HANOI: Leading regional oil and gas services provider SapuraCrest Petroleum Bhd (SapuraCrest) on Saturday signed a cooperation agreement with PetroVietnam Technical Services Corporation (PTSC) as a further step in establishing its commitment to Vietnam.
SapuraCrest was represented by Datuk Shahril Shamsuddin, executive vice-chairman of SapuraCrest Petroleum and Sapura Group president and chief executive officer, while PTSC was represented by its general director, Nguyen Hung Dung.
The ceremony was witnessed by Prime Minister Datuk Seri Najib Tun Razak on the sidelines of a three-day, 17th Asean Summit and Related Summits which ended Saturday.
'This collaboration will enable SapuraCrest to develop its existing stable of products, together with PTSC, in order to meet market requirements in Vietnam.
'This will further support SapuraCrest's international business development strategy,' said Shahril, adding that the company's has had a presence for more than five year in Vietnam.
He also announced that SapuraCrest would offer five scholarships for PTSC personnel to pursue studies in chemical engineering, business management and related courses at the Asia Pacific University College in Technology Park, Bukit Jalil.
The two companies also committed to set up a comprehensive cooperation with which they would be able to co-develop their core businesses in supplying technical services for oil and gas projects, such as seismic surveying, installing and building ocean constructions.
SapuraCrest has already established a presence in India, Australia, Russia, Japan and Africa, in addition to most of Southeast Asia. -- Bernama
Sunday, October 31, 2010
Friday, October 29, 2010
IOICORP - Plantations on an extendable rally
Stock Name: IOICORP
Company Name: IOI CORPORATION BHD
Research House: ECMLIBRA
Plantation sector
Upgrade to overweight: We view that there may be impetus for crude palm oil (CPO) prices to run further in coming months. The key drivers for prices are: (i) strong exports which are already up 6.4% year-to-date (YTD); (ii) weak production that is only up 1.6% YTD; (iii) upcoming festive season demand may see CPO stock levels tumble; and (iv) the soyabean market faces a tightening in supplies due to China's demand. Just to illustrate the severity of point (iv), 9MCY10 imports by China already make up some 94% of full-year 2009 imports.
For 2011, we see that CPO prices have a good potential to average at RM2,700 per tonne. It might appear low compared with current CPO prices, but let us not forget that CPO prices are volatile. We view that prices will be stronger in 4Q10/1H11, given the factors mentioned above, but then may calm down in the later part of the year as supplies of other oil seeds may recover, cooling demand for palm oil. Of course, this is assuming there are no weather shocks next year affecting palm oil or other major oil seeds.
The picture we paint appears to make for another CPO price rally, however, there are always risks we have to watch out for: (i) a strong South American crop may balance out soya market supplies; (ii) a drop-off in exports due to overstocking in countries like China; (iii) strong production of other oil seeds may reduce the need for palm oil as a replacement; and (iv) structural changes like import duties or quotas that may affect exports.
Following our series of earnings and call upgrades for the stocks under our coverage we are now formalising our 'overweight' view on the sector. We note that Sime Darby (YTD -1.2%) and IOI (YTD +6.2%) particularly have been laggards compared with the FBM KLCI (YTD +17.3%). KLK (YTD + 17.6%) and Genting Plantations (YTD +36.5%), on the other hand, have been stronger YTD. Hence, we view more upside potential for Sime Darby and IOI, citing them as the top picks for the sector. ' ECM Libra Investment Research, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
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Company Name: IOI CORPORATION BHD
Research House: ECMLIBRA
Plantation sector
Upgrade to overweight: We view that there may be impetus for crude palm oil (CPO) prices to run further in coming months. The key drivers for prices are: (i) strong exports which are already up 6.4% year-to-date (YTD); (ii) weak production that is only up 1.6% YTD; (iii) upcoming festive season demand may see CPO stock levels tumble; and (iv) the soyabean market faces a tightening in supplies due to China's demand. Just to illustrate the severity of point (iv), 9MCY10 imports by China already make up some 94% of full-year 2009 imports.
For 2011, we see that CPO prices have a good potential to average at RM2,700 per tonne. It might appear low compared with current CPO prices, but let us not forget that CPO prices are volatile. We view that prices will be stronger in 4Q10/1H11, given the factors mentioned above, but then may calm down in the later part of the year as supplies of other oil seeds may recover, cooling demand for palm oil. Of course, this is assuming there are no weather shocks next year affecting palm oil or other major oil seeds.
The picture we paint appears to make for another CPO price rally, however, there are always risks we have to watch out for: (i) a strong South American crop may balance out soya market supplies; (ii) a drop-off in exports due to overstocking in countries like China; (iii) strong production of other oil seeds may reduce the need for palm oil as a replacement; and (iv) structural changes like import duties or quotas that may affect exports.
Following our series of earnings and call upgrades for the stocks under our coverage we are now formalising our 'overweight' view on the sector. We note that Sime Darby (YTD -1.2%) and IOI (YTD +6.2%) particularly have been laggards compared with the FBM KLCI (YTD +17.3%). KLK (YTD + 17.6%) and Genting Plantations (YTD +36.5%), on the other hand, have been stronger YTD. Hence, we view more upside potential for Sime Darby and IOI, citing them as the top picks for the sector. ' ECM Libra Investment Research, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
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SIME - Plantations on an extendable rally
Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: ECMLIBRA
Plantation sector
Upgrade to overweight: We view that there may be impetus for crude palm oil (CPO) prices to run further in coming months. The key drivers for prices are: (i) strong exports which are already up 6.4% year-to-date (YTD); (ii) weak production that is only up 1.6% YTD; (iii) upcoming festive season demand may see CPO stock levels tumble; and (iv) the soyabean market faces a tightening in supplies due to China's demand. Just to illustrate the severity of point (iv), 9MCY10 imports by China already make up some 94% of full-year 2009 imports.
For 2011, we see that CPO prices have a good potential to average at RM2,700 per tonne. It might appear low compared with current CPO prices, but let us not forget that CPO prices are volatile. We view that prices will be stronger in 4Q10/1H11, given the factors mentioned above, but then may calm down in the later part of the year as supplies of other oil seeds may recover, cooling demand for palm oil. Of course, this is assuming there are no weather shocks next year affecting palm oil or other major oil seeds.
The picture we paint appears to make for another CPO price rally, however, there are always risks we have to watch out for: (i) a strong South American crop may balance out soya market supplies; (ii) a drop-off in exports due to overstocking in countries like China; (iii) strong production of other oil seeds may reduce the need for palm oil as a replacement; and (iv) structural changes like import duties or quotas that may affect exports.
Following our series of earnings and call upgrades for the stocks under our coverage we are now formalising our 'overweight' view on the sector. We note that Sime Darby (YTD -1.2%) and IOI (YTD +6.2%) particularly have been laggards compared with the FBM KLCI (YTD +17.3%). KLK (YTD + 17.6%) and Genting Plantations (YTD +36.5%), on the other hand, have been stronger YTD. Hence, we view more upside potential for Sime Darby and IOI, citing them as the top picks for the sector. ' ECM Libra Investment Research, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
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Company Name: SIME DARBY BHD
Research House: ECMLIBRA
Plantation sector
Upgrade to overweight: We view that there may be impetus for crude palm oil (CPO) prices to run further in coming months. The key drivers for prices are: (i) strong exports which are already up 6.4% year-to-date (YTD); (ii) weak production that is only up 1.6% YTD; (iii) upcoming festive season demand may see CPO stock levels tumble; and (iv) the soyabean market faces a tightening in supplies due to China's demand. Just to illustrate the severity of point (iv), 9MCY10 imports by China already make up some 94% of full-year 2009 imports.
For 2011, we see that CPO prices have a good potential to average at RM2,700 per tonne. It might appear low compared with current CPO prices, but let us not forget that CPO prices are volatile. We view that prices will be stronger in 4Q10/1H11, given the factors mentioned above, but then may calm down in the later part of the year as supplies of other oil seeds may recover, cooling demand for palm oil. Of course, this is assuming there are no weather shocks next year affecting palm oil or other major oil seeds.
The picture we paint appears to make for another CPO price rally, however, there are always risks we have to watch out for: (i) a strong South American crop may balance out soya market supplies; (ii) a drop-off in exports due to overstocking in countries like China; (iii) strong production of other oil seeds may reduce the need for palm oil as a replacement; and (iv) structural changes like import duties or quotas that may affect exports.
Following our series of earnings and call upgrades for the stocks under our coverage we are now formalising our 'overweight' view on the sector. We note that Sime Darby (YTD -1.2%) and IOI (YTD +6.2%) particularly have been laggards compared with the FBM KLCI (YTD +17.3%). KLK (YTD + 17.6%) and Genting Plantations (YTD +36.5%), on the other hand, have been stronger YTD. Hence, we view more upside potential for Sime Darby and IOI, citing them as the top picks for the sector. ' ECM Libra Investment Research, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
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DAYANG - Positive surprises in store from Dayang
Stock Name: DAYANG
Company Name: DAYANG ENTERPRISE HOLDINGS BHD
Research House: HWANGDBS
Dayang Enterprise Holdings Bhd
(Oct 28, RM2.39)
Maintain buy at RM2.35 with target price of RM3: The RM2 billion hook-up and commissioning contract (four packages) might be awarded as early as next month. Dayang has a solid track record in this segment, and has secured 57% of the jobs awarded in 2010.
We believe Dayang's strong footing places it among the favourites to secure at least one of the packages. Assuming the packages are of equal value, Dayang could add RM500 million into its backlog, bringing its total order book to a record high RM1.5 billion or book-to-bill ratio of five times.
We estimate net profit at RM20 million to RM23 million, underpinned by contribution from the Shell contract and hook-up and commissioning jobs. Dayang has secured about RM600 million worth of jobs in 2010, within our expectation. But there could be positive surprises to our 2011 new wins assumption if Dayang succeeds in its bid for one of the packages of the above contract. Every RM100 million increase to our contract win assumption would raise FY11/FY12F earnings by 6% or 7% each.
We reiterate our 'buy' call on this growth story in the making. We like Dayang for its growth story (FY09/FY11F net profit CAGR of 46.2%), underpinned by a strong order book and superior margins. Dayang is also expected to be among the beneficiaries of potential new contracts. It is our high conviction call for the sector, and our RM3 target price is pegged to 11 times FY11F EPS. Dayang is trading at an attractive FY11F PER of 8.6 times against the sector's 10.3 times. ' HwangDBS Vickers Research, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
Company Name: DAYANG ENTERPRISE HOLDINGS BHD
Research House: HWANGDBS
Dayang Enterprise Holdings Bhd
(Oct 28, RM2.39)
Maintain buy at RM2.35 with target price of RM3: The RM2 billion hook-up and commissioning contract (four packages) might be awarded as early as next month. Dayang has a solid track record in this segment, and has secured 57% of the jobs awarded in 2010.
We believe Dayang's strong footing places it among the favourites to secure at least one of the packages. Assuming the packages are of equal value, Dayang could add RM500 million into its backlog, bringing its total order book to a record high RM1.5 billion or book-to-bill ratio of five times.
We estimate net profit at RM20 million to RM23 million, underpinned by contribution from the Shell contract and hook-up and commissioning jobs. Dayang has secured about RM600 million worth of jobs in 2010, within our expectation. But there could be positive surprises to our 2011 new wins assumption if Dayang succeeds in its bid for one of the packages of the above contract. Every RM100 million increase to our contract win assumption would raise FY11/FY12F earnings by 6% or 7% each.
We reiterate our 'buy' call on this growth story in the making. We like Dayang for its growth story (FY09/FY11F net profit CAGR of 46.2%), underpinned by a strong order book and superior margins. Dayang is also expected to be among the beneficiaries of potential new contracts. It is our high conviction call for the sector, and our RM3 target price is pegged to 11 times FY11F EPS. Dayang is trading at an attractive FY11F PER of 8.6 times against the sector's 10.3 times. ' HwangDBS Vickers Research, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
LMCEMNT - Comparing Lafarge and YTL Cement
Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Research House: RHB
Building materials
Maintain neutral: In this report, we make a comparison between the two largest cement players in Malaysia, Lafarge and YTL Cement. Year-to-date (YTD), Lafarge's share price has outperformed the FBM KLCI, while YTL Cement's share price has underperformed. Based on our estimate, Lafarge is currently trading at 17.1 times our revised FY11 ending December EPS forecast of 46.4 sen, while YTL Cement is trading at just 11 times our CY11 fully-diluted EPS forecast of 43 sen. We think a six times multiple discount is excessive and we outline two reasons why the discount should narrow over time.
We do not doubt that Lafarge is poised to benefit more than YTL Cement from the anticipated pick-up in domestic cement consumption, given its leadership position in the domestic cement market and strategic location of its plants. But YTL Cement is actually not that far behind Lafarge in terms of domestic market share, or far off'' Lafarge in terms of the location of its plants. As such, we see no reason why YTL Cement should trade at such a wide discount to Lafarge.
We have cut Lafarge's FY10/FY11 earnings forecasts by 5.8% to 16.2% and raised Lafarge's FY12 earnings forecasts by 5.4% after adjusting for the ratio of domestic versus export sales, domestic net selling price and effective tax rates.
We increase YTL Cement's FY11/FY13 ending June earnings by 1.9% to 7.4% after adjusting for a higher domestic net selling price. Our FY11/FY13 domestic sales volume growth assumption for YTL Cement remains unchanged at about 1% per year.
The risks include: (i) delays in the roll-out of projects, resulting in lower cement consumption; (ii) steep rise in energy prices; and (iii) potential price war in the industry when new capacity (CIMA expansion and Hume Cement's new plant in Perak) come onstream near end-2012.
Given investors' better risk appetite for cement stocks in the near term, we raise our one-year target forward PER for the cement stocks under our coverage from 11 to 14 times to 13 to 16 times. Following the raise in one-year target forward PER, our indicative fair values for the cement stocks are raised by 7.8% to 19.2%. Nevertheless, our recommendations for the respective companies are maintained. Hence, our 'neutral' call on the cement sub-sector is maintained as well. ' RHB Research Institute, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
Company Name: LAFARGE MALAYAN CEMENT BHD
Research House: RHB
Building materials
Maintain neutral: In this report, we make a comparison between the two largest cement players in Malaysia, Lafarge and YTL Cement. Year-to-date (YTD), Lafarge's share price has outperformed the FBM KLCI, while YTL Cement's share price has underperformed. Based on our estimate, Lafarge is currently trading at 17.1 times our revised FY11 ending December EPS forecast of 46.4 sen, while YTL Cement is trading at just 11 times our CY11 fully-diluted EPS forecast of 43 sen. We think a six times multiple discount is excessive and we outline two reasons why the discount should narrow over time.
We do not doubt that Lafarge is poised to benefit more than YTL Cement from the anticipated pick-up in domestic cement consumption, given its leadership position in the domestic cement market and strategic location of its plants. But YTL Cement is actually not that far behind Lafarge in terms of domestic market share, or far off'' Lafarge in terms of the location of its plants. As such, we see no reason why YTL Cement should trade at such a wide discount to Lafarge.
We have cut Lafarge's FY10/FY11 earnings forecasts by 5.8% to 16.2% and raised Lafarge's FY12 earnings forecasts by 5.4% after adjusting for the ratio of domestic versus export sales, domestic net selling price and effective tax rates.
We increase YTL Cement's FY11/FY13 ending June earnings by 1.9% to 7.4% after adjusting for a higher domestic net selling price. Our FY11/FY13 domestic sales volume growth assumption for YTL Cement remains unchanged at about 1% per year.
The risks include: (i) delays in the roll-out of projects, resulting in lower cement consumption; (ii) steep rise in energy prices; and (iii) potential price war in the industry when new capacity (CIMA expansion and Hume Cement's new plant in Perak) come onstream near end-2012.
Given investors' better risk appetite for cement stocks in the near term, we raise our one-year target forward PER for the cement stocks under our coverage from 11 to 14 times to 13 to 16 times. Following the raise in one-year target forward PER, our indicative fair values for the cement stocks are raised by 7.8% to 19.2%. Nevertheless, our recommendations for the respective companies are maintained. Hence, our 'neutral' call on the cement sub-sector is maintained as well. ' RHB Research Institute, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
YTLCMT - Comparing Lafarge and YTL Cement
Stock Name: YTLCMT
Company Name: YTL CEMENT BHD
Research House: RHB
Building materials
Maintain neutral: In this report, we make a comparison between the two largest cement players in Malaysia, Lafarge and YTL Cement. Year-to-date (YTD), Lafarge's share price has outperformed the FBM KLCI, while YTL Cement's share price has underperformed. Based on our estimate, Lafarge is currently trading at 17.1 times our revised FY11 ending December EPS forecast of 46.4 sen, while YTL Cement is trading at just 11 times our CY11 fully-diluted EPS forecast of 43 sen. We think a six times multiple discount is excessive and we outline two reasons why the discount should narrow over time.
We do not doubt that Lafarge is poised to benefit more than YTL Cement from the anticipated pick-up in domestic cement consumption, given its leadership position in the domestic cement market and strategic location of its plants. But YTL Cement is actually not that far behind Lafarge in terms of domestic market share, or far off'' Lafarge in terms of the location of its plants. As such, we see no reason why YTL Cement should trade at such a wide discount to Lafarge.
We have cut Lafarge's FY10/FY11 earnings forecasts by 5.8% to 16.2% and raised Lafarge's FY12 earnings forecasts by 5.4% after adjusting for the ratio of domestic versus export sales, domestic net selling price and effective tax rates.
We increase YTL Cement's FY11/FY13 ending June earnings by 1.9% to 7.4% after adjusting for a higher domestic net selling price. Our FY11/FY13 domestic sales volume growth assumption for YTL Cement remains unchanged at about 1% per year.
The risks include: (i) delays in the roll-out of projects, resulting in lower cement consumption; (ii) steep rise in energy prices; and (iii) potential price war in the industry when new capacity (CIMA expansion and Hume Cement's new plant in Perak) come onstream near end-2012.
Given investors' better risk appetite for cement stocks in the near term, we raise our one-year target forward PER for the cement stocks under our coverage from 11 to 14 times to 13 to 16 times. Following the raise in one-year target forward PER, our indicative fair values for the cement stocks are raised by 7.8% to 19.2%. Nevertheless, our recommendations for the respective companies are maintained. Hence, our 'neutral' call on the cement sub-sector is maintained as well. ' RHB Research Institute, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
Company Name: YTL CEMENT BHD
Research House: RHB
Building materials
Maintain neutral: In this report, we make a comparison between the two largest cement players in Malaysia, Lafarge and YTL Cement. Year-to-date (YTD), Lafarge's share price has outperformed the FBM KLCI, while YTL Cement's share price has underperformed. Based on our estimate, Lafarge is currently trading at 17.1 times our revised FY11 ending December EPS forecast of 46.4 sen, while YTL Cement is trading at just 11 times our CY11 fully-diluted EPS forecast of 43 sen. We think a six times multiple discount is excessive and we outline two reasons why the discount should narrow over time.
We do not doubt that Lafarge is poised to benefit more than YTL Cement from the anticipated pick-up in domestic cement consumption, given its leadership position in the domestic cement market and strategic location of its plants. But YTL Cement is actually not that far behind Lafarge in terms of domestic market share, or far off'' Lafarge in terms of the location of its plants. As such, we see no reason why YTL Cement should trade at such a wide discount to Lafarge.
We have cut Lafarge's FY10/FY11 earnings forecasts by 5.8% to 16.2% and raised Lafarge's FY12 earnings forecasts by 5.4% after adjusting for the ratio of domestic versus export sales, domestic net selling price and effective tax rates.
We increase YTL Cement's FY11/FY13 ending June earnings by 1.9% to 7.4% after adjusting for a higher domestic net selling price. Our FY11/FY13 domestic sales volume growth assumption for YTL Cement remains unchanged at about 1% per year.
The risks include: (i) delays in the roll-out of projects, resulting in lower cement consumption; (ii) steep rise in energy prices; and (iii) potential price war in the industry when new capacity (CIMA expansion and Hume Cement's new plant in Perak) come onstream near end-2012.
Given investors' better risk appetite for cement stocks in the near term, we raise our one-year target forward PER for the cement stocks under our coverage from 11 to 14 times to 13 to 16 times. Following the raise in one-year target forward PER, our indicative fair values for the cement stocks are raised by 7.8% to 19.2%. Nevertheless, our recommendations for the respective companies are maintained. Hence, our 'neutral' call on the cement sub-sector is maintained as well. ' RHB Research Institute, Oct 28
This article appeared in The Edge Financial Daily, October 29, 2010.
MAHB 3Q net profit down 25.9% to RM61.8m
KUALA LUMPUR: Malaysia Airports Holdings Bhd posted net profit of RM61.82 million for the third quarter ended Sept 30, 2010, down 25.9% from the RM83.43 million a year ago due to a higher share of losses in an associate company.
MAH said on Friday, Oct 29 that revenue rose 18.2% to RM446.28 million from RM377.36 million. Earnings per share were 5.62 sen versus 7.59 sen.
"The improved revenue in the current quarter under review was mainly contributed by the group's airport operations, driven by a stronger recovery in air travel demand.
Passenger movements for the current quarter were 6.6% higher than the corresponding period last year, in which the international and domestic passenger movements improved by 13.5% and 0.7% respectively," it said.
MAHB added the improved revenue was also contributed by growth in the retail business as well as higher rental revenue derived from additional commercial spaces.
For the nine months, it said earnings fell 18.2% to RM193.92 million from RM237.15 million. Revenue rose 13.6% to RM1.318 billion from RM1.16 billion.
"The improvement in revenue for the financial period-to-date under review was mainly contributed by a positive growth of 14.9% from the airport operations, driven by an increase in both aeronautical and non-aeronautical revenue of 13.1% and 17.0% respectively," it said.
MAHB said the improvement in non-aeronautical revenue was mostly derived from retail businesses as well as rental of available commercial spaces.
It added that passenger movements were 15.1% higher than the corresponding period last year, in which the international and domestic passenger movements improved by 25.2% and 7.0% respectively.
On the profit before tax and zakat (PBT) for the current quarter and financial period-to-date under review, it said it was lower than the corresponding period last year by 17.9% and 9.5% respectively, mainly due to the adoption of FRS 139.
This resulted in the higher share of losses in an associate company, whereby, the concession payable by the associate company was recognized at fair value and subsequently at amortised cost.
TENAGA - Tenaga earnings forecast lowered
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: MIMB
MIMB Investment Bank Bhd has revised downwards Tenaga Nasional Bhd's earnings forecast between seven per cent and 12 per cent for the 2011/2012 financial year.
It attributed the revision to fuel generation mix in view of higher coal requirements by the Jimah power plant in Port Dickson, the research bank said in a note today.
It also cut TNB's earnings per share by 12 per cent for the 2011 financial year after adjusting the generation mix on escalating coal usage.
"We see no price catalyst in the near-term. A re-rating will be in order when industry-wise reforms materialise," the investment bank said.
In the post earning revision, the research house has downgraded the target price for TNB to RM8.54 per share from RM9.24 per share previously.
Meanwhile, ECMLibra Investment Research is maintaining a buy on TNB at RM10.10 per share due to TNB's decent earnings growth.
"Coal prices are currently hovering at US$97 per tonne and historically, they tend to peak in September and October due to seasonally higher winter demand before tapering off," it said. - BERNAMA
Company Name: TENAGA NASIONAL BHD
Research House: MIMB
MIMB Investment Bank Bhd has revised downwards Tenaga Nasional Bhd's earnings forecast between seven per cent and 12 per cent for the 2011/2012 financial year.
It attributed the revision to fuel generation mix in view of higher coal requirements by the Jimah power plant in Port Dickson, the research bank said in a note today.
It also cut TNB's earnings per share by 12 per cent for the 2011 financial year after adjusting the generation mix on escalating coal usage.
"We see no price catalyst in the near-term. A re-rating will be in order when industry-wise reforms materialise," the investment bank said.
In the post earning revision, the research house has downgraded the target price for TNB to RM8.54 per share from RM9.24 per share previously.
Meanwhile, ECMLibra Investment Research is maintaining a buy on TNB at RM10.10 per share due to TNB's decent earnings growth.
"Coal prices are currently hovering at US$97 per tonne and historically, they tend to peak in September and October due to seasonally higher winter demand before tapering off," it said. - BERNAMA
TENAGA - Tenaga cut to 'neutral' at JPMorgan
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: JP MORGAN CHASE
Tenaga Nasional Bhd was cut to "neutral" from "overweight" at JPMorgan Chase & Co after the Malaysian power utility reported fiscal fourth-quarter profit that was below expectations.
The share-price estimate was reduced to RM9.20 from RM10.40, Simone Yeoh, an analyst at JPMorgan, said in a report today. -- Bloomberg
Company Name: TENAGA NASIONAL BHD
Research House: JP MORGAN CHASE
Tenaga Nasional Bhd was cut to "neutral" from "overweight" at JPMorgan Chase & Co after the Malaysian power utility reported fiscal fourth-quarter profit that was below expectations.
The share-price estimate was reduced to RM9.20 from RM10.40, Simone Yeoh, an analyst at JPMorgan, said in a report today. -- Bloomberg
NESTLE - OSK raises earning forecasts for Nestle
Stock Name: NESTLE
Company Name: NESTLE (M) BHD
Research House: OSK
OSK Research has raised Nestle (Malaysia) Bhd's earnings forecasts for the financial year 2010 and 2011 by 18 per cent and 20 per cent to RM459.6 million and RM504.7 million respectively, factoring a stronger ringgit and better operating efficiency.
The research house, in its note today, said Nestle's results for the nine-months ended Sept 30, 2010, surpassed earlier etimates with revenue and earnings growing 9.6 per cent and 32.6 per cent, respectively, fuelled by strong domestic and export sales.
On Thursday, Nestle reported a higher pre-tax profit of RM132.65 million for the third-quarter compared with RM106.41 million chalked-up in the same period last year.
The profit was achieved over a bigger revenue of RM991.076 million.
Against this backdrop, OSK has revised upwards its target price for Nestle to RM47.90 per share from RM38.53 per share estimated previously. - BERNAMA
Company Name: NESTLE (M) BHD
Research House: OSK
OSK Research has raised Nestle (Malaysia) Bhd's earnings forecasts for the financial year 2010 and 2011 by 18 per cent and 20 per cent to RM459.6 million and RM504.7 million respectively, factoring a stronger ringgit and better operating efficiency.
The research house, in its note today, said Nestle's results for the nine-months ended Sept 30, 2010, surpassed earlier etimates with revenue and earnings growing 9.6 per cent and 32.6 per cent, respectively, fuelled by strong domestic and export sales.
On Thursday, Nestle reported a higher pre-tax profit of RM132.65 million for the third-quarter compared with RM106.41 million chalked-up in the same period last year.
The profit was achieved over a bigger revenue of RM991.076 million.
Against this backdrop, OSK has revised upwards its target price for Nestle to RM47.90 per share from RM38.53 per share estimated previously. - BERNAMA
TENAGA - AmResearch maintains Hold On Tenaga
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: AMMB
KUALA LUMPUR: AmResearch reiterated its HOLD call on TENAGA NASIONAL BHD [] with an unchanged DCF-derived fair value of RM9 share after its FY10 core net profit came in right on the dot of its forecast but below 15% below street estimates.
'We have become less sanguine about Tenaga and have fine-tuned FY11F-FY12F earnings due to the US$10/tonne increase in coal cost assumption to US$100/tonne,' it said on Friday, Oct 29
AmResearch said however, that was largely offset by a revision to its exchange rate projection from RM3.10/US$1 to RM3.00/US$1. The stock currently trades at a fair FY11F PE of 14 times, which is Tenaga's three-year average.
Company Name: TENAGA NASIONAL BHD
Research House: AMMB
KUALA LUMPUR: AmResearch reiterated its HOLD call on TENAGA NASIONAL BHD [] with an unchanged DCF-derived fair value of RM9 share after its FY10 core net profit came in right on the dot of its forecast but below 15% below street estimates.
'We have become less sanguine about Tenaga and have fine-tuned FY11F-FY12F earnings due to the US$10/tonne increase in coal cost assumption to US$100/tonne,' it said on Friday, Oct 29
AmResearch said however, that was largely offset by a revision to its exchange rate projection from RM3.10/US$1 to RM3.00/US$1. The stock currently trades at a fair FY11F PE of 14 times, which is Tenaga's three-year average.
PLENITU - OSK Research: FV for Plenitude at RM5.56
Stock Name: PLENITU
Company Name: PLENITUDE BHD
Research House: OSK
KUALA LUMPUR:'' OSK Rsearch said Plenitude's proposed one-for-one bonus issue will go ex on Nov 12, 2010. The entitlement date for the bonus is Nov 16.
The bonus issue involves an issuance of up to 135 million shares. However, OSK Research said on Friday, Oct 29 the bonus issue exercise would not have an impact on its earnings forecast.
Ex-bonus, the earnings per share and net tangible asset/share will be reduced by 50% (FY11: from 72.4 sen and RM5.94 to 36.2 sen and RM2.97 respectively).
'Plenitude is one of our top picks for the Malaysian property sector as we believe that the company will ride high on the coming property upcycle between now and 2012/13, which will be primarily led by mid-to-high end landed PROPERTIES [],' it said.
OSK Research also stated that as this is also the first time that Plenitude is actually being proactive in addressing the issue of the stock's liquidity since its listing in 2003, there is a possibility of the stock trading at a premium even to its historical valuation.
'Our recent target price of RM4.84 (cum) was derived from 0.8 times CY11 price/net tangible asset. If we ascribe a liquidity premium of 15% to the stock's historical valuation, this would translate into our new fair value of RM5.56 for Plenitude (or RM2.78 ex-bonus), equivalent to 0.9 times CY11 P/NTA,' it said.
OSK Research said the stock was well-supported by anticipated strong earnings growth, a healthy balance sheet with a net cash of RM2.02/share (40% of current share price), and the fact that it is trading below its net asset value.
Company Name: PLENITUDE BHD
Research House: OSK
KUALA LUMPUR:'' OSK Rsearch said Plenitude's proposed one-for-one bonus issue will go ex on Nov 12, 2010. The entitlement date for the bonus is Nov 16.
The bonus issue involves an issuance of up to 135 million shares. However, OSK Research said on Friday, Oct 29 the bonus issue exercise would not have an impact on its earnings forecast.
Ex-bonus, the earnings per share and net tangible asset/share will be reduced by 50% (FY11: from 72.4 sen and RM5.94 to 36.2 sen and RM2.97 respectively).
'Plenitude is one of our top picks for the Malaysian property sector as we believe that the company will ride high on the coming property upcycle between now and 2012/13, which will be primarily led by mid-to-high end landed PROPERTIES [],' it said.
OSK Research also stated that as this is also the first time that Plenitude is actually being proactive in addressing the issue of the stock's liquidity since its listing in 2003, there is a possibility of the stock trading at a premium even to its historical valuation.
'Our recent target price of RM4.84 (cum) was derived from 0.8 times CY11 price/net tangible asset. If we ascribe a liquidity premium of 15% to the stock's historical valuation, this would translate into our new fair value of RM5.56 for Plenitude (or RM2.78 ex-bonus), equivalent to 0.9 times CY11 P/NTA,' it said.
OSK Research said the stock was well-supported by anticipated strong earnings growth, a healthy balance sheet with a net cash of RM2.02/share (40% of current share price), and the fact that it is trading below its net asset value.
TENAGA - Maybank IB Research: Sell Tenaga
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: MAYBANK
KUALA LUMPUR: Maybank Investment Bank Bhd Research (Maybank IB) sees more challenges ahead for TENAGA NASIONAL BHD [] and has a Sell call with an unchanged target price of RM7.50.
The research house said on Friday, Oct 29 that its 4Q net profit plunged 23% on-quarter to RM414 million on seasonally high "other costs" and rising coal prices.
"The final dividend was raised to 20 sen/share, but the 3% gross full-year yield is still not particularly compelling. We tweak our EPS forecasts on post-result housekeeping and still expect FY11 net profit contraction on higher coal prices," it said.
Maybank IB Research said the market had focused on its low 13% foreign ownership and gains from a weak US dollar.
"However, we see higher coal prices and gas supply constraints as the key issues. We maintain our below-consensus earnings forecasts. It could be even worse if gas supply constraints force Tenaga to burn costly distillate to meet power demand growth," it said.
Company Name: TENAGA NASIONAL BHD
Research House: MAYBANK
KUALA LUMPUR: Maybank Investment Bank Bhd Research (Maybank IB) sees more challenges ahead for TENAGA NASIONAL BHD [] and has a Sell call with an unchanged target price of RM7.50.
The research house said on Friday, Oct 29 that its 4Q net profit plunged 23% on-quarter to RM414 million on seasonally high "other costs" and rising coal prices.
"The final dividend was raised to 20 sen/share, but the 3% gross full-year yield is still not particularly compelling. We tweak our EPS forecasts on post-result housekeeping and still expect FY11 net profit contraction on higher coal prices," it said.
Maybank IB Research said the market had focused on its low 13% foreign ownership and gains from a weak US dollar.
"However, we see higher coal prices and gas supply constraints as the key issues. We maintain our below-consensus earnings forecasts. It could be even worse if gas supply constraints force Tenaga to burn costly distillate to meet power demand growth," it said.
Hwang DBS Vickers Research sees flattish performance for KLCI
KUALA LUMPUR: Hwang DBS Vickers Research expects the FBM KLCI to probably stage a flattish performance on Friday, Oct 29, ending the week near the psychological level of 1,500.
"This is in view of a dearth of fresh market developments that are needed to stimulate further buying interest," it said.
The research house said this was a similar story on Wall Street. Major U.S. equity indices showed a daily change of between -0.1% and +0.2% at the closing bell as investors were waiting for new market leads to emerge.
"Back home, Tenaga shares may come under a bit of selling pressures after its FY Aug 10 full-year financial results came in slightly below par.
"But the highlight of the day will be the debut listing of Malaysia Marine & Engineering Holdings – a heavy engineering and marine services provider in the oil & gas segment – which would be valued at a market cap of RM6.1 billion based on the institutional offer price of RM3.80 per share," it said.
Thursday, October 28, 2010
Tenaga Q4 profit doubles to RM388.4m
Malaysia's top power producer Tenaga Nasional posted a fourth-quarter net profit of RM388.4 million, more than double from the same period a year ago, the company said today.
The company's Q4 net profit for 2009 was RM164.3 million.
Tenaga owns more than half the total generation capacity installed in Peninsular Malaysia, its main market. - Reuters
The company's Q4 net profit for 2009 was RM164.3 million.
Tenaga owns more than half the total generation capacity installed in Peninsular Malaysia, its main market. - Reuters
AIRPORT - MAHB jumps on share estimate boost
Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: MAYBANK
Malaysia Airports Holdings Bhd (MAHB) rose 1.9 per cent to RM5.97, set for its steepest gain since September 30.
The share price estimate was raised to RM7.12 from RM6.63 by Khair Mirza, an analyst at Maybank Investment Bank Bhd, who cited growth potential from investment in an airport in Turkey. - Bloomberg
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: MAYBANK
Malaysia Airports Holdings Bhd (MAHB) rose 1.9 per cent to RM5.97, set for its steepest gain since September 30.
The share price estimate was raised to RM7.12 from RM6.63 by Khair Mirza, an analyst at Maybank Investment Bank Bhd, who cited growth potential from investment in an airport in Turkey. - Bloomberg
Y&G proposes 4-into-1 share capital reduction
KUALA LUMPUR: Property-based Y&G Corp Bhd has proposed a four-into-one share capital reduction and to acquire three companies for RM164.14 million via issuance of new shares.
The company had on Thursday, Oct 28 proposed to reduce the share capital from RM51 million, comprising 51 million shares of RM1 each, into 51 million shares of 25 sen each. It proposed to consolidate four 25 shares into one share each.
It also proposed to acquire three companies -- Hala Kota Development Sdn Bhd, Teras Zaman Sdn Bhd and Beta Fame Sdn Bhd – for RM164.14 million via the issue of new Y&G shares of RM1 each.
The companies would be acquired from Kinta Aroma Sdn Bhd, Datuk Seri Yap Seng Yew, Datin Seri Gan Li Li, Datuk Yap Jun Jien Yap Jun Wei and Teh Mi Mi.
Plenitude sees RM333m from new projects
Property developer Plenitude Bhd expects its new project launches to yield an estimated gross development value of RM333 million for the financial year ending June 30, 2011.
Its executive chairman Elsie Chua said the company's projects include Taman Desa Tebrau in Johor, Taman Putra Prima in Selangor, Bandar Perdana and Lot 88 Perdana Heights in Sungai Petani, Kedah.
'We will continue to be cautious of the economy and launch our projects when the timing is right,' she said after the company's annual general meeting (AGM) in Kuala Lumpur today.
Chua said Plenitude plans to launch condominium projects located at Tanjung Bungah and in Batu Ferringhi, Penang, soon and its first township in Balik Pulau.
She said the company will focus on building attractive and affordable houses priced above RM300,000 due to encouraging signs of a booming property market.
'We are very upbeat on future projects in Penang but also cautious about the rising price of land and building materials which would inadvertently raise the pricing of properties,' she added.
Plenitude also aims to launch its first bungalow development, Tebrau Mutiara at Taman Desa Tebrau, Johor Baru soon, she added.
Plenitude continues to maintain a healthy balance sheet whereby its net cash position rose to RM325 million for the financial year ended June 30, 2010 from RM246 million previously.
It also recorded RM113.55 million in higher pre-tax profit for the financial year ended June 30, 2010 compared with RM109.259 million last year, while revenue increased to RM349.713 million from RM282.756 million previously.
According to Chua, the company is looking at expanding its landbank in the Klang Valley as well as the region.
At the AGM, the shareholders also approved a first and final single tier tax exempt dividend of 15 per cent or 15 sen per share for the financial year ended June 30, amounting to RM20.25 million to be paid out by November 12.
It also proposed and shareholders approved, a bonus issue of 135 million new ordinary shares of RM1 each to be credited as fully paid up on the basis of one bonus share for every one existing share, held during the extraordinary general meeting which was held after the AGM. -- Bernama
Its executive chairman Elsie Chua said the company's projects include Taman Desa Tebrau in Johor, Taman Putra Prima in Selangor, Bandar Perdana and Lot 88 Perdana Heights in Sungai Petani, Kedah.
'We will continue to be cautious of the economy and launch our projects when the timing is right,' she said after the company's annual general meeting (AGM) in Kuala Lumpur today.
Chua said Plenitude plans to launch condominium projects located at Tanjung Bungah and in Batu Ferringhi, Penang, soon and its first township in Balik Pulau.
She said the company will focus on building attractive and affordable houses priced above RM300,000 due to encouraging signs of a booming property market.
'We are very upbeat on future projects in Penang but also cautious about the rising price of land and building materials which would inadvertently raise the pricing of properties,' she added.
Plenitude also aims to launch its first bungalow development, Tebrau Mutiara at Taman Desa Tebrau, Johor Baru soon, she added.
Plenitude continues to maintain a healthy balance sheet whereby its net cash position rose to RM325 million for the financial year ended June 30, 2010 from RM246 million previously.
It also recorded RM113.55 million in higher pre-tax profit for the financial year ended June 30, 2010 compared with RM109.259 million last year, while revenue increased to RM349.713 million from RM282.756 million previously.
According to Chua, the company is looking at expanding its landbank in the Klang Valley as well as the region.
At the AGM, the shareholders also approved a first and final single tier tax exempt dividend of 15 per cent or 15 sen per share for the financial year ended June 30, amounting to RM20.25 million to be paid out by November 12.
It also proposed and shareholders approved, a bonus issue of 135 million new ordinary shares of RM1 each to be credited as fully paid up on the basis of one bonus share for every one existing share, held during the extraordinary general meeting which was held after the AGM. -- Bernama
Malaysia banks set for strong earnings
SINGAPORE: Singapore and Malaysian banks are set to post strong quarterly earnings as bad debts slump, loans to housing sector rise and fees from underwriting stock offerings as well as wealth management services climb.
But interest rate margins for Singapore banks, led by DBS, will remain weak as rates remain hostage to the US, where the Federal Reserve could announce a second round of easing after its policy setting committee meets on Nov 2-3.
'Margins to remain under pressure from low interest rates and intense competition from the large foreign banks and new entrants such as CIMB and ANZ,' Standard Chartered's Natasha Midgley said in a note to clients about Singapore banks.
Banks in Singapore and Malaysia will also benefit from a rise in large stock offerings in the two countries that will generate higher fees.
Malaysian oil giant Petronas's chemicals unit is set to raise US$4.2 billion in Southeast Asia's biggest IPO this month and Global Logistic Properties, a unit of Singapore sovereign wealth fund GIC raised about US$3 billion recently.
Investors are also keen to hear from DBS, Southeast Asia's biggest lender, about its strategy to tackle low interest rates and its desire to expand outside its two core markets - Singapore and Hong Kong.
DBS has said it is open to buying assets in Indonesia, but analysts doubt it will embark on another MandA quest at a time when valuations are so high.
The top four Indonesia banks are trading at an average price-to-book ratio of 3.87 based on 2010 estimates, versus 1.3 for DBS, according to Thomson Reuters data.
The Singapore bank will be wary of overpaying for any acquisition after getting burned on an expensive Hong Kong deal almost a decade ago.
'We do not believe that an acquisition is imminent within the next few quarters,' Matthew Smith, a banking analyst at Macquarie, said in a note. 'Management quite rightly is focused on implementing internal improvements to the existing business before embarking on MandA.'
Malaysian banks are also expected to benefit from strong loan growth in the country as well as Indonesia, where both Maybank and CIMB have significant presence.
'Numbers should be good,' says ECM Libra analyst Bernard Ching. 'Loan growth has been rather strong, not only from Malaysia but also Indonesia.'
He said CIMB will benefit from a pickup in capital market activity. -- Reuters
But interest rate margins for Singapore banks, led by DBS, will remain weak as rates remain hostage to the US, where the Federal Reserve could announce a second round of easing after its policy setting committee meets on Nov 2-3.
'Margins to remain under pressure from low interest rates and intense competition from the large foreign banks and new entrants such as CIMB and ANZ,' Standard Chartered's Natasha Midgley said in a note to clients about Singapore banks.
Banks in Singapore and Malaysia will also benefit from a rise in large stock offerings in the two countries that will generate higher fees.
Malaysian oil giant Petronas's chemicals unit is set to raise US$4.2 billion in Southeast Asia's biggest IPO this month and Global Logistic Properties, a unit of Singapore sovereign wealth fund GIC raised about US$3 billion recently.
Investors are also keen to hear from DBS, Southeast Asia's biggest lender, about its strategy to tackle low interest rates and its desire to expand outside its two core markets - Singapore and Hong Kong.
DBS has said it is open to buying assets in Indonesia, but analysts doubt it will embark on another MandA quest at a time when valuations are so high.
The top four Indonesia banks are trading at an average price-to-book ratio of 3.87 based on 2010 estimates, versus 1.3 for DBS, according to Thomson Reuters data.
The Singapore bank will be wary of overpaying for any acquisition after getting burned on an expensive Hong Kong deal almost a decade ago.
'We do not believe that an acquisition is imminent within the next few quarters,' Matthew Smith, a banking analyst at Macquarie, said in a note. 'Management quite rightly is focused on implementing internal improvements to the existing business before embarking on MandA.'
Malaysian banks are also expected to benefit from strong loan growth in the country as well as Indonesia, where both Maybank and CIMB have significant presence.
'Numbers should be good,' says ECM Libra analyst Bernard Ching. 'Loan growth has been rather strong, not only from Malaysia but also Indonesia.'
He said CIMB will benefit from a pickup in capital market activity. -- Reuters
GENM - Genting Malaysia rating cut at Morgan
Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Research House: MORGAN STANLY
Genting Malaysia Bhd had its stock rating lowered to "equal-weight" from "overweight" at Morgan Stanley, which said it saw limited room for further gains in the near term. -- Bloomberg
Company Name: GENTING MALAYSIA BERHAD
Research House: MORGAN STANLY
Genting Malaysia Bhd had its stock rating lowered to "equal-weight" from "overweight" at Morgan Stanley, which said it saw limited room for further gains in the near term. -- Bloomberg
STAR - OSK raises 2010 adex forecast
Stock Name: STAR
Company Name: STAR PUBLICATIONS (M) BHD
Research House: OSK
OSK Research has nudged up advertising expenditure (adex) growth forecast for 2010 to 15 per cent from 14 per cent previously.
In a research note today, OSK said this followed the recent upgrade in its gross domestic product (GDP) growth projection for the year to 7.5 per cent from seven per cent.
"As we expect adex growth for the fourth quarter of 2010 (4Q10) to moderate, we believe it is on track to meet our adex growth projection of 15 per cent for 2010.
"Based on this forecast, we see adex for 4Q10 growing at 10 per cent year-on-year and 3.5 per cent quarter-on-quater.
"This is in line with the slower GDP projection for the quarter, as well as a bigger base impact, whereby adex for 4Q09 accounted for some 29 per cent of total adex in for 2009," it said.
OSK said despite the rosier sector outlook, it was maintaining a 'neutral' call on the sector as there were now limited investment choices following the privatization of Astro All Asia Networks plc, and given the fact that investors had factored in robust adex growth for 2010 into stock prices.
"Media Prima is a good choice for investors seeking the widest exposure in the media sector, supported by its position as the only integrated media player in Malaysia with exposure to all media platforms," it said.
It recommended a 'buy' on the stock at the target price of RM2.45.
OSK said despite the recent windfall from its special dividend, the medium-term and long-term prospects for Star was rather unattractive, especially if one considered its relatively expensive valuation. It maintained its 'neutral' call on Star at a target price of RM3.68.
Meanwhile, it said Chinese Media was an attractive valuation proposition as the stock was currently trading below ten times its price earnings ratio on one-year forward earnings per share.
It recommended a 'buy' on the stock at a target price of RM1.35. -- Bernama
Company Name: STAR PUBLICATIONS (M) BHD
Research House: OSK
OSK Research has nudged up advertising expenditure (adex) growth forecast for 2010 to 15 per cent from 14 per cent previously.
In a research note today, OSK said this followed the recent upgrade in its gross domestic product (GDP) growth projection for the year to 7.5 per cent from seven per cent.
"As we expect adex growth for the fourth quarter of 2010 (4Q10) to moderate, we believe it is on track to meet our adex growth projection of 15 per cent for 2010.
"Based on this forecast, we see adex for 4Q10 growing at 10 per cent year-on-year and 3.5 per cent quarter-on-quater.
"This is in line with the slower GDP projection for the quarter, as well as a bigger base impact, whereby adex for 4Q09 accounted for some 29 per cent of total adex in for 2009," it said.
OSK said despite the rosier sector outlook, it was maintaining a 'neutral' call on the sector as there were now limited investment choices following the privatization of Astro All Asia Networks plc, and given the fact that investors had factored in robust adex growth for 2010 into stock prices.
"Media Prima is a good choice for investors seeking the widest exposure in the media sector, supported by its position as the only integrated media player in Malaysia with exposure to all media platforms," it said.
It recommended a 'buy' on the stock at the target price of RM2.45.
OSK said despite the recent windfall from its special dividend, the medium-term and long-term prospects for Star was rather unattractive, especially if one considered its relatively expensive valuation. It maintained its 'neutral' call on Star at a target price of RM3.68.
Meanwhile, it said Chinese Media was an attractive valuation proposition as the stock was currently trading below ten times its price earnings ratio on one-year forward earnings per share.
It recommended a 'buy' on the stock at a target price of RM1.35. -- Bernama
MEDIA - OSK raises 2010 adex forecast
Stock Name: MEDIA
Company Name: MEDIA PRIMA BHD
Research House: OSK
OSK Research has nudged up advertising expenditure (adex) growth forecast for 2010 to 15 per cent from 14 per cent previously.
In a research note today, OSK said this followed the recent upgrade in its gross domestic product (GDP) growth projection for the year to 7.5 per cent from seven per cent.
"As we expect adex growth for the fourth quarter of 2010 (4Q10) to moderate, we believe it is on track to meet our adex growth projection of 15 per cent for 2010.
"Based on this forecast, we see adex for 4Q10 growing at 10 per cent year-on-year and 3.5 per cent quarter-on-quater.
"This is in line with the slower GDP projection for the quarter, as well as a bigger base impact, whereby adex for 4Q09 accounted for some 29 per cent of total adex in for 2009," it said.
OSK said despite the rosier sector outlook, it was maintaining a 'neutral' call on the sector as there were now limited investment choices following the privatization of Astro All Asia Networks plc, and given the fact that investors had factored in robust adex growth for 2010 into stock prices.
"Media Prima is a good choice for investors seeking the widest exposure in the media sector, supported by its position as the only integrated media player in Malaysia with exposure to all media platforms," it said.
It recommended a 'buy' on the stock at the target price of RM2.45.
OSK said despite the recent windfall from its special dividend, the medium-term and long-term prospects for Star was rather unattractive, especially if one considered its relatively expensive valuation. It maintained its 'neutral' call on Star at a target price of RM3.68.
Meanwhile, it said Chinese Media was an attractive valuation proposition as the stock was currently trading below ten times its price earnings ratio on one-year forward earnings per share.
It recommended a 'buy' on the stock at a target price of RM1.35. -- Bernama
Company Name: MEDIA PRIMA BHD
Research House: OSK
OSK Research has nudged up advertising expenditure (adex) growth forecast for 2010 to 15 per cent from 14 per cent previously.
In a research note today, OSK said this followed the recent upgrade in its gross domestic product (GDP) growth projection for the year to 7.5 per cent from seven per cent.
"As we expect adex growth for the fourth quarter of 2010 (4Q10) to moderate, we believe it is on track to meet our adex growth projection of 15 per cent for 2010.
"Based on this forecast, we see adex for 4Q10 growing at 10 per cent year-on-year and 3.5 per cent quarter-on-quater.
"This is in line with the slower GDP projection for the quarter, as well as a bigger base impact, whereby adex for 4Q09 accounted for some 29 per cent of total adex in for 2009," it said.
OSK said despite the rosier sector outlook, it was maintaining a 'neutral' call on the sector as there were now limited investment choices following the privatization of Astro All Asia Networks plc, and given the fact that investors had factored in robust adex growth for 2010 into stock prices.
"Media Prima is a good choice for investors seeking the widest exposure in the media sector, supported by its position as the only integrated media player in Malaysia with exposure to all media platforms," it said.
It recommended a 'buy' on the stock at the target price of RM2.45.
OSK said despite the recent windfall from its special dividend, the medium-term and long-term prospects for Star was rather unattractive, especially if one considered its relatively expensive valuation. It maintained its 'neutral' call on Star at a target price of RM3.68.
Meanwhile, it said Chinese Media was an attractive valuation proposition as the stock was currently trading below ten times its price earnings ratio on one-year forward earnings per share.
It recommended a 'buy' on the stock at a target price of RM1.35. -- Bernama
IJMPLNT - AmResearch keeps Buy on IJM Plantations, ups FV to RM3.20
Stock Name: IJMPLNT
Company Name: IJM PLANTATIONS BHD
Research House: AMMB
KUALA LUMPUR: AmResearch is keeping its BUY''on IJM PLANTATION []S BHD [] with an increased fair value of RM3.20/share to account for a higher CPO price assumption.
'We like IJM Plantations for its pure exposure to CPO prices. We estimate that for every RM100/tonne change in CPO price, IJM Plantation's net profit would improve by 3% to 4%,' it said on Thursday, Oct 28.
AmResearch assumed an unchanged PE of 17 times on IJM Plantations' FY12F basic EPS. Its PE-multiple assumption''is within IJM P's four-year historical PE band of 6 times to 28 times. The group's average PE was 19 times for the past four years.
Company Name: IJM PLANTATIONS BHD
Research House: AMMB
KUALA LUMPUR: AmResearch is keeping its BUY''on IJM PLANTATION []S BHD [] with an increased fair value of RM3.20/share to account for a higher CPO price assumption.
'We like IJM Plantations for its pure exposure to CPO prices. We estimate that for every RM100/tonne change in CPO price, IJM Plantation's net profit would improve by 3% to 4%,' it said on Thursday, Oct 28.
AmResearch assumed an unchanged PE of 17 times on IJM Plantations' FY12F basic EPS. Its PE-multiple assumption''is within IJM P's four-year historical PE band of 6 times to 28 times. The group's average PE was 19 times for the past four years.
SEALINK - AmResearch reaffirms Buy on Sealink
Stock Name: SEALINK
Company Name: SEALINK INTERNATIONAL BHD
Research House: AMMB
KUALA LUMPUR: AmResearch reaffirms its BUY rating on SEALINK INTERNATIONAL BHD [] with an unchanged fair value at 86 sen a share based on a PE target of 7.0 times.
Sealink announced on Wednesday, Oct 27 the sale of two supply vessels worth RM67 million, valued at RM33.5 million each, which is at par to the current going rate.
'We understand these vessels are still under CONSTRUCTION [] and should be ready for delivery by year-end. We are keeping our estimates as we have assumed five to six vessels to be sold in our earnings model,' AmResearch said on Thursday.
'We gather that the group is looking to finalise the sale of two more vessels before the year closes out. Management guided that a RM55 million to RM60 million earnings range is within reach. Management also guided of the possibility of being awarded a long-term charter contract by year-end,' it said.
Company Name: SEALINK INTERNATIONAL BHD
Research House: AMMB
KUALA LUMPUR: AmResearch reaffirms its BUY rating on SEALINK INTERNATIONAL BHD [] with an unchanged fair value at 86 sen a share based on a PE target of 7.0 times.
Sealink announced on Wednesday, Oct 27 the sale of two supply vessels worth RM67 million, valued at RM33.5 million each, which is at par to the current going rate.
'We understand these vessels are still under CONSTRUCTION [] and should be ready for delivery by year-end. We are keeping our estimates as we have assumed five to six vessels to be sold in our earnings model,' AmResearch said on Thursday.
'We gather that the group is looking to finalise the sale of two more vessels before the year closes out. Management guided that a RM55 million to RM60 million earnings range is within reach. Management also guided of the possibility of being awarded a long-term charter contract by year-end,' it said.
HAIO - OSK Research keeps Sell on Hai-O
Stock Name: HAIO
Company Name: HAI-O ENTERPRISE BHD
Research House: OSK
KUALA LUMPUR: OSK Research said the road to recovery for Hai-O's multi-level marketing (MLM) business is longer than expected as membership growth and buying sentiment among members has slowed down further.
Meanwhile, Hai-O announced that it is venturing into the property business, another non-core business, after diversifying into the TECHNOLOGY [] business earlier.
'While this could help reduce the company's reliance on the MLM business, we are concerned that the group is taking on more risk since its MLM business is struggling to regain its footing locally and establishing itself in Indonesia. Maintain SELL,' OSK Research said on Thursday, Oct 28.
Company Name: HAI-O ENTERPRISE BHD
Research House: OSK
KUALA LUMPUR: OSK Research said the road to recovery for Hai-O's multi-level marketing (MLM) business is longer than expected as membership growth and buying sentiment among members has slowed down further.
Meanwhile, Hai-O announced that it is venturing into the property business, another non-core business, after diversifying into the TECHNOLOGY [] business earlier.
'While this could help reduce the company's reliance on the MLM business, we are concerned that the group is taking on more risk since its MLM business is struggling to regain its footing locally and establishing itself in Indonesia. Maintain SELL,' OSK Research said on Thursday, Oct 28.
Hai-O entry into property may add risk: OSK
Hai-O Enterprise Bhd's venture into the property business will add more risk to the group, given that its multi-level marketing (MLM) business is still trying to recover locally, says OSK Research.
'While the venture may help generate future earnings and reduce its reliance on the more volatile MLM business, our concern is that this will further divert its focus on its current businesses and add risk to the group if not executed properly,' it said in its research note today.
The research house said apart from the risk of venturing into a non-core property business, in which Hai-O has no expertise, the group's MLM business was still struggling from the impact of more stringent rules on direct marketing.
The property venture is the second non-core business Hai-O has gone into after it diversified into the heat transfer technology in August 2009.
OSK said given the recovery in buying sentiment among Hai-O's members was taking longer than expected (members were ordering less even for the saleable products), the management believed the MLM division would need more than six months to recover.
'Nonetheless, the Hai-O management is confident that with all the measures put in place by the task force set up to beef up performance, its MLM division would regain momentum and continue to drive the group's earnings,' it said. -- Bernama
'While the venture may help generate future earnings and reduce its reliance on the more volatile MLM business, our concern is that this will further divert its focus on its current businesses and add risk to the group if not executed properly,' it said in its research note today.
The research house said apart from the risk of venturing into a non-core property business, in which Hai-O has no expertise, the group's MLM business was still struggling from the impact of more stringent rules on direct marketing.
The property venture is the second non-core business Hai-O has gone into after it diversified into the heat transfer technology in August 2009.
OSK said given the recovery in buying sentiment among Hai-O's members was taking longer than expected (members were ordering less even for the saleable products), the management believed the MLM division would need more than six months to recover.
'Nonetheless, the Hai-O management is confident that with all the measures put in place by the task force set up to beef up performance, its MLM division would regain momentum and continue to drive the group's earnings,' it said. -- Bernama
Buy banks, planters on profit surprise: Citi
Malaysian banks such as AMMB Holdings Bhd and plantation stocks will 'positively surprise' on profits for the third quarter, demonstrating their resilient earnings, Citigroup Inc said.
'Rotational plays and stock picking will likely dictate trades in the coming weeks,' Ng Yong Yin, an analyst at Citigroup, said in a report yesterday.
'In this phase of the cycle, shares of companies that deliver on earnings are expected to benefit.' -- Bloomberg
'Rotational plays and stock picking will likely dictate trades in the coming weeks,' Ng Yong Yin, an analyst at Citigroup, said in a report yesterday.
'In this phase of the cycle, shares of companies that deliver on earnings are expected to benefit.' -- Bloomberg
OSK Research keeps bullish outlook for FBM KLCI in near-term
KUALA LUMPUR: OSK Research said the FBM KLCI briefly crossed the 1,500-mark on Wednesday, Oct 27 but its upside was capped at the previous peak of 1,503.8.
The index ended the day below the major 1,500 psychological level. Without surpassing the 1,500 to 1,503.8 point area, it said it would not know for sure if the "Bullish Harami" is confirmed.
OSK Research said in its technical outlook on Thursday that although the index was still trading below the steep uptrend line, market action has stabilised with no signs of a further drop.
"As the market did not exhibit panic selling after violating the steep uptrend line, we still think the FBM KLCI has a fairly good chance of returning to above the steep uptrend line and confirming the "Bullish Harami".
"Anyhow, the accuracy of the breakdown signal from the short-term trend line is usually not very high and we have never really been concerned about it. This is because we will continue to keep our bullish bias on the near-term stock market as long as it maintains a posture at above the new uptrend line," it said.
OSK Research said the next resistance still lies at the psychological 1,500 mark, followed by the 1,524.69 level. To the downside, the 1,479 level is the immediate support, followed by the 1,439 level.
Wednesday, October 27, 2010
Tanjung Offshore gets RM22m vessel contract
KUALA LUMPUR: TANJUNG OFFSHORE BHD [] has received a RM22 million contract from Carigali-PTTEPI Operating Company Sdn Bhd (CPOC) to supply a tug and utility vessel.
It said on Wednesday, Oct 27 the contract was for a primary duration of three years. The vessel would be used to support the offshore operations of CPOC in block B-17 in the Malaysia-Thailand Joint Authority development area.
Tanjung Offshore said the contract was expected to contribute positively to the earnings and net assets of Tanjung Offshore for the financial year ending Dec 31, 2010 and beyond.
It said on Wednesday, Oct 27 the contract was for a primary duration of three years. The vessel would be used to support the offshore operations of CPOC in block B-17 in the Malaysia-Thailand Joint Authority development area.
Tanjung Offshore said the contract was expected to contribute positively to the earnings and net assets of Tanjung Offshore for the financial year ending Dec 31, 2010 and beyond.
Naim secures RM168.8m PWD job in Sarawak
KUALA LUMPUR: NAIM HOLDINGS BHD [] has secured a RM168.8 million contract from the Public Works Department for the infrastructure works of the the Bengoh Resettlement scheme in in Kuching.
In a filing to Bursa Malaysia on Wednesday, Oct 27, Naim said its unit NCSB Engineering Sdn Bhd had secured the contract which would involved the design and building of the infrastructure.
Amanah Raya REIT Q3 profit rises
Amanah Raya Real Estate Investment Trust's (ARREIT) pre-tax profit for the third quarter ended September 30, 2010 rose to RM10.79 million from RM7.95 million in the same quarter 2009.
Its revenue jumped to RM16.28 million from RM11.77 million previously.
In a filing with Bursa Malaysia, ARREIT said the higher revenue was due to the upward revision in rental rates for several investment properties as well as additional rental income from the two new investment properties. - Bernama
Its revenue jumped to RM16.28 million from RM11.77 million previously.
In a filing with Bursa Malaysia, ARREIT said the higher revenue was due to the upward revision in rental rates for several investment properties as well as additional rental income from the two new investment properties. - Bernama
HSL - Hock Seng Lee jumps to 13-year high
Stock Name: HSL
Company Name: HOCK SENG LEE BHD
Research House: MAYBANK
Hock Seng Lee Bhd, a builder, advanced 2.2 per cent to RM1.86,
its highest level since September 1997.
The share-price estimate was raised to RM2.30 from RM1.90 by Wong Chew Hann, an analyst at Maybank Investment Bank Bhd, citing rising construction orders. - Bloomberg
Company Name: HOCK SENG LEE BHD
Research House: MAYBANK
Hock Seng Lee Bhd, a builder, advanced 2.2 per cent to RM1.86,
its highest level since September 1997.
The share-price estimate was raised to RM2.30 from RM1.90 by Wong Chew Hann, an analyst at Maybank Investment Bank Bhd, citing rising construction orders. - Bloomberg
PARKSON - Parkson sees new market growth
Stock Name: PARKSON
Company Name: PARKSON HOLDINGS BHD
Research House: BIMB
Parkson Holdings Bhd
(Oct 25, RM5.85)
Upgrade to buy at RM6 with target price RM7.57: Parkson recorded a strong same store sales (SSS) growth in the first six months of FY10 with +11% recorded in Malaysia, +26.9% Vietnam, and 11.3% China.
The strong SSS growth was mainly driven by its aggressive expansion strategy throughout the year. Eight new stores were opened in Kota Baru, Kota Kinabalu, and Kluang (Malaysia), Changsu, Lanzhou, Shijiazhuang, and Shaoxing (China), and Ho Chi Min City (Vietnam).
The management is committed to continue with its aggressive expansion plans in the future. Parkson expects to open at least five new stores in China and one or two new ones in Malaysia and Vietnam in the immediate term.
So far, Parkson has 35 stores in Malaysia, six in Vietnam, and 46 in China. Note that Parkson's operation in China is run by the Parkson Retail Group (PRG) in which Parkson has 51.5% equity interest. In the future, Parkson will transfer all its direct owned stores for PRG to operate. For that, Parkson expects to spend more than RM200 million on capex.
Parkson management reaffirmed that Parkson Cambodia will start operations in 2012, in addition to seriously looking into the Indonesian market.
The penetration strategy into the highly populated nation will bode well for the group as the company's earnings growth is primarily driven by new store openings.
We are positive on this as Indonesia and Cambodia have a combined population in excess of 200 million people, at least seven times bigger than Malaysia.
Concessionaire sales contribute about 73% of the annual revenue in Malaysia with 90% in China and 92% in Vietnam.
Moving forward, Parkson will focus to increase its revenue contribution by concessionaire sales, which basically include the commissions that come from the sales of tenants in Parkson stores.
Parkson does not have a formal dividend policy but has been consistently paying dividends to its shareholders. Parkson expects to pay about 30% of net profit as dividend in the future, which translates into 1.6% dividend yield (FY11).
We have made some adjustment to our earnings forecast in tandem with the aggressive expansion plans by Parkson. As a result, FY11 earnings have been bumped up by 16% to RM369 million. Hence, we upgrade our call to a 'buy' from 'outperform' with a target price of RM7.57 based on sum-of-parts valuation. Total return is at a sterling 27.8% including 1.6% dividend yield. ' BIMB Securities Research (Oct 26)
This article appeared in The Edge Financial Daily, October 27, 2010.
Company Name: PARKSON HOLDINGS BHD
Research House: BIMB
Parkson Holdings Bhd
(Oct 25, RM5.85)
Upgrade to buy at RM6 with target price RM7.57: Parkson recorded a strong same store sales (SSS) growth in the first six months of FY10 with +11% recorded in Malaysia, +26.9% Vietnam, and 11.3% China.
The strong SSS growth was mainly driven by its aggressive expansion strategy throughout the year. Eight new stores were opened in Kota Baru, Kota Kinabalu, and Kluang (Malaysia), Changsu, Lanzhou, Shijiazhuang, and Shaoxing (China), and Ho Chi Min City (Vietnam).
The management is committed to continue with its aggressive expansion plans in the future. Parkson expects to open at least five new stores in China and one or two new ones in Malaysia and Vietnam in the immediate term.
So far, Parkson has 35 stores in Malaysia, six in Vietnam, and 46 in China. Note that Parkson's operation in China is run by the Parkson Retail Group (PRG) in which Parkson has 51.5% equity interest. In the future, Parkson will transfer all its direct owned stores for PRG to operate. For that, Parkson expects to spend more than RM200 million on capex.
Parkson management reaffirmed that Parkson Cambodia will start operations in 2012, in addition to seriously looking into the Indonesian market.
The penetration strategy into the highly populated nation will bode well for the group as the company's earnings growth is primarily driven by new store openings.
We are positive on this as Indonesia and Cambodia have a combined population in excess of 200 million people, at least seven times bigger than Malaysia.
Concessionaire sales contribute about 73% of the annual revenue in Malaysia with 90% in China and 92% in Vietnam.
Moving forward, Parkson will focus to increase its revenue contribution by concessionaire sales, which basically include the commissions that come from the sales of tenants in Parkson stores.
Parkson does not have a formal dividend policy but has been consistently paying dividends to its shareholders. Parkson expects to pay about 30% of net profit as dividend in the future, which translates into 1.6% dividend yield (FY11).
We have made some adjustment to our earnings forecast in tandem with the aggressive expansion plans by Parkson. As a result, FY11 earnings have been bumped up by 16% to RM369 million. Hence, we upgrade our call to a 'buy' from 'outperform' with a target price of RM7.57 based on sum-of-parts valuation. Total return is at a sterling 27.8% including 1.6% dividend yield. ' BIMB Securities Research (Oct 26)
This article appeared in The Edge Financial Daily, October 27, 2010.
MAS - Structural issues at MAS cap yield growth
Stock Name: MAS
Company Name: MALAYSIAN AIRLINE SYSTEM BHD
Research House: RHB
Malaysian Airline System Bhd
(Oct 26, RM2.29)
Maintain underperform at RM2.31 with fair value RM1.91: Despite the strong recovery in the global aviation sector, a strong rebound in yields has so far eluded MAS largely due to two key structural issues: (i) its inability to immediately roll out higher-yielding product offerings, predominantly those at the front end, as the delivery of newer aircraft is still pending; and (ii) MAS's main hub, Kuala Lumpur, is not quite a natural market for higher-yielding business travellers.
Based on its existing confirmed aircraft orders with an estimated cost of RM15.6 billion ' 35 planes of the B787-800 range, 17 planes of'' the A330-300/F range and six of the A380-800 model ' MAS does not see the need to make another round of cash calls. However, if the national airline is to exercise its options for an additional 20 B787-800 and 12 A330-300/F planes, with an estimated cost of RM7.8 billion, it does not rule out the possibility of some form of fund-raising exercise down the road.
MAS confirmed news reports that it is considering re-deploying its 37 older-generation B737-400 to its low-cost operation under Firefly. If MAS is to proceed with the plan, the jet services, likely to be branded 'Firefly Jet', will operate out of the LCCT at KLIA, and not SAAS Airport in Subang. We do not find the Firefly Jet model compelling largely because: (i) it is without the very key advantage of Firefly, namely, operating out of a city airport; and (ii) It will be in direct competition with AirAsia.
Our forecasts remain relatively unchanged as they reflect MAS's relatively muted yield outlook over the short term.
Risks to our view include: (i) a stronger-than-expected recovery in MAS's yields; (ii) lower jet fuel costs; and (iii) effective containment of outbreaks of pandemic diseases.
We maintain our 'underperform' call. We believe the airline sector is poised for improved prospects over the medium term in line with the recovery in the global economy. However, we remain cautious on MAS as: (i) it is still saddled with fuel hedges at high prices; (ii) its quarterly operating results remain volatile with losses during the latest two quarters; and (iii) there may be cash calls down the road, assuming MAS is to exercise its options for additional new aircraft. Indicative fair value is relatively unchanged at RM1.91 based on 14 times FY11 EPS, in line with its nearest comparable issue Singapore Airlines Ltd. ' RHB Research Institute Sdn Bhd (Oct 26)
This article appeared in The Edge Financial Daily, October 27, 2010.
Company Name: MALAYSIAN AIRLINE SYSTEM BHD
Research House: RHB
Malaysian Airline System Bhd
(Oct 26, RM2.29)
Maintain underperform at RM2.31 with fair value RM1.91: Despite the strong recovery in the global aviation sector, a strong rebound in yields has so far eluded MAS largely due to two key structural issues: (i) its inability to immediately roll out higher-yielding product offerings, predominantly those at the front end, as the delivery of newer aircraft is still pending; and (ii) MAS's main hub, Kuala Lumpur, is not quite a natural market for higher-yielding business travellers.
Based on its existing confirmed aircraft orders with an estimated cost of RM15.6 billion ' 35 planes of the B787-800 range, 17 planes of'' the A330-300/F range and six of the A380-800 model ' MAS does not see the need to make another round of cash calls. However, if the national airline is to exercise its options for an additional 20 B787-800 and 12 A330-300/F planes, with an estimated cost of RM7.8 billion, it does not rule out the possibility of some form of fund-raising exercise down the road.
MAS confirmed news reports that it is considering re-deploying its 37 older-generation B737-400 to its low-cost operation under Firefly. If MAS is to proceed with the plan, the jet services, likely to be branded 'Firefly Jet', will operate out of the LCCT at KLIA, and not SAAS Airport in Subang. We do not find the Firefly Jet model compelling largely because: (i) it is without the very key advantage of Firefly, namely, operating out of a city airport; and (ii) It will be in direct competition with AirAsia.
Our forecasts remain relatively unchanged as they reflect MAS's relatively muted yield outlook over the short term.
Risks to our view include: (i) a stronger-than-expected recovery in MAS's yields; (ii) lower jet fuel costs; and (iii) effective containment of outbreaks of pandemic diseases.
We maintain our 'underperform' call. We believe the airline sector is poised for improved prospects over the medium term in line with the recovery in the global economy. However, we remain cautious on MAS as: (i) it is still saddled with fuel hedges at high prices; (ii) its quarterly operating results remain volatile with losses during the latest two quarters; and (iii) there may be cash calls down the road, assuming MAS is to exercise its options for additional new aircraft. Indicative fair value is relatively unchanged at RM1.91 based on 14 times FY11 EPS, in line with its nearest comparable issue Singapore Airlines Ltd. ' RHB Research Institute Sdn Bhd (Oct 26)
This article appeared in The Edge Financial Daily, October 27, 2010.
TENAGA - Rising coal price could dampen Tenaga earnings
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: MIDF
Tenaga Nasional Bhd
(Oct 26, RM8.88)
Maintain buy at RM8.80 with target price RM10.35: In the previous earnings announcement, the group posted a strong top line growth due to a 9.9% year-on-year growth in demand. However, despite the better than expected numbers, we retain our forecast as earnings in 4Q10 could be under pressure from the increasing coal prices and higher utilisation of coal for power generation.
A limited gas supply resulted in higher coal usage. The situation was exacerbated by the higher coal prices against FY09. The cost of coal has risen since Dec 2009, pushing Tenaga's average coal price to US$92 per tonne (current: about US$100) as compared with US$82 per tonne in 1H10. Expectations for the average coal price have increased to US$95 for FY10. As such, gross margins suffered, declining to 23.3% in 3Q10 from 32.1% in 2Q10.
In 3QFY10 Tenaga's forex exposure was at an average of RM3.26/US dollar (FY09: RM3.53), while ringgit/Japanese yen was averaging RM3.56 (FY09: RM3.75/Y100). The current RM/US dollar is at circa RM3.10, while the yen is around RM3.83/Y100. Despite the rise in the yen, the average for FY10 is hardly affected, thus the overall impact is expected to be marginal. As at 3Q10, gearing was at 43.2% against 46.5% in FY09, where almost 24% of its RM21.6 billion debt is in yen (22.2% in US dollars).
No tariff review will happen this year and any developments would be after the next general election. The government would not want to introduce unpopular measures at this point in time so it would be a lengthy wait for any firm decision on the matter.
We maintain 'buy' with target price unchanged at RM10.35. We are maintaining our FY10 numbers for the time being but, as mentioned, we are wary about the impact of the rising cost of coal with potential margin compression in 4Q10. Target price is pegged at 13 times FY11 earnings. ' MIDF Research (Oct 26)
This article appeared in The Edge Financial Daily, October 27, 2010.
Company Name: TENAGA NASIONAL BHD
Research House: MIDF
Tenaga Nasional Bhd
(Oct 26, RM8.88)
Maintain buy at RM8.80 with target price RM10.35: In the previous earnings announcement, the group posted a strong top line growth due to a 9.9% year-on-year growth in demand. However, despite the better than expected numbers, we retain our forecast as earnings in 4Q10 could be under pressure from the increasing coal prices and higher utilisation of coal for power generation.
A limited gas supply resulted in higher coal usage. The situation was exacerbated by the higher coal prices against FY09. The cost of coal has risen since Dec 2009, pushing Tenaga's average coal price to US$92 per tonne (current: about US$100) as compared with US$82 per tonne in 1H10. Expectations for the average coal price have increased to US$95 for FY10. As such, gross margins suffered, declining to 23.3% in 3Q10 from 32.1% in 2Q10.
In 3QFY10 Tenaga's forex exposure was at an average of RM3.26/US dollar (FY09: RM3.53), while ringgit/Japanese yen was averaging RM3.56 (FY09: RM3.75/Y100). The current RM/US dollar is at circa RM3.10, while the yen is around RM3.83/Y100. Despite the rise in the yen, the average for FY10 is hardly affected, thus the overall impact is expected to be marginal. As at 3Q10, gearing was at 43.2% against 46.5% in FY09, where almost 24% of its RM21.6 billion debt is in yen (22.2% in US dollars).
No tariff review will happen this year and any developments would be after the next general election. The government would not want to introduce unpopular measures at this point in time so it would be a lengthy wait for any firm decision on the matter.
We maintain 'buy' with target price unchanged at RM10.35. We are maintaining our FY10 numbers for the time being but, as mentioned, we are wary about the impact of the rising cost of coal with potential margin compression in 4Q10. Target price is pegged at 13 times FY11 earnings. ' MIDF Research (Oct 26)
This article appeared in The Edge Financial Daily, October 27, 2010.
Alam Maritim — signs MoU with Yayasan Sabah
Alam Maritim Resources Bhd
(Oct 25, RM1.17)
Maintain buy at RM1.07 with fair value under review: Alam Maritim Resources Bhd on Oct 22 announced that it had entered into a memorandum of understanding (MoU) with Yayasan Sabah Shipping Sdn Bhd (YSS), a wholly owned subsidiary of Yayasan Sabah.
The MoU includes the possibility of (i) setting up a JV company for offshore installation and construction, pipe laying, pipe replacement and so on and (ii) sharing of marine assets including supply vessels and underwater assets.
YSS is also a Petronas licensee and the group has had long working relationships with Petronas and other oil majors. Currently, it has six vessels — three oil/chemical tankers and other offshore support vessels such as crew boats and landing craft.
We view this as a strategic move for Alam as it would give it a stronger chance to be involved in the expected acceleration in Sabah's oil and gas activities. Recall that recently there was a separate tender for the provision of offshore support vessels for the peninsula and East Malaysia — something that has not been practised previously.
The outlook remains positive for marine players as demand will continue to be driven by the new 7 + 14 requirements by Petronas Carigali. Seven vessels 
are required for shallow water works in 2H10, and 14 vessels are required to assist in deep water exploration and production in 2011. This bodes well for Alam as the group is expecting the delivery of two DP2 deep water anchor handling tug supply vessels (AHTS) by year-end.
We understand the value of these contracts is estimated to be in the region of RM1.5 billion and does not include other requirements by PSCs such as Shell and ExxonMobil.
We reaffirm our "buy" rating on Alam with our fair value currently under review pending a company visit. — AmResearch Sdn Bhd (Oct 26)
This article appeared in The Edge Financial Daily, October 27, 2010.
Credit Suisse sees year-end CPO seasonal rally, possibly early 2011
KUALA LUMPUR: Credit Suisse Research sees a year-end seasonal rally, possibly until early 2011 for crude palm oil (CPO) prices.
It said in a research note issued on Tuesday, Oct 26 that palm oil spot prices have breached the RM3,000 level, and is now at a 27-month high.
Year-to-date (YTD), palm oil spot prices have averaged RM2,599 a tonne, up 18% YTD. Meanwhile, palm oil prices in the US dollar have risen 28% YTD, as the US dollar has weakened 11% against the ringgit.
Over the past 10 years, palm oil prices have troughed in July-September and peaked in December-March, more than three quarters of the time.
"We believe the current palm oil price rally could be partly seasonal. If the trend is similar to that of previous years, the palm oil price rally may last until March 2011, but could weaken thereafter," it said.
Credit Suisse said it sticks to its view spelt out in its August 2010 report, "The rise before the fall".
"We believe palm oil prices will seasonally increase over the next few months, but remain bearish in 2011," it said.
The research house said for investors looking to take advantage of the seasonal rally, it highlighted high-beta stocks: Indofood Agri Resources Ltd (IFAR beta of 1.7); PT London Sumatra Indonesia (LSPI beta of 1.3) and IOI Corporation (beta of 1.3).
PLANTATION [] companies with the highest leverage to rising palm oil prices are PT Astra Agro Lestari Tbk , Sampoerna Agro Tbk, IFAR, Genting Plantations Bhd and Kuala Lumpur Kepong.
C.I. Hldgs to focus on non-carbonated drinks
Beverage manufacturer C.I Holdings Bhd will focus on its non-carbonated drinks segment this year namely, product types like juices, tea and isotonic drinks.
'We commissioned our RM45 million non-carbonated production facility last month. Its production capacity can give us another RM300 million in turnover,' group managing director Datuk Johari Abdul Ghani told reporters today.
He added, previously, there had been some production constraints but the new facility would give the company ample space to increase capacity.
'We will look into the Asian drinks category in the next 12-months. Our priority is the juice, tea and isotonic drinks segment which are higher growth categories offering more lucrative margins,' he said after the company's annual general meeting (AGM) today.
Speaking on potential mergers and acquisitions (MandA), he said the company was looking at companies centred around food related products.
'If there is any MandA, these companies can leverage on our distributionchannel and enjoy the benefit of its strength,' he explained.
Currently, C.I.Holdings has about 42,000 distribution outlets throughout the country, and aims to increase the number to 45,000 for FY11.
Johari is confident of maintaining the company''s strong growth momentum aswell.
'If you look at our first quarter results to be announced next week, it shows the same trend.
'With a new production line capable of generating RM300 million in sales, we are on a growth phase,' he said.
C.I.Holdings expects to maintain its 10 per cent allocation from revenue for advertising and promotion activities for FY11. Last year, it had spent about RM50 million, on marketing activities.
At the AGM, shareholders had approved a final pre-tax dividend of 7.0 sen per share, bringing its full year dividend to 11.0 sen per ordinary share.
For its financial year ended June 30, 2010, the company recorded a pre-tax profit of RM48.035 million, a 72 per cent increase from the RM27.96 million recorded previously.
The profit was achieved on the back of a total revenue of RM516.4 million, a 43 per cent increase from RM362.98 million previously. -- Bernama
'We commissioned our RM45 million non-carbonated production facility last month. Its production capacity can give us another RM300 million in turnover,' group managing director Datuk Johari Abdul Ghani told reporters today.
He added, previously, there had been some production constraints but the new facility would give the company ample space to increase capacity.
'We will look into the Asian drinks category in the next 12-months. Our priority is the juice, tea and isotonic drinks segment which are higher growth categories offering more lucrative margins,' he said after the company's annual general meeting (AGM) today.
Speaking on potential mergers and acquisitions (MandA), he said the company was looking at companies centred around food related products.
'If there is any MandA, these companies can leverage on our distributionchannel and enjoy the benefit of its strength,' he explained.
Currently, C.I.Holdings has about 42,000 distribution outlets throughout the country, and aims to increase the number to 45,000 for FY11.
Johari is confident of maintaining the company''s strong growth momentum aswell.
'If you look at our first quarter results to be announced next week, it shows the same trend.
'With a new production line capable of generating RM300 million in sales, we are on a growth phase,' he said.
C.I.Holdings expects to maintain its 10 per cent allocation from revenue for advertising and promotion activities for FY11. Last year, it had spent about RM50 million, on marketing activities.
At the AGM, shareholders had approved a final pre-tax dividend of 7.0 sen per share, bringing its full year dividend to 11.0 sen per ordinary share.
For its financial year ended June 30, 2010, the company recorded a pre-tax profit of RM48.035 million, a 72 per cent increase from the RM27.96 million recorded previously.
The profit was achieved on the back of a total revenue of RM516.4 million, a 43 per cent increase from RM362.98 million previously. -- Bernama
DIGI - MIDF raises Digi's 2010/2011 forecast
Stock Name: DIGI
Company Name: DIGI.COM BHD
Research House: MIDF
MIDF Research has raised its 2010 and 2011 revenue forecast for DiGi.Com Bhd by 2.4 per cent and 3.3 per cent respectively, to reflect the growth in data revenue.
The research house said data revenue had the potential to grow further and the expected collaboration with Celcom, will bring substantial cost saving benefits to DiGi.
It also believes, the mobile internet market in Malaysia is set to grow significantly, based on the rising popularity of smart phones with an explosion of Android and Symbian based models to rival the iPhone 4.
"With the entry point projects (EPP) announced, stressing on increasing connectivity, we expect that data will increasingly be the new driver for growth.
"We like the fact that Digi has moved from handset subsidies to monthly discount on contracts to attract users and we believe this is a key reason for the good performance in 3Q10.
DiGi, yesterday announced an interim dividend of 50 sen, which brings the total dividend announced in FY10 to RM1.20.
"We believe that its consistently above-market dividend yield will enhance the attractiveness of the stock. We expect dividend yield to reach 6.1 per cent, based on current price in FY10," MIDF added.
It has also upgraded DiGi to a "buy" with a higher target price of RM27.00 from RM24.00 previously. -- Bernama
Company Name: DIGI.COM BHD
Research House: MIDF
MIDF Research has raised its 2010 and 2011 revenue forecast for DiGi.Com Bhd by 2.4 per cent and 3.3 per cent respectively, to reflect the growth in data revenue.
The research house said data revenue had the potential to grow further and the expected collaboration with Celcom, will bring substantial cost saving benefits to DiGi.
It also believes, the mobile internet market in Malaysia is set to grow significantly, based on the rising popularity of smart phones with an explosion of Android and Symbian based models to rival the iPhone 4.
"With the entry point projects (EPP) announced, stressing on increasing connectivity, we expect that data will increasingly be the new driver for growth.
"We like the fact that Digi has moved from handset subsidies to monthly discount on contracts to attract users and we believe this is a key reason for the good performance in 3Q10.
DiGi, yesterday announced an interim dividend of 50 sen, which brings the total dividend announced in FY10 to RM1.20.
"We believe that its consistently above-market dividend yield will enhance the attractiveness of the stock. We expect dividend yield to reach 6.1 per cent, based on current price in FY10," MIDF added.
It has also upgraded DiGi to a "buy" with a higher target price of RM27.00 from RM24.00 previously. -- Bernama
AMMB extends gains, next resistance at RM6.50
KUALA LUMPUR: Shares of AMMB HOLDINGS BHD [] advanced to a high of RM6.20 in late morning on Wednesday, Oct 27 after the shares broke out from the RM5.94 congestion level.
At 11.08am, it was up 13 sen to RM6.20 with 1.5 million shares done.
RHB Research said next resistance level is seen only at RM6.50 after breakout from RM5.94
The research house said that on Tuesday, it registered a huge bullish candle to close at RM6.07, with an upbeat reading on the momentum indicators.
"Technically, the stock is poised to confirm a breakout pattern from the recent congestion near RM5.94. Its next resistance level is seen only at RM6.50.A successful neutralisation of RM6.50 will lead to a further rally towards RM7.40," it said.
An immediate support is situated at the recent congestion area at RM5.94.
DIGI - DiGi advances after RHB Research maintains Outperform call
Stock Name: DIGI
Company Name: DIGI.COM BHD
Research House: RHB
KUALA LUMPUR: DIGI.COM BHD [] shares advanced on Wednesday, Oct 27 after RHB Research maintained its Outperform call on the stock with a DCF-derived fair value of RM26.35.
At 9.20am, DiGi was up 12 sen to RM24.78.
RHB Research said DiGi's net profit came in within its and consensus estimates at 77%-78% of full year estimates.
Revenue was up 1.2% on-quarter, and would have been higher at 3.5% if not for RM30m lost due to lower mobile termination rates. The lower mobile termination rates effective July 2010 caused postpaid and prepaid Average Revenue Per Minute (ARPM) to dip marginally on-quarter.
"Overall net additions' momentum slowed down in 3Q10, adding only 142k subscribers (2Q10: +158,000). Ebitda margins improved 0.6 basis points on-quarter to 43.9% as DiGi replaced upfront handset subsidies with monthly discounts on contracts," it said.
Company Name: DIGI.COM BHD
Research House: RHB
KUALA LUMPUR: DIGI.COM BHD [] shares advanced on Wednesday, Oct 27 after RHB Research maintained its Outperform call on the stock with a DCF-derived fair value of RM26.35.
At 9.20am, DiGi was up 12 sen to RM24.78.
RHB Research said DiGi's net profit came in within its and consensus estimates at 77%-78% of full year estimates.
Revenue was up 1.2% on-quarter, and would have been higher at 3.5% if not for RM30m lost due to lower mobile termination rates. The lower mobile termination rates effective July 2010 caused postpaid and prepaid Average Revenue Per Minute (ARPM) to dip marginally on-quarter.
"Overall net additions' momentum slowed down in 3Q10, adding only 142k subscribers (2Q10: +158,000). Ebitda margins improved 0.6 basis points on-quarter to 43.9% as DiGi replaced upfront handset subsidies with monthly discounts on contracts," it said.
TENAGA - No stellar Q4 earnings for Tenaga: OSK
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: OSK
Tenaga Nasional Bhd's full-year earnings forecast was cut by 8 per cent at OSK Research Sdn Bhd to reflect lower tariff estimates and higher coal prices.
"We don't expect Tenaga to announce stellar" earnings for the fourth quarter ended August 31 on October 28, Chris Eng, an analyst at OSK, said in a report today.
"Our previous effective tariff forecast had been too bullish."
He reduced his fair value for the Malaysian power utility to RM9.76 from RM9.90. -- Bloomberg
Company Name: TENAGA NASIONAL BHD
Research House: OSK
Tenaga Nasional Bhd's full-year earnings forecast was cut by 8 per cent at OSK Research Sdn Bhd to reflect lower tariff estimates and higher coal prices.
"We don't expect Tenaga to announce stellar" earnings for the fourth quarter ended August 31 on October 28, Chris Eng, an analyst at OSK, said in a report today.
"Our previous effective tariff forecast had been too bullish."
He reduced his fair value for the Malaysian power utility to RM9.76 from RM9.90. -- Bloomberg
Tasek up on 3Q net earnings
KUALA LUMPUR: TASEK CORPORATION BHD [] shares rose on Wednesday, Oct 27 after its net profit for the third quarter ended Sept 30, 2010 jumped 40.7% to RM27.99 million from RM19.89 million a year ago due to the local cement price revision during the last quarter and also lower production cost.
At 9.30am, Tasek was up 20 sen to RM6.70 with 2,000 shares done.
Tasek said revenue rose 7.7% to RM143.78 million from RM133.48 million a year ago. Earnings per share were 17.52 sen compared with10.72 sen. Net assets per share was RM6.99.
At 9.30am, Tasek was up 20 sen to RM6.70 with 2,000 shares done.
Tasek said revenue rose 7.7% to RM143.78 million from RM133.48 million a year ago. Earnings per share were 17.52 sen compared with10.72 sen. Net assets per share was RM6.99.
Tuesday, October 26, 2010
Tasek 3Q net profit up 40.7% to RM27.99m
KUALA LUMPUR: TASEK CORPORATION BHD [] net profit for the third quarter ended Sept 30, 2010 jumped 40.7% to RM27.99 million from RM19.89 million a year ago due to the local cement price revision during the last quarter and also lower production costs.
It said on Tuesday, Oct 26, revenue rose 7.7% to RM143.78 million from RM133.48 million a year ago. Earnings per share were 17.52 sen compared with 10.72 sen. Net assets per share was RM6.99.
Tasek said the improvement in its results was due to the local cement price revision during the last quarter coupled with lower production cost during the quarter as compared to a year ago.
In addition, a gain of RM1.5 million from the disposal of land belonging to a subsidiary and the higher interest income also contributed to the higher profit for the group during the reporting quarter. Tasek said it expected its performance for the remaining quarter to remain profitable.
V S Industry in expansion mode
Electronic manufacturing services provider, V.S. Industry Bhd (VSI), is set to expand further its production facilities in Senai, having purchased a piece of freehold land for RM12.3 million.
Its subsidiary, V.S. Plus Sdn Bhd, today signed an agreement to purchase the 2.6-hectare land, near the Group's existing headquarters and operations in Senai.
According to VSI's managing director Gan Sem Yam, the purchase of the land would enhance the group's operations in terms of production and warehousing capacity to meet its clientele''s manufacturing requirements.
'The recovering global demand for consumer electric and electronic products has been reflected in our recent financial performance for financial year 2010.
'We expect the demand momentum to gain further strength going forward, as a result of the better economic conditions,' he said in a statement here today. - Bernama
Its subsidiary, V.S. Plus Sdn Bhd, today signed an agreement to purchase the 2.6-hectare land, near the Group's existing headquarters and operations in Senai.
According to VSI's managing director Gan Sem Yam, the purchase of the land would enhance the group's operations in terms of production and warehousing capacity to meet its clientele''s manufacturing requirements.
'The recovering global demand for consumer electric and electronic products has been reflected in our recent financial performance for financial year 2010.
'We expect the demand momentum to gain further strength going forward, as a result of the better economic conditions,' he said in a statement here today. - Bernama
'Slowdown seen for Malaysia glove makers'
Malaysian rubber glove makers are getting used to a slower life after years of scorching growth as demand drops, latex prices soar and the dollar weakens.
World's No.1 glove exporter Top Glove recently said it expects to grow at a meagre 10 per cent in 2011, a far cry from the 50 per cent growth rate it has seen in the last two years.
Shares of Top Glove and its Malaysian peers such as Supermax Corp and Kossan Rubber, have dropped more than 20 per cent since touching all-time highs in July.
Will a rising ringgit and high latex prices continue to depress the stocks, or are the low prices a good entry point into the sector?
WHICH ARE THE TOP PICKS?
While analysts are divided on their recommendation on Top Glove, confidence in the stock is slipping. The mean recommendation has dropped by as much as 38 per cent in the last three months, according to Thomson Reuters Starmine data.
Most analysts have smaller firms like Supermax, Kossan and Hartalega Holdings as their top picks due to cheaper valuation and a product mix that includes nitrile gloves.
'All companies are facing the same sort of headwinds, but we prefer Supermax because of its pricing and#8212; it still trades at a single-digit multiple on a price-to-earnings ratio,' said Wong Li Hsia, an analyst with TA Securities.
Latex, which accounts for more than half of Top Glove's overall costs, is trading near a multi-year peak at RM7.85 per kilo. The ringgit is also trading near its highest levels since 2008 at 3.09 to the dollar.
While Top Glove shares trade at 14 times forward earnings, Supermax and Kossan trade at a multiple of 8-9 times.
Some industry watchers said the bigger concern was supply outstripping demand as firms from Australia, Thailand and other countries foray into the medical rubber gloves sector.
'Now, we are not looking so much at multiples,' said Ang Kok Heng, who helps manage about US$290 million at Phillip Capital Management in Kuala Lumpur.
'We are looking at the new supply from the new players and that will affect the Malaysian firms.'
Oversupply will hit Top Glove most because of its greater capacity than other players.
This month, at least 14 of the 17 analysts covering Top Glove have revised their annual earnings per share forecasts, cutting them by 10.4 per cent on average, according to Starmine.
However, the company's scale and size may help it turn around faster when the external factors are more favourable.
'During bad times the company with the highest capacity will get hit the most and the reverse happens when the environment is more favourable,' said OSK Research analyst Jason Yap, referring to Top Glove. Yap has a 'neutral' rating on the stock.
Some analysts said Top Glove could be a good entry point for foreign investors looking to invest in Malaysia.
'The sector trades at an average of 10.1 times forward earnings or just half the peak seen for some of the manufacturers in 2006-07,' said Farahnaz Ireena, an analyst with CIMB, who has an overweight rating on the sector. - Reuters"
World's No.1 glove exporter Top Glove recently said it expects to grow at a meagre 10 per cent in 2011, a far cry from the 50 per cent growth rate it has seen in the last two years.
Shares of Top Glove and its Malaysian peers such as Supermax Corp and Kossan Rubber, have dropped more than 20 per cent since touching all-time highs in July.
Will a rising ringgit and high latex prices continue to depress the stocks, or are the low prices a good entry point into the sector?
WHICH ARE THE TOP PICKS?
While analysts are divided on their recommendation on Top Glove, confidence in the stock is slipping. The mean recommendation has dropped by as much as 38 per cent in the last three months, according to Thomson Reuters Starmine data.
Most analysts have smaller firms like Supermax, Kossan and Hartalega Holdings as their top picks due to cheaper valuation and a product mix that includes nitrile gloves.
'All companies are facing the same sort of headwinds, but we prefer Supermax because of its pricing and#8212; it still trades at a single-digit multiple on a price-to-earnings ratio,' said Wong Li Hsia, an analyst with TA Securities.
Latex, which accounts for more than half of Top Glove's overall costs, is trading near a multi-year peak at RM7.85 per kilo. The ringgit is also trading near its highest levels since 2008 at 3.09 to the dollar.
While Top Glove shares trade at 14 times forward earnings, Supermax and Kossan trade at a multiple of 8-9 times.
Some industry watchers said the bigger concern was supply outstripping demand as firms from Australia, Thailand and other countries foray into the medical rubber gloves sector.
'Now, we are not looking so much at multiples,' said Ang Kok Heng, who helps manage about US$290 million at Phillip Capital Management in Kuala Lumpur.
'We are looking at the new supply from the new players and that will affect the Malaysian firms.'
Oversupply will hit Top Glove most because of its greater capacity than other players.
This month, at least 14 of the 17 analysts covering Top Glove have revised their annual earnings per share forecasts, cutting them by 10.4 per cent on average, according to Starmine.
However, the company's scale and size may help it turn around faster when the external factors are more favourable.
'During bad times the company with the highest capacity will get hit the most and the reverse happens when the environment is more favourable,' said OSK Research analyst Jason Yap, referring to Top Glove. Yap has a 'neutral' rating on the stock.
Some analysts said Top Glove could be a good entry point for foreign investors looking to invest in Malaysia.
'The sector trades at an average of 10.1 times forward earnings or just half the peak seen for some of the manufacturers in 2006-07,' said Farahnaz Ireena, an analyst with CIMB, who has an overweight rating on the sector. - Reuters"
TAS Offshore targets more orders
Shipbuilding and repair company, TAS Offshore Berhad, hopes to secure more orders for support vessels and tugboats among others, from around the globe.
Its chairman Datuk Mohammed Sepuan Anu said today the company is optimistic of this following the recovery signs in some industries as countries implement economic stimulus packages and recovery measures.
'The oil and gas industry is expected to grow due to the demand from an increase in population and better living standards.
'The current encouraging crude oil price which is moving in the range of US$73 to US$85 per barrel, is also deemed favourable for the oil majors to expand their offshore deep sea projects and production activities,' he said in his statement at the company's inaugural annual general meeting after the listing on August 28 last year.
Mohammad Sapuan said he expected more offshore support vessels to be needed as Petronas and other oil majors award contracts.
'In addition, the demand for tugboats has increased as the mining industries in Indonesia, particularly those related to coal and iron ore, are doing well,' he added.
For its financial year ended 31 May 2010, the group achieved a net profit before tax of RM11.4 million against a revenue of RM140.2 million.
The profit after tax stood at RM8.3 million which translates into an earnings per share of five sen while net asset per share improved to 73 sen.
In view of the satisfactory result and taking into consideration the current trying economic conditions and depressed investors' sentiments, the Board has recommended a single tier final dividend of two sen per share to shareholders.
The coming financial year, Mohammad Sapuan said, would be challenging as the global recovery is still uncertain.
'We will continue to work towards securing better and more projects to translate into improved profit margins for all shareholders,' he added.
Meanwhile, managing director Datuk Lau Nai Hoh told reporters that TAS, in an effort to improve on its next bottomline, would be actively looking at new markets and opportunities.
He said its current markets included the United Arab Emirates(UAE), Singapore, Bahrain, Papua New Guninea and Indonesia.
He said the UAE had been the company's major client accounting for RM66.2 million of the sales in its current financial year as against RM28.5 million previously.
'Singapore is our second major client.Previously its purchases were worth RM19.45million but for the current financial year, this went up to RM39 million,' he added.
Lau also said domestic buyers too had increased their purchases from only RM261,896 previously to RM3.281 million now.
Meanwhile, a UAE client is expected to take delivery of a US$10 million anchor handling tugboat this November. -- Bernama
Its chairman Datuk Mohammed Sepuan Anu said today the company is optimistic of this following the recovery signs in some industries as countries implement economic stimulus packages and recovery measures.
'The oil and gas industry is expected to grow due to the demand from an increase in population and better living standards.
'The current encouraging crude oil price which is moving in the range of US$73 to US$85 per barrel, is also deemed favourable for the oil majors to expand their offshore deep sea projects and production activities,' he said in his statement at the company's inaugural annual general meeting after the listing on August 28 last year.
Mohammad Sapuan said he expected more offshore support vessels to be needed as Petronas and other oil majors award contracts.
'In addition, the demand for tugboats has increased as the mining industries in Indonesia, particularly those related to coal and iron ore, are doing well,' he added.
For its financial year ended 31 May 2010, the group achieved a net profit before tax of RM11.4 million against a revenue of RM140.2 million.
The profit after tax stood at RM8.3 million which translates into an earnings per share of five sen while net asset per share improved to 73 sen.
In view of the satisfactory result and taking into consideration the current trying economic conditions and depressed investors' sentiments, the Board has recommended a single tier final dividend of two sen per share to shareholders.
The coming financial year, Mohammad Sapuan said, would be challenging as the global recovery is still uncertain.
'We will continue to work towards securing better and more projects to translate into improved profit margins for all shareholders,' he added.
Meanwhile, managing director Datuk Lau Nai Hoh told reporters that TAS, in an effort to improve on its next bottomline, would be actively looking at new markets and opportunities.
He said its current markets included the United Arab Emirates(UAE), Singapore, Bahrain, Papua New Guninea and Indonesia.
He said the UAE had been the company's major client accounting for RM66.2 million of the sales in its current financial year as against RM28.5 million previously.
'Singapore is our second major client.Previously its purchases were worth RM19.45million but for the current financial year, this went up to RM39 million,' he added.
Lau also said domestic buyers too had increased their purchases from only RM261,896 previously to RM3.281 million now.
Meanwhile, a UAE client is expected to take delivery of a US$10 million anchor handling tugboat this November. -- Bernama
TENAGA - MIDF keeps Q4 Tenaga earnings forecast
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: MIDF
MIDF Research has retained its fourth quarter earnings forecast for Tenaga Nasional Bhd (TNB) as rising coal prices could weigh down the company's result.
"We are maintaining our financial year 2010 number for time being. We are wary of the impact from the rising cost of coal with potential margin compression in the fourth quarter 2010," it said in its research note today.
It added that expectation on this year's average coal price has increased to US$95 for 2010. The cost of coal has risen since December 2009, pushing Tenaga's average coal price to US$92 per tonne, as compared to US$82 per tonne in the first half this year.
As such, gross margin suffered, declining to 23.3 percent in the third quarter 2010 from 32.1 percent in the second quarter.
MIDF has also maintained a "buy" call on Tenaga Nasional Bhd with its target price remaining unchanged at RM10.35. -- Bernama
Company Name: TENAGA NASIONAL BHD
Research House: MIDF
MIDF Research has retained its fourth quarter earnings forecast for Tenaga Nasional Bhd (TNB) as rising coal prices could weigh down the company's result.
"We are maintaining our financial year 2010 number for time being. We are wary of the impact from the rising cost of coal with potential margin compression in the fourth quarter 2010," it said in its research note today.
It added that expectation on this year's average coal price has increased to US$95 for 2010. The cost of coal has risen since December 2009, pushing Tenaga's average coal price to US$92 per tonne, as compared to US$82 per tonne in the first half this year.
As such, gross margin suffered, declining to 23.3 percent in the third quarter 2010 from 32.1 percent in the second quarter.
MIDF has also maintained a "buy" call on Tenaga Nasional Bhd with its target price remaining unchanged at RM10.35. -- Bernama
NCB - NCB maintained a 'neutral' at MIDF
Stock Name: NCB
Company Name: NCB HOLDINGS BHD
Research House: MIDF
MIDF Research has maintained a "neutral" call on NCB Holdings Bhd with a revised target of RM3.66 from RM4.00 due to cautious prospects in financal year 2011.
"We are revising our expectations on a dividend payout to 65 per cent for financial year 2010," it said in its research note today.
The transport and logistics services provider's revenue was below the expectations of the research house, coming at 66.7 per cent of full year estimates.
This was due to the continuing decline of haulage/logistics revenue which fell by 9.9 per cent year-on-year.
Pre-tax profit for its third quarter ended Sept 30, 2010, fell to RM54.3 million from RM56.1 million in the same quarter last year.
However, for the nine-month period, the group's pre-tax profit increased to RM149.8 million from RM129.5 million in the same period last year while revenue rose to RM658.8 million from RM606.8 million previously. -- Bernama
Company Name: NCB HOLDINGS BHD
Research House: MIDF
MIDF Research has maintained a "neutral" call on NCB Holdings Bhd with a revised target of RM3.66 from RM4.00 due to cautious prospects in financal year 2011.
"We are revising our expectations on a dividend payout to 65 per cent for financial year 2010," it said in its research note today.
The transport and logistics services provider's revenue was below the expectations of the research house, coming at 66.7 per cent of full year estimates.
This was due to the continuing decline of haulage/logistics revenue which fell by 9.9 per cent year-on-year.
Pre-tax profit for its third quarter ended Sept 30, 2010, fell to RM54.3 million from RM56.1 million in the same quarter last year.
However, for the nine-month period, the group's pre-tax profit increased to RM149.8 million from RM129.5 million in the same period last year while revenue rose to RM658.8 million from RM606.8 million previously. -- Bernama
KENCANA - OSK Research maintains Buy on Kencana
Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Buy call on Kencana Petroleum and its target price remains unchanged at RM2.06, based on a calendarised PER of 16 times FY11 EPS.
'The stock remains our top pick for the oil and gas (O&G) sector due to its strong delivery track record and reputation in the industry,' said the research house on Tuesday, Oct 26.
To recap, despite the slowdown in new O&G contract awards this year, Kencana's cumulative awards to-date since April 2010 has reached about RM700 million, which represents half of OSK Research's forecast revenue for the company.
OSK Research said Kenanca's order book also has increased to RM1.8 billion (from RM1.6 billion earlier) while its tender book stands at about RM2 billion.
Company Name: KENCANA PETROLEUM BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Buy call on Kencana Petroleum and its target price remains unchanged at RM2.06, based on a calendarised PER of 16 times FY11 EPS.
'The stock remains our top pick for the oil and gas (O&G) sector due to its strong delivery track record and reputation in the industry,' said the research house on Tuesday, Oct 26.
To recap, despite the slowdown in new O&G contract awards this year, Kencana's cumulative awards to-date since April 2010 has reached about RM700 million, which represents half of OSK Research's forecast revenue for the company.
OSK Research said Kenanca's order book also has increased to RM1.8 billion (from RM1.6 billion earlier) while its tender book stands at about RM2 billion.
KOSSAN - OSK Research maintains Buy on Kossan
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Buy on Kossan and its target price for Kossan is RM5.25, based on PER of 13x FY11 EPS.
'We like the company's equal emphasis on natural rubber and nitrile gloves, which we believe is important in weathering the current period of normalizing demand for examination gloves,' it said on Tuesday, Oct 26.
OSK Research said it also liked the company's strong emphasis on higher margin examination gloves.
Kossan also differentiated itself from its peers with a product mix comprising 60% natural rubber and 40% nitrile gloves.
OSK Research said having this balanced mix ensures earnings sustainability for the company as this gives it more flexibility in shifting its glove mix whenever demand shifts as it would have the production lines and distribution arms ready and markets to sell to.
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Research House: OSK
KUALA LUMPUR: OSK Research is maintaining its Buy on Kossan and its target price for Kossan is RM5.25, based on PER of 13x FY11 EPS.
'We like the company's equal emphasis on natural rubber and nitrile gloves, which we believe is important in weathering the current period of normalizing demand for examination gloves,' it said on Tuesday, Oct 26.
OSK Research said it also liked the company's strong emphasis on higher margin examination gloves.
Kossan also differentiated itself from its peers with a product mix comprising 60% natural rubber and 40% nitrile gloves.
OSK Research said having this balanced mix ensures earnings sustainability for the company as this gives it more flexibility in shifting its glove mix whenever demand shifts as it would have the production lines and distribution arms ready and markets to sell to.
HLG Research: ETP roadmap to provide short term lift in sentiment
KUALA LUMPUR: HLG Research said technically, there are signs of weariness on the momentum and trend indicators, signaling more consolidation ahead as the FBM KLCI is unable to break the 1,500 psychological resistance convincingly but the Economic Transformation Plan (ETP) roadmap could galvanise sentiment.
"We could see more downside pressure if the index breaches the 10-day SMA of 1,490," it said on Tuesday, Oct 26.
HLG Research said however, healthy volume above one billion units, persistent rotational buying interests amongst blue-chips and lower liners, speculation of an early general election next year and positive expectation of the upcoming Nov reporting season and yesterday's launch of ETP roadmap could provide short term lift in sentiment.
On Monday, the FBM KLCI jumped as much as 5.5 points in intraday amid strong gains in PLANTATION [] counters after CPO prices rose to 2010's high of RM3,070 per tonne.
However, profit taking activities reduced its gains at the close to only 0.8 of a point at 1491.4. Market breadth was positive with 511 gainers as compared to 268 losers but overall trading volume and value declined 8% each to 1.13 billion shares worth RM1.47 billion.
OSK Research: Daya Materials to consolidate before resuming upward trend
KUALA LUMPUR: OSK Research said Daya Materials violated its one-year downtrend line last Friday and its share price continued to go higher on Monday, Oct 25.
It said on Tuesday, Oct 26 that last Friday's violation was a significant price action. The breakout signals that the stock's share price is likely to appreciate further going forward.
As Daya Materials' share price has run up aggressively over the last two sessions, there is a possibility that the stock might start to consolidate first before resuming its rally.
"Traders can consider accumulating the shares at above the 20 sen level. If the share price really starts to consolidate, it will provide an opportunity to accumulate its shares. We are eyeing the 26 sen level as the upside target," it said.
OSK Research said its cut-loss point is pegged at below the 19.5 sen level. At below the 19.5 sen level, look for the 18 sen level as the next support followed by the 16 sen level, it said.
Monday, October 25, 2010
Perwaja to build iron ore pelletisation plant
Perwaja Holdings Bhd, an integrated producer of primary steel products, will invest RM400 million to build the country's first iron ore pelletisation plant to reduce dependency on imported
iron ore.
Executive chairman Tan Sri Abu Sahid Mohamed said the plant, to be built in two phases, will have a total annual production capacity of 2.4 million metric tonnes when both phases are completed.
The first phase will begin in the first quarter next year and is scheduled for completion before end of 2012, he told reporters after the signing of contract agreement between Perwaja Steel Sdn Bhd and Sinosteel Equipment and Engineering Co Ltd in Kuala Lumpur today.
The US$65 million contract has been awarded to Sinosteel Equipment and Engineering, which will design and build the concentration and pelletising plant at Perwaja's manufacturing site in Kemaman, Terengganu.
Abu Sahid said the new production capacity will be able to meet 80 to 90 per cent of the company's need and able to save more than 15 per cent of production cost.
Currently, Perwaja and other direct reduced iron plants in Malaysia import 100 per cent of iron ore pellets from overseas. The price of iron ore has increased significantly from US$110 per metric tonne to US$220 per metric tonne this year.
In addition, the company is also looking for a joint venture with the Terengganu state government to get a regular supply of iron ore, which from the state alone amounted to a deposit of about 40 million tonnes, Abu Sahid said.
'We have submitted our application to the state government for a joint venture. Terengganu has quite a substantial deposit of iron ore, and instead of exporting it without added value, why not a joint venture?' he said.
The company is looking at a concession kind of agreement with the state government and in return, it will offer some kind of equity stake in the plant to the state government, Abu Sahid said.
Asked whether the company was interested in other state governments like Pahang and Kelantan, which also have iron ore mines, for a similar agreement, he said the company was open to the idea.
Abu Sahid said local mining areas which had been identified as sources included Bukit Besi in Terengganu and Bukit Iban, Lipis, Maran and Lanchang in Pahang as well as Kelantan, accounted for about 100 million tonnes of iron ore
reserves.
Currently, local iron ore is being exported at US$80 per metric tonne but it will be imported back as pellets at US$220 per metric tonne, he said. -- Bernama
iron ore.
Executive chairman Tan Sri Abu Sahid Mohamed said the plant, to be built in two phases, will have a total annual production capacity of 2.4 million metric tonnes when both phases are completed.
The first phase will begin in the first quarter next year and is scheduled for completion before end of 2012, he told reporters after the signing of contract agreement between Perwaja Steel Sdn Bhd and Sinosteel Equipment and Engineering Co Ltd in Kuala Lumpur today.
The US$65 million contract has been awarded to Sinosteel Equipment and Engineering, which will design and build the concentration and pelletising plant at Perwaja's manufacturing site in Kemaman, Terengganu.
Abu Sahid said the new production capacity will be able to meet 80 to 90 per cent of the company's need and able to save more than 15 per cent of production cost.
Currently, Perwaja and other direct reduced iron plants in Malaysia import 100 per cent of iron ore pellets from overseas. The price of iron ore has increased significantly from US$110 per metric tonne to US$220 per metric tonne this year.
In addition, the company is also looking for a joint venture with the Terengganu state government to get a regular supply of iron ore, which from the state alone amounted to a deposit of about 40 million tonnes, Abu Sahid said.
'We have submitted our application to the state government for a joint venture. Terengganu has quite a substantial deposit of iron ore, and instead of exporting it without added value, why not a joint venture?' he said.
The company is looking at a concession kind of agreement with the state government and in return, it will offer some kind of equity stake in the plant to the state government, Abu Sahid said.
Asked whether the company was interested in other state governments like Pahang and Kelantan, which also have iron ore mines, for a similar agreement, he said the company was open to the idea.
Abu Sahid said local mining areas which had been identified as sources included Bukit Besi in Terengganu and Bukit Iban, Lipis, Maran and Lanchang in Pahang as well as Kelantan, accounted for about 100 million tonnes of iron ore
reserves.
Currently, local iron ore is being exported at US$80 per metric tonne but it will be imported back as pellets at US$220 per metric tonne, he said. -- Bernama
SUNWAY - ECM keeps 'buy' call on Sunway
Stock Name: SUNWAY
Company Name: SUNWAY HOLDINGS BHD
Research House: ECMLIBRA
ECM Libra Investment Research has maintained a "buy" call on Sunway Holdings Bhd with its target price remaining unchanged at RM2.61.
This is premised on strong earnings growth of 67.6 per cent in the financial year 2010, more landbank acquisitions in the pipeline, and its strength in securing overseas construction contracts, ECM Libra Investment said in a research note today.
Last Friday, Sunway announced that it had entered into a Memorandum of Understanding (MoU) with Shanghai Zhushengyuan Real Estate Co. Ltd (SZRE). - Bernama
Company Name: SUNWAY HOLDINGS BHD
Research House: ECMLIBRA
ECM Libra Investment Research has maintained a "buy" call on Sunway Holdings Bhd with its target price remaining unchanged at RM2.61.
This is premised on strong earnings growth of 67.6 per cent in the financial year 2010, more landbank acquisitions in the pipeline, and its strength in securing overseas construction contracts, ECM Libra Investment said in a research note today.
Last Friday, Sunway announced that it had entered into a Memorandum of Understanding (MoU) with Shanghai Zhushengyuan Real Estate Co. Ltd (SZRE). - Bernama
IJM - IJM Corp up after AmResearch raises TP to RM6.30
Stock Name: IJM
Company Name: IJM CORPORATION BHD
Research House: AMMB
KUALA LUMPUR: IJM Corp Bhd shares advanced in the afternoon session on Monday, Oct 25 after AmResearch maintained its buy call on the stock at RM5.48 and raised its target price RM6.30 based on the sum-of-parts methodology.
It said the upcoming months would likely be momentous for IJM ' with news flow momentum focusing on an expected re-acceleration of contract flows, exciting presales pipeline and exposure to rising crude palm oil (CPO) prices via IJM PLANTATION []S BHD [] (IJMP).
"We recommend a switch from GAMUDA BHD [] to IJM as our top large-cap pick for the CONSTRUCTION [] sector, given the latter's cheaper valuation (11%-20% discount on FY11F-12F earnings).
"IJM's foreign shareholding has nudged up to ~33% currently, but still below its peak of 65% in mid-2007," it said in a note on Monday.
Company Name: IJM CORPORATION BHD
Research House: AMMB
KUALA LUMPUR: IJM Corp Bhd shares advanced in the afternoon session on Monday, Oct 25 after AmResearch maintained its buy call on the stock at RM5.48 and raised its target price RM6.30 based on the sum-of-parts methodology.
It said the upcoming months would likely be momentous for IJM ' with news flow momentum focusing on an expected re-acceleration of contract flows, exciting presales pipeline and exposure to rising crude palm oil (CPO) prices via IJM PLANTATION []S BHD [] (IJMP).
"We recommend a switch from GAMUDA BHD [] to IJM as our top large-cap pick for the CONSTRUCTION [] sector, given the latter's cheaper valuation (11%-20% discount on FY11F-12F earnings).
"IJM's foreign shareholding has nudged up to ~33% currently, but still below its peak of 65% in mid-2007," it said in a note on Monday.
OSK maintains FBM KLCI target of 1,496
Positive pre-election sentiment will help drive the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) to an all-time high in 2011, according to OSK Research.
'Given the history of pre-election rallies, we maintain our year-end FBM KLCI target of 1,496 points and 2011 FBM KLCI fair value of 1,648 points even as we caution on the third-quarter results to be announced in November,' it said in
a research note today.
'We continue to think this fair value is achievable ahead of the general election,' the research house said.
Prime Minister Datuk Seri Najib Tun Razak Prime Minister called on UMNO party members to get ready for the general election at the 61st Umno general assembly last week.
'We are particularly positive on the construction, property, and oil and gas sectors as part of the election theme,' OSK Research said.
With the Sarawakian state election expected to be held this year and the general election before June 2011, any weakness in the local bourse next month is a cue to buy, it said.
Among stocks to look out for in line with the election theme are construction players such as Naim Holdings Bhd, Hock Seng Lee Bhd, Gamuda and Sunway Bhd, OSK Research said.
For property, the research house's key buys are SP Setia, Bandar Raya Developments and Sunrise while Kencana Petroleum is its top buy for the oil and gas sector. -- Bernama
'Given the history of pre-election rallies, we maintain our year-end FBM KLCI target of 1,496 points and 2011 FBM KLCI fair value of 1,648 points even as we caution on the third-quarter results to be announced in November,' it said in
a research note today.
'We continue to think this fair value is achievable ahead of the general election,' the research house said.
Prime Minister Datuk Seri Najib Tun Razak Prime Minister called on UMNO party members to get ready for the general election at the 61st Umno general assembly last week.
'We are particularly positive on the construction, property, and oil and gas sectors as part of the election theme,' OSK Research said.
With the Sarawakian state election expected to be held this year and the general election before June 2011, any weakness in the local bourse next month is a cue to buy, it said.
Among stocks to look out for in line with the election theme are construction players such as Naim Holdings Bhd, Hock Seng Lee Bhd, Gamuda and Sunway Bhd, OSK Research said.
For property, the research house's key buys are SP Setia, Bandar Raya Developments and Sunrise while Kencana Petroleum is its top buy for the oil and gas sector. -- Bernama
SPSETIA - SP Setia upgraded to 'buy' at Kenanga
Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: KENANGA
SP Setia Bhd, Malaysia's largest property developer, had its stock rating upgraded at Kenanga Investment Bank Bhd to reflect the company's earnings growth prospects.
The company was raised to "buy" from "trading buy" and its fair value increased to RM5.50 from RM4.78, Yeow Yeonzon, an analyst, said in a report today. -- Bloomberg
Company Name: SP SETIA BHD
Research House: KENANGA
SP Setia Bhd, Malaysia's largest property developer, had its stock rating upgraded at Kenanga Investment Bank Bhd to reflect the company's earnings growth prospects.
The company was raised to "buy" from "trading buy" and its fair value increased to RM5.50 from RM4.78, Yeow Yeonzon, an analyst, said in a report today. -- Bloomberg
ALAM - Maybank IB positive on Alam Maritim's partnership with Yayasan Sabah
Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD
Research House: MAYBANK
MAYBANK Investment Bank Bhd Research (Maybank IB) maintained its hold call on ALAM MARITIM RESOURCES BHD [] at RM1.07 and target price RM1.15 and said it was positive on the company's partnership with Yayasan Sabah Group.
It said the partnership creates a Sabah-based O&G company and sends out a strong signal of intent to capitalise on O&G opportunities in the state.
"The SOGT [Sabah Oil and Gas Terminal] and pipe-laying projects would be among the jobs that it could target.
"Maintain Hold with a RM1.15 target price, based on 10 times 2011 EPS," it said in a note on Monday, Oct 25.
Company Name: ALAM MARITIM RESOURCES BHD
Research House: MAYBANK
MAYBANK Investment Bank Bhd Research (Maybank IB) maintained its hold call on ALAM MARITIM RESOURCES BHD [] at RM1.07 and target price RM1.15 and said it was positive on the company's partnership with Yayasan Sabah Group.
It said the partnership creates a Sabah-based O&G company and sends out a strong signal of intent to capitalise on O&G opportunities in the state.
"The SOGT [Sabah Oil and Gas Terminal] and pipe-laying projects would be among the jobs that it could target.
"Maintain Hold with a RM1.15 target price, based on 10 times 2011 EPS," it said in a note on Monday, Oct 25.
QL - QL up after RHB Research raises TP to RM5.50
Stock Name: QL
Company Name: QL RESOURCES BHD
Research House: RHB
KUALA LUMPUR: QL RESOURCES BHD [] share price rose on Monday, Oct 25 after RHB Research Institute Sdn Bhd maintained its outperform call on the stock and raised its target price to RM5.50 from RM5.41 previously.
At 9.50am, QL was up four sen to RM5.12 with 2,000 shares traded.
In a note on Monday, RHB Research said QL was in the midst of constructing its 13ha Breeder and 17 hectare Layer plant in Cianjur district, located approximately two hours from Jakarta.
The plant is expected to contribute 12 million day old chicks per year by end FY11, and one million eggs per day by end FY12.
Similarly in Tay Ninh, Vietnam, QL started CONSTRUCTION [] on its egg plant in May of this year. The plant is expected to produce 500,000/eggs per day by end FY12, with similar margins as Malaysia, ie 24 sen-25 sen/egg selling price and about 7%-8% in PBT margins.
For its MPM division, QL is expecting to complete Phase 1 of its new plant in Surabaya, Indonesia by March 2011.
The Surimi and Fishmeal plant is situated on a 10 hectare land, and the overall cost would be around RM30 million-RM35 million. With capacity of 5,000 tonnes of Surimi and 5,000 tonnes of fishmeal, the plant will increase QL's current capacity by 20%.
QL has finished planted 8,500 hectares of land in Eastern Kalimantan around the middle of this year. By FY13, the group aims to finish planting 15,000 hectares.
The 8,500ha that was planted is expected to mature in FY13, thus doubling its production from FY12.
"After tweaking our ILF assumptions, our FY12-13 earnings are thus lifted by 2-6%. Our fair value is raised slightly to RM5.50 (RM5.41 previously) based on unchanged target 16x CY11 EPS. Maintain Outperform," it said.
Company Name: QL RESOURCES BHD
Research House: RHB
KUALA LUMPUR: QL RESOURCES BHD [] share price rose on Monday, Oct 25 after RHB Research Institute Sdn Bhd maintained its outperform call on the stock and raised its target price to RM5.50 from RM5.41 previously.
At 9.50am, QL was up four sen to RM5.12 with 2,000 shares traded.
In a note on Monday, RHB Research said QL was in the midst of constructing its 13ha Breeder and 17 hectare Layer plant in Cianjur district, located approximately two hours from Jakarta.
The plant is expected to contribute 12 million day old chicks per year by end FY11, and one million eggs per day by end FY12.
Similarly in Tay Ninh, Vietnam, QL started CONSTRUCTION [] on its egg plant in May of this year. The plant is expected to produce 500,000/eggs per day by end FY12, with similar margins as Malaysia, ie 24 sen-25 sen/egg selling price and about 7%-8% in PBT margins.
For its MPM division, QL is expecting to complete Phase 1 of its new plant in Surabaya, Indonesia by March 2011.
The Surimi and Fishmeal plant is situated on a 10 hectare land, and the overall cost would be around RM30 million-RM35 million. With capacity of 5,000 tonnes of Surimi and 5,000 tonnes of fishmeal, the plant will increase QL's current capacity by 20%.
QL has finished planted 8,500 hectares of land in Eastern Kalimantan around the middle of this year. By FY13, the group aims to finish planting 15,000 hectares.
The 8,500ha that was planted is expected to mature in FY13, thus doubling its production from FY12.
"After tweaking our ILF assumptions, our FY12-13 earnings are thus lifted by 2-6%. Our fair value is raised slightly to RM5.50 (RM5.41 previously) based on unchanged target 16x CY11 EPS. Maintain Outperform," it said.
Hunza up in early trade
KUALA LUMPUR: HUNZA PROPERTIES [] BHD [] shares advanced on Monday, Oct 25 after the company's net profit for the first quarter ended Sept 30, 2010 surged 273% to RM34.69 million from RM12.69 million a year ago, on the back of a 13% increase in revenue to RM64.53 million.
At 9.23am, Hunza was up 10 sen to RM1.61.
Hunza attributed the higher revenue and profit mainly to improvement to FRS 140 Investment Properties, whereby it measures investment property under CONSTRUCTION [] at fair value on a yearly basis.
On its prospects, the company said it was confident of a strong performance for the 2011 financial year.
At 9.23am, Hunza was up 10 sen to RM1.61.
Hunza attributed the higher revenue and profit mainly to improvement to FRS 140 Investment Properties, whereby it measures investment property under CONSTRUCTION [] at fair value on a yearly basis.
On its prospects, the company said it was confident of a strong performance for the 2011 financial year.
Alam up on Yayasan Sabah Group link
KUALA LUMPUR: ALAM MARITIM RESOURCES BHD []'s share price advanced on Monday, Oct 25 after Maybank Investment Bank Bhd Research (Maybank IB) maintained its hold call on the stock with target price RM1.15 and said it was positive on the company's partnership with the Yayasan Sabah Group.
At 9.35am, Alam was up five sen to RM1.12 with 783,000 shares traded.
Alam Maritim entered into memorandum of understanding (MoU) with Yayasan Sabah Shipping Sdn Bhd, a unit of Yayasan Sabah Group with a view to form a joint venture (JV) company.
Alam Maritim said the JV would be involved in the provision of services including offshore installation CONSTRUCTION [], marine operations, and subsea works to the energy industry in Sabah.
At 9.35am, Alam was up five sen to RM1.12 with 783,000 shares traded.
Alam Maritim entered into memorandum of understanding (MoU) with Yayasan Sabah Shipping Sdn Bhd, a unit of Yayasan Sabah Group with a view to form a joint venture (JV) company.
Alam Maritim said the JV would be involved in the provision of services including offshore installation CONSTRUCTION [], marine operations, and subsea works to the energy industry in Sabah.
Saturday, October 23, 2010
Hunza Q1 pre-tax profit soars 125pc
Hunza Properties Bhd recorded a 125 per cent increase in pre-tax profit to RM38.95 million in the first quarter ended Sept 30, 2010 from RM17.39 million in the same period last year.
Revenue increased 13 per cent to RM64.53 million from RM57.11 million previously, it said in a filing to Bursa Malaysia today.
It also said Hunza was confident of a strong performance for the 2011 financial year in view of strong market sentiment. -- Bernama
Revenue increased 13 per cent to RM64.53 million from RM57.11 million previously, it said in a filing to Bursa Malaysia today.
It also said Hunza was confident of a strong performance for the 2011 financial year in view of strong market sentiment. -- Bernama
Friday, October 22, 2010
Hunza Properties Q1 net profit surges 273% to RM34.69m
KUALA LUMPUR: HUNZA PROPERTIES [] BHD [] net profit for the first quarter (1Q) ended Sept 30, 2010 surged 273% to RM34.69 million from RM12.69 million a year ago, on the back of a 13% increase in revenue to RM64.53 million.
Earnings per share was 18.39 sen while net assets per share was RM2.36.
Hunza attributed the higher revenue and profit mainly to improvement to FRS 140 Investment Properties, whereby it measures investment property under CONSTRUCTION [] at fair value on a yearly basis.
It also said the physical construction for the two residential towers of Gurney Paragon had been progressing well and cumulative percentage of sales was now higher at this juncture, contributing to higher attributable revenue.
On its prospects, the company said it was confident of a strong performance for the 2011 financial year.
KLK - KL Kepong buys land at reasonable price
Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
Research House: ECMLIBRA
The acquisition of 7,177 hectares will add to the 133,114-hectare oil palm landbank of Kuala Lumpur Kepong Bhd (KLK) in Indonesia, according to ECM Libra Investment Research.
KLK announced yesterday its subsidiary KL-Kepong Plantation Holdings Sdn Bhd was buying 95 per cent of PT Bumi Makmur Sejahtera Jaya (PTBMS) from Tjong Hasan Agus Salim and Tjhang Ardy Fadrinata.
PTBMS holds two certificates of Izin Lokasi for land measuring 2,336.62 hectares in Desa Mentawak and Desa Air Kelik, Kecamatan Kepala Kampit, Belitung Timur, and another 4,840 hectares in Desa Lilangan, Desa Limbongan, Desa Jangkar Asam, and Desa Gantung, Kecamatan Gantung, Belitung Timur.
"In terms of purchase price for the Izin Lokasi (location permit) land, the purchase price comes up to roughly RM12,300 per hectare," ECM Libra Investment said in an equity note today.
"Generally, RM12,000 per hectare for green-field land is a reasonable price to pay, whether in Malaysia or in Indonesia," it said.
ECM Libra Investment said that KLK has a planting target of 15,000 hectares per annum.
"With its current unplanted landbank in Indonesia (including the acquisition) and assuming no new acquisitions, the group will take 4.2 more years to complete planting. Major maturities in Indonesia will kick in two to three years' time," it said.
ECM Libra Investment said it continued to have a "buy" on KLK with a target price of RM21.70. -- Bernama
Company Name: KUALA LUMPUR KEPONG BHD
Research House: ECMLIBRA
The acquisition of 7,177 hectares will add to the 133,114-hectare oil palm landbank of Kuala Lumpur Kepong Bhd (KLK) in Indonesia, according to ECM Libra Investment Research.
KLK announced yesterday its subsidiary KL-Kepong Plantation Holdings Sdn Bhd was buying 95 per cent of PT Bumi Makmur Sejahtera Jaya (PTBMS) from Tjong Hasan Agus Salim and Tjhang Ardy Fadrinata.
PTBMS holds two certificates of Izin Lokasi for land measuring 2,336.62 hectares in Desa Mentawak and Desa Air Kelik, Kecamatan Kepala Kampit, Belitung Timur, and another 4,840 hectares in Desa Lilangan, Desa Limbongan, Desa Jangkar Asam, and Desa Gantung, Kecamatan Gantung, Belitung Timur.
"In terms of purchase price for the Izin Lokasi (location permit) land, the purchase price comes up to roughly RM12,300 per hectare," ECM Libra Investment said in an equity note today.
"Generally, RM12,000 per hectare for green-field land is a reasonable price to pay, whether in Malaysia or in Indonesia," it said.
ECM Libra Investment said that KLK has a planting target of 15,000 hectares per annum.
"With its current unplanted landbank in Indonesia (including the acquisition) and assuming no new acquisitions, the group will take 4.2 more years to complete planting. Major maturities in Indonesia will kick in two to three years' time," it said.
ECM Libra Investment said it continued to have a "buy" on KLK with a target price of RM21.70. -- Bernama
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