HLIB Research 30 September 2011 (RHB Cap; Gamuda; Traders Brief)

RHB Cap (BUY)

Merger Talks With OSK

§  RHB Cap and OSK submitted applications to BNM, seeking approval to commence merger negotiations. 

§  For illustration only, assuming that RHB Cap acquires OSK at 1.34x P/B (30% discount to Maybank's acquisition of Kim Eng at 1.91x) for cash and annualizing OSK 1HFY11 results, RHB Cap's FY11 net profit could be enhanced by circa 1.2%.

§  Tier-1 and RWCAR (at bank level) would be diluted by circa 66bps and 86bps to 10.1% and 13.1% respectively.

§  Despite minimal impact, the acquisition will be positive for RHB Cap as it will gain immediate IB presence in the region and also almost double its brokerage market share to number one position.

§  Maintain Buy. Target price unchanged at RM9.49 based on Gordon Growth with ROE of 14.7% and WACC of 10.8%.

 

Gamuda (BUY)

Record breaking year

§  FY11 earnings came in at a record high of RM425m (20.7 sen/share), in line with HLIB forecast but 7.6% above consensus numbers.

§  Strong performances from all divisions buoyed Gamuda's earnings to record highs, which grew by 32% YoY. Outstanding active order book fell to RM2.3bn (RM2.1bn from EDTP), translating to only 1.2x FY11's construction revenue. Hence, the MRT tunnelling project is crucial for Gamuda to replenish its order book.

§  Launches in Bandar Botanic, Horizon Hills and Jade Hills continued to do well with some ~RM300m new sales achieved during 4Q11. Unbilled sales remained at ~RM1bn, translating to 1.4x FY11's property revenue. For FY12 property sales target, Gamuda has already secured ~RM350m new sales out of the targeted RM1.35bn in local property sales.

§  As for Vietnam, response has been poor due to the high interest rate environment and the lack of development track records. The management has revised their Vietnam property sales target downwards drastically by >50%, from RM1.5bn to RM650m.

§  FD SOP valuation trimmed by 2.8% from RM3.92 to RM3.81 as we introduced a 10% discount in our SOP valuation to reflect the current risk adverse appetite in the market.

 

FBM KLCI: Heading towards relief rally targets at 1400-1423 pts

§  Technically, after filling the 1377-87 gap, upside momentum has increased with potential rebound targets at 1400 psychological barrier, 1423 (mid Bollinger band) and 1443 (30-d SAM). Supports are situated near 1364 (5-d SMA), 1341 (lower Bollinger band) and 1310 (26 Sep pivot low).   

PCHEM: Relief rally targets at RM6.00-6.10

§  PCHEM rebounded 6% from recent low of RM5.23 to close at RM5.55 yesterday amid strong buying spree (especially from EPF) as the 31% plunge from 52-wk high has bashed down its valuations to relatively undemanding against market P/E (as it is the 3^rd largest market cap on Bursa) and its regional peers.

§  Technical rebound targets are RM5.85-6.00 whilst supports are RM5.23-5.47 Cut loss below RM5.20.

 

JF Apex - SP Setia – Finally PNB’s takeover come true

SP Setia (Non-rated) has received a notice of takeover from its largest shareholder, PNB following the latter has triggered the 33% threshold of Mandatory General Offer (MGO). The offer price is at RM3.90/share, whilst warrant is at 91sen. The general offer to the Group will be satisfied by cash.

We are not surprised with the PNB’s takeover of SP Setia as it has been talk in the market for quite sometimes. The recent talk has resurfaced with recent GLC, Sime Darby bought a 30% stake in E&O and pursuant to the earlier UEM Land takeover of Sunrise and the aborted merger between MRCB and IJM Land.

At RM3.90 offer price, it represents 11.4% upside to the last closing (or even higher with 25.8 upside compared with Monday’s closing); whilst, the offer price for warrant represents 97.8% upside to the last traded price.

However, the Board of SP Setia is in view that the offer price has fundamentally undervalued the Group and decided to seek a competing offer from other interested parties. The Board of the Group will also be writing to PNB to seek its consideration to revise upwards its offer price.

We view that PNB offer is fair given that SP Setia is being valued at 13% discount to our indicative RNAV/share of RM4.50 as compared with Sime Darby bought over 30% stake in E&O which valued the latter at 20% discount to its RNAV; and UEM Land takeover of Sunrise which valued the latter at over 20-25% RNAV discount. We believe that the lower RNAV discount is due to the premium given to the Group as being the sector bellwether in respect of its market cap (just after UEM Land), strong brand name, highest property sales among all the developers, sizeable landbank and projects’ GDV. Also, the offer price values 20x FY12F PE and 2.1x P/B, which implies the Group at its upcycle valuation. Given that current bearish sentiment on property counters and possible of policy risks faced by the sector, such as reintroduction of 30% RPGT in upcoming budget, we would advise investors to take this opportunity to cash out by accepting the offer.

Possible success of the offer? Government-linked funds, namely EPF (13.4%) and KWAP (5%), together with PNB (33.2%), collectively own about 51.6% in SP Setia. The offer requires the acceptance of more than 50% of SP Setia’s shares. Upon successful completion of the deal, PNB intend to maintain the listing status of the Group.

Strategic move for PNB to inject its property assets. We believe that the takeover of SP Setia is in line with PNB’s strategy to consolidate or inject all its property companies, namely I&P, Pelangi and Petaling Garden (which were privatised by PNB in 2005-07) into SP Setia. We believe that the deal will further strengthen PNB’s brand name in township development. Besides, there will be more synergies created especially the merger between I&P and SP Setia whereby I&P could tap on SP Setia’s expertise in high-rise residential and commercial development (as evidenced by the encouraging take-up rate for SP Setia’s KL Ecocity in Mid Valley City) and diversifying PNB’s landbank to overseas such as Vietnam, Singapore and Australia.

Strong upcoming bidder for the federal land development. Furthermore, PNB move to takeover SP Setia also leverage its chances to develop 1MDB’s Sg Besi airforce base, co-develop of Sg Buloh land with MRCB, and River-of-Life project in Klang valley. We see that other major peers such as UEM Land (Khazanah being the major shareholder) and MRCB (EPF being the major shareholder) are aggressively lobbying for the federal land development.

Other potential corporate restructuring candidates in the property sector include E&O (where SC is still examining whether Sime Darby is required to make a GO following the company acquired 30% stake from E&O’s major shareholders for a 60% premium), Country Heights (pursuant to the earlier report that founder Tan Sri Lee Kim Yew intend to privatise the company), and other deep-value property counters such as KSL (trading at 43% below its NTA), Wing Tai Malaysia (trading at 37% below its NTA) and MK Land (trading at 69% below its NTA).

HLIB Research 28 September 2011 ( MRCB; Traders Brief)

MRCB (BUY, NEW)

Strategic integrated property developer

§  MRCB's earnings growth for the immediate term will be supported by the existing development of KL Sentral, which has a huge unbilled sales of ~RM1.2bn, translating to ~6.3x FY10's property revenue. Hence, providing strong earnings visibility over the next few years

§  From 2013 onwards, rental income will become a substantial earnings contributor for the Group as NLA will jump from the current ~995 sq ft to ~2,400 sq ft, which will most likely make up ~15% of MRCB's PATAMI. New investments – 348 Sentral and Nu Sentral Retail Mall have already received ~60% commitment for its NLA and we expect it to be fully occupied as the unique proposition of KL Sentral will be able to address the huge incoming supply of office space within KL

§  With the unique qualities of KL Sentral to support earnings growth and potential in developing strategic land banks, coupled with an healthy property unbilled sales and construction order book, we initiate with a BUY call on MRCB, which provides 24% upside from our TP. TP of RM2.05 based on SOP valuation.

 

FBM KLCI: Banking on Euro-crisis resolution

§  Technical indicators are beginning to improve following yesterday's strong gains but whether it is a sustainable bounce hinges on the follow-through reaction from Europe this week. Supports are 1310 (26 Sep pivot low), 1300 and 1293 (38.2% FR from 311 low and 1597 high) whilst strong resistance levels are the 1377-1387 gap  (23 Sep) and 1400 pts

 

MUDAJAY: Potential rebound targets at RM2.13-2.35

§  The 4.4% jump in share prices to RM1.88 yesterday, accompanied by 21% hike in volume could indicate a temporary bottom for MUDAJYA, given its steep oversold positions, cheap valuations, continuous share buyback and a 2.5 sen interim dividend (ex-date: 6 Oct). Technical rebound targets are RM2.13 (10-d SMA) to RM2.36 (mid Bollinger band) whilst supports are RM1.61 (23.6% FR) to RM1.80. Cut loss below RM1.60.

RHBInvest Research Highlights 28th September 2011

28th September 2011

 

Top Story: Shifting Trends – Looking to the past for guidance

Market Update

¨       We believe past downturns may give an indication of what to look out for in the market in the near term. We thus looked at previous RHBRI Market Outlook & Strategy reports published during the global financial crisis, and pinpointed the changes to earnings forecasts and one-year forward PER.

 

Transport: Higher earnings risk on increased risk of a global recession                                Neutral

Sector Update

¨       We are cutting FY12/11-13 earnings forecasts of MISC, ILB and Century by 4-42% to reflect the impact of the increased risk of the global economy sliding into a double-dip recession.

¨       We are also downgrading our benchmark 1-year forward PER for the logistics sector from 10x to 6x largely to reflect further earnings risk and reduced appetite for small-cap companies, resulting in fair values of logistics companies being cut by 28-51%.

 

Insurance: Slowdown in gross premiums growth, rise in claims ratio expected in 2012       Neutral

Sector Update

¨       Due to the global economic slowdown, we believe FY12-13 gross premium growth for the general insurance (GI) industry would likely be weaker than our earlier projections of 7-8%. We see downside risk to GDP growth ahead, and this would likely translate to weaker gross premium growth for the GI industry. We are thus revising our gross premium growth assumption for FY12-13 to 5-6% p.a..m

 

Corporate Highlights

 

Puncak Niaga: Lack of visibility - Ceasing coverage                         Market Perform (Cease Coverage)

Company Update

¨       The takeover story of Puncak's water assets has dragged on far too long, mainly due to political and valuation issues.

¨       Puncak's cash flow quality may be weaker than expected, so long as the SSG does not grant the 37% tariff hike and if the related compensation for the tariff delay is not forthcoming.

¨       Puncak's receivables now stand at a staggering RM1.4bn as at Jun 2011 (as it continues to accrue for the "delayed compensation").

HLIB Research 27 September 2011 (KLCC Property; Traders Brief)

KLCC Property (HOLD)

 

Refinancing its debt

 

§  KLCC's 50.5% owned subsidiary, Midciti Resources Sdn Bhd has agreed to fully repay its bonds outstanding to parent company PETRONAS, at a premium of RM35.31m.

§  The bonds in question are the RM199m secured Bai Al-Dayn Bonds and the RM600m 13-year bond, due in Nov 2011 and Nov 2012 respectively.  They will be refinanced from the proposed issuance RM880m Sukuk.

§  Impact is uncertain, as the interest rate for the new RM880m, 10-year sukuk have yet to be announced.

§  However, we do note that interest costs for the refinanced bonds were RM67m, or 47% of last year's total financing costs.

§  Maintain HOLD on KLCC, given lack of upside catalysts and unresolved RCULS conversion issue. Target price maintained at RM3.46.

 

FBM KLCI: Taking cues from overseas

§  On the monthly chart, the KLCI remains vulnerable to further downward correction towards 1259 (lower Bollinger band) and 1200 (50% FR) in the medium to long term. Immediate supports are 1310 (26 Sep pivot low), 1300 and 1293 (38.2% FR).

§  Without a firm recovery in euro-zone solution, any market bounce-ups from an oversold position will likely be short-lived. Based on the daily charts, resistance levels are 1363 (lower Bollinger band), 1383 (5-d SMA) and 1409 (10-d SMA).

 

Crude oil: Supports: US$70-75; Resistance: US$90-95

§  If prices can breach the mid Bollinger band of US$85, we expect more upside targets to US$88 (50-d SMA) and US$90 (downtrend line resistance). Beyond that, it is likely to face tremendous hurdles at US$92.6 (upper Bollinger band) and US$95.4 (200-d SMA).

§  On the other hand, deteriorating economic outlook and failure to tackle the euro-zone debt crisis in the near term will dampen sentiment and trigger another round of selldown towards US$75-79 territory. A global recession may see prices sliding further towards US$65-74 levels (weekly chart)

HLIB Research 26 September 2011 (SP Setia; Traders Brief)

SP Setia (Hold)

A second act in Melbourne

§  SP Setia is acquiring 2.23 acres of vacant freehold land located in the South Yarra suburb of Melbourne, approximately 4km south-east of the Melbourne CBD.

§  We believe the price of AUD2,796/m² is fair, given that SP Setia paid AUD6,912/m2 for the Fulton Lane development.

§  Management intends to launch an AUD250m (~RM800m) residential project within 12-18 months.

§  We are positive on this development, which allows them to capitalise on their success of Fulton Lane, and tap the booming Australian property market, as can be seen in the 58% rise of the Melbourne HPI over the last 5 years.

§  No changes to our forecasts, as no major impact to earnings is expected until post FY13.

§  Despite >20% decline in share price during the current sell-down, we see more near-term volatility on share price given its relatively high foreign shareholding amidst flight to the safety of US$.

§  Maintain HOLD.

 

FBM KLCI: Potential relief rally amid oversold positions

 

§  Speculation that European policy makers will announce steps to contain the debt crisis as foreign counterparts lobby for action will likely trigger potential relief rallies this week.

§  Critical level to watch is the 1311 (23.6% FR). A breach below this level will push index to retest 1300 psychological support. In the wake of extremely oversold positions, potential technical rebound targets are 1386 (lower Bollinger band), 1400 and 1422 (10-d SMA).   

 

 

RHBInvest Research Highlights 26th September 2011

26th September 2011

 

Top Story: Proton – No fresh catalysts                           Underperform

Briefing Note

¨       Proton held an analysts' briefing last Friday and below are the key takeaways:

¨       Management warned that the outlook for the remaining quarters in FY12 was likely to remain challenging. In addition to Lotus restructuring costs being a drag on consolidated earnings, earnings for the quarter were also hit by stock provisioning and component vendor impairment costs of about RM30m. A change in the model mix combined with higher acquisition costs also resulted in weaker margins during the quarter.

 

Corporate Highlights

 

SP Setia: Second venture into Melbourne                         Underperform

News Update

¨       SP Setia announced that it has entered into a conditional contract of sale with Portbridge to purchase a piece of land measuring 2.23 acres for AU$25.3m. This translates to AU$260 psf.

¨       Compared to the Fulton Lane project which is within the CBD and had a land cost of AU$690 psf, this piece of land is cheaper as it is 4km south-east of Melbourne CBD. The land is a prime corner development site on St Kilda Road . It is close to Melbourne Grammar and Wesley College , as well as Alfred Hospital , Albert Park and some key shopping districts. The land is also well-connected to the tram system.

RHBInvest Research Highlights 23rd September 2011

23rd September 2011

 

Top Story: MAHB – EU troubles to affect venture in Turkey                   Outperform

Visit Note

¨       The continued weakness in European economies stemming from the debt crisis, we believe, will eventually take a toll on the performance of MAHB's 20%-owned Sabiha Gokcen International Airport (SGIA) in Turkey . Already, we note that SGIA's total passenger traffic in Aug 2011 only grew 1.4% on yoy basis which suggests that demand for air traveling has already begun to slack.

 

Corporate Highlights

 

Faber: Good news and bad news                                                  Market Perform (down from OP)

Company Update

¨       We have heard that the three concessionaires, including Faber Medi-Serve, Pantai Medivest and Radicare, have been asked to submit a Request For Proposal (RFP) for renewal of their concessions. This is good news as there have been concerns that the concessions, which expire on 28 Oct, would not be renewed.

 

WCT: RM530m BOT concession for "integrated complex" at KLIA2 signed                Market Perform (up from UP)

Briefing Note

¨       WCT, via a 70:30 JV with Malaysia Airports, has formally signed a 25+10 year BOT concession for "Integrated Complex" at KLIA2 with a shopping mall boasting a net lettable area of 350k sq ft.

 

Glomac: Valuations supported by yields                                                              Underperform

Briefing Note

¨       The recent disposal of Glomac's 49% equity stake in a Thai warehouse operation is expected to yield a gross gain of RM9m. The gain will be recognised in 2QFY12 as the transaction will be completed in Sep.

 

Eversendai: Secures RM371m new jobs in India and the Middle East             Outperform

News Update

¨       Eversendai has bagged three key jobs in India and Middle East worth a total of RM371m comprising: 1) Shell and core works worth RM272.4m for the Worli Mixed Use development in Mumbai, India; 2) Structural steel works worth RM39.4m for the Qatar Faculty of Islamic Studies in Doha, Qatar; and 3) Structural steel works worth RM58.7m for Salalah Airport expansion in Oman.

 

SapuraCrest: Buying two new pipelay barges                                                    Market Perform

News Update

¨       The company has contracted for two pipelay cum heavylift offshore construction vessels worth US$227m (RM681m) from Cosco Nantong Shipyard. The vessels are expected to be delivered within 26-28 months whilst the purchase will be funded via a combination of internal and external funding.

 

SP Setia: Sales started weakening                                                           Underperform (down from MP)

3QFY11 Results

¨       3QFY11 core net profit of RM91.2m (+57.2% yoy; +46.6% qoq) came in above our expectation but in line with market consensus.

__,_._,___

HLIB Research 23 September 2011 (Market View; WCT; SP Setia; Glomac; Traders Brief)

What If MYR Weaken Further?

§  Fight to safety resulted in appreciation of the USD Index against regional currencies, including MYR. 

§  Greater ST MYR volatility which could decline to RM3.22/USD (3%/yr avg appreciation since MYR de-peg and within lower range of the 3-5%/yr appreciation guided by the Chinese authority).

§  Flight to safety would likely see foreign funds exiting equity, debt and currency concurrently.

§  Linear regression study between MYR and FBM KLCI yielded relatively high R² of 0.81 and high F-Stat reading.

§  For every RM0.10 depreciation against the US dollar, the FBM KLCI will drop by 86pts.  

§  At RM3.22/USD the FBM KLCI could hit 1328, equivalent to 11.7x 2012 earnings or 1.2SD below five-year average.

§  Linear regression of FBM KLCI component stocks - Axiata, CIMB, DiGi, KLK, Public and RHB Cap has high R² ≥ 0.80. 

§  AMMB, Genting, Maxis, Pet Dagang, Pet Gas and UMW have R² of between 0.70-0.80.

§  Among the 12, only Pet Dagang and Pet Gas have foreign/free float of ~20%, others ranged from 38%-66%.

§  Gent Malaysia, Pet Chem, BAT and YTL have R² < 0.70 but > 60% foreign/free float.

 

WCT (Buy)

KLIA2 IC becomes official

§  WCT has finally inked the concession agreement for the Integrated Complex (IC) at KLIA2 (see Figure #1). The concession spans for 25 years with an option of additional 10 years, which commences on 1 Aug '11.

§  The IC is expected to cost RM530.3m and comprises of a transportation hub; commercial NLA of 350k sq ft; and 6,000 car parks.

§  Following yesterday's briefing, we walked away reassured on the IC's viability and will provide recurring income to WCT by FY13. Based on our estimated IRR of 15.5%, this concession works out to be 12.8 sen/share of WCT's valuation.

§  Maintain BUY on positive outlook for the sector as we expect more orders to materialise under the ETP given the urgency to mitigate the slowdown in economy.

§  However, we cut our TP by 16.8% to RM2.98 from RM3.59 based on 14x reduced average FY11 and FY12 earnings.

 

SP Setia (HOLD)

Strong set of Q3 results

§  9M FY11 net profit rose 38.5% yoy to RM244.7m, making up 84.7% and 87.0% of HLIB and consensus forecasts.

§  We attribute the deviation from forecast to our overly conservative margin assumptions for their projects, and have raised our net profit forecast for FY11-13 by 3-12%.

§  YTD, 10 months' sales clocked in at RM2.3bn, or RM2.8bn on an annualised basis, suggesting that SP Setia could fall slightly short of their stated RM3bn sales target for FY11.

§  Unbilled sales rose slightly to RM2.3bn (2Q: RM2.2bn), or 1.5x FY10 revenue.

§  Despite 22% decline in share price during the current sell-down, we see more near-term volatility on share price given its relatively high foreign shareholding amidst flight to the safety of US$. Hence, we are maintaining our HOLD rating on the stock for now.

 

Glomac (Buy)

Analyst briefing notes

§  From yesterday's briefing, we gather that management's outlook on the property market remains optimistic, as they believe that the Malaysian property market remains domestically driven, and will remain resilient despite the worsening global and domestic economic outlook.

§  Management has no intention of deferring or delaying any of their scheduled launches, which amount to RM1.2bn over the next 12 months; the most high-profile projects include Mutiara Damansara and the Cyberjaya projects.

§  We remain positive on Glomac's earnings, and maintain our RM2.57 target price, based on 20% discount to RNAV.  Maintain BUY.

 

FBM KLCI: Fasten your seatbelts for roller coaster ride ahead

 

§  Expectations of persistent selling activities to depress the market in the short term, reflected by the rotational fierce selldown on key blue chips and flight to safety of U.S. Treasurys and US$. Further technical supports are 1367 (61.8%) and 1312 (76.4%). Any technical rebound is likely to face tough hurdles near 1400-1433 (10-D SMA) pts.  

 

Dow Jones – Downside risks intensify   

§  The breach of the uptrend line support and a possible violation of the neckline support near 10600 are likely to trigger further selldown towards 10383 (76.4% FR) and 10000 psychological supports. Immediate resistance levels are 11000 and 11287 (mid Bollinger band).

HLIB Research 22 September 2011 (BToto; Glomac; Econ; Traders Brief)

BToto (BUY)

4D Jackpot – The lucky charm

§  Reported 1QFY12 net profit of RM93.8m came in within expectation, accounting for 23.1% of HLIB's estimate and 24.2% of consensus full year estimates. Historically, 1Q results normally contributed 22-24% of full year earnings.

§  Declared first interim single tier exempt dividend of 8 sen.

§  Net profit for 1QFY12 increased 43.7% yoy due to the contribution from the new 4D Jackpot game that was introduced in June 2011. Net profit decline qoq due to seasonal factor as 4Q records higher sales on the back of Chinese New Year festival.

§  4D Jackpot's sales remains exciting as its sales was stable at an average of RM1.6m meanwhile for the jackpot games as a whole, total sales has been above Magnum's jackpot sales since the launch of 4D Jackpot.

§  Maintain BUY with unchanged TP of RM4.98.

 

Glomac (BUY)

Q1 results: A decent start to FY12

§  1QFY12 net profit of RM17.9m was 22% of HLIB and 24% of consensus full-year forecast respectively, driven by 18% rise in PBT qoq arising from lower operating expenditure for the quarter.

§  We consider this to be in-line given that 1HFY12 is expected to be a slow period, as this year's projects (total GDV of RM900m) have yet to be launched. 

§  Unbilled sales remain at RM550m (0.9x FY11 property development revenue).

§  No change to our earnings forecast and TP of RM2.57 (20% discount to RNAV). Maintain BUY. 

 

August Inflation Report

§  CPI growth slowed marginally to 3.3% yoy in Aug 2011 (Jul: +3.4% yoy), the second consecutive month of moderation and matching the consensus estimate. MOM basis, the increase in CPI remained stable at 0.2%

§  August CPI data confirmed that inflation has already peaked in June at 3.5% yoy. The pass-through effect from June electricity hike continued to be visible in August, as reflected in the higher inflation rate in the services sector.

§  We expect the next round of subsidy rationalisation to be implemented in December. All-in-all, we retain our forecast that the CPI growth will average 3.2% in 2011.

§  Given that risks to growth have increased while inflation appeared to have peaked, we continue to see BNM holding the OPR steady until end-2011.

 

FBM KLCI - Renewed downside risks as Fed disappoints

§  In the wake of the overnight sharp falls in U.S. and Europe markets, the technical rebound momentum from yesterday is likely to be under threat. Critical level to watch is the 1400 psychological support as a break below will trigger further pressures towards 1367 pts (61.8% FR from peak 1597 and low 1224). Any technical rebound is likely to face tough hurdles near 1441 (10-D SMA) and 1453 (mid Bollinger band) pts.

Dow Jones – Downside risks increase   

§  The short term uptrend line support near 11000 is likely to be tested soon due to weakening technical indicators. Immediate resistance levels are 11316 (mid Bollinger band) and 11610 (50-d SMA) whilst supports fall on 11000 and 12 Sep pivot low of 10824 pts.

RHBInvest Research Highlights 22nd September 2011

22nd September 2011

 

Top Story: TM – Momentum still with UniFi                                 Trading Buy

Visit Note

¨       As at mid-Sep, TM has about 157k UniFi subscribers, implying average monthly net adds of about 20k since Jul. With 1,003k premises passed already, this implies a take-up rate of 15.6%, far exceeding the initial 8-10% take-up target by year-end. Management now expects 30-50% UniFi take-up in 3-5 years.

 

Corporate Highlights

 

Berjaya Sports Toto: 40% contribution to lotto sales from 4D jackpot game in 1QFY04/12            Outperform

1QFY12 Results

¨       1QFY04/12 net profit was in line with our and consensus expectations, accounting for 23-24% of FY04/12 forecasts. BToto declared a first interim tax exempt dividend of 8 sen (1QFY11: 8 sen), in line with our expectations. We continue to maintain our dividend payout projections at 80-85%, which translates to attractive net yields of 5.5-6.5% p.a..

 

Kencana: Closing the year on a favourable note                         Market Perform

4QFY11 Results

¨       Core net profit of RM223.2m came close to both our (RM214.4m) and consensus full-year earnings estimates (RM213m). Yoy, revenue (+43.2%) and net earnings (+63.9%) grew significantly mainly due to: 1) The start-up of the KM-1 rig (operational since Sep-10); and 2) The stronger contract backlog which led to higher EPCC works for the company. To-date order book is RM2.1bn.

 

SapuraCrest: Within expectations                                                Market Perform

2QFY12 Results

¨       6MFY1/11 net profit of RM150.6m came within expectations accounting for 52.2% of both our (RM288.6m) and consensus full-year estimates (RM288.5m) respectively. The sequential increase in earnings was unsurprising as the company typically performs better during the 2nd and 3rd quarters of the year. In the 4th and 1st quarters, traditionally less work is done during the monsoon season.

 

Glomac: More downside in valuations                              Underperform (down from MP)

1QFY12 Results

¨       1QFY12 net profit of RM17.9m came in within our forecast but missed consensus estimates by 12%. Turnover for the quarter fell 19% qoq and was flattish at 1.2% yoy, as 1Q is typically the weakest quarter in a financial year. Sequential earnings were stronger, due to cost savings in Glomac Cyberjaya project, which has led PBT margin to expand to 25% during the quarter from 17% in 4QFY11.