RHBInvest Research Highlights 29th August 2011

29th August 2011

 

Top Story: Banking – History suggests potential sector derating ahead       Neutral (down from OW)

Sector Update

Maybank: Fair value and call downgraded to RM8.85                                       Market Perform (down from OP)

CIMB: Fair value at RM7.49 (from RM8.80)                                                         Market Perform

Public Bank: Fair value and call downgraded to RM14.10                               Market Perform (down from OP)

HL Bank: Fair value at RM11.89 (from RM12.50)                                               Market Perform

AMMB: Fair value and call downgraded to RM6.15                                            Underperform (down from OP)

AFG: Fair value at RM3.38 (from RM3.60)                                                           Market Perform

Affin: Fair value and call downgraded to RM2.77                                                Underperform (down from MP)

 

Macro View

 

Money Supply: Broad monetary aggregate and loan growth eased in July

Economic Highlights (published 26 Aug 2011)

¨       The broader money supply, M3, eased to 11.6% yoy in July, off the 30-month high of +12.4% in Jun but higher than +11.5% in May, indicating that economic activities are cooling but remained resilient.

 

Sector Call

 

Banking: Jul '11 system data – Loan growth and leading indicators softened            Neutral

Sector update

¨       Jul '11 system-wide loan growth eased further to 12.9% yoy, as compared to +13.5% yoy in Jun '11 following lower disbursements during the month (vs. Jun).

 

Oil & Gas: Petronas 1QFY12/11 results               Overweight

Sector Update

Dialog: Fair value at RM3.90                                 Outperform

P Gas:  Fair value at RM14.47                               Outperform

RH Petrogas: Fair value at $1.36                         Outperform

Dayang: Fair value at RM2.33                               Outperform

Petra Perdana:  Fair value at RM1.15                  Outperform

Wah Seong:  Fair value at RM2.66                       Outperform

Petronas Chemicals: Fair value and call downgraded to RM6.37                Market Perform (down from OP)

Kencana: Fair value at RM2.99                             Market Perform

SapuraCrest:  Fair value at RM4.56                     Market Perform

KNM: Fair value at RM0.93                                    Underperform

MMHE: Fair value at RM5.62                                 Underperform

 

Corporate Highlights

 

Carlsberg: Premium segment growing stronger             Outperform

Briefing Note

¨       Carlsberg's range of premium and super premium beers, which include Hoegaarden, Corona and Asahi, among others, grew by ~44% yoy in the 1HFY11. We understand that the strong growth resulted in Carlsberg's premium brands gaining approximately 4.9%-pts in market in share in the premium beer segment, which accounts for approximately 20% of the total beer market Malaysia .

 

CI Holdings: Disposal of Permanis by November          Trading Buy

Briefing Note

¨       During the analysts' briefing on Friday, CI Holdings' (CIH) management highlighted that they are targeting to complete the disposal of Permanis to Asahi in 2QFY06/11. The deal is currently pending the approval from Bursa for CIH's circular to shareholders, MITI, and others. Management expects to hold the EGM concurrently with the AGM in late Oct, would be the final hurdle before Permanis is sold.

 

Kencana: Expanding its drilling fleet                                 Market Perform

News Update

¨       Kencana announced that its subsidiary Kencana Marine Drilling will build two tender assisted drilling rigs (TADRs) at a cost of US$145m (RM435m) each. We are not surprised by this as we mentioned in a previous note that Kencana will resume the expansion of its drilling rig division within the year as it expects many opportunities to emerge for offshore drilling in 2014.

 

Corporate Results

 

PetChem: Down on lower production and methane gas supply            Market Perform (down from OP)

1QFY11 Results / Briefing Note

¨       3MFY12/11 net profit of RM737m came below expectations accounting for 20.3% of our (RM3.6bn) and 16.8% of consensus estimates (RM4.4bn). Overall, net earnings were down on a qoq basis due lower utilisation and methane gas supply limitation.

 

Ann Joo: 2QFY12/11 net profit declines by 23% qoq                            Underperform

2QFY11 Results / Briefing Note

¨       1HFY12/11 net profit came in within our expectations. 2QFY12/11 net profit declined by 23% mainly due to higher raw material cost amid relatively stable steel prices.

HLIB Research 26 August 2011 (SIME; DRB-Hicom; YTL-P; Maxis; TimeDotCom; HSL; TRC; Traders Brief) Part2

Time DotCom (BUY)

Entering Margin Expansion Phase

§  EBITDA margin expansion in 2Q11 due to the increased contribution from data segment and slower than expected capex spending. Management expects EBITDA margin to average above 30% for FY11.

§  TDC to focus on strategies to expand data revenues (+6% yoy, +23% qoq) from wholesale, corporate and global bandwith sales

§  Under Astro partnership, TDC to incur huge capex in FY11

§  Management guided whole year capex of RM250m for FY11 and RM80-120m for FY12.

§  The acquisition exercise of AIMS Group, GTC and GTL are expected to be completed in 4Q11.

§  TDC is entering into a multi-year growth cycle with a high degree of operating leverage. By tapping into new growth areas the company is poised to become a regional growth telco.

§  At the current price, Time DotCom is trading at an estimated PER of 12.8x, 11.4x and 10.0x for FY11, FY12 and FY13 respectively.

§  Raised Target Price to RM0.97 (Previously RM0.95) based on SOP.

 

Hock Seng Lee (BUY)       

2Q11 continues to deliver

§  2Q PATAMI came in at RM20.9m (+18% QoQ), translating to 3.78 sen/share. As of 1H11, cumulative PATAMI was RM38.6m, translating to 6.97 sen/share, making up 43% of our forecast.

§  On a YoY and QoQ basis, 2Q revenue grew by 34% and 20% respectively. On the other hand, YoY and QoQ PATAMI only grew by 16% and 18% respectively. Cumulatively, revenue and PATAMI grew by 34% and 22% respectively. We believe that the company is on track to deliver earnings growth of >20% for FY11.

§  As of 2Q11, we estimate that HSL has ~RM880m worth of orderbook outstanding, which translates to ~1.9x FY10's revenue and ~1x order book-to-market cap ratio. YTD, HSL has secured RM153.7m worth of new orders.

§  Maintain BUY as the company has a niche market for itself in land reclamation/dredging works and healthy balance sheet to take on bigger projects. Target Price of RM2.44 based on 14x average FY11 and FY12 earnings maintained.

 

TRC Synergy (BUY)

2Q11 weighed down by LRT delays

§  2Q PATAMI plunged by 57% QoQ to RM2.5m, translating to 0.55 sen/share. As of 1H11, cumulative PATAMI was 20% lower compared to a year ago at RM8.4m (1.83 sen/share after adjustment), making up only 32% of our estimates and 30% of street's estimates.

§  The reason for the deviation is due to slower than anticipated progress for the LRT project and lower GP margins due to a mixture of projects which are at the tail end and while others are at the initial stages. Hence, lower value added works were recognised during the quarter. We see this weakness in 2Q as temporary and foresee construction activities to accelerate once the issue has been resolved.

§  We estimate that TRC's current outstanding order book remains healthy at ~RM1.1bn, translating to ~2.9x FY10's revenue and ~4x order book-to-market cap ratio.

§  Despite 2Q's setback, we believe that this is just a timing issue in profit recognition. We are maintaining our BUY call with a Target Price of RM0.83 based on 13x FY12 earnings.

 

FBM KLCI - Cautious ahead of long holidays and Bernanke speech

§  In the wake of unresolved external woes, moderating global economic growth outlook and long holidays next week, we remain vigilant and would like to caution investors about potential kneejerk correction on Bursa Malaysia if Bernanke speech tonight fails to live up to market expectations.

§  The bearish engulfing candle formation on 24 Aug, negative technical readings and the failure to defend supports at 1470 and 50% FR (at 1467 pts) yesterday could exert more downward pressure on the FBM KLCI. A breakdown below 61.8% FR (now at 1456) subsequently will pressure the index to retest 1443 (76.4% FR) and 9 Aug pivot low at 1423 pts.

 

Dow Jones - All eyes on Bernanke speech

§  Technically, a fall below the 10-d SMA yesterday and the failure to surpass the mid Bollinger bad at 11133 and 11530 (17 Aug high) could derail the current rebound, especially if Bernanke speech fails to live up to market expectations of more dramatic action rather than outline gradualist measures.

§  Immediate resistance levels are 11530 and 11987 (200-d SMA) whilst supports are situated near 10801 (19 Aug low) and 11000.

 

HLIB Research 26 August 2011 (SIME; DRB-Hicom; YTL-P; Maxis; TimeDotCom; HSL; TRC; Traders Brief) Part1

Sime Darby (Buy)

FY06/11 result: above our expectation

§  FY06/11 core net profit of RM3,808.5m beat our expectation, accounted for 110.5% of our full-year forecast.

§  Main deviations are higher-than-expected contribution from the plantation, industrial, and motor divisions. 

§  FY06/12-13 net profit forecasts raised by 0.1-3.1%, largely to reflect higher margin assumptions at both the industrial ad motor divisions, and slightly higher FFB output growth assumption in Malaysia.

§  SOP-derived TP cut by 3.7% from RM10.99 to RM10.60 to reflect higher holding company discount that more than offset an upward revision in our forecasts.

 

DRB-HICOM (BUY çè)

Forward with Strong Earnings Recovery

§  1QFY3/12 core profit of RM90.8m in line with our expectation (18.6%), but below consensus (16.8%).

§  Impact of Japanese crisis on DRB automotive division was substantial in 1QFY3/12.

§  Supply constraint has gradually eased off since July, in line to meet its FY3/12 target

§  Expect strong earnings from 2QFY3/12 onwards due to recovery of automotive division, maiden contribution from POS, and effective implementation of Hire Purchase Act amendment and Waste Management Act amendment.

§  Maintain BUY with unchanged TP of RM2.97.

 

YTL Power (BUY çè)

4Q11 Results in Line

§  Reported 4QFY6/11 core earnings of RM379m bringing FY11 to RM1,216m, inline with our expectation (96.1%) and  consensus (102.1%).

§  Strong contribution from Power Seraya in Singapore on the back of strong GDP growth, which offsets the lower contribution from Wessex (due to depreciation of UK£) and losses from YTLC (due to high initial capex outlay).

§  YTLP will recognize RM210m gain on disposal in 1QFY6/12 from the sale of 15% Java Power. However, the contribution from Java Power will be reduced to RM150m in FY6/12 and RM130m in FY6/13 onwards, from original RM225m pa.

§  Proposed 1.875 sen net dividend, taking FY6/12 dividend to 9.375 sen, below our expectation.

§  Reduced FY6/12-13 earnings by 6-7%.

§  Maintain BUY with lower TP of RM2.33 after accounting for lower earnings and imputing 10% holding discount.

 

Maxis (Hold)

1H11 results: In line wirh our expectation

§  1H11 reported core net profit of RM1,090m (-3.7%) came in within our expectation, at 48.2% of our full-year forecast. Against consensus, the results came in below, accounted for only 45.4% of the full-year estimates.

§  2011-13 net profit forecasts and our DDM-derived TP of RM5.51 maintained.

RHBInvest Research Highlights 26th August 2011

26th August 2011

 

Top Story: Media – Riding on TV3 and Malay adex growth                                          Underweight

Sector Update

¨       According to Nielsen Media Research (NMR), Jul's gross advertising expenditure (adex) for TV and print media combined rose 11.8% yoy (+8.3% mom), led by the print media (+17.8% yoy), while the TV segment saw improvement (+5% yoy) after experiencing a 3% yoy contraction in Jun.

 

Corporate Highlights

 

Fajarbaru: Slow LRT billings to weigh down on FY06/12 performance                        Outperform

Company Update (published 25 Aug)

¨       The weak FY06/11 result announced yesterday was partly due to the recognition of additional costs from existing projects, pending the approval of variation orders.  If the variation orders are granted, there will be substantial writebacks in FY06/12.

 

Affin: Growing amid a challenging environment                                                               Market Perform

Briefing Note

¨       Given concerns over macro economic conditions and stiff competition the group remains selective with respect to loan growth. Loan growth thus far has not been at the expense of quality with management pointing to the improving gross impaired loan ratio trend. As for deposits, the growth has been helped by deposit campaigns but with a LD ratio of 78.9%, the group's balance sheet remains liquid. 

 

MMHE: Going ahead with Pasir Gudang yard acquisition                                              Underperform

News Update

¨       MMHE announced yesterday that it had entered into a definite sale and purchase agreement with Sime Darby Engineering (SDE) for the Pasir Gudang yard but at a slightly lower purchase consideration of RM393.5m (vs. RM399m previously).

 

Corporate Results

 

Maxis: Steady performance                                                                                               Market Perform

2QFY11 Results / Briefing Note

¨       1HFY11 net profit was within expectations as we expect a seasonally stronger 2H as well as potential earnings boost from the 6% service tax that we believe will be passed on to prepaid subscribers in 4Q.

 

Genting Malaysia : Stronger Malaysia – No more novelty effect in Singapore ?          Outperform

2QFY11 Results / Briefing Note

¨       1HFY11 core net profit was in line with our but below consensus expectations, making up 51.3% of our FY11 projections and 45% of consensus projections.

 

Genting Bhd: Still growing                                                                                                 Outperform

2QFY11 Results / Briefing Note

¨       1HFY11 normalised net profit was in line with our and consensus expectations, coming in at 51-53% of FY11 projections. Genting recorded a net EI gain of RM98m in 2Q11, bringing total EI for 1HFY11 to RM31.9m. Genting declared a gross interim DPS of 3.5 sen (less 25% tax), in line with our forecasts.

 

Sime Darby: Ending the year with a bang                                                                        Outperform

4QFY11 Results / Briefing Note

¨       FY06/11 core net profit was above our and consensus expectations, at 112-114% of FY06/11 forecasts. Main variances were the higher than expected revenue and EBIT for the heavy equipment and motor divisions. Sime declared a final single tier dividend of 22 sen, bringing FY11 DPS to 30 sen, which is higher than our projected 27 sen. This translates to net payout of 49%, and net yield of 3.4%.

 

UEM Land: Earnings continued to miss expectations                                        Underperform (down from MP)

2QFY11 Results / Briefing note

¨       2Q11 net profit missed expectations by 20-30%. The strong sequential growth of 171% in turnover was due to higher revenue from property development projects (+125%) and developed land sales (to RM122.1m from RM7.3m in 1Q11). This 2Q11 results also reflected the full quarter contribution from Sunrise .

 

HLIB Research 25 August 2011 (RHB Cap; IJM Corp; Genting Plantations; TimeDotCom; UM Land; TM; IOI; Traders Brief) Part 2/2

RHB Cap (BUY)

ROE KPI Intact But Face NIM Pressure

§  2QFY11 results slightly below HLIB (due to lower NIM) and consensus expectations.

§  Interim dividend of 8 sen (17% payout), all under DRP.

§  Encouraging results except continued NIM erosion (higher funding cost – though unlikely to decline significantly, still pressurize by intense competition for deposits) and jump in provision for several SMEs (unlikely to recur).

§  Loans and deposits growth continued to be ahead of industry average while credit charge to stay within 50-60bps.

§  Although ROE slightly behind, FY11 KPI of 15.2-15.8% unchanged amidst downward pressure from NIM.

§  Liquidity position is healthy and has no US$ funding issue while IB pipeline remains decent.  However, near term pressure on MTM and potential risk to big ticket items and IB deal delay towards 4Q.   

§  EASY now contributes 2.3% of pre-provision profit with low gross impaired loan ratio of 0.8%.

§  Acquisition of Mestika unlikely this year, pending clear rule on Indonesia foreign shareholding limit.

§  Asset quality improved despite higher net impaired loans formation while capital ratio also improved.

§  FY11-13 forecasts cut by 4.7-5% to account for lower NIM, consequently, target price cut to RM10.20 from RM10.96 based on Gordon Growth.

 

IJM Corp (BUY)

Improved 1Q results

§  1Q12 PATAMI came in at RM115m, translating to an EPS of 8.51 sen/share. Earnings made up ~24% and ~23% of ours and streets' estimates respectively.

§  On a QoQ and YoY basis, 1Q12 core earnings jumped by 11% and 34% respectively against the back of improved performances in nearly all division, especially the plantation division which was lifted by bumper harvest and improved earnings margin. ~65% of IJM's PBT during the quarter came from the property and plantation division.

§  The construction PBT margins remained uninspiring at 2.8% during the quarter after improving to ~3.5% last financial year. However, it was the second consecutive quarter of construction revenue growth, indicating that construction activities may have recovered and margins may improve further going forward. Outstanding order book stands at

RM3.7bn, translating to ~2.8x FY11's construction revenue.

§  Upgraded to BUY in view of slightly >10% upside from our target price of RM6.61 based on SOP valuation.

 

Genting Plantations (BUY)

1H11: Beat expectations

§  1H11 net profit of RM234.2m beat expectations, accounted for 53.6-56.8% of our and consensus full-year estimates.

§  The RM200/month increment for plantation workers will raise Genp's production cost by RM5m per annum.

§  Given the strong FFB output growth recorded, management raised FFB growth guidance for 2011 from 5-7% to 8-9%.

§  Genp has planted only 1,537ha of oil palm in Indonesia in 1H11, due mainly to social and land issues. Management is confident that it would be able to accelerate its planting programme to 3,000-4,000ha in 2H, making up to ~5,000ha in 2011.

§  Management guided a lower capex of RM300m in 2011 (vs. RM360m that it previously guided).

§  2011-13 net profit forecasts raised by 2.7-3.8%, largely to reflect: (1) Higher FFB output growth assumption; and (2) Higher production costs.

§  TP raised by 2.9% to RM8.80 based on 17x revised 2012 EPS of 51.8 sen. Upgrade from Hold to Buy.

 

Time DotCom (BUY)

1H11: Beats our expectation

§  1H11 net profit beat our expectation, accounted for 67.9% of our full-year forecast.

§  Earnings forecasts and TP of R0.95 (based on SOP) maintained for now, pending further details on today's conference call.

 

UMLand (BUY)

Earnings in-line

§  Net profit rose 18% yoy, while 1H net profit rose 89% yoy to RM24m, or 46% of our estimate. 

§  We regard this as in-line with our expectation, due to seasonality. 

§  The RM189m Puteri Harbour condo was slated for 3Q launch, but has been pushed back to 4Q as building approval is still pending. 

§  We continue to like UMLand for their undemanding valuations and earnings growth story.  UMLand continues to trade at 70% discount to RNAV and single-digit P/E, providing investors with an opportunity to accumulate before earnings re-rating takes place in 2012, which we estimate to be circa 30%.

§  The bonus issue shares from the 1 for 4 bonus issue will be listed today, and we adjust our price target from RM2.87 to RM2.30 accordingly. Maintain BUY.

 

TM (Hold)

§  1H11 core net profit of RM344.6m (+32%) came in within expectations, accounted for 48% of our forecast. Against consensus, the results came in above expectations, at 62.6% of full-year estimates. 

§  TP remains unchanged at RM4.20 (based on DDM, WACC of 6.3%, TG 0%). Downgrade from Buy to Hold as the recent share price run-up has capped potential capital upside on the stock.

 

IOI Corporation (Hold)

FY11: Below expectations

§  FY06/11 core net profit of RM1,996.7m came in below expectations, at 90-92.4% of our and consensus full-year estimates.

§  FY06/12-13 net profit forecasts cut by 2.8-2.9% to reflect lower EBIT margin assumptions at both the property development and manufacturing divisions.  

§  SOP-derived TP cut by 3.7% to RM5.27 following the downward adjustments to our earnings forecasts.    

 

FBM KLCI - Unresolved uncertainties and long holidays to cap rebound

§  We remain vigilant and would like to caution investors about potential downward correction if Bernanke speech this Friday fails to live up to market expectations as well as long holidays ahead next week. Immediate resistance levels remain near 1,500-1,530 whilst supports are around 1456-1466 pts.

 

Stock to watch - MASTEEL: Limited downside amid strong 1H11 results and oversold positions   

§  Signs of bottoming up in weekly & daily slow Stochastics indicators coupled with its strong 1H11 results bode well for a possible technical rebound towards RM1.14 (30-d SMA) and 1.22 (200-d SMA) in the medium term. Supports are RM0.92-1.00. Cut loss below RM0.92.

 

HLIB Research 25 August 2011 (RHB Cap; IJM Corp; Genting Plantations; TimeDotCom; UM Land; TM; IOI; Traders Brief) Part 1/2

RHB Cap (BUY)

ROE KPI Intact But Face NIM Pressure

§  2QFY11 results slightly below HLIB (due to lower NIM) and consensus expectations.

§  Interim dividend of 8 sen (17% payout), all under DRP.

§  Encouraging results except continued NIM erosion (higher funding cost – though unlikely to decline significantly, still pressurize by intense competition for deposits) and jump in provision for several SMEs (unlikely to recur).

§  Loans and deposits growth continued to be ahead of industry average while credit charge to stay within 50-60bps.

§  Although ROE slightly behind, FY11 KPI of 15.2-15.8% unchanged amidst downward pressure from NIM.

§  Liquidity position is healthy and has no US$ funding issue while IB pipeline remains decent.  However, near term pressure on MTM and potential risk to big ticket items and IB deal delay towards 4Q.   

§  EASY now contributes 2.3% of pre-provision profit with low gross impaired loan ratio of 0.8%.

§  Acquisition of Mestika unlikely this year, pending clear rule on Indonesia foreign shareholding limit.

§  Asset quality improved despite higher net impaired loans formation while capital ratio also improved.

§  FY11-13 forecasts cut by 4.7-5% to account for lower NIM, consequently, target price cut to RM10.20 from RM10.96 based on Gordon Growth.

 

IJM Corp (BUY)

Improved 1Q results

§  1Q12 PATAMI came in at RM115m, translating to an EPS of 8.51 sen/share. Earnings made up ~24% and ~23% of ours and streets' estimates respectively.

§  On a QoQ and YoY basis, 1Q12 core earnings jumped by 11% and 34% respectively against the back of improved performances in nearly all division, especially the plantation division which was lifted by bumper harvest and improved earnings margin. ~65% of IJM's PBT during the quarter came from the property and plantation division.

§  The construction PBT margins remained uninspiring at 2.8% during the quarter after improving to ~3.5% last financial year. However, it was the second consecutive quarter of construction revenue growth, indicating that construction activities may have recovered and margins may improve further going forward. Outstanding order book stands at

RM3.7bn, translating to ~2.8x FY11's construction revenue.

§  Upgraded to BUY in view of slightly >10% upside from our target price of RM6.61 based on SOP valuation.

 

Genting Plantations (BUY)

1H11: Beat expectations

§  1H11 net profit of RM234.2m beat expectations, accounted for 53.6-56.8% of our and consensus full-year estimates.

§  The RM200/month increment for plantation workers will raise Genp's production cost by RM5m per annum.

§  Given the strong FFB output growth recorded, management raised FFB growth guidance for 2011 from 5-7% to 8-9%.

§  Genp has planted only 1,537ha of oil palm in Indonesia in 1H11, due mainly to social and land issues. Management is confident that it would be able to accelerate its planting programme to 3,000-4,000ha in 2H, making up to ~5,000ha in 2011.

§  Management guided a lower capex of RM300m in 2011 (vs. RM360m that it previously guided).

§  2011-13 net profit forecasts raised by 2.7-3.8%, largely to reflect: (1) Higher FFB output growth assumption; and (2) Higher production costs.

§  TP raised by 2.9% to RM8.80 based on 17x revised 2012 EPS of 51.8 sen. Upgrade from Hold to Buy.

 

Time DotCom (BUY)

1H11: Beats our expectation

§  1H11 net profit beat our expectation, accounted for 67.9% of our full-year forecast.

§  Earnings forecasts and TP of R0.95 (based on SOP) maintained for now, pending further details on today's conference call.

 

UMLand (BUY)

Earnings in-line

§  Net profit rose 18% yoy, while 1H net profit rose 89% yoy to RM24m, or 46% of our estimate. 

§  We regard this as in-line with our expectation, due to seasonality. 

§  The RM189m Puteri Harbour condo was slated for 3Q launch, but has been pushed back to 4Q as building approval is still pending. 

§  We continue to like UMLand for their undemanding valuations and earnings growth story.  UMLand continues to trade at 70% discount to RNAV and single-digit P/E, providing investors with an opportunity to accumulate before earnings re-rating takes place in 2012, which we estimate to be circa 30%.

§  The bonus issue shares from the 1 for 4 bonus issue will be listed today, and we adjust our price target from RM2.87 to RM2.30 accordingly. Maintain BUY.

 

TM (Hold)

§  1H11 core net profit of RM344.6m (+32%) came in within expectations, accounted for 48% of our forecast. Against consensus, the results came in above expectations, at 62.6% of full-year estimates. 

§  TP remains unchanged at RM4.20 (based on DDM, WACC of 6.3%, TG 0%). Downgrade from Buy to Hold as the recent share price run-up has capped potential capital upside on the stock.

 

IOI Corporation (Hold)

FY11: Below expectations

§  FY06/11 core net profit of RM1,996.7m came in below expectations, at 90-92.4% of our and consensus full-year estimates.

§  FY06/12-13 net profit forecasts cut by 2.8-2.9% to reflect lower EBIT margin assumptions at both the property development and manufacturing divisions.  

§  SOP-derived TP cut by 3.7% to RM5.27 following the downward adjustments to our earnings forecasts.    

 

FBM KLCI - Unresolved uncertainties and long holidays to cap rebound

§  We remain vigilant and would like to caution investors about potential downward correction if Bernanke speech this Friday fails to live up to market expectations as well as long holidays ahead next week. Immediate resistance levels remain near 1,500-1,530 whilst supports are around 1456-1466 pts.

 

Stock to watch - MASTEEL: Limited downside amid strong 1H11 results and oversold positions   

§  Signs of bottoming up in weekly & daily slow Stochastics indicators coupled with its strong 1H11 results bode well for a possible technical rebound towards RM1.14 (30-d SMA) and 1.22 (200-d SMA) in the medium term. Supports are RM0.92-1.00. Cut loss below RM0.92.