Ann Joo Resources (Sell; TP: RM1.34) - Below our expectation

Ann Joo Resources (Sell; TP: RM1.34)

Below our expectation

• FY11 core net profit of RM103.4m (-13.8%) came in below our expectation, at only 84.6% of our forecast. Variance against our forecast was higher-than-expected production cost.
• Recommended a final NDPS of 3.5 sen, bringing total NDPS for FY11 to 7.5 sen.
• Management maintains its cautious view on steel price outlook in 2012, given the global economic uncertainties and the expected slowdown in the Chinese economy. Given its cautious view on steel prices, management indicated that it would pare down its inventory level for raw materials.
• Hopeful to achieve cost savings at its blast furnace in 3 months’ time, pending installation of several auxiliary facilities, the utilization of pulverized coal injection and the utilization of cheaper raw materials.
• Expects sales tonnage of this division will grow by at least 10% in 2012.
• Maintain 2012-13 net profit forecasts and TP of RM1.34 (based on unchanged 9x 2012 FD EPS of 14.9 sen).  

Source: HLIB Research 29 Feb 2012

ViTrox (HOLD) - 4Q11 Results: Below Expectations

ViTrox (HOLD)

4Q11 Results: Below Expectations

• FY11 reported core net profit of RM22.2m came in below expectations, accounting for 83.1% of our full-year forecast and 83.3% of consensus chiefly due to the disappointing sales performance.
• The decrease in revenue mainly due to reduction in sales from all three product segments, whereby MVS, ABI and ECS recorded a contraction of 58%, 24% and 73% yoy respectively.
• ViTrox attributed this weak sales performance to the slowdown in semiconductor and electronics industry as a result of European financial debt crisis and sluggish US economy.
• Our target price is revised downward to RM0.82 (from RM0.85 previously) based on DCF with a WACC of 13.4% and TG of 0%. This gives ViTrox an implied PER of 6.5x for FY12. We maintain our HOLD call on the equity although there is a slightly higher than 10% potential total return given our cautious view of its profitability in 1H12 and pending further guidance from the analyst briefing.

Source: HLIB Research 29 Feb 2012

Mah Sing (BUY) - 4Q results

Mah Sing (BUY)

4Q results

• FY11 net profit rose 43% yoy to RM168.6m, in-line with consensus but making up only 91% of our FY11 estimate, due to their higher than expected effective tax rate of 29%.
• First and final gross dividend of 11 sen.
• Another record year in sales - RM2.26bn for FY11, but sales continued to slow down in 4Q.  But with ~RM1.0bn in unconverted bookings, we believe their FY12 sales target of RM2.5bn remains achievable.
• Given their intention to acquire land with RM5bn of GDV in 2012, we believe there could be up to five acquisitions, focusing on the affordable housing segment in Klang Valley.
• Rolling over our numbers, our FY12 earnings estimate is revised downwards slightly by 2% to RM241m, but key assumptions remain unchanged.  Maintain target price at RM2.37 (maintain 30% discount to RNAV). BUY  

Source: HLIB Research 29 Feb 2012

RHB Cap (Hold) - Better FY12 Earnings Outlook

RHB Cap (Hold)

Better FY12 Earnings Outlook

• FY11 results in line with HLIB and consensus.
• Final div of 11.82 sen and single-tier 5.59 sen, FY11 30% payout in line with unchanged policy and HLIB’s projection
• Missed FY11 ROE KPI due to one-offs but management already gave early warning while asset quality as well as loans and deposits growth were ahead of KPIs.
• FY12 KPI of >14% ROE (post acquisition of Mestika and RI).  HLIB ROE projection is at the lower end. 
• Management assured that it has already made sufficient impairment for the CLO exposure.
• We expect FY12 earnings enhancement from: 1) absence of the one-offs; 2) guidance of improving NIM; and 3) benefits of 400 new touch points to gradually filter through. 
• Mestika and OSK M&As slated for completion by 1HFY12. 
• Raised FY12-13 forecasts by 10-11% (absence of one-offs).
• Maintain Hold.
• Target price raised to RM7.85 based on Gordon Growth with ROE of 14.5% and WACC of 11.4%, from RM7.37. 

Source: HLIB Research 29 Feb 2012

HSL (BUY) - FY11 another record year

HSL (BUY)

FY11 another record year

• HSL posted another record earnings as FY11 earnings grew by 19% to RM87.3m (15.8 sen/share) beating streets’ estimates slightly but 3% below our forecast of RM90m.
• Net dividend of 1.8 sen/share declared. Hence, total FY11 dividends declared was 2.7 sen/share. Also, 1-for-50 treasury share distribution announced which works out to additional 3.3 sen/share at current share price of RM1.65.
• Overall, the HSL has an outstanding order book of ~RM1.1bn, translating to ~2.0x FY11’s construction revenue and ~1.1x order book-to-market cap ratio.
• With the improved newsflow for the construction sector and potential in award of SCORE projects picking up, we maintain our BUY call on HSL with a TP of RM2.21.

Source: HLIB Research 29 Feb 2012