RHBInvest Research Highlights 30th December 2011

30^th  December 2011

 

Top Story

Gaming Sector – Hedging Their Bets Overseas                                 Overweight Sector Update -          Given the relatively mature gaming market in Malaysia , gaming companies have been looking to branch out to different geographical locations globally. We view this move positively, given the large untapped potential in many countries, although we are wary that not all locations are suitable and that most of these new developments would take some time to materialise. We believe these are exciting times and would look to these expansions as a rerating catalyst especially for the Malaysian casino companies, given the significant valuation gap between the Malaysian casino companies and its regional peers

 

Important Dates

Company	Entitlement details	Ex	Payment
New entitlements
None
Going "ex" on xx Dec
Imaspro Corporation	First & final single-tier dividend of 3.5 sen	3-Jan-12	18-Jan-12
Konsortium Logistik	1st interim (TE) div of 8 sen + special div of 12.15 sen (TE) and 25.55 sen less tax	3-Jan-12	26-Jan-12
Focus Lumber	1st single-tier interim dividend of 6 sen	3-Jan-12	16-Jan-12
Chin Teck Plantations	First interim dividend of 16 sen less 25% tax	3-Jan-12	17-Jan-12
Freight Management Holdings	Bonus issue on the basis of 1-for-3	3-Jan-12	-
Freight Management Holdings	Issue of free warrants on the basis of 1-for-5	3-Jan-12	-

RHBInvest Research Highlights 29th December 2011

29th December 2011

 

Malaysia Equities Top Story Education – Lacking Excitement                                        Neutral Sector Update ¨       After the sector's lackluster performance in 2011, we believe that earnings will be more stable in 2012. Growth is expected to be organically-driven as the players' focus on optimising the utilisation of their existing campuses.

Bulletins

Company News Comment Rating Consumer: Retail The Malaysian Retailers Association (MRA) expects the industry to grow 6% in 2012, slightly slower than its estimates of 6.5% for 2011. The MRA said the unresolved eurozone debt crisis, the potential US double-dip recession and the recent decline in China export market will affect the country's economy in 2012. (Business Times) Neutral. MRA's estimates for the slightly slower growth in retail sales is in line with our expectations of a slower consumer spending growth in 2012 of 5.3% (down from an estimated 6.6% in 2011). We believe the continued growth in consumer spending would drive the retail sales revenue growth, which augurs well for the retail companies under our coverage, i.e AEON, Amway and Parkson. Overweight

RHBInvest Research Highlights 28th December 2011

28th December 2011

 

Top Story   Motor Sector – An Uphill Climb                                                    Underweight Sector Update ¨       The more cautious outlook and slowing economy in 2012 will likely see households and businesses alike reassess spending on big-ticket items. ¨       We expect total industry volumes (TIV) to remain relatively flat at 607,000 units in 2012 (2011E: 604,000). ¨       We see some selective supply constraints of certain models continuing into 1Q12 arising from the flooding in Thailand , with Honda the most severely affected.   Corporate Highlights WCT – A Second Property Venture In Vietnam                            Market Perform News Update ¨       WCT, via a 70:30 JV with a local partner, has obtained the Investment Certificate (IC) from the Vietnamese government to undertake a residential/commercial development on a 11.5-acre land in Binh Hung Commune, Binh Chanh District, HCMC, Vietnam .  ¨       This is WCT's second property venture in Vietnam .  We estimate it to boast a GDV of about RM500m. Maintain Market Perform.  Fair value is RM2.08.

HLIB Research 28 Dec 2011 (Traders Brief)

KLCI: Immediate resistance at 1519 levels 

§ Barring any external shocks, we remain positive that KLCI is likely to close above 1500 pts this week, driven by a bullish breakout and positive technical readings coupled with rotational window dressing activities. Resistance levels are 1519-1529 whilst supports fall on 1476-1488.

 

MEDIAC: Positive breakout     

§ Since hitting a low of RM0.905 (26 Sep), Based on daily and weekly charts, technical landscape are positive, indicating that Mediac is ripe for further appreciation. Mediac prices are trending upwards along its uptrend line support to end at RM1.10 yesterday, closing above the mid Bollinger band & 50-d SMA (both at RM1.07) and 100-d SMA (RM1.08). A breakout above RM1.13 (50% FR) will spur prices higher towards retesting 200-d SMA (RM1.15) and RM1.18 (38.2% FR) levels. A more formidable resistance is RM1.25 (23.6% FR).

§ Strong supports are situated near RM1.01 (76.4% FR) and RM1.04 (lower Bollinger band). Cut loss below RM1.00.

 

HLIB Research 27 Dec 2011 (Traders Brief)

KLCI: Remain positive to retest 1501-1519 zones 

§  Barring any external shocks of potential credit ratings downgrades on several European nations and further spreads of bird-flu pandemic from HK, FBM KLCI is likely to maintain its upside momentum to retest immediate resistance at 200-d SMA (now at 1501), followed by 2010's close at 1519. More formidable resistance is 23.6% FR at 1529. Supports are 38.2% FR (1487), mid Bollinger band (1472) and 30-d SMA (at 1467).

HIAPTEK: Upside bias as technicals are on the mend     

§  HIAPTEK's prices had been trending southbound from a 52-wk high of RM1.06 (14 Jan) to as low as RM0.56 (20 Dec) after its right issue shares went ex on 14 Dec. Technically, HIAPTEK is grossly oversold and we see a technical rebound soon, reflected by the signs of bottoming up in MACD.

§  There is a good chance that HIAPTEK may reclaim the 10-d SMA (now at RM0.61) soon. A breakout above RM0.61 will spur prices higher towards mid Bollinger band (RM0.65) and 100-d SMA (RM0.69). A more formidable resistance is at 200-d SMA (RM0.75).

§  Immediate supports are lower Bollinger band (RM0.55) and RM0.50 (rights issue price). Cut loss below RM0.50.

 

RHBInvest Research Highlights 27th December 2011

Malaysia Equities

Top Story Semiconductor – No Recovery In Sight Yet                                    Underweight Sector Update ¨       The growing uncertainty on the global economy has continued to impact the industry with more downgrades to revenue guidance by major tech players. ¨       Given the weakening demand outlook for 4Q11, we understand that several players have suggested that the industry has reached the bottom. They believe that: (1) inventory adjustment is expected to be over; and (2) the 2008/2009 semicon downturn lasted for two quarters, hence given that Oct 2011 global chip sales was the fourth month of yoy contraction, this suggests that a recovery is poised to occur beginning 2012.      Corporate Highlights HELP International – A Marginal Improvement                           Market Perform Results Note ¨       The 4QFY10/11 net profit of RM3.6m (-44.6% yoy, >100% qoq) took FY10/11 earnings to RM13.1m, a 31.6% decline yoy. This was above our expectations but slightly missed consensus estimates. As expected, only a minimal full-year GDPS of 2 sen was declared, as HELP continues to conserve its cash for the construction of its Subang 2 campus.

RHBInvest Research Highlights 23rd December 2011

23rd December 2011

 

Top Story

 

Construction – Due For A Reality Check                                                                                                                                                                 Neutral

Sector Update

¨       We are downgrading our recommendation for the construction sector to Neutral from Overweight. 

¨       Investors' confidence and comfort level that the Klang Valley MRT project will start work soon are being chipped away by further delays in the roll-out of certain already long-overdue large-scale projects.

 

 

Sector Update

Building Materials – Continued weakness for steel; cement affected by increased competition                                                                      Underweight

Sector Update

¨       We believe global demand and prices for steel will likely remain weak in 2012 due to slower demand growth in China and the still-less-than robust construction activities in the developed countries.

¨       Share price of steel companies are likely to remain depressed in the absence of meaningful margin improvement, although most of them are already trading at trough level valuations.

 

Building Materials – Continued weakness for steel; cement affected by   increased competition                                                                       Underweight

Sector Update

¨       We believe global demand and prices for steel will likely remain weak in 2012 due to slower demand growth in China and the still-less-than robust construction activities in the developed countries.

¨       Share price of steel companies are likely to remain depressed in the absence of meaningful margin improvement, although most of them are already trading at trough level valuations.

UMW Holdings (Hold): Reduced losses from WSP in 3Q11

WSP continues to hurt. WSP, a 23% China-based associate of UMW, continues to be loss making for the last 9 consecutive quarters with net loss of USD17m in 3Q11 and USD50m for 9M11. Against this backdrop, we have trimmed UMW’s 2011-12 earnings by 1-3% with a higher net loss assumption at WSP (see Table 1). Coupled with headwinds at the auto division, there are minimal catalysts to re-rate UMW, which is a Hold with an unchanged RM6.10 target price, pegged at 11x 2012 EPS.

Maybank research (23 December 2011)

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AEON Co. (Buy): Land acquisition in Kulai, Johor

Positive, for continuous organic growth. AEON Co.'s recent land transaction at Kulai, Johor, which should be near the newly opened Johor Premium Outlet (JPO), is positive for its provides an organic growth to the group which already has a good reach in the Klang Valley. We maintain our forecasts and PER based RM7.90 target price (14x 2012) as earnings contribution will be beyond 2013. AEON Co. is our top pick for consumer sector. Maintain Buy.

Maybank research (22 December 2011)

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KFC Holdings (Hold) Boards accepted offer

Accepts offer. KFC's board has accepted MESB's offer to take over KFC's assets and liabilities, and it does not intend to seek alternative bids. We maintain that the offer price of RM4.00 per KFC share is fair to minorities because it values KFC at a 2012 PER of 19.4x and 2.6x P/B, based on our forecasts. The high prospective PER is fair for an M&A involving an entire business - our previous fair value for KFC shares was RM3.12 based on DCF which implies 15x 2012 PER.

Maybank research (22 December 2011)

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RHBInvest Research Highlights 22nd December 2011

22nd December 2011

 

Top Story Media – Nov Sees Weakest Adex Growth So Far                             Underweight Sector Update ¨       Nov's gross adex for TV and print media recorded its weakest growth so far in 2011 with only 2.2% growth yoy. YTD, adex grew 9.5%. With the Christmas boost in Dec, our projected 2011 adex growth of 9% may appear somewhat conservative.     Sector Update Banking – Financial sector blueprint 2011-2020                               Underweight Sector update ¨       BNM yesterday launched its Financial Sector Blueprint 2011-2020. Themed "Strengthening Our Future", the aim of the blueprint is to build a financial sector that will benefit a high value-added, high-income society in 2020. All in, the blueprint sets out a total of 69 recommendations under nine focus areas. Generally, there were no major surprises. We find the blueprint largely to be an extension of the previous Financial Sector Master Plan.   Corporate Highlights MAHB – RM540m KLIA2 public infrastructure poser                           Outperform Company Update ¨       We gather that MAHB has yet to finalise with the Government on the payment mechanism for the RM540m public infrastructure MAHB is putting into KLIA2 (that was supposed to be borne by the Government).   Fajarbaru – Lands RM62m Sewerage Treatment Plant Job In Selangor                    Market Perform News Update ¨       Fajarbaru has secured a RM62m contract for the construction of a sewerage treatment plant in Selangor.      KFCH – JCorp Offer Accepted                                                         Trading Buy News Update ¨       Both KFCH and QSR announced yesterday that they have decided to accept the offer by Massive Equity (MESB) for the acquisition of their total assets and liabilities for RM4/share and RM6.80/share respectively. MESB is a SPV owned by JCorp (51%) and CVC Capital (49%). Both companies board have also decided that they do not intend to seek any alternative bids.

HLIB Research 22 December 2011 (Econs; Traders Brief)

November Inflation Report

§  CPI growth eased marginally to 3.3% yoy in Nov (Oct: +3.4% yoy), in line with consensus estimates, on account of slower price increases in major segments, i.e. food, housing/utilities/fuels and transport.

§  Mom, the CPI growth eased to 0.1%, the first moderation in five months, providing a relief that price pressure on the ground has begun to subside.

§  However, services inflation increased further to 3.2% yoy (Oct: +3.1% yoy), the highest since April 2009, suggesting that inflationary pressure on the ground is still strong.

§  We maintain our inflation forecast of 3.2% for 2011 and 3.0% for 2012. Risk to our forecast is on the upside given uncertainty on food supply chain and its impact on prices.

§  We expect BNM to hold the OPR steady at 3.0% until end-2012 given the resilient economic growth and negative real return to savings.

 

KLCI: Remain positive to retest 200-d SMA 

§  Tracking broad profit taking activities by overnight Dow and Europe markets after the surge on 20 Dec, we may see similar pattern to take place on Bursa Malaysia (albeit likely be well-contained). Remain positive that KLCI will retest upside targets at upper Bollinger band (1497) and 200-d SMA at 1502 while supports fall on mid Bollinger band (1467) and 50-d SMA (1461).

 

UOADEV: Upside bias as technicals are on the mend      

§  Based on daily chart, we reckon that UOADEV is likely to find immediate supports near RM1.30 and lower Bollinger band near RM1.27. It appears that UOADEV is consolidating well above its triangle pattern and is ripe for further appreciation as technical indicators are gradually hooking upwards. The next upswing should push prices towards 30-d SMA (now at RM1.42), 50-d SMA (RM1.47) and upper Bollinger band (RM1.53). More significant resistance level is RM1.72 (61.8% FR). Cut loss below RM1.25. 

RHBInvest Research Highlights 21st December 2011

21st December 2011

 

Top Story

Indonesia Banks – Double Happiness                                                            Neutral (maintained) Sector Update -          Indonesian equities were recently boosted by two pieces of positive news. The Indonesian Parliament passed the long awaited land bill that will be a key element in facilitating infrastructure investments that could help to be a strong source of demand for bank financing. -          In addition, Fitch Ratings raised Indonesia 's long-term and local currency rating to BBB- from BB+ that lifts its sovereign credit rating to investment grade. -          While the Land Bill and Fitch upgrade are positive developments, they were widely anticipated and are likely to have been fully priced in. -          We acknowledge Indonesia 's structural growth prospects but retain our cautious near-term view and Neutral call on the sector. Our wariness stems from high absolute valuations that leave banking stocks susceptible to a de-rating of sector multiples from a market correction in view of the deteriorating global macroeconomic conditions. -          Related story: Indonesia Banking Sector Update  – A Perfect 10 (18 Nov 2011)

Malaysia Equities

Corporate Highlights

UMW Holdings – New Iraq Power Contract                                                                Underperform News Update -          UMW's 60%-owned subsidiary Synergistic Generation Sdn Bhd (SGSB) has entered into a US$29.7m contract with PETRONAS Carigali Iraq (PCI) over 55 months for the procurement of materials and equipment and installation and commissioning of equipment and facilities for the setting up of the Garraf Power Plant Phase I in Iraq . -          UMW's 22.3%-associate WSP Holdings also recently announced that its board has formed a special committee after receiving a non-binding proposal letter from H.D.S. Investments to acquire all the shares of the company in a possible going-private transaction. -          No change to our Underperform recommendation on valuation grounds. Our sum-of-parts derived fair value estimate is RM5.80.  -          Related story: UMW Results Briefing  – O&G To Turn-Around In 2012, FX Worries Remain (29 Nov 2011)   Freight Management– Warrant exercise priced at RM0.97                                      Market Perform News Update -          FM announced that the exercise price of its free warrants will be priced at RM0.97. -          Recall that FM had proposed a bonus issue on the 1:3 basis (shares) and 1:5 (warrants) before the proposed bonus issue. -          The exercise is expected to be completed by Jan-12. -          Based on our estimate, on a fully diluted basis, FY13 EPS will be diluted by 9.3%. -          We will adjust our fair value upon the completion of the exercise. Fair value is RM1.15/share based on 6x CY EPS. Related story: Freight Management Results Note – 1QFY06/12 net profit grows 12.4% yoy (1 Dec 2011)

Tanjung Offshore (Sell): Disappointment ahead

Downgrade to Sell, TP cut to RM0.70 (-14%, to 0.6x PBV), ahead of a disappointing 4Q results, hit by a confluence of issues at its engineering equipment division. For this, we forecast TOFF to end 2011 with a higher net loss of RM14m, making consensus and our initial estimates untenable. The stock is unlikely to re-rate until the company shows tangible signs of managing costs effectively.


Maybank research (21 December 2011)

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