using the internet as a means for making money has grown dramatically since the 90s. Starting an ecommerce business is not the only way to make online anymore. You can create a website and get paid by ad companies. Advertisers are always looking for new sites to market their products and are willing to pay large sums to do it. You can register with Google Adsense, Yahoo Publisher, Commission Junction, and WidgetBucks. You can either go the route of selling a product on a website or creating an information-based website. This could be considered not passive if you’re actively running the website, maintaining it, and writing content. But, if you hire someone else to manage it, then it could be something that you benefit from in a passive way.

5. Limited Partnerships
A limited partnership is a partnership in which one or more of the partners is a limited partner. Limited partners have limited liability and no input in the day to day operations of the partnership. All income is deemed as passive since limited partners are not actively involved in the management of the partnership. Limited partnerships often require an initial investment in order to participate in the partnership’s profit sharing structure. One of the most popular limited partnerships is a master limited partnership (MLP). MLP’s are publicly traded limited partnerships that pay out quarterly distributions to investors.

Which of these five forms of passive income do you think is the right one for you? Do you have any other good ideas when it comes to ways to generate passive income streams?


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QCAPITA - Quill Capita cut to 'hold'

Stock Name: QCAPITA
Company Name: QUILL CAPITA TRUST
Research House: MAYBANK



Quill Capita Trust, a Malaysian property trust partly owned by Singapore's CapitaCommercial Trust, dropped 1 per cent to RM1.04, set for its biggest decline since July 7.

Quill was cut to "hold" from "buy" at Maybank Investment Bank Bhd, which said investor interest on the stock is expected to be diverted to the country's two biggest property trusts which were listed earlier this month. -- Bloomberg

(title unknown)

Constructed and Written by Smartbiz


Market is deemed to step into the bearish divergence in a short period. Gains will not be sustainable, if any.

Asian markets fell Friday, overlooking strong earnings from some of the region's biggest companies as Japanese shares tumbled on dour economic figures and a strong yen.


New figures from Japan offered a sobering reminder that the recovery in the world's No. 2 economy remains fragile: The jobless rate rose, deflation deepened, and industrial production fell unexpectedly. (Yahoo)


After 5.00pm, Japan market lost 1.62%, China 0.40%, Hong Kong 0.30% and Singapore 0.41%.


At the local front, FBMKLCI rolled like roller-coaster up and down along the neutral level. Again, last minute manipulation pulled it to end at its day-high at 1,360.92 (+2.51/0.18%). FBMKLCI Average (Pivot Point) was 1,358.87 (+1.92). Total volume was 917m (-82).



Market sentiment progressed from bad to worst with the Oscillator slid into red. However, last minute buying lifted it to end off low at -66.57 lost 166.28, when compares with its starting point. The Average recorded a loss of 150.94.



At day's end, 12EMA (blue) of MSCD fell to +109.33 (-48.03), 26EMA (red) to +95.00 (-20.00) and the Histogram fell to +14.33 (-28.03).

Conclusion (Click on chart to view)


Every time, when I saw FBMKLCI easily been manipulated in the last minute I couldn’t stop myself to contempt the existence of the Index. It looks like the Index is easier to manipulate than any counter in the ACE board.


After today’s market, both 12EMA and 26EMA fell sharply and 12EMA almost touched 26EMA. The Histogram is now floated just slightly above the sea level. Market is deemed to step into the bearish divergence in a short period. Gains will not be sustainable, if any.


My Portfolio: No transaction

(Note: You can read the explanation for Intra-Day MSO and MSCD from the achieves under heading 'Labels' at the lower portion of the sidebar.)

Unisem 2Q net profit surges 102% to RM48m

KUALA LUMPUR: Unisem (M) Bhd net profit for the second quarter ended June 30, 2010 surged 102.2% to RM48.05 million from RM23.98 million a year ago on the back of a 40.8% increase in revenue to RM359.5 million.

In a filing to Bursa Malaysia on Friday, July 30, Unisem attributed the significant increase in revenue and net profit to improved sales volume due to strong demand for its products and services.

Earnings per share was 9.27 sen, while net assets per share rose to RM1.94 from 1.83.

Suria's 2Q net profit up 52% y-o-y

KUALA LUMPUR: Suria Capital Holdings Bhd's net profit for the second quarter ended June 30, 2010 (2Q10) rose 52% to RM18.74 million from RM12.29 million a year ago due to higher revenue and lower operating expenditures in the current quarter.

The company said on Friday, July 30, that the group's revenue climbed 3% to RM62.78 million from RM60.95 million a year ago, thanks to higher contribution by the core business of port operations. It registered earnings per share of 6.62 sen for 2Q10 versus 4.34 sen in the same quarter last year.The directors did not recommend any dividend for the current financial quarter ended June 30, 2010. Suria posted net asset per share of RM2.50 as at June 30.

For the six months ended June 30, 2010, Suria's net profit surged 81% to RM37.56 million from RM20.76 million in the same half last year, while revenue grew 7% to RM122.49 million from RM114.51 million.

On its prospects, Suria said port operations would continue to be the main contributor to the group’s earnings and the board was optimistic of achieving satisfactory performance for the financial year.

The stock today added 2 sen to close at RM1.60 with turnover of 509,100 shares.

K-One Technology 2Q net profit jumps to RM2.2m on higher sales, cost reduction

KUALA LUMPUR: K-One Technology Bhd net profit for the second quarter ended June 30, 2010 jumped significantly to RM2.2 million from RM315,000 a year earlier due to increase in sales and cost reduction exercises.

Revenue rose to RM33.77 million from RM15.34 million a year ago, while earnings per share was 1.99 sen.

For the six months ended June 30, K-One’s registered net profit RM3.88 million compared to net loss RM1.19 million last year.

In a filing to Bursa on Friday, July 30, the company said its sales revenue increased by 121% comparing the current quarter and the same quarter last year.

The increase in sales was expected and attributed to the continuing momentum generated from the mass production of new network cameras, new electronic sports headlamps and new USB cables, it said.

“In fact, mobile phone accessories sales picked up substantially and contributed significantly in overall sales for this current quarter.

“The significant improvement in profit is attributable to the increased sales, the benefits of economies of scale, vigilant on-going cost reduction exercises and last but not least, the elimination of foreign exchange risks caused by foreign hedging contracts, which the group has replaced with natural hedging ie paying key suppliers in the same inward remittance currency, thus markedly reducing foreign exchange risks,” it said.

On its prospects, the company said it was optimistic that the group would continue to show escalating sales growth in the second half of 2010.

It said the demand for its products, which were categorised as mobile phone accessories, computer peripherals and consumer technology products looks vibrant because consumers its global OEM customers seemed to still have an appetite for consumer electronic products.

“The recent launch of the iPad is a reflection of this insatiable appetite for innovative consumer electronic products.

“Furthermore, our second half sales as in the past many years have always been much higher than the first. We therefore expect the sales and profit performance for the full year to be especially strong,” it said.

Chin Teck posts lower 3Q net profit, declares 24 sen 2nd interim dividend

KUALA LUMPUR: Chin Teck Plantations Bhd's net profit for the third quarter ended May 31, 2010 (3Q10) fell 23.8 % to RM10.89 million from RM14.29 million a year ago on the back of a higher revenue of RM29.62 million versus RM28.37 million.

In a filing to Bursa Malaysia, on Friday, July 30, the company's revenue increased 4.4% mainly due to a substantial increase in the average selling prices of fresh fruit bunches (FFB) and palm kernel (PK) even though the production of FFB, crude palm oil (CPO), and PK were significantly lower, resulting in reduced sales volume.

'Overall share in profits of associates were lower due mainly to a decrease in contribution from the joint ventures engaged in oil palm plantation in Indonesia,' it said.

Chin Teck posted earnings per share of 11.92 sen for 3Q10 as against 15.65 sen in the same quarter last year. Its net asset per share stood at RM6.02 as at May 31.

Th company declared a second interim dividend of 24 sen per stock less tax for the financial year ending Aug 31, 2010 (FY10) which would be payable on Aug 30, 2010.

For the nine months ended May 31, 2010, Chin Teck's net profit rose 13% to RM35.43 million from RM31.37 million in the same period last year. Revenue increased marginally to RM82.24 million from RM82.19 million.

On its prospect, the group said the average selling price of CPO for the remaining financial quarter in respect of the year ending Aug 31, 2010 was expected to remain strong and should have a positive impact on the plantation profit.

The stock today added one sen to close at RM7.91 with 14,600 shares traded.

HAIO - Membership in Hai-O to contract in FY2011

Stock Name: HAIO
Company Name: HAI-O ENTERPRISE BHD
Research House: RHB

Hai-O Enterprise Bhd
(July 29, RM3.66)
Downgrade to underperform (from market perform) at RM3.70 with reduced fair value of RM3.63 (from RM4.06): We believe that due to the revised Direct Selling Act (DSA), Hai-O's membership drive will be affected, as well as its retention of existing members.

We have adjusted our forecast to include a net membership contraction of 1,200 per month, which consequently reduces our FY2011 ending April 30, 2011, to FY2013 core distribution force (CDF) assumption by 5.1% to 10%.

One of the reasons for contraction is that the revised DSA has tightened the regulations in the MLM industry to stop MLM members from front-loading stocks, as this could subsequently lead to its members not being able to sell the excess shares.

It also deters MLM leaders or members who were previously front-loading to continue their recruitment activities as they are now unable to make quick profits as they did previously.

While the more stringent ruling will lead to a temporary slowdown in recruitment, we believe that it could also lead to negative growth of MLM members, given that some of the members who were previously making quick profits may drop out of the company.

We are thus cutting our revenue per member growth assumption to negative 10% (from negative 5% previously), for FY2011 because we believe that member productivity will decline as they are no longer able to front-load their stocks. For FY2012 to FY2013, however, we are maintaining our revenue/member growth at 1% for each year.

Although the MLM division outlook is bleak, the negative impact is cushioned somewhat by the fact that all the other divisions are on track, especially its energy division, which has drawn interest from various parties with regard to its heat transference technology.

Private placement is still a no-go and the recently announced cancellation of its proposed private placement is positive news in our view.

The private placement would have diluted earnings-per-share (EPS) by 6.9% and reduced FY2011 projected dividends to 15.6 sen, from 17.1 sen currently.

The risks to the stock include termination of supply agreements from its suppliers in China, stronger-than-expected strengthening of the US dollar; and weaker-than-expected increase in consumer spending.

We are reducing our FY2011 to FY2013 earnings forecast by 8% to 11.8% after incorporating the contraction in membership numbers and a reduction in revenue/member as previously highlighted.

The temporary setback to the MLM business will affect earnings significantly in the near term. However, we believe that Hai-O will be able to pull through and come back stronger in the longer term, with members of higher quality and productivity.

Nonetheless, we are downgrading our call to underperform, as we have reduced fair value to RM3.63 from RM4.06, based on unchanged 10 times CY2011 EPS. ' RHB Research Institute, July 29


This article appeared in The Edge Financial Daily, July 30, 2010.

PLUS - PLUS sells stake in Indonesian highway for insignificant gain

Stock Name: PLUS
Company Name: PLUS EXPRESSWAYS BHD
Research House: OSK

PLUS Expressways Bhd
(July 29, RM3.75)
Maintain buy'' at RM3.70 with increased target price of RM4.30 (from RM4.25): PLUS announced on Wednesday that it had entered into a sale and purchase agreement to dispose of its 60% stake in the Cimanggis-Cibitung Tollway to PT Bakrie & Brothers for IDR57.8 billion (about RM20.2 million). Currently, Bakrie owns 25% of the'' highway. The disposal will be satisfied in cash.

There is a rationale for disposal. The 25km highway is supposed to link Cimanggis and Cibitung to form part of the Jakarta Outer Ring Road 2.

Recall that the concession agreement (CA) was never signed between the Ministry of Works and the JV parties. This was mainly due to the absence of a land capping clause, without which the concessionaire would not be protected from high land prices and may end up paying more than what was initially estimated.

The risks of this were amplified because the highway cuts through urban areas. With the land issue unresolved, PLUS has decided to dispose of its stake in the joint venture.

There are minimal gains from disposal. PLUS has invested RM17.8 million in its 60% stake. Including some expenses incurred in the past few years, the expected gain from the disposal is an insignificant RM1 million.

We are not making any changes to our dividend projections as the RM20.2 million cash proceeds are small compared to our annual free-cash-close-to-equity (FCFE) projection of RM1.2 billion to RM 1.6 billion.

Domestic traffic volume is still strong. Year-to-date (June) traffic volume growth along the North-South Expressway (NSE) has remained at a strong 9.8% year-on-year. Management has revised up its traffic volume guidance from 3% to 4% to 5% this year.

As for the proposed lane expansion along certain stretches of the NSE and New Klang Valley Expressway costing RM1.14 billion, management has guided that this will not affect its dividend policy (75% payout ratio).

We raise our traffic volume projection to 5% in line with management's guidance and the strong 1H numbers.

This increases our FY2010 ending Dec 31, to FY2012 earnings by about 1.4%. Earnings are expected to jump 35% next year due to the scheduled rate hike along the NSE. Our target prices continue to be based on a 20% discount to the FCFE valuation (9.2% equity cost).

We like PLUS for its defensive nature and decent forward yields of 4.6% to 5.9%. ' OSK Research, July 29


This article appeared in The Edge Financial Daily, July 30, 2010.

SIME - Dust at Sime to settle only in November

Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: CIMB

Sime Darby Bhd
(July 29, RM7.69)
Maintain neutral at RM7.76 with lower target price of RM8.15 (from RM8.40): Among the key takeaways from our recent visits are that the final results of the forensic audits on the energy and utilities (E&U) losses will be known at end-August.

We gather that the losses are due to poor management of the projects. The group was unable to secure contractors in a timely manner, for example.

It faced cost overruns and was poor in its control of claims management. The losses were revealed and provided for in mid-May 2010 after the Board Work Group reported their findings to the board of directors.

We gather that the group has completed and delivered the Qatar Petroleum and Marine projects. As such, we believe the risk of further provisions for these two projects is low. The Maersk Oil Qatar project, however, is only 96% complete and the final handover is targeted for September.

Another project pending completion is the Bakun project, which is also 96% complete. We believe there is a risk of further provisioning for these two projects before the final handover.

We are more concerned about Bakun as the consortium members may not be willing to fork out their share of the disputed losses and there are still no details on the breakdown of the Bakun cost overruns.

In FY2010 ended June 30, fresh-fruit-bunch (FFB) production fell 0.2% year-on-year, which is below our forecast.

We are cutting our FY2010 to FY2012 earnings forecasts by 2% to 6% to account for lower-than-expected FFB yields due to poor weather.

Also, the contracts for top management will be up for renewal in November and Sime Darby will be holding its AGM then.

News reports have touched on the possibility that some of the top management may leave when their contracts expire. We would not be surprised by a management reshuffle in November, after which the dust may finally start to settle for the group.

This has the effect of lowering our sum-of-parts (SOP)-based target price from RM8.40 to RM8.15. We remain neutral on the stock as our positive take on the appointment of a new CEO is offset by the ongoing probe into the E&U unit and the possibility of a management reshuffle and changes to the group's strategy.

Sime Darby appointed Datuk Mohd Bakke Salleh as acting president and group chief executive on July 15, replacing Datuk Seri Ahmad Zubir Murshid. The appointment of Mohd Bakke, former president/CEO of Felda Global Ventures Holdings Sdn Bhd, came close to a month after Sime announced that he had been picked as the new CEO.

According to news reports, Bakke's first task is to implement a new group-wide organisation and reporting structure, which is the second phase of the ongoing review of gaps in the management, organisation and reporting structure at the energy and utilities division.

He will also be working on the group's future strategy. ' CIMB Research, July 29


This article appeared in The Edge Financial Daily, July 30, 2010.

Property sector overweight with Mont’Kiara deal

Property sector
Maintain overweight: According to news reports, Aseana Properties is selling an office tower with a net lettable area (NLA) of 180,000 sq ft and retail mall of 250,000 sq ft — part of One Mont'Kiara — for RM333 million to ARA Asian Dragon Fund.

The property is located exactly opposite Sunrise's Plaza Mont'Kiara.

One Mont'Kiara, part of a mixed-use development with retail, office and residential components, is 50:50 owned by CapitaLand and London-listed Aseana Properties Ltd. The building is being developed by Ireka Corp Bhd, which also owns 20% of Aseana Properties.

Based on the NLA, the selling price works out to RM774 per sq ft.

Looking at Solaris Dutamas office suites currently selling at RM550 to RM570 per sq ft, One Mont'Kiara is selling at a 41% premium. This is also higher than the RM400 per sq ft Quill Capita paid to Sunrise for a retail lot and carpark bays at Plaza Mont'Kiara in 2007.

We believe the premium can be explained by the fact that there are no proper retail malls in the vicinity of the Mont'Kiara, with the exception of Publika in Solaris Dutamas, though the focus there is more on art and al-fresco dining.

Also, the purchaser is banking on affluent households within the catchment area to drive its rental yield.

We reaffirm our overweight stance on the sector. We are especially bullish on the landed residential segment. Incremental demand growth for landed homes in established neighbourhoods continues to outstrip supply.

However, we see mixed responses to high-rise properties. While we are concerned over demand saturation in the KLCC and Mont'Kiara areas, other parts have done quite well.

An example is the take-up for Boustead's Surian Residences in Mutiara Damansara, which has reached 80% to 85% at a price of RM600 per sq ft with only bumiputera-reserved units left.

Similarly Desa Park City's West Side One condo is almost fully sold with average pricing at RM600 per sq ft to RM650 per sq ft.

We maintain our overweight stance on the sector with buy calls on IJM Land Bhd and S P Setia Bhd. We have hold ratings on Bandar Raya Development Bhd, Glomac Bhd, IGB Corp Bhd and Sunway City Bhd. — AmResearch, July 29

This article appeared in The Edge Financial Daily, July 30, 2010.

New Hoong Fatt rises after OSK Research ups target price

KUALA LUMPUR: The share price of New Hoong Fatt Holdings Bhd (NHF) rose on Friday, July 30 after OSK Research maintained its buy call and raised its target price for the stock to RM2.85.

At 9.22am, New Hoong Fatt was up seven to RM2.36 with 8,000 shares done. OSK Research said the company's 2QFY10 revenue and net profit for the quarter were in line within its forecasts.

The company's revenue continued to scale new highs, growing organically by double digits, it said.

'We continue to like NHF's stable organic growth. Rolling over our valuation to FY11 EPS and pegging it at a lower PE multiple of 6 times (from 7 times), we derive a target price of RM2.85 (previously RM2.62), with our buy call maintained,' it said in a note July 30.

DXN - Hidden gems among Malaysia MLM companies

DXN Holdings Berhad or "DXN" is mainly involved in the cultivation, manufacturing and marketing of the health food supplements, with its revenue mainly derived from its Ganoderma business. The Group's earnings improved significantly in 1Q2010 with its net income more than double y-o-y to RM10.1m. By ascribing 8.7x PER to our FY2011 EPS forecast, we value DXN at RM1.11. Despite being a Non Rated stock, our target price indicates potential 41.4% upside.

Highlights

• Ling Zhi or Ganoderma healthcare product – DXN is a multi-level marketing (MLM) company which was established in 1993. Founded by Dato' Dr. Lim Siow Jin, the Company's range of healthcare product is mainly made from "Ling Zhi mushroom" or Ganoderma. DXN's health product has achieved Malaysian Organic Scheme, MS ISO/IEC 17025, ISO 14001, ISO 9001 and TGA recognition.
• Owns integrated factory of 28,000 square feet - DXN owns an in-house production line to process Ganoderma products. Its fully owned subsidiary, DXN Pharmaceutical Sdn. Bhd is an integrated factory of 28,000 square feet.
• Strong 1Q2011 results - DXN recorded revenue of RM67.8m (up 4.66% y-o-y and 12.74% q-o-q) in 1Q2011. The higher revenue y-o-y is mainly caused by higher revenue contributed from multi-level marketing segment. However, net profit in 1Q2011 surged to RM10.1m (up 101.04% y-o-y and 96.60% q-o-q). The significantly higher net profit was attributed to the higher profit margin due to cost efficiency from the multi-level marketing segment.
• Gross dividend yield of 7.64% expected - DXN has declared gross interim dividend of 2 sen per share in 1Q2011. As compared to gross interim dividend of 0.75 sen announced last year, the dividend has more than doubled in the absolute value. We have assumed that DXN should be able to pay higher dividend of 6 sen in FY2011, translating into 7.64% gross dividend yield.
• Target price of RM1.11 - By ascribing our discounted industry average PER of 8.7x (for Malaysia listed MLM companies) to our forecasted EPS of 12.73 sen for FY2011, we value DXN at RM1.11. In our opinion, DXN is attractive for investors seeking dividend-paying stocks with plenty of opportunities for growth overseas.

NHFATT - OSK Research raises target price for New Hoong Fatt to RM2.85

Stock Name: NHFATT
Company Name: NEW HOONG FATT HOLDINGS BHD
Research House: OSK

KUALA LUMPUR: OSK Research has maintained its buy call on NEW HOONG FATT HOLDINGS BHD [] at RM2.29 with a higher target price of RM2.85 (from RM2.62) and said the company's 2QFY10 revenue and net profit for the quarter were in line within its forecasts.

The company's revenue continued to scale new highs, growing organically by double digits, it said.

"We continue to like NHF's stable organic growth. Rolling over our valuation to FY11 EPS and pegging it at a lower PE multiple of 6 times (from 7 times), we derive a target price of RM2.85 (previously RM2.62), with our buy call maintained," it said.

AXIATA - Axiata at highest since Sept 2008

Stock Name: AXIATA
Company Name: AXIATA GROUP BERHAD
Research House: CIMB

KUALA LUMPUR: Axiata Group Bhd's share price rose to its highest since September 2008 in late afternoon on Thursday, July 29 after analysts upgraded the telco on expectations of further earnings surprises.

At 3.18pm, it was up 20 sen to RM4.35 in active trade with 26.74 million shares done.

CIMB Equities Research had maintained its OUTPERFORM call and sum-of-parts based target price of RM4.95 for Axiata.

"A likely catalyst for the stock is further earnings surprises. Our forecasts are 21-23% higher than consensus although the gap is down from 30-34% two months ago," it said.

CIMB Research said falling competitive risks in India should buoy the stock. Axiata remains its top Malaysian telco pick but XL Axiata remains its favourite regional play.

JCY - JCY hits lowest since listing

Stock Name: JCY
Company Name: JCY INTERNATIONAL BERHAD
Research House: CIMB

KUALA LUMPUR: Shares of JCY International Bhd fell to its lowest since listing to RM1.32 in late afternoon on Thursday, July 29 in very active trade.

At 3.35pm, it was down four sen to RM1.32 with 13.2 million shares done. Its highest was RM1.98.

It was listed on Feb 25 at an offer price of RM1.60. Since then, its share price is down 28 sen or 21%.

In a report issued on July 20, CIMB Equities Research had a Sell on JCY at RM1.48, based on its technical charts.

"The stock has fallen back to its debut price after hitting a high of RM1.98. The pullback has been severe and does not look like a correction. We expect further price weakness in the medium term as it is now forming a bearish flag pattern," it said on July 20.

CIMB Research said a break below the RM1.44 would signal that prices are heading lower towards RM1.30, based on the height of the flag. There is also a good chance that it could even drop below RM1.30.

JCY'' manufactures hard disk drive mechanical components.

TopGlov About To Test The Market

Soon TopGlov will test the market with so mark up, if still got many seller, the price will go down again but if no seller than the price will go up again.

PETDAG Moving Up With Low Vol

PETDAG become one of my target share since May big dip because this share supported FBM KLCI when needed. I had keep some for long term investment when the price is around RM9.62.

If you analysis the chart this share move like BAT but the price can go up without vol to support. FBM KLCI can supported above 1,340 is thanks to PETDAG. For long term investment this share is good and also as long as government want to support the index even FDI fund is low in Malaysia this share will up.

FREIGHT - Freight management sailing the high seas

Stock Name: FREIGHT
Company Name: FREIGHT MANAGEMENT HLDGS BHD
Research House: OSK

Freight Management Holdings Bhd (Freight)
(July 28, RM1.04)
Maintain buy at RM1.03 with higher target price of RM1.40 (from 95 sen): Freight has drawn strong buying since last week, which has driven its share price up by 27% to RM1.03,'' well above our target price. The daily average volume traded over the past one week was also higher than usual. From our checks, we gather that it's business as usual. As such, we believe that the heavy interest in the stock was possibly spurred by its sound fundamentals and future prospects, as well as attractive valuations.

Taking the cue from NCB's Northport's (buy, target price RM3.72) encouraging 2QCY2010 container throughput volume, which reached a historical high, we see Freight potentially chalking up similarly robust numbers during the quarter, which would translate into higher earnings. This will be positive for Freight's newly set up haulage division, which currently earns a higher than industry average margin.

The management has also indicated that July's handling volume remained encouraging and expects the outlook to remain favourable, although we acknowledge that economic growth in 2HCY2010 will be more subdued as the low base effect wears out.

It has been acknowledged that major liners are currently facing container shortages after the global slump disrupted the production of new containers, which has in turn resulted in higher freight rates. The management indicated that the company has been spared because Freight acts'' only as an intermediary between the liners and importer/exporters. This crisis has instead opened the opportunity for Freight to leverage on the situation by maximising its profit spread on freight shipments.

While the tug and barge division will remain weak over the next few quarters given that the oversupply of barges from the Middle East, we see heightening construction activities in Malaysia come 2011 supporting a recovery in the segment in the form of higher shipments of building materials.

Furthermore, as unveiled in the 10MP, land reclamation for the expansion of Westport requires the shipment of sand, thus potentially benefitting tug and barge operators like FMH. ' OSK Research, July 28


This article appeared in The Edge Financial Daily, July 29, 2010.

GENP - Genting Plantations' Indonesian estates to start 'fruiting' soon

Stock Name: GENP
Company Name: GENTING PLANTATIONS BERHAD
Research House: RHB

Genting Plantations Bhd
(July 28, RM7.10)
Maintain underperform at RM6.65 with higher fair value RM6.70 (from RM6.50): Key highlights from our meeting with Genting Plantations (GP) include: (i) CPO price outlook; (ii) No El Nino impact yet, slower production growth seen in 2HFY2010; (iii) Indonesian plantation contributions to start coming through from FY2011; (iv) change in labour permit regulations; (v) production costs to rise, not drop in FY2010; and (vi) quiet on property development front, but potential coming from Chelsea Outlets and Kulai project.

GP's fresh fruit bunch (FFB) production growth has recovered from the weakness seen in 1H2009, to post an 11.7% year-on-year (y-o-y) growth year-to-date June 2010. Going forward, however, management expects this y-o-y growth to slow in 2H2010, given the recovery in FFB production which was seen in 2H2009. For the whole of 2H2010, management expects FFB production to be relatively flat y-o-y, which would bring FY2010 FFB production growth to approximately 6-7% y-o-y. Contributions from GP's Indonesian plantations should already start contributing in FY2011, albeit very minimally, but we expect a larger impact from Indonesia to be felt from FY2012, contributing about 11% to total production.

We believe more exciting prospects await once GP's Chelsea Premium Outlets and the surrounding area in Kulai start to be developed, given that the land is within the Iskandar economic zone and is easily accessible at the intersection between the Second Link to Singapore and the North-South Expressway. In addition, we understand there will be a trumpet interchange going into the area which is targeted to be completed by Oct 2011 (built by Ireka Bhd), which will make access even more convenient.

Main risks include: (i) a convincing reversal in crude oil price trend resulting in reversal of CPO and other vegetable oils price trend; (ii) weather abnormalities resulting in an over or under supply of vegetable oils; iii) revision in global biofuel mandates and trans-fat policies; and (iv) a quick global economic recovery, resulting in higher than expected demand for vegetable oils.

We tweaked our forecasts by -2% for FY2010, +2.9% for FY2011 and +9.1% for FY2012.

Post-earnings revision, we raise our fair value to RM6.70 (from RM6.50), based on an unchanged 14.5 times CY2011 target PER. We maintain our underperform recommendation, as we believe valuations remain stretched at current levels. Catalysts would include a spike in CPO prices, given GP's sensitivity to this, as well as foreseeable contributions from its integrated property project in Kulai. ' RHB Research Institute, July 28


This article appeared in The Edge Financial Daily, July 29, 2010.

SAPCRES - AmResearch maintains overweight call on O&G sector

Stock Name: SAPCRES
Company Name: SAPURACREST PETROLEUM BHD
Research House: AMMB

Oil & Gas sector
Maintain overweight: We recently visited five oil and gas (O&G) companies in Singapore with some fund managers. We met with fabricators, offshore installation providers and vessel operators ' Keppel Corp, Sembcorp Marine, Otto Marine, Ezra Holdings and Cosco Corp (S) Ltd.

We came away with the impression that the management of these companies are generally cautiously optimistic near term while remaining highly positive on the rollout of O&G projects in the long term.

Keppel Corp and SembCorp Marine's managements indicated that the deepwater ban in the US Gulf of Mexico (GOM) could mean higher value jobs in the longer term given a more stringent safety regime.

Petrobras is expected to call for tenders for 28 deepwater rigs, potentially worth US$20 billion (RM63.8 billion), over the next three weeks. We understand that there could be up to three successful bidders as the contracts could be awarded in four separate packages of seven drillships. Keppel Corp and Sembcorp Marine are among nine contenders.

This positive feedback reaffirms our overweight call on the sector given: (i) RM4 billion fabrication contracts for Malaysian shallow fields to be awarded in 2H2010; (ii) a RM3 billion Petronas liquefied natural gas re-gasification plant in Melaka; (iii) new maintenance and hook-up commissioning services for offshore platforms, potentially worth RM3.2 billion; (iv) Exxon-Mobil's enhanced oil recovery investments worth over RM7 billion; (v) revival of the RM2 billion Sabah Oil & Gas Terminal project in Kimanis; and (vi) proposed listing of MISC's Malaysia Marine Heavy Engineering and Petronas' petrochemical division by end-2010.

We maintain our buy calls on SapuraCrest, Alam Maritim, Kencana, Wah Seong, Tanjung Offshore, Dialog Group and Petronas Gas. Our top pick continues to be SapuraCrest given its huge lock-in order book of almost RM10 billion. We maintain our sell call on KNM Group given its poor earnings delivery. ' AmResearch, July 28


This article appeared in The Edge Financial Daily, July 29, 2010.

Sime Darby slips, CIMB lowers TP to RM8.15

KUALA LUMPUR: Sime Darby slipped in late morning trade on Thursday, July 29 which could be linked to near-term uncertainty over the probe into the energy and utilities division.At 11.11am, it was down seven sen to RM7.69 with 636,100 shares done.

CIMB Equities Research had maintained a NEUTRAL recommendation on Sime with a lower target price of RM8.15. It said with the earnings downgrade, it is lowering its sum-of-parts (SOP) based target price from RM8.40 to RM8.15.

“There is no change to our valuation basis of 10% discount to SOP. The discount essentially factors in ongoing concern and uncertainty over corporate governance and the group’s direction,” it said.

CIMB Equities Research said there is no change to its NEUTRAL call on the stock. We are positive on the appointment of a new CEO which could bring positive changes to the group.

“However, this is clouded by near-term uncertainty over the probe into the E U division, a possible management reshuffle and changes in the group’s strategy,” it said.

Landmrk & DNP broke above their downtrend

The listing of Ivory Properties Group Bhd ('Ivory') on our exchange yesterday has been a real boon for investors with exposure to property stocks. Ivory gained 30 sen to close at RM1.30. The sharp gain for Ivory sparked a rally in many property stocks. Below are two quiet stocks which managed to break above their medium-term downtrend line. These stocks- Landmrk & DNP- could be good trading BUY.


Chart 1: Landmrk's daily chart as at July 29, 2010_9.30am (Source: Quickcharts)


Chart 2: DNP's daily chart as at July 29, 2010_11.00am (Source: Quickcharts)

Stock to Watch - Thu, 29 July 2010

* HPI Resources (RM1.84, SELL) – Strong resistance ahead.
* Malayan Banking (RM7.70, SELL) – Limited upside potential.
* Malaysia Building Society (RM1.49, BUY) – Breaking above wedge resistance.
_____________________________________________________________________

1. HPI Resources (RM1.84, SELL)

____________________________________________________________________

2. Malayan Banking (RM7.70, SELL)

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3. Malaysia Building Society (RM1.49, BUY)

SIME - CIMB Research maintains Neutral on Sime Darby

Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research is maintaining a NEUTRAL recommendation on SIME DARBY BHD [] with a lower target price of RM8.15.

It said on Thursday, July 29 that in line with the earnings downgrade, it is lowering its sum-of-parts (SOP) based target price from RM8.40 to RM8.15.

'There is no change to our valuation basis of 10% discount to SOP. The discount essentially factors in ongoing concern and uncertainty over corporate governance and the group's direction,' it said.

CIMB Equities Research said there is no change to its NEUTRAL call on the stock. We are positive on the appointment of a new CEO which could bring positive changes to the group.

'However, this is clouded by near-term uncertainty over the probe into the E&U division, a possible management reshuffle and changes in the group's strategy,' it said.

Top Glove up on positive outlook for sector

KUALA LUMPUR: Top Glove advanced in early trade on Thursday, July 29 as Citi Group global markets research sees more upside for the glove manufacturing sector.

At 9.32am, Top Glove was up 12 sen to RM6.68 with 253,900 shares done.

Citi Research had initiate Kossan and Supermax at Buy/Low Risk with target prices of RM4.95 and RM7.40 respectively, underpinned by earnings growth of 15-24% and ROE of 31%.

“Top Glove is rated Hold/Low Risk given its lower earnings growth of 10.5% and ROE of 25%,” it said.

The research house said its RM7.25 target price values the stock at 16x FY11E EPS, or 1SD above its historical P/E of 13.5x.

Citi Research said while it believes the stock to continue to command premium valuations given its larger earnings base and excellent track record, “we expect the premium gap to narrow as earnings growth momentum moderates and growing market share becomes increasingly challenging”.

DAIBOCI - CIMB Research retains Outperform on Daibochi

Stock Name: DAIBOCI
Company Name: DAIBOCHI PLASTIC & PACKAGING
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research reiterated its Outperform call on Daibochi Plastic and Packaging Bhd.

It said on Thursday, July 29 that factors that could catalyse the stock include i) margin expansion over the next few quarters, ii) contracts from major non-F&B companies and, iii) attractive dividend yields of around 7%.

CIMB Research said Daibochi's 1H10 results met its and market expectations. Although annualised 1H10 core net profit worked out to only 80% of its forecast, it considered it to be in line as 2H should be a stronger half.

The 2.5 sen interim tax-exempt DPS took YTD DPS to 6.0 sen, within market and its expectations.

'We maintain our earnings forecasts and RM4.60 target price, which we continue to base on 12x CY11 P/E, a 20% discount to our 15x target P/E for the market.

'Daibochi's medium-term prospects look promising given the positive initial feedback on its anti-static packaging for electronic products which was finally certified last month,' it said.

HPI - CIMB Research: Sell on HPI at RM1.84

Stock Name: HPI
Company Name: HPI RESOURCES BHD
Research House: CIMB

KUALA LUMPUR: CIMB Retail Research has a Sell on HPI Resources at RM1.84, which pegs its price-to-earnings for FY11 at 5.6 times and price-to-book value of 0.7 times.

It said on Thursday, July 29 that Wednesday's pullback confirmed the bearish engulfing pattern formed on Tuesday. Next downleg would likely drag HPI towards its 38.2% FR at RM1.75, and possibly even the 50% Retracement level at RM1.68.

'Technical indicators are also showing signs of exhaustion. MACD is about to turn south while its histograms also show an easing trend. Meanwhile, RSI is diving towards the neutral zone,' it said.

CIMB Retail Research said it appears that the RM2 high would likely be its near term peak. Hence, any rebound towards this level is an opportunity to sell into strength. Only a break above RM2.02 would cancel out the negative momentum.

HPI Resources manufactures corrugated boards, carton boxes, and plastic film packaging products.

SCOMI - AmResearch maintains Buy on Scomi Group

Stock Name: SCOMI
Company Name: SCOMI GROUP BHD
Research House: AMMB

KUALA LUMPUR: AmResearch maintains its BUY rating on SCOMI GROUP BHD [] but have raised its fair value to 80 sen a share (from 76 sen a share previously) based on 5% discount to its sum-of-parts (SOP) of 84 sen a share.

'We believe Scomi is undervalued, as it will certainly benefit from potential new contracts for SCOMI ENGINEERING BHD [] (SEB) - its 70%-owned subsidiary,' it said on Thursday, July 29.

Scomi associate SCOMI MARINE BHD []'s (SMB) recent proposed disposal of its Indonesian associate could result in impairment losses of RM433 million - Scomi's portion: RM185mil.

AmResearch said operational wise, its oil & gas unit will ride on stronger drilling activities globally. Scomi does have a pedigree in monorail works based on track record.

'We believe Scomi's subsidiary SEB is a leading candidate for the KL Monorail expansion. In addition there could be more earnings upside (a further 15%-20%) for SEB, via: (i) LRT - Ampang/Kelana Jaya extension & new Cheras-Kota Damansara line; and (ii) MRT involvement - via M&E works - worth RM400 million to RM500 million,' it said.

Tanjong may buy power assets: JPMorgan

Tanjong Plc, a Malaysian power and gaming company whose shares were suspended yesterday pending an announcement, may spin off its power unit to unlock value or acquire electricity generation assets, according to JPMorgan Chase and Co.

Both options have been expressed by management as being part of its long term strategy, JPMorgan analyst Simone Yeoh said in a report dated July 28.

Still, power acquisitions are more likely for now as any spin-off of its energy division may take time to implement given the lull in equity markets, she said. -- Bloomberg

Measat rises to 6-year high on buyout bid

Measat Global Bhd, Malaysia's sole satellite operator, rose to its highest level in more than six years after billionaire T. Ananda Krishnan bid RM662 million (US$207 million) for full control of the company.

The stock climbed 7.1 per cent to RM4.07 at 9:03 a.m. in Kuala Lumpur, set for its highest close since Dec. 10, 2003. Krishnan, Malaysia's second-richest man, offered RM4.20 a share for the 40.4 per cent of Measat he doesn't already own, according to a statement yesterday. -- Bloomberg

Measat soars on takeover offer

KUALA LUMPUR: Shares of Measat Global Bhd jumped in early trade to RM4.08 on Thursday, July 29 after MEASAT Global Network Systems Sdn Bhd (MGNS) made an offer to take over the remaining shares at RM4.20 each.

At 9.02am, it was up 28 sen tp Rm4.08 with 1.59 million shares done.

MGNS’s total acquisition cost is RM662 million, which will be satisfied fully in cash. Based on the offer price of RM4.20 per MEASAT share, MEASAT is valued at RM1.64 billion.

MGNS is the single largest shareholder in Measat Global with 59.56%. The controlling shareholder in MGNS is billionaire T. Ananda Krishnan.

Measat Global Networks launches takeover of Measat at RM4.20 a share

KUALA LUMPUR: MEASAT Global Network Systems Sdn Bhd (MGNS) has launched a takeover of Measat Global Bhd to acquire all the ordinary shares of 78 sen each not already held by MGNS at RM4.20 per share.

'The board has deliberated on the Notice and does not intend to seek an alternative person to make a take-over offer for the offer shares,' said Measat Global on Wednesday, July 28.

Measat Global said the board has appointed AmInvestment Bank Bhd as the independent adviser to advise the independent directors and holders of the offer shares on the reasonableness of the offer.

MGNS is the single largest shareholder in Measat Global with 59.56%. The controlling shareholder in MGNS is billionaire T. Ananda Krishnan.
Measat Global will resume trading on Thursday.

SC revokes SJ Asset Mgmt licence

KUALA LUMPUR: The Securities Commission has revoked SJ Asset Management Sdn Bhd's (SJAM) licence to undertake fund management activities.

The SC said on Wednesday, July 28 that the move, which took immediate effect, came after the SC found that SJAM breached regulatory requirements in relation to the safeguarding of clients' assets and the company had engaged in deceitful and improper business practices.

'The SC also found that SJAM had furnished false and misleading information and documents to the regulator. 'The SC is working closely with the police and regulatory counterparts in other countries as part of its investigations into the affairs of SJAM,' said the SC in a statement posted on its website.

The SC said that it had on Tuesday, petitioned to the High Court for the winding up of SJAM. It said the winding-up of SJAM will enable liquidators to effectively deal with the rights and entitlements of all creditors including the clients of SJAM. The liquidators would also determine an appropriate basis of returning the clients assets to the entitled clients."

P&O- a value stock with a bullish breakout

Once in a while, a research report came to your attention and made you sit up. Recently, Kenanga Research issued such a report. It's the initial report on Pacific & Orient Bhd ('P&O'). The gist of the report is as follows:

1) P&O will take pole position in the market for motorcycle insurance business.
2) It's extremely cheap, trading at a PE of 3 times FY2011 earning or 0.55 times its book value.
3) Based on (2), its base case valuation is about RM1.15- giving an upside of 92% from its then close of RM0.63.
4) There is potential for M&A as the general insurance sector is quite fragmented & the owner is contemplating divesting his shares in P&O. Based on Price to Book of 4.2 times, P&O's M&A valuation could be about RM1.65.

While P&O's valuation is very undemanding, I found it very hard to get excited about a company that is so dependent on motorcycle business. A quick look at the chart (plotted on logarithmic scale) made me reconsider my skepticism. The stock looks set to break above its long-term downtrend line at RM0.75. As at 3.00pm, P&O was trading at RM0.79- gaining 8 sen above its close of RM0.71 yesterday.


Chart: P&O's monthly chart as at July 5, 2010 (Source: Tradesignum)

Based on cheap valuation & bullish technical outlook, P&O could be both a trading BUY & a long-term BUY.

FREIGHT - Freight Mgt 'buy' call maintained: OSK

Stock Name: FREIGHT
Company Name: FREIGHT MANAGEMENT HLDGS BHD
Research House: OSK



OSK likes Freight Management for the company's consistency in posting double digit earnings growth since its listing in 2005.

"We see the company repeating the stellar showing amid favourable trade and demand conditions, which prompts us to nudge up our earnings forecast by some 10 per cent and 16 per cent respectively for financial year 2011 and financial year 2012."

OSK added that with the company's valuations rolled over to FY11 numbers pegged at a higher price earnings multiple of 9 times, it upgraded the target price on the company to RM1.40, with its 'BUY' call maintained. - Reuters

Stock to Watch - Tue, 28 July 2010

* IFCA MSC (RM0.18, SELL) – More room to the downside.
* TDM (RM2.22, SELL) – Evening Star seen.
* Daya Materials (RM0.21, BUY) – Potential breakout rally.
______________________________________________________________________

1. IFCA MSC (RM0.18, SELL)

____________________________________________________________________

2. TDM (RM2.22, SELL)

____________________________________________________________________

3. Daya Materials (RM0.21, BUY)

APM - HLG Research neutral on APM automotive

Stock Name: APM
Company Name: APM AUTOMOTIVE HOLDINGS BHD
Research House: HLG

APM Automotive Holdings Bhd
(July 27, RM4.77)
Neutral at RM4.75 with target price of RM4.90: Since our accumulate call at RM3.90 on June 16, its share price has already rallied 26% in less than a month to as high as RM4.90 on July 26.

We believe the surge was mainly due to: (i) strong industry TIV (total industry volume) growth ahead, as MAA has revised its FY2010 forecast to 570,000 units (previously 550,000) on a stronger-than-expected 19.8% growth in TIV year to date; (ii) sustained strengthening of the ringgit against the US dollar and yen which would help to reduce the costs of imported materials; (iii) improving consumer sentiment and business conditions; (iv) its diversification to increase sales to sister company Tan Chong rather than overdependence on Perodua and Proton; and (v) reaping the benefits of its restructuring via the streamlining of plants and labour force over the past five years.

APM enjoyed a good spell over the past few days but the share price could encounter some stiff resistance soon as the relative strength index and moving average convergence-divergence readings are heading towards the overbought zones whilst the slow stochastic indicator is trending down.

If the candles break below the five-day simple moving average (SMA) of RM4.56, selling pressure could accelerate. This would drag prices towards more solid supports at RM4.45 (10-day SMA), RM4.33 (20-day SMA) and RM4.20 (50-day SMA). While we think the long-term uptrend channel is still intact, following the positive breakout above the RM4.50 neckline last week, the share price may come under pressure over the next few days as profit taking intensifies following the formation of a bearish shooting star.

Although we cannot discount the possibility of further gains towards the RM5 zone (the upward channel), we think the odds are slowly turning in favour of the bears. Therefore, traders should adopt sell into strength.

We are neutral on APM now after its recent sharp rally. We see limited upside in the short term to our technical target of RM4.90, implying 8.8 times FY2011 PER (in line with its average 10-year PER of 8.5 times). ' HLG Research, July 27


This article appeared in The Edge Financial Daily, July 28, 2010.

BHIC - Boustead's BHIC regaining its lustre

Stock Name: BHIC
Company Name: BOUSTEAD HEAVY INDUSTRIES CORP
Research House: TA

Boustead Holdings Bhd
(July 27, RM3.91)
Maintain buy at RM3.90 with target price of RM4.40: We understand that Boustead's 65% owned subsidiary, BHIC is close to finalising the service and maintenance job for the navy's Scorpene submarines which, if it materialises, would potentially boost 2H2010 earnings.

We have highlighted in previous reports that this job could be worth RM1 billion to RM1.2 billion against RM600 million (over six years) as originally envisioned. The actual work already commenced in 1Q2010, although BHIC was not able to recognise the revenue as the contract is still being negotiated to include the expanded job scope.

Hence, 3Q2010 earnings may be substantially higher as the results would include three quarters recognition of the maintenance job.

To recap, a consortium comprising BHIC and French based DCNS SA (on a 60:40 equity basis) received the letter of intent (LOI) to undertake the maintenance and technical support for the two Scorpene submarines acquired by the Ministry of Defence.

We believe that Boustead is also close to securing the LOI for construction of the second batch of patrol vessels (PVs), which is in our view the most significant catalyst for re-rating of the share price.

We understand the contract value could be significantly higher at RM8 billion to RM9 billion (RM6.7 billion for the first batch) due to an upgrade to frigates, which are more technologically advanced than PVs. The group has already delivered five PVs and the last is scheduled for delivery in August/September. We think a successful completion and delivery of the first batch of PVs will significantly enhance Boustead's chances of securing the second batch.

Recall that the first batch, originally granted to PSCI Bhd, was plagued with numerous delays and scandals. Hence, we believe that from the government's perspective, completion of the first batch will be regarded as the main KPI before committing on the second batch.

We have also highlighted the possibility of BHIC clinching the service and maintenance contract for the first batch PVs.

We now understand that BHIC is in negotiation to secure the maintenance contract for the first three PVs that were commissioned in June 2006, August 2006 and June 2009, respectively. The contract value could range between RM20 million and RM30 million per PV, according to the management, compared with our initial estimate of RM30 million to RM40 million per PV.

However, no deal has materialised so far. That said, we note that it has been four years since the first two PVs were commissioned. Therefore, we believe the Navy is unlikely to delay any further the maintenance contract.

We maintain earnings forecasts and target price at RM4.40 based on sum-of-parts valuation methodology. We continue to see significant upside risk to earnings forecasts if management can deliver on new contracts, expand property development landbanks and extract merger synergy from the acquisition of Pharmaniaga.

Our current earnings forecasts are already some 12% lower than consensus, reflecting our conservative take on earnings outlook, particularly in the heavy equipment segment.

Maintain Boustead as buy. We continue to like the stock as a growth story and attractive dividend yield. ' TA Securities, July 27


This article appeared in The Edge Financial Daily, July 28, 2010.

TM - Telekom UniFi subscriber rate most encouraging

Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Research House: AMMB

Telekom Malaysia Bhd (TM)
(July 27, RM3.36)
Maintain buy at RM3.33 with fair value of RM3.90: Our checks with the company reveal that UniFi has attracted over 7,000 subscribers since its launch almost five months ago. This encouraging subscriber base is achieved on the back of 18 new areas covered, from just four at the time of the launch.

We find the speed of subscriber acquisition strong, as we are looking at a high year-end target for UniFi of 20,000 subscribers.

We believe UniFi's strength is largely due to the faster-than-planned launches, which have opened up a much bigger pool of potential subscribers.

Some key areas, which we believe gained the most subscribers, are Damansara, USJ and Klang. These 18 areas ' initially targeted to be launched in 3Q2010 ' were launched a full quarter early. Next, TM is expecting to roll out services in another 16 areas, which include the high-density areas of Cheras and Petaling Jaya.

It is also indicated that TM now receives an average of 100 new orders a day, a huge push from an estimated 50 before the launch of the 18 new areas.

According to our sources, TM has been able to meet 80% to 90% of the daily installations.

To date, the total number of premises covered by UniFi has increased to at least 400,000, against the 750,000 targeted for December 2010.

The original target for UniFi was to cover at least one million households by 2011; a target we believe would easily be surpassed.

For FY2012, the guidance remains at 1.3 million premises covered.

Recall that in our FY2010 estimate, we imputed 20,000 subscribers, on a base-case scenario, by the end of this year. We had also assumed an ARPU'' (average revenue per user) of RM115 per subscriber during the period.

Although the actual pricing is RM149 (the cheapest package), we believe deviation would be compensated for by the fact that the earlier customers were given three months of rent-free promotion. Thus, we see the net impact to TM's bottom line will be insignificant.

The bigger bandwidth of UniFi allows for a greater amount of traffic within its fibre optic cables, giving TM greater manoeuvrability in terms of product offering, especially in the content-selling business.

TM is also actively seeking new business opportunities. It is on a quest to diversify from riding on the rental of its facilities.

We maintain our preference on TM for its unique buffer dividend policy. We continue to rate TM a buy with a fair value of RM3.90 per share on discounted cash flow-based valuation (terminal growth 1.5% and weighted average cost of capital 9.7%).

On dividend yield comparison, TM offers a slightly higher yield of 5.2%. This compared against 5.1% offered by DiGi.Com Bhd and 4.7% by Maxis Bhd. ' AmResearch, July 27


This article appeared in The Edge Financial Daily, July 28, 2010.

KPJ - KPJ courting medical tourists

Stock Name: KPJ
Company Name: KPJ HEALTHCARE BHD
Research House: OSK

KPJ Healthcare Bhd
(July 27, RM3.64)
Maintain buy at RM3.71 with higher target price of RM4.62 (from RM3.92): With KPJ committed to pursuing its expansion strategy, we believe it will maintain its lead in the private healthcare sector as well as sustain growth. Its community-based business model has enabled KPJ to build strong brand equity and loyalty as well as allowed the group to grow with the community it is in. The recent openings of the new Tawakal Hospital and Penang Specialist Hospital in August last year are strong testimony to its business model, through which it has increased capacity and broadened its service offerings in line with rising demand from the local community.

We see KPJ recently turning up the heat with more aggressive advertising activities, judging from the number of outdoor and electronic media advertisements placed locally and abroad. We are positive on this move as we have long held the belief that there is a sizeable untapped medical tourism market for Malaysia. Given the right marketing and promotion strategies as well as its undisputed position as the country's leading private healthcare provider, KPJ stands to benefit the most from tapping this huge market potential.

We have upgraded our earnings forecasts for FY2010 and FY2011 by 6.5% and 6.3% respectively, after taking into account the earnings contribution from Sabah Medical Centre, of which the acquisition was completed recently, as well as higher margins assumption.

We maintain our buy recommendation at higher target price of RM4.62 from RM3.92 previously, premised on our earnings upgrade as well as rolling over our EPS from FY2010 to FY2011. Our target price is based on 18.5 times FY2011 EPS. Although KPJ is no longer the cheapest healthcare stock in the region following its sharp price appreciation over the last one year, the stock is still trading at a significant discount to its comparable peer, Parkway, which currently commands 27 times PER on FY2010 EPS. ' OSK Research, July 27


This article appeared in The Edge Financial Daily, July 28, 2010.

Freight Management - 3-month technical target at RM1.00

Share prices jump 28% since our BUY call on 23 June

Since our BUY recommendation on 23 June at RM0.805, FM's share price rallied 28% to as high as RM1.07 before
closing at RM1.03 yesterday.

We believe the surge was mainly due to the resurgence of appetite in small cap value stocks as well as anticipation of a strong 4QFY10 results and a good final dividend next month. The group already paid 2.5sen gross dividend on 15 July.

Improving prospects
Despite the challenges facing in the freight sector, FM has an astute management on costs, expansion plans and international marketing strategy. The group is a good proxy to expansion in economic activities, with estimated revenue and earnings CAGR of 12% and 17% from FY2005-2011.

Its 9MFYJune 2010 net earnings already surpassed 12MFY09 earnings by 6.3%. This will translate into an uninterrupted 6 year growth since listed in 2005, a commendable achievement for a RM125m market capitalization company.

Given its focus on Intra-Asia freight, impact from recent Eurozone weakness will be muted. FM is also steadily increasing its ASEAN footprint, with five offices in Indonesia and one each in Thailand and Vietnam. With its excellent track record and value added services, FM will garner market share at the expense of smaller logistic players in the industry.

Time to take a breather as technical indicators are overbought
FM enjoyed a good spell over the past two weeks but share prices could face stiff resistance soon as major technical indicators are in the overbought zones whilst the slow stochastic indicator is trending downwards.

While FM's long term prospects is positive and valuations remain undemanding at 7.5x FY11 P/E, a break down below the 5-d and 10-d SMAs of RM1.01 and RM0.955 respectively would accelerate selling pressure. This would drag prices towards more solid support around RM0.90 (61.8% FR from RM0.80 to 52-week high at RM1.07).

Although we cannot discount the possibility of further gains above the RM1.10 zone after surpassing its previous 5-year high situated around RM1.05, we think the odds are slowly turning in favour of the bears. Therefore, traders should do well by adopting SELL INTO STRENGTH.

SELL INTO STRENGTH with a 3-month technical target at RM1.00
Our 3-month technical target is RM1.00, implying a 7.3x FY11 P/E and in line with its average 8x historical P/E since listing.

SUPERMX - Kossan Rubber, Supermax rated 'buy'

Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Research House: CITI GROUP



Kossan Rubber Industries Bhd and Supermax Corp were rated "buy" in new coverage by Citigroup Inc analysts Fiona Leong and Lawrence Ye, who said the companies are trading at undemanding valuations.

The brokerage has a share-price estimate of RM4.95 for Kossan Rubber and RM7.40 for Supermax. - Bloomberg

IVORY - Ivory Properties makes impressive debut

Stock Name: IVORY
Company Name: IVORY PROPERTIES GROUP BERHAD
Research House: AMMB

KUALA LUMPUR: Ivory PROPERTIES [] Bhd made an impressive debut on the Main Market of Bursa Malaysia on Wednesday, July 28 and was up 21 sen to RM1.21 at 9.30am. It was also the most actively traded counter with 21.8 million shares done.

AmResearch's fair value is RM1.75 per share pegged to a 35% discount to its estimated net asset value of RM2.70 per share.

The research house described the company as an established developer with a strong track record in Penang.

AmResearch said Ivory has strong localised knowledge and an impeccable execution track record, with quick turnaround times, adding that it is at the forefront of urban renewal in Penang.

"The redevelopment of the Escoy tin smelter into prolific Penang Times Square is a good case in point ' it provides Ivory bargaining leverage to negotiate future redevelopments. Ivory will be accelerating presales from RM500mil in FY10F to RM750mil in FY11F," it said.

"We are forecasting earnings of RM36mil in FY10F, rising by 51% to RM54mil in FY11F and a further 30% to RM70mil in FY12F ' putting its 3-year earnings CAGR at a solid 63% off an earnings base of just RM17mil in FY09.

"Balance sheet is strong, with net gearing of 10% in FY11F. We see scope for transformational growth from large NAV-accretive land deals under negotiation. The IPO is attractively priced ' at just 3.4x FY11F's earnings, and at a steep 63% discount to our NAV of RM2.70/share. It is also trading at deep discount to its small-cap peers ' despite Ivory's stronger earnings growth."

TDM - CIMB Research: Unload TDM on strength

Stock Name: TDM
Company Name: TDM BHD
Research House: CIMB

KUALA LUMPUR: CIMB Retail Research has advised investors to unload TDM BHD [] on strength. At the last traded price of RM2.22, it is trading at a price-to-book value of 0.8 times.

The research house said on Wednesday, July 28 the Evening Star formed on Monday is an early warning that the trend is about to reverse. If prices fall below Tuesday's low of RM2.19, expect more room to the downside with near term support seen at RM2.09.

'The bulls are looking exhausted at the moment. Both MACD and RSI have flattened out, suggesting that buying momentum has faded. If RM2.09 is violated, next downside targets are RM2.02 (also its 38.2% FR) and RM1.86, the 30-day SMA,' it said.

CIMB Research said its'' strategy here is to unload on strength. As it stated that it cannot completely write off the possibility of further rally, always put a buy stop at RM2.30.

KOSSAN - Kossan Rubber, Supermax rated 'buy'

Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Research House: CITI GROUP



Kossan Rubber Industries Bhd and Supermax Corp were rated "buy" in new coverage by Citigroup Inc analysts Fiona Leong and Lawrence Ye, who said the companies are trading at undemanding valuations.

The brokerage has a share-price estimate of RM4.95 for Kossan Rubber and RM7.40 for Supermax. - Bloomberg

WCT - WCT a 'buy' at RM3.60: HwangDBS

Stock Name: WCT
Company Name: WCT BHD
Research House: HWANGDBS



WCT Bhd, a Malaysian builder and property group, had its stock rating raised to "buy" from "fully valued" at HwangDBS Vickers Research Sdn Bhd to reflect higher new order wins and property rental income.

The share price estimate was increased to RM3.60 from RM2.25, HwangDBS said in a report today.

EONCAP - EONCap rated a 'hold' by AmBank

Stock Name: EONCAP
Company Name: EON CAPITAL BHD
Research House: AMMB



EON Capital(EONCap) announced that its EGM has been set on August 19 for the purposed of considering Hong Leong Bank's offer to buy the entire assets andliabilities of EONCap for a cash consideration of RM5.06 billion.

AmBank said recent events reinforce its view that the takeover will likely proceed pending a favourable outcome to the defendants.

AmBank noted its fair value for EONCap remains at RM7.30 per share. - Reuters

OSK Research: KLCI immediate technical outlook bullish

KUALA LUMPUR: OSK Research said the immediate technical outlook of the FBM KLCI remains bullish.

In its technical outlook report issued on Wednesday, July 28 it said from the current level, continue to look for the next tough resistance at the 1,395-level. Initial support is now seen at the 1,350-level, followed by the 1,332-level and the 1,326-level.

On Tuesday, the FBM KLCI was trading listlessly in the vicinity of the peak of 2010-2009 rally, which was expected when the market is situated at around a key level. At the end the session, the index carved out a “Doji Star”, which represents indecision in the market.

“Remember that the 1,350-level is not just a random level, as there were previously three failed breakout attempts at this level during the March-May period,” it said.

OSK Research said Tuesday was just a day whereby buyers and sellers were trying to dominate each other at this meaningful level. The immediate technical outlook of the FBM KLCI remains bullish.

Chuan Huat rises on bonus issue plans

KUALA LUMPUR: Chuan Huat Resources Bhd's share price rose on Wednesday, July 28 after it proposed a corporate exercise which includes a bonus issue, renounceable rights issue and increase in authorised share capital. The bonus issue would involve one bonus shares for every three shares held.At 9.30am, Chuan Huat was up 20.5 sen to 76.5 sen with 2.45 million shares done.

The proposed renounceable rights issue of 41.78 million five-year warrants 2010/2015 on the basis of one warrant for every four shares held after the proposed bonus issue at an issue price of 2 sen per warrant.

Chuan Huat said it planned to increase the authorised share capital from RM100 million comprising 200 million shares to RM500 million comprising one billion shares by the creation of an additional 800 million shares.

TOPGLOV - Top Glove drops on JPMorgan downgrade

Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Research House: JP MORGAN CHASE



Top Glove Corp, the world's biggest rubber-glove maker, slid 3.3 percent to RM6.53, on course for its largest drop since May 6.

The company's rating was cut to "underweight" from "neutral" at JPMorgan Chase & Co because the stock has surpassed its share price estimate of RM6.30 and is trading at a premium to its peers.

It's "looking toppish," JPMorgan analyst Nicole Goh said in a report dated July 26. - Bloomberg

TCHONG - Tan Chong Teana takes off in high gear

Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD
Research House: OSK

Tan Chong Motor Holdings Bhd
(July 26, RM4.80)
Maintain buy at RM4.78 with higher target price of RM6.40 (from RM5.73): Tan Chong's preview of its completely knocked-down (CKD) Teana last week was well attended by customers. After a series of similar events in Penang, it has scooped up bookings for 1,200 units. The Nissan Teana (CKD), which boasts a sleek exterior and luxurious interior, comes in two variants (2.0-litre and 2.5-litre). It is expected to garner favourable sales given its competitive pricing among the D segment which has been long dominated by the Accord and Camry. To achieve economies of scale in production, management has deferred the launch date to November (from September), and also surprised by announcing that it will be launching the Nissan X-Trail next month.

While there is little change in the models launching outlook since our last report, apart from the Nissan X-Trail, management also says its upcoming CKD B segment line-up (the Nissan March) will see a higher localisation rate of 50%, higher than the 30% for the Grand Livina.

Tan Chong says it intends to secure an exclusive distributorship licence in Myanmar to complete its Indo-China footprint. In serving these markets, management will make its Vietnam plant (due to commence production by 2012) the production hub, with an initial production volume of 1,200 units annually which will see it gradually increasing by 12,000 units annually over the next five years to serve the under-penetrated motor vehicle market.

We are keeping our earnings pending the release of its 2Q results next month. Valuation-wise, we have rolled our earnings to FY2011, which we continue to peg to a PER multiple of 13 times, to derive a new target price of RM6.40 (previously RM5.73). We deem as fair a multiple of 13 times since Tan Chong is undergoing PER expansion and structural changes that will see volume and earnings rev up by a CAGR of 17% and 35% respectively over the next three years. ' OSK Investment Research, July 26


This article appeared in The Edge Financial Daily, July 27, 2010.

GAB - GAB post-tournament depression turned celebration

Stock Name: GAB
Company Name: GUINNESS ANCHOR BHD
Research House: TA

Guinness Anchor Bhd
(July 26, RM8)
Maintain buy at RM7.79 with target price RM8.70: The brewers have had an amazing year so far as volume climbed in the absence of an excise duty hike. Brewer of the Year ' Guinness Anchor Bhd (GAB) ' is poised to perform with outstanding FY2010 results soon. Apart from media sources, we also note the FIFA World Cup season boosted sales by 30% at its trade partners' outlets, pubs and coffee shops.

GAB spent approximately RM10 million on promotions during the sporting season which we have imputed in our earnings assumptions. GAB's flagship outlets had about 750 viewing parties which recorded approximately 90,000 people. However, it was reported that some outlets recorded a tremendous 320% increase in sales year-on-year.

As mentioned previously, we anticipate strong growth in sales during the FIFA World Cup season. However, given that the event took place in June/July, we believe the full impact will not be felt in its FY2010 results ended June. Note that although there were more games held in June, the popular ones that is the semifinals and finals were played in July.

In 4QFY2010, we estimate sales to record 18% to 20% growth quarter-on-quarter. This is reflected in our 20.6% upward revision in net profit for the quarter. On that note, we also raise our projection for FY2010 by 5.1% to RM163.9 million. We believe the FIFA World Cup impact on the malt liquor market volume was underrated.

A potential threat to our estimates would be a possible excise duty hike in the budget this year which brewers have escaped for four consecutive years. Given the recent hike in gaming tax, we would not be surprised to see an excise duty hike on malt liquor this year. An increase in excise duty may significantly cause volume to contract as seen in previous years. Rolling over our valuation, we derive a new target price for GAB at RM8.70 ' based on discount dividend model (DDM) with an unchanged rate of return of 8.5%. Maintain buy on GAB. ' TA Securities Holdings, July 26


This article appeared in The Edge Financial Daily, July 27, 2010.

M3nergy offer gets over 85pc acceptance

Despite differing views on the takeover offer of M3nergy Bhd, an overwhelming majority or over 85 per cent of its shareholders have accepted Adamus Avenue Sdn Bhd's offer price of RM1.85 per share.

A source close to the deal told Bernama that the offer price must have been deemed to be attractive, fair and reasonable, to compel these shareholders to make the acceptances.

And it will be more than a week to go before the August 3, 2010, deadline for acceptances, he said.

The source said this in response to a recent filing by M3nergy to Bursa Malaysia, which said that its board had viewed the offer to be unfair, unreasonable and uncompelling.

The board was reported to have said that it concurred with the opinions of both Hwang DBS Investment Bank Bhd, its financial adviser, and independent adviser TA Securities Holdings Bhd, that the offer was not compelling as it did not reflect the underlying value of the company as well as prospects of its business.

M3nergy is mainly involved in the oil and gas, marine and power industries with proven expertise in the field of engineering, project management, operations and maintenance, shipping and construction for the offshore industry.

Nevertheless, it is understood that the offer price which represents a premium of 9.47 per cent over the closing price of the share prior to the announcement of the offer on May 17, is within the range of takeover premiums of 8.61 per cent for the comparable takeover transactions over the last 12 months.

At the same time, the EV/EBITDA (enterprise value/earnings before interest, taxes, depreciation and amortisation) multiple of 9.59 times based on the offer price is above the average EV/EBITDA multiple of 9.13 times of comparable companies.

As such, the source said Adamus was offering a better price for M3nergy shares as compared to the market prices of similar companies in the same oil and gas industry.

It was also reported that the earnings of M3energy have not been stable as its shares have been thinly traded for the last one year with the price hovering below RM1.50 most of the time.

Over the past 12 months preceding May 14, 2010, the daily average trading volume was 104,005 shares which represented about 0.08 per cent of the issued and paid-up capital of the company as at March 31, 2010.

As such, any further acceptances would be beneficial as shareholders could exit and cash in on the cost of their investment while realising a tidy premium without having to take on further exposure to potential market price risk.

With just over a week to go before the deadline, the source said, acceptances for Adamus offer were edging closer to the 90 per cent acceptance level required by Adamus to undertake the privatisation exercise of M3nergy.

Among the shareholders that accepted the offer is Melewar Equities (BVI) Ltd, which owned 45.42 per cent of the controlling block (57.531 million shares) in M3nergy.

In throwing support for the reasonable offer price, Melewar Equities' chief principal officer Datuk K.C. Lim said the offer price was sufficiently attractive and viewed as an opportune time to dispose of its shares.

'This transactions will raise capital for our group's plan and solidify our business while allowing us to exit M3nergy without any future risk exposure and we are indeed glad to see this through,' he said.

Meanwhile, a source close to the deal said that in the event the required acceptances of the conditional offer by Adamus did not pull through, there is a high possibility that the current M3nergy share price could tumble due to the failure of the proposed exercise.

Any significant fall in share price, thereafter, will expose all those who have margin financing, which comprised the bulk majority of the shareholders who accepted the offer.

The effect is that shareholders would stand to incur potential financial loss, he said.

Furthermore, there are also no other alternative offers on the table, he added.

The M3nergy shares were traded at RM1.82 per share as at 3pm today. -- BERNAMA

RHB maintains overweight on banking sector

Banking sector
Maintain overweight: Singaporean banks adopted FRS39 back in 2005, and with the economy having gone through a full economic cycle during this period, we have turned to the recent experience of the banks there to serve as a rough guide on the potential impact ahead of FRS139 on the local banks.

Generally, despite the switch to the "incurred loss" model, the experience of the banks in Singapore appears to suggest that the current loan loss model is procyclical. This would help lend support to our view that credit cost should remain relatively benign if economic conditions hold up.

Similarly, portfolio allowances (or collective allowances, CA) for Singapore banks were low during the growth cycle and picked up only during the downturn.

In Malaysia, the adoption of FRS139 has resulted in the banks (except for Public Bank Bhd) maintaining a higher level of CA compared to Bank Negara's required minimum of 1.5%. However, this suggests that as economic conditions and historical default and loss rates improve, these banks may be able to write back the excess provisions and/or grow loan base without having to provide for further collective allowances (ie run down the CA coverage).

Banks with higher exposures to the SME and corporate segments could now also be harder hit with impairment allowances when credit conditions deteriorate, compared to banks that have a higher exposure to the retail segment. This is because the corporate sector has, historically, had a higher default rate (versus household segment) and loans to businesses and corporates are typically given out on a clean basis. In mitigation, we believe the banks have taken the opportunity to beef up provisioning levels as the implementation of FRS139 has allowed banks to restate opening balances.

To address the issue of procyclicality, IASB plans to move towards a more forward-looking provisioning model to help banks build up their reserves over time, resulting in higher reserves being held when entering periods of deteriorating credit quality.

The implementation of the expected loss method may lead to higher provisioning levels required. The availability of data may also pose an operational challenge as to determine expected losses, banks must now forecast expected credit losses and the timing of such losses over the life of the loan.

We are maintaining our overweight rating on the sector. We like Malayan Banking Bhd, CIMB Group Holdings Bhd, AMMB Holdings Bhd and Public Bank for an exposure to large-cap banking stocks. Affin Holdings Bhd and Alliance Financial Group Bhd are also rated as outperform while EON Capital Bhd and Hong Leong Bank Bhd are both rated market perform. — RHB Research Institute, July 26

This article appeared in The Edge Financial Daily, July 27, 2010.