Bursa Malaysia Stock Watch

TSH - Highest growth profile

2012-02-14T18:52:00.003+08:00

TSH Resources; Buy; RM2.23
Price Target: RM2.55; TSH MK

Aggressive expansion in Indonesia to resume; maturing estates to drive FFB output growth. Raised FY12/13F earnings by 10/11% after revising CPO price and FX rate. Maintain Buy with higher TP of RM2.55

Source: HwangDBS Research 14 Feb 2012

SIME - Still undervalued

2012-02-14T18:51:00.004+08:00

Sime Darby; Buy; RM9.67
Price Target: RM11.25; SIME MK

FY12F-14F earnings raised by 4-6% after accounting for revised CPO prices and FX rates. 2QFY12 NPAT expected at RM1.0bn, down 6% QoQ on weaker plantation and motor contributions. Efforts to boost plantation productivity may yield more upside than expected. Reiterate Buy call for 19% return; some catalysts have not been priced in

Source: HwangDBS Research 14 Feb 2012

KLK - Limited land for new plantings

2012-02-14T18:50:00.004+08:00

KL Kepong; Hold; RM25.48
Price Target: RM24.00; KLK MK

1QFY12 core earnings to increase 19% QoQ. FY12-14F earnings raised by 3-7% after changes to CPO price, FX rate and segmental profit. Maintain Hold, TP revised to RM24.00, imputing lower ERP in DCF valuation

Source: HwangDBS Research 14 Feb 2012

IOICORP - No near term catalysts

2012-02-14T18:50:00.000+08:00

IOI Corporation; Hold; RM5.47
Price Target: RM5.50; IOI MK

FY12F-14F earnings revised by -5% to +4% to account for revised CPO prices and FX rates. We expect 2QFY12 NPAT to come in at RM450- 460m; up 74-78% QoQ on smaller FX losses. Indonesia expansion slowed in FY11; expect more aggressive 10k ha planting in FY12F. Lacklustre Singapore property sales and weak refining margins; Hold for dividends

Source - HwangDBS Research 14 Feb 2012

IJMPLNT - Demanding valuation

2012-02-14T18:49:00.001+08:00

IJM Plantations; Hold; RM3.33
Price Target: RM3.10; IJMP MK

3QFY12 earnings to be supported by strong CPO prices. FY12F-14F earnings raised by 2-18% on CPO price and FX rate revisions. Lacking near-term catalyst. Hold rating maintained; TP revised to RM3.10 on lower ERP assumption

Source: HwangDBS Research 14 Feb 2012

GENP - Solid cash cow

2012-02-14T18:44:00.003+08:00

Genting Plantations; Buy; RM9.51
Price Target: RM11.00; GENP MK

FY12F-13F profit raised by 11% – 16% on revised CPO prices, FX rates, Success of Iskandar Malaysia should boost value of its 5,500 acre land bank in Kulai. Reiterate Buy, SOP-derived TP raised to RM11.00 (16% upside potential)

Source: HwangDBS Research 14 Feb 2012

RHBInvest Research Highlights 14th February 2012

2012-02-14T10:49:00.001+08:00

14th February 2012

Malaysia Equities

Top Story

Maybank – Expecting A Weaker Quarter, But All In The Price Outperform

Results Preview

- Maybank will be announcing its 2QFP12/11 results (for the 6 months financial period to Dec 2011 as the FYE was changed from Jun to Dec) results sometime during the week beginning 20 Feb. Our net profit forecast of RM2.56bn (+19.1% yoy) for the 6-month period implies that 2Q net profit would be down marginally qoq (-0.7% qoq) but up by around 13.5% yoy.

- Fair value of RM9.47 and Outperform call maintained.

Corporate Highlights

HSL – Lands RM82.2m Road Project In Sarawak Target Outperform

News Update (published 13 Feb 2012)

- HSL has secured a RM82.2m subcontract for the construction of a new road linking Balingian to Jalan Persekutuan in Sibu/Bintulu, Sarawak .

- Forecasts maintained as we have already assumed HSL to secure RM600m worth of new jobs in FY12. We are putting fair value of RM1.59 under review with an upward bias. Maintain Outperform.

Hektar REIT – Achieves A Record DPU of 10.5 sen for FY11 Outperform

Results Note

- Hektar's 4QFY11 realised net profit (-3.6% yoy; +3.5% qoq) came within our and consensus estimates. Gross revenue grew 0.9% yoy and qoq due to the marginal improvement in rental contribution from its assets as well as an increase in car park income.

- No changes to our earnings forecasts. Maintain Outperform with fair value of RM1.61.

Hock Seng Lee: Maintain Buy - First Valentine … of the year

2012-02-14T09:34:00.001+08:00

Maintain Buy. Newsflow is improving and HSL's first job win for 2012 - a RM82.2m road construction sub-contract - has lifted its outstanding order book to RM1.08b (+8%). The stock still offers value at 9.7x 2012 earnings despite the share price having outperformed, up 30% year-to-date. We believe there is still upside potential for the stock, on the back of a pick-up in infrastructure construction activities in Sarawak this year. Maintain Buy with an unchanged RM2.10 target price.

Maybank Research 14 Feb 2012

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Kencana Petroleum: Maintain Buy - Going the extra yard

2012-02-14T09:32:00.001+08:00

Maintain Buy with a RM3.66 target price. Kencana remains our top conviction Buy in the sector for 2012. Kencana, on a stand-alone basis, is a stock with strong earnings visibility and offers the best exposure to PETRONAS' domestic capex programme in fabrication, drilling and marginal field/enhanced oil recovery (EOR) projects. We believe SapCrest-Kencana Petroleum (Newco) is highly likely to be featured in the KLCI-FBM 30 come the next revision in Jun 2012, a positive in our view, in drawing higher interest and ratings. Our marginally revised target price of RM3.66 offers an 15% upside from current levels.

Maybank Research 14 Feb 2012

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HLIB Research 14 February 2012 (Tech; HSL; Traders Brief)

2012-02-14T09:28:00.001+08:00

Technology: HDDs (Neutral)

Growth Neutralized

§ Seagate was fortunate that all its factories in Thailand were fully operational and remain largely unscathed. Seagate's HDD shipment had surpassed WD in 2Q12.

§ In the consumer market, weak demand in personal computers (PC) drags down the demand for HDD. According to preliminary results by Gartner, worldwide PC shipments totalled 92.2m units in 4Q11, a 1.4% decline qoq, muting the boost of holiday season sales.

§ This negative outlook is partly due to the market preference of tablets, such as iPads substituting PC due to convenience and handy. In the recent CES in Las Vegas, we saw that PC makers begin to embrace ultrabook, thin laptop computers built with new Intel low-power chip and solid-state drive (SSD) instead of HDD.

§ As for the enterprise market, HDD demand is forecasted to undergo growth in tandem with global spending on IT. Gartner predicted global IT spending would rise 3.7% in 2012 while Forrester Research expects 5.5% growth.

§ SSD has set a solid footprint in HDD's space and raised doubts on HDD's future as the long term storage solution. While SSD remains considerably more costly, the flash-based storage devices are coming down in prices much faster compared to HDD. SSD is making a small scale in-road into the market in the form of hybrid hard drive (HHD), which is the combination of HDD and SSD.

§ Despite expectations of modest demand growth, other negatives (input cost, FOREX and replacement by SSD) are likely to weight down share price performance.

§ Notion (HOLD, TP: RM2.03) is our top pick for the sector due to its unique position, having diversified away from HDDs to the higher-margin Camera business.

HSL (BUY)

Kick starting 2012 with a road project

§ HSL has secured a RM82.2m sub-contract from PN Construction S/B for a road project from Balingian to Jalan Persekutan, Sibu/Bintulu. The project is slated for completion in 1Q2014.

§ By assuming a PAT margin of ~13%, the latest road project translates to ~1.9 sen/share for the company. Overall, we estimate that HSL has ~RM1.1bn in outstanding order book, translating to ~2.4x FY2010's construction revenue and ~1.1x order book-market cap ratio.

§ Maintain BUY as we expect further exciting developments coming from the company. Our TP has been upgraded by 10% from RM2.09 to RM2.30 as we roll over our P/E multiple of 12x to average FY12 and FY13 earnings.

KLCI: Consolidation before trending higher again

§ We remain cautiously optimistic of KLCI resuming its uptrend after a mild profit taking consolidation.

§ If the index swing past last week's high of 1565 pts, then the index is likely to edge closer towards the our envisaged resistance targets near 1570-1580.

§ Support levels are 1550, 1556 (5-d SMA) and 1540 (10-d SMA).

CANONE: Building its base

§ At RM1.81, CANONE is trading at implied 6x P/E on adjusted EPS of 30.3sen (FIG#5). The pullback from RM2.24 appears to be at its tail end, as prices have been consolidating above the 61.8% FR, supported by its extremely oversold slow Stochastics. Further strong support can be found around RM1.68 (lower Bollinger band).

§ Buyers may start to nibble when price approaches the RM1.70-1.80 territory to ride the technical rebound wave. Technical rebound targets are RM1.95 (76.4% FR), RM2.00 psychological barrier and RM2.24. Significant resistance is RM2.53 (123.6% FR). Cut loss below RM1.68 as it will fall back to refill the RM1.37-1.59 gap on 6 Jan.

TGOFFS - Cessation of Citech’s operation

2012-02-13T14:38:00.001+08:00

Tanjung Offshore; Fully Valued; RM0.925
Price Target: RM0.70; TOFF MK

Tanjung Offshore announced that its wholly-owned subsidiary, Citech Energy Recovery Systems UK Limited (Citech) has commenced the cessation of business operations with effect from 10 Feb 12. Citech is primarily involved in the manufacturing and marketing of waste heat recovery units to major O&G customers in the European and US markets and Tanjung Offshore has invested £6.70m (~RM26.8m) in Citech. The cessation of Citech’s operation is due to the sluggish and highly competitive market which has severely affected its profitability. The company will incur cessation expenses of £6.70m (~RM24.8m) due to various expenses including termination payment, provisions for warranties on completed projects and other professional fees.

The cessation of operation costs will likely impact its FY11 earnings which were not imputed earlier on. We are currently reviewing our numbers in view of the unexpected cessation expenses. Also, we understand from the company that there could be other provisions related to its engineering business in Malaysia to be booked in its 4Q11 results.

We reiterate our Fully Valued call with RM0.70 TP at this juncture, pending more details on the scale of losses from its engineering division, which may affect the company’s cash flow in view of the its debt-laden balance sheet with RM514m net debt (1.4x net gearing) as at Sep11.

Source: HwangDBS Research 13 Feb 2012

Construction - Newsflow for MRT gains traction

2012-02-13T14:37:00.001+08:00

There has been more positive newsflow on the MRT project. The PDP agreement has been officially signed with announcements made by Gamuda and MMC. As expected the fee is 6% less value of the tunneling works for the Sungai Buloh to Kajang (SBK) line MRT. Apart from this the PDP will receive in total 13.9% reimbursable costs to cover overheads, engineering (design and supervision) and site investigation where the breakdown is - i) 5.3% to cover overheads where 456 workers have been hired ; ii) 2.9% for engineering and consultants conducting site investigations, topographical surveys and iii) 5.7% for engineering consultants, architects, quantity surveyors and system integrators. The other important point is the entire quantum of allowed cost overruns or contingency funds is capped at 15% where anything over this limit will be borne by the PDP.

In our view, the terms of the PDP agreement is attractive for a project of this magnitude where it will have to manage all the contract winners for the 90 packages ensuring timely delivery within the budgeted cost. The total PDP fees works out to be RM480m assuming a project cost of RM8bn (less land acquisition) and 6% fees. This works out to be RM0.12/share for Gamuda and RM0.08/share for MMC. This has yet to be factored into our SOP value.

MRT Co has also issued the detalied list of packages for the construction of the SBK Line which includes when tenders will open, award date and completion of projects. To recap, V5 (Maluri Portal - Plaza Phoenix) and V6 (P. Phoenix - Bandar Tun Hussein Onn) have been awarded to IJM and Ahmad Zaki respectively. The next packages are V4 (Sect 16 - Semantan portal), V1 (Sg. Buloh to Kota Damansara), V2 (Kota Damansra to Dataran Sunway) and V3 Dataran Sunway to Sect. 16 where tenders will be called in 2Q12 and award will be in 3Q12. We expect contract sizes to be chunky for each pacakge at between
RM700m to more than RM1bn. There will be an open and bumiputra category where the listed beneficiaries for the open category include Sunway, Mudajaya, Muhibbah, IJM Corp, MRCB and Gadang. The bumiputra category listed beneficiaries include Naim, TRC Synergy, TSR Capital, Ahmad Zaki and Zecon.

As for the tunneling portion, the tender calling period is between 2Q-3Q12 with awards in 3Q-4Q12. We continue to believe MMC-Gamuda JV is the frontrunner for the RM7-8bn tunneling portion driven given the strong multiplier effect on the economy if the project award is kept domestic. MRT Co. estimates the mutliplier effect on the economy from this project to be 2.5x or RM213bn flowing into the economy until 2020. We maintain our Buy ratings on Gamuda (TP RM4.50) and MMC Corp (TP RM3.70).

Source: HwangDBS Research 13 Feb 2012

HLIB Research 13 Feb 2012 (Plantations; Gamuda; CSC Steel, Traders Brief)

2012-02-13T14:28:00.001+08:00

Plantation (Neutral)

Palm oil inventory declines in Jan 12

§ Palm oil inventory in Jan 12 declined by 2.5% mom to 2.01m tonnes, mainly on the back of a 13.9% mom decline in production (Peninsular: -13.9%; East Malaysia: -13.8%) and 195.5% increase in domestic consumption, which more than offset a 13.2% decline in exports.

§ Exports declined by 13.2% to 1.38m tonnes, led by a 31.2%, 31.9% and 20.5% mom decline from China, Pakistan and India.

§ On a yoy basis, palm oil inventory rose by 41.5% to 2.01m tonnes mainly on: (1) Higher beginning inventory; (2) A 21.7% increase in production; and (3) A 36.5% decline in domestic consumption, which altogether more than offset a 13.4% increase in exports.

§ While La Nina event will likely sustain near-term palm oil prices at above RM3,100/tonne, we are keeping our average CPO price assumption of RM3,000/tonne for 2012-13.

§ Maintain our Neutral stance on the sector, top pick is Tradewinds Plantation.

Gamuda (BUY)

Formalising PDP terms

§ MMC-Gamuda JV has executed the PDP agreement with MRT Corp for the MRT Project-Sungai Buloh-Kajang line.

§ The total fee for MMC-Gamuda works out to be 11.3% based on the aggregate of all the awarded work contracts, whereby 5.3% (~RM1.1bn) is fixed to cover the PDP overhead, while 6% (excluding the value of the underground portion should the PDP wins it) is the performance fee should the project be delivered within 15% of the total agreed target cost of the MRT project.

§ Assuming that the MRT elevated portion works out to be RM10bn, the PDP role translates to ~11 sen/share for Gamuda (after adjusting for its 50% stake).

§ Maintain our BUY call on Gamuda with a TP of RM4.41.

CSC Steel (Hold)

4Q performance improves operationally

§ Below expectations. 2011 net profit of RM29.6m (-57.3%) came in below expectations at 84.3% of our forecast and 78.2% of the consensus.

§ Variance against our forecast due mainly to lower-than-expected margin stemming from lower-than-expected sales volume vis-à-vis our forecast despite achieving sales growth.

§ FY12-13 net profit forecasts cut by 14.3% and 12.3% to RM47.7m and RM50.1m respectively, to reflect lower EBIT margins arising from lower selling price assumptions.

§ TP raised from RM1.03 to RM1.54 as we rationalize our valuation method for CSC Steel (as P/E alone is no longer suitable given CSC Steel's strong balance sheet, which allows CSC Steel to declare commendable dividends despite its weak earnings performance). Our TP for CSC Steel is now based on: (1) 7x 2013 EPS of 13.2 sen; and (2) 61.4 sen net cash as at 31 Dec 2011.

§ Upgraded from Sell to Hold following the rationalisation in our valuation method.

KLCI: Mild profit taking expected this week

§ Despite the emergence of a Doji candle last Friday, coupled with the overbought daily and weekly slow Stochastics indicators, positive daily and weekly RSI and MACDs are suggesting current KLCI could resume after a mild profit taking correction.

§ Immediate resistance is 1570-1580 levels, followed by historical peak at 1597. Weekly support levels are 1550, 1541 (7-d SMA) and 1535 (10-d SMA).

ETITECH: Upside bias amid a positive breakout

§ Technically, ETITECH broke out of its triangle pattern last Friday and is now charging towards the RM0.20 (61.8% FR) and RM0.23 (50% FR). A push above RM0.23 would be medium term positive as it also signals the return of the bulls towards RM0.26 (38.2%FR), RM0.29 (23.8% FR) and RM0.345 (18 Jan 11's day high).

§ Technical landscape is improving, reflected by rising momentum, trend and +DMI. Supports are RM0.165 (200-d SMA) and RM0.155 (lower Bollinger band). Cut loss below RM0.155

Tanjung Offshore: Maintain Sell - Closes Citech, Tanjung CSI next?

2012-02-13T09:40:00.000+08:00

Maintain Sell. TOFF's move to shut down Citech and take a heavy hit in 4Q11 will be painful in the short term but operationally positive in the longer term as the Group takes constructive steps to restructure its businesses. We think it will address its troubled engineering equipment division next. While we laud these efforts, we are maintaining our Sell call on concerns over its high gearing and the probability of further impairments. Last Friday's spike in share price (+10%) is fundamentally unwarranted in our view, and is an opportunity to exit.

Maybank Research 13 Feb 2012

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Multi-Purpose Holdings: Maintain Buy - The wheels are in motion

2012-02-13T09:39:00.003+08:00

Buy now or forever hold your peace. Multi-Purpose Holdings (MPHB) disposed 13% of Philippine Racing Club (PRC PM, Not Rated) for RM51.6m cash. This is reaffirmation of its commitment to dispose non-core assets, degear its balance sheet and pay more dividends going forward. We raise our TP from RM3.54 to RM3.82 as we roll forward our SOP based valuation. Maintain Buy.

Maybank Research 13 Feb 2012

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Gamuda: Maintain Buy - Signed and sealed

2012-02-13T09:38:00.003+08:00

Manageable terms. The KVMRT SBK PDP terms are well structured, giving the PDP reasonable room to manage the project delivery, in our view. We estimate that the PDP fee attributable to Gamuda works out to be 13sen/share, to be recognised over 5 years. We raise our net profit forecasts by 12% (FY12) and 17% (FY13) after imputing higher margins for existing construction and property projects, and the PDP fee from FY13. We maintain our RM4.10 RNAV-based target price, which has incorporated the KVMRT SBK PDP and tunnelling works.

Maybank Research 13 Feb 2012

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RHBInvest Research Highlights 13th February 2012

2012-02-13T09:35:00.001+08:00

13th February 2012

Malaysia Equities

Top Story

Banks – Easing Headwinds + YTD Underperformance = Sector Upgrade Neutral (Upgraded)

Sector Update

Public Bank – Fair value at RM15.00 (from RM14.10) Outperform

Maybank – Fair value at RM9.47 (from RM7.33) Outperform (upgraded)

CIMB – Fair value at RM7.41 (from RM6.20) Market Perform (upgraded)

AMMB – Fair value at RM6.23 (from RM4.99) Market Perform (upgraded)

HL Bank – Fair value at RM11.01 (from RM9.90) Underperform

Affin – Fair value at RM3.10 (from RM2.37) Underperform

AFG – Fair value at RM3.56 (from RM3.25) Underperform

MBSB – Fair value at RM2.32 (from RM1.95) Market Perform

RCE – Fair value at RM0.57 (from RM0.50) Market Perform

Sector Update

Plantation – Only Time Can Resolve The Indonesian Tax Structure Problem Overweight

Sector Update

- The seasonal decline in production continued in Jan as CPO production fell 13.8% mom. Exports fell by a slightly smaller 13.2% mom also due to seasonal factors, post-festive season. Despite the lower CPO stock levels, annualised stock/usage ratio rose to 11.1% (up from 10.5% in Dec), mainly due to the smaller export volume in Jan.

Corporate Highlights

SEG International – No Signs of Slowing Down Outperform

Visit Note

- The management expects total student population of 35k (vs. our previous assumptions of 37k) by end-2012, implying yoy growth of almost 30% from the current 27k.

Gamuda – PDP Terms For Klang Valley MRT Announced Market Perform

Company Update

- The agreement between MRT Co and project delivery partner (PDP) for the Klang Valley MRT project MMC-Gamuda JV has been signed with key terms being: 1) The PDP will be paid a fee equivalent to 6% of total contract value; 2) If the actual project cost exceeds the target cost by up to 15%, the PDP fee will be reduced in accordance with an agreed formula; 3) The PDP will have to shoulder the balance if the actual project cost exceeds the target cost by 15%; and 4) The PDP is liable to a liquidated and ascertained damage (LAD) for late delivery of RM500,000/day.

MPHB – Sells down stake in Associate, Philippine Racing Club Outperform

News Update

- MPHB has sold a 13.1% stake in Philippine Racing Club Inc. (PRCI) at an average price of Peso 9.50/share, for Peso 722.4m (RM51.64m). Post-disposal, MPHB will own 19.9% of PRCI, and will no longer equity account it as an associate. MPHB will record a dispoal gain of RM17.34m.

CSC Steel – 4QFY12/11 in the red on inventory writedown Trading Buy

Results Note

- FY11 net profit exceeded our full-year forecast by 42%, but missed the full-year market consensus by 22%. The variance against our forecast largely came from a lower-than-expected writedown of inventories. CSC Steel also declared a 7sen single tier dividend (net yield of 4.9%).

Regional Equities

Indonesia Banks : Opportunity To Accumulate Overweight

Sector Update

Bank Rakyat – Fair value IDR8,200 Outperform

Bank Mandiri – Fair value IDR7,900 Outperform

BCA – Fair value IDR7,500 Market Perform

Bank Danamon Fair value IDR5,500 Outperform

Macro

GDP – Resilient GDP Growth In 4Q 2011, Odds Of An Upgrade Improving

Economic Update (published 10 Feb 2012)

- The country's real GDP growth is estimated to have softened to 5.4% yoy in the 4Q, after bouncing back to +5.8% in the 3Q. The moderation in real GDP growth is expected to persist into 2012, due to global economic slowdown amidst a lingering sovereign debt crisis in the Eurozone.

BURSA - Sustainable momentum is key

2012-02-10T17:57:00.003+08:00

Bursa Malaysia; Fully Valued; RM7.52
Price target: RM6.00 (Prev RM5.20); BURSA MK

FY11 net profit of RM146m was in line. Declared 13 sen final DPS; 95% payout for FY11. Maintain Fully Valued; raised TP to RM6.00.

Source: HwangDBS Research 10 Feb 2012

MRCB - Highlights from analyst briefing

2012-02-10T17:56:00.001+08:00

Malaysian Resources Corp; Buy; RM2.19
Price Target: RM3.10; MRC MK

4Q11 included provision for variation orders (VOs) for some construction projects amounting to RM20m. MRCB believe there is strong grounds for claim and a potential write back in 2012 is possible. We understand construction margins for FY11 would be 4% excluding VOs instead of the 1.9% reported.

2012 bottomline growth could be impacted by:- i) higher tax rate as it has utilised most of its tax losses; ii) higher minority interest from Lot D and Lot B; and iii) start up losses and higher interest cost for Eastern Dispersal Link (EDL). However, pretax profit growth should still be decent. We are currently looking at RM107m net profit for FY12F (+38% growth) which is below consensus of RM118m. However, we may look to revise our numbers pending more clarity for EDL and when its KPIs are disclosed in March.

EDL may start tolling in May pending cabinet approval. Based on this, the expected budgeted loss is RM30m to RM40m for FY12F but will be profitable in FY13F assuming traffic volume remains consistent at 70,000 to 80,000 vehicles per day. There will also be higher interest cost as MRCB will unlikely be able to capitalise interest cost going forward (RM7.5m per month) as the project has been completed.

MRCB is still exploring launching a REIT but thinks if it happens in 2012 it will be via injecting its properties into an existing REIT. Lot E has achieved 70% tenancy with average rental rates of RM8.50 psf for office and RM5.50psf for retail. Lot 348 will be delayed up to a maximum of 6 months (realistically one month) but potential LADs may be absorbed by budgeted savings of RM38m from the construction.

With construction flows remaining strong, MRCB has targets to bag at least RM1bn worth of new works in FY12F. It will continue to bid for MRT elevated works, LRT extensions, River of Life projects and environmental projects. On the RM1.3bn LRT contract clinched in 2011, RM450m will be done internally while for the balance MRCB has option to either earn a project fee of 1-2% or participate in the tenders.

Margin guidance for civil works is 3-4%. We maintain our Buy rating and SOP-derived TP of RM3.10. Key catalysts include:- i) potential participation in the RRIM due to its strong parentage; ii) more construction wins; iii) approval for Penang Sentral in 2012 and receiving an official approval for another similar type of project in another state.

Source: HwangDBS Research 10 Feb 2012

Sunway REIT: Maintain Buy - Growing its asset size inorganically

2012-02-10T17:52:00.005+08:00

Above expectations; TP raised. SunREIT's reported 1HFY12 realised net profit of RM95m (+14.3% YoY) was slightly above our expectations but within consensus estimates. The earnings variance was attributed to better-than-expected performance from Sunway Putra Place (SPP). 2Q DPU declared of 2.0sen also beat our estimates. We adjust our FY12-14 earnings forecasts by -2% to +2%. Our new DCF-based target price is RM1.38, translating into a 13% total return.

Maybank Research 10 Feb 2012

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Bursa Malaysia: Maintain Hold - No surprises in 2011 final results

2012-02-10T17:52:00.001+08:00

Maintain Hold. RM146m 2011 net profit (+29% YoY) made up 98% of our and 101% of consensus estimates. We marginally tweak forecasts, expecting a slower 11% growth in 2012 profit with continuous volatility to support equity and derivative trading activities. We lift our sum-of-parts based target price by 7% to RM7.00, pegging Bursa at 20x 2012 PER (18x previously) which is at a 20% discount to our target for SGX SP plus excess cash (94sen/sh). We expect Bursa to retain its 95% net profit payout translating into a 3.8% net yield for 2012.

Maybank Research 10 Feb 2012

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Malaysia Airline System: Maintain Hold - 4Q11: Brace for a hard landing

2012-02-10T17:51:00.002+08:00

Yields, fuel and slow motivation. 4Q11 is expected to be severely loss-making due to the impact of a 38% higher fuel price YoY and a weak yield environment. We have been monitoring MAS' fares and notice that it is lower than those of competitors by a wide margin. We maintain our Hold call with a target price of RM1.55, pegged to 6.6x 2012 adjusted EV/EBITDAR - on par with Asia Pacific airline peers.

Maybank Research 10 Feb 2012

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HLIB Research 10 February 2012 (MRCB; Econs; Traders Brief)

2012-02-10T17:48:00.001+08:00

MRCB (BUY)

KL Sentral to support growth

§ Following yesterday's briefing, we walked away reassured that the company's fundamentals are still strong underpinned by the maturing KL Sentral development.

§ VOs as much as RM20m should be recognised by FY12, hence an earnings boost for the construction division. However, the division is expected to post EBIT margins of 3-4% going forward as opposed to 7-9% achieved previously. This is due to the intense bidding for the RM1.4bn LRT Ampang Line Package B project. Overall, outstanding order book remains strong at ~RM2.2bn, translating to 3.3x FY11 construction/environmental revenue.

§ Lot G offices, Aloft Hotel, QSentral (70% take-up) and Sentral Residences (50% take-up/bookings) will continue to drive the property division's earnings. Overall, unbilled property sales stood at ~RM1.68bn, translating to 3.5x FY11 property revenue.

§ We estimate that FY12 earnings will be impacted by higher financing charges arising from the EDL highway. Hence, we slash our FY12 forecast, while introducing FY14 earnings estimates. That said, it should not impact our valuations as MRCB is valued based on SOP method.

§ We maintain our BUY call on MRCB for the unique qualities of KL Sentral to support earnings growth, but with a lower TP of RM2.50.

Performance of IPI (Dec 2011)

§ IPI growth picked up to 3.0% yoy in Dec (Nov: +2.4% yoy), higher than consensus estimate of +1.7%, driven by improvement in electricity and mining segment.

§ E&E production declined further by 7.4% yoy (Nov: -2.8%) driven by weakness in all product segments, with severe output drop in printed circuit board segment.

§ Contraction in mining output narrowed to only -0.8% yoy in Dec, reducing its drag on the overall IPI performance.

§ Maintain our full year 2011 GDP estimate at 5.1%, factoring in 4Q estimate of 5.0%. Also maintain our 2012 GDP growth forecast at 4.5% as we expect resilient domestic demand to cushion the softer industrial sector.

§ We expect BNM to hold the OPR steady at 3.00% until end-2012 given the resilient economic growth with sticky inflation.

Softening in December Export Growth

§ Export growth moderated further to 6.1% yoy in Dec (Nov: +8.0% yoy), the slowest since June 2011, while import growth bucked the trend, picking up for the second consecutive month to 10.4% yoy (Nov: +8.4% yoy).

§ Trade surplus narrowed to RM8.3bn (Nov: RM9.5bn), as import growth significantly outpaced export expansion.

§ Contribution of palm oil diminished drastically, with export growth slowing sharply to 8.4% yoy in Dec, a sharp slowdown compared to an average growth of 43.2% during Jan-Oct 2011.

§ Further pick-up in import growth with intermediate imports rising by 7.7% yoy suggests that manufactured exports could remain stable in the coming months.

§ We expect January's export growth to show temporary contraction due to festivity and seasonality.

§ MITI announced its official export growth forecast of 5-6% for 2012. Our export growth projection is slightly lower at 4.5%, which is in line our overall GDP outlook.

§ Maintain our 2012 GDP growth forecast at 4.5% as we expect resilient domestic demand to cushion the softer industrial sector.

KLCI: Momentum to remain strong to retest 1570-1580 zones

§ Despite surging 3.9% from YTD low of 1509 (6 Jan) to 1565 yesterday, technical indicators are bullish and overall market momentum (with the rotational plays on bigcaps, 2^nd & lower liners and penny stocks) remains positive to climb higher towards the resistance targets at 1570-1580 territory.

§ In our view, any profit taking activities are likely to be well-absorbed near supports at 1551 (upper Bollinger band) and 1531 (10-d SMA).

Dow Jones: Dow ekes out 7 pts gain in a choppy trade

§ Overall, after surging from Oct 11's low at 10404, investors were cautious after months of continuous gains as the market is approaching an overbought position amid rising RSI.

§ However, we are encouraged by the continuous improvement in US economic news which show that the country is not as handicapped to what's going on in Europe as in the past. In our view, any pullback will attract investors who missed the rally, limiting the decline near supports of 10-d SMA (12695) and 20-d SMA (12582).

RHBInvest Research Highlights 10th February 2012

2012-02-10T17:47:00.001+08:00

10th February 2012

Malaysia Equities

Top Story

KNM – Still gloomy skies ahead? Underperform

Visit Note

- We came away from our visit remaining quite cautious on the company's outlook. Management guided that 2012 will be a year of cost, operation and plant rationalisation.

- Besides that we are concerned that a couple of its' large contracts will continue to be deferred despite management's best efforts. The company is tentatively looking to release its 4QFY11 results on 28 Feb, but we are not too optimistic on it reporting better numbers.

Corporate Highlights

MRCB – EDL Losses To Weigh Down On FY12/12 Performance Market Perform (Downgraded)

Briefing Note

- MRCB guided RM30-40m start-up losses in FY12/12 from the newly completed 100%-owned toll road Eastern Dispersal Link (EDL) in Johor. MRCB guided very thin margins of 1-4% from the RM1.4bn LRT line extension project secured in Aug 2011.

Sunway REIT – Sunway Pyramid Still Spurring Growth Market Perform

Results/Briefing Note

- Sunway REIT's (SunREIT) 2QFY12 realised net profit of RM50.7m (+13.6% yoy; +14.7% qoq) came in slightly above ours and consensus estimates. The strong earnings growth was driven by: 1) the flow through of rental reversion from Sunway Pyramid (SP); and 2) the incremental contribution from Sunway Putra Place . A 1.99 sen DPU was declared during the quarter, up 13.7% yoy and qoq.

Macro

IPI – Despite a rebound in industrial prod. in Dec, real GDP growth is likely to have moderated in 4Q

Economic Highlights (published 8 Feb 2012)

- Industrial production unexpectedly rebounded to 3.0% yoy in Dec, the first bounce back in four months, after easing to a revised +2.4% in Nov, from +2.9% in Oct.

Gamuda: Maintain Buy - PDP finalised? Lowest for tunnel works?

2012-02-09T10:13:00.002+08:00

Almost there for the SBK MRT line.
Press reports that MMC-Gamuda JV has finalised the details of its PDP job scope and fee, as well as being the lowest bidder for the SBK MRT tunnelling works are positive news that we have anticipated since we lifted Gamuda as one of our top buys for 2012. Share price has outperformed with a 15% gain YTD. We maintain our RM4.10 RNAV-based TP which has incorporated a 50sen contribution from the MRT for now, pending finalisation of details.

Maybank Research 9 Feb 2012

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RHBInvest Research Highlights 09th February 2012

2012-02-09T10:09:00.001+08:00

09th February 2012

Malaysia Equities

Top Story

Gamuda – A Tale Of Two Rail Projects Market Perform

Visit Note

- Apr 2012 remains the most critical for Gamuda as it is when the RM7-8bn tunnelling package of the Sg Buloh – Kajang (SBK) Line of the Klang Valley MRT project is expected to be awarded.

- We believe there is more than half a chance that MMC-Gamuda JV will emerge the winner given its tremendous edge over its rivals by virtue of its right to match the lowest bid under a "Swiss challenge", sweetened by a 7.5% "price preference".

Corporate Highlights

MBSB – 1Q12 Headline Income Indicators In For A Rebound? Market Perform

Company visit

- Management attributed the 22% qoq drop in 4Q11 pre-tax profit to: 1) higher funding cost from loan securitisation; 2) lower processing fee from slower PF-i disbursements; and 3) higher loan impairment allowances due to higher collective allowances for PF-i. Management said that 4Q11 gross loans were flattish qoq mainly due to slower PF-i disbursements during the quarter as MBSB had already met the full-year disbursement target in early-4Q11.

Dialog – Tie-Up With Atlas Global Oil And Gas Services Outperform

News Update

- Yesterday, Dialog entered into a shareholders agreement with Atlas Global Oil and Gas Services (ATG) to establish a 55:45 JV to market, promote and supply seismic technology and services.

WCT – Lands RM301m MITI Building Job Market Perform

News Update

- WCT has secured construction contract for the new 31-storey headquarters of the Ministry of International Trade & Industry in KL for RM300.5m.

- This is the first key contract WCT has secured so far in FY12/12, boosting its outstanding construction orderbook by 10% to RM3.3bn. Assuming an EBIT margin of 7-8%, the contract will fetch RM21-24m EBIT over the construction period ending Feb 2015.

- Forecasts are maintained as we have already assumed WCT to secure RM1.5bn worth of new contracts in FY12/12. Maintain Market Perform. Fair value is RM1.97.

- Related story: WCT Company Update – FY12/11 New Contract Wins Fall Short Of RM2bn Target (9 Jan 2012)

Pavilion REIT – Off To A Good Start Outperform

Results / Briefing Note

- 4Q11 net profit was in line with expectations. A DPU of 0.44 sen was declared for FY11.

MRCB – FY12/11 Core Net Profit Grows 7% Trading Buy

Results Note

- FY12/11 core net profit of RM72.2m (excluding RM5.3m writeback of impairment in 2Q) came in within our forecast but missed the market consensus by 14%.

Regional Equities

Genting Singapore : Potential To Gain Market Share In 4Q11, But … Market Perform

Company Update

- In 4Q, Marina Bay Sands (MBS) recorded weaker casino volumes, as rolling chip (VIP) volumes fell 35.6% qoq, while mass volumes fell 4.5% qoq and slot volumes fell 1.7% qoq. Bottomline growth was stronger vis-à-vis topline growth, as VIP win rate rose significantly to 3.34% (from 2.69% in 3Q11), above theoretical levels of 2.7-3%.

HLIB Research 9 Feb 2012 (WCT; MRCB; JCY; Traders Brief)

2012-02-09T10:04:00.001+08:00

WCT (BUY)

The first for FY2012

§ WCT has been awarded a contract to design and construction the new Ministry of International Trade & Industry (MITI) HQ at Jalan Khidmat Usaha by Putrajaya Management S/B for RM300.5m. Works are expected to be completed in Feb 2015.

§ After a barren spell last year, WCT has finally clinched a meaningful project. We understand that the new MITI HQ was supposed to be awarded last year, and has finally come to fruitation. Overall, WCT's outstanding order book has been lifted to ~RM2.7bn, translating to ~1.7x FY10's construction revenue and ~1.3x order book-to-market cap ratio.

§ Maintain BUY call with TP of RM2.98 based on 14x average FY11 and FY12 earnings.

MRCB (BUY)

FY11 lifted by KL Sentral developments

§ Reported FY11 earnings grew by 15% to RM77.5m (5.59 sen/share). However, after adjusting for EI of RM5.29m, core earnings came in at RM77.2m (5.21 sen/share), missing our estimates slightly by 6% but off consensus' mark by 16%. Nonetheless, FY11's core earnings growth was still decent at 7%, lifted by strong performance in the property division.

§ 4Q marks the second consecutive quarterly EBIT losses for the construction division. We understand that the losses occurred due VOs which is pending approval. Hence, once the VOs are approved, there should be lumpy earnings recognition for the division going forward. We are not overly concerned as it is a timing issue in profit recognition. On the other hand, the property division saw tremendous growth, underpinned by the maturing KL Sentral developments.

§ Forecasts under review pending analyst briefing. Maintain BUY call with TP of RM2.64 based on SOP valuation.

JCY International (HOLD)

1QFY12 Results

§ 1QFY12 core net profit of RM164.9m exceeded our expectations, accounting for 42% of our full-year forecast and 71.6% of street's estimates.

§ JCY registered a revenue of RM599 (+27.4% yoy, +27.1% qoq), EBITDA of RM190.6m (+434.7% yoy, +362.7% qoq), PAT of RM162.5m (+2,063% yoy, +514.4% qoq)

§ JCY's performance was 8.3% better than profit guidance issued in January, attributable to increase in orders, higher ASP, effective product mix, favorable exchange rate and continuous cost management.

§ JCY managed to capture 25% of HDD component market after the Thai flood as it saw orders from Seagate almost doubled. As a result, JCY achieve better economy of scale and scope (product mix) while achieving above 80% utilization rate.

§ The firm acknowledged the challenges in acquiring talent and human resources and may be a bane to its growth.

§ We have revised our profit forecast marginally after revising our cost models. As a result, FY12 and FY13 EPS are revised by +12.3% and -3.2% respectively.

§ Following the revision in earnings forecasts, target price has been raised to RM1.33 from RM1.26

KLCI: To retest 1570 zones after the 1550 breakout

§ Renewed buying interest on index-linked stocks after recent consolidation and persistent active retail participation on lower liners, ACE and penny stocks are expected to sustain KLCI rally in the short term, in anticipation of positive progress on Greece debt talk, acceleration in ETP projects rollout, continuous funds inflows and stronger global manufacturing data.

§ Immediate supports are 1542 (upper Bollinger band) and 1530 (31 Dec 11) whilst resistances are the upper channel near 1570-1580 zones.

AMMB: To retest 200-d SMA

§ Currently, the momentum and trend indicators are on the mend and AMMB is consolidating upwards along the uptrend line formed since Sep 11 low. Following the triangle breakout, AMMB could test higher ground over the next few sessions with immediate resistance at RM6.15 (200-d SMA).

§ A more bullish outlook would only appear if share price manages to close consistently above the 200-d SMA. The next upside targets are RM6.23 (50% FR) and RM6.46 (38.2% FR).

§ Immediate supports are RM5.86 (100-d SMA), RM5.82 (mid Bollinger band) and RM5.71 (lower Bollinger band). Cut loss below RM5.71.

MRCB - 4Q anchored by property

2012-02-09T09:15:00.003+08:00

Result Snapshot
Malaysian Resources Corp; Buy; RM2.24
Price target: RM3.10; MRC MK

Making amends in 4Q – earnings driven by property. Next key catalysts – RRIM auction and MRT awards. Maintain Buy call and SOP-derived RM3.10 TP.

Source: HwangDBS Equity Research 9 Feb 2012

Boustead Holdings - Gearing up for a bumper year

2012-02-09T09:14:00.003+08:00

Boustead Holdings; Buy; RM5.48
Price target: RM7.30 (Prev RM6.60); BOUS MK

Bumper year in 2012, upside for plantations. Works at Cochrane have started, 75-80% committed tenancies. Buy, raising TP to RM7.30.

Source: HwangDBS Equity Research

WCT - Bags RM300m MITI contract

2012-02-09T09:13:00.004+08:00

WCT; Buy; RM2.58
Price target: RM3.70; WCT MK

WCT announced it has won a RM300.5m contract for the construction of a Ministry of International Trade & Industry (MITI) building by Putrajaya Management. The scope of works includes the design and build of GBI Gold rating 31-sotrey office, tower, a 2-storey car park and a 3-storey podium with completion in February 2015.

This is an important win for WCT after a long lull in 2011 (order wins of RM187m). This contract win represents 15% of our FY12F new win assumption of RM2bn. We expect margins to be c.5% but may trend higher given WCT’s reputation of being cost competitive. Total tenderbook now stands at RM5bn, which is still skewed towards the Middle East. We maintain our Buy rating and SOP-derived TP of RM3.70.

Source: HwangDBS Equity Research 9 Feb 2012

Malaysia Construction - PDP agreement details revealed

2012-02-09T09:12:00.005+08:00

According to the media, the MMC-Gamuda JV has finalised the details with MRT Co on the scope of work and fees for its role as the Project Delivery Partner (PDP) for the MRT project. The fees are expected to be a lucrative 6% of the total project cost excluding tunneling (c. RM8bn excluding land cost) and 5% reimbursement for costs incurred so far for approvals, technical designs and Environmental Impact Analysis (EIA). This will be progressively recognised over the duration of the project until mid-2017.

The total PDP fees works out to be RM480m assuming a project cost of RM8bn and 6% fees but will be RM900m if including the tunneling portion (c. RM7bn). This works out to be RM0.12/share for Gamuda and RM0.08/share for MMC. This has yet to be factored into our SOP but we have taken some assumptions in terms of the civil works for the MRT. Recall, the MMC-Gamuda JV is also bidding for the tunneling portion.

Hence, in the unlikely event it is not awarded the project it is able to reap PDP fees for the entire project cost (c. RM15bn). The scope of works for the PDP include acting as a turnkey contractor where it will be responsible for the engineering designs and technical specifications. It also has to deliver the MRT project within the cost and time frame and be responsible for all other contractors in terms of quality, safety and timeliness.

We continue to like MMC-Gamuda’s chances for the tunneling works given i) tunneling experience dating back to 2001 with 4 projects currently; ii) government’s interest to keep project domestic driven given strong multiplier effect on the economy; iii) the project will be awarded via a Swiss Challenge; and iv) MRT is funded by the government and hence foreign contractors may not have an advantage in terms of the funding card.

The award is expected in April 2012. We maintain our Buy ratings on Gamuda (TP RM4.50) and MMC Corp (TP RM3.70).

Source: HwangDBS Equity Research 9 Feb 2012

Pavilion REIT: Maintain Hold - Strong showing for 2011

2012-02-09T09:06:00.004+08:00

A good set of results. PavREIT's RM12.4m core net profit over 7-31 Dec 2011 (listed on 8 Dec 2011) was 13% above our and its own IPO forecasts. Management is confident of beating its own RM167m 2012 net profit forecast, especially with the reconfiguration of the existing TANGS space into a high street fashion precinct, thereby attracting higher rentals psf. We tweak our 2012-13 net profit forecasts by +1% but maintain our RM1.10 DCF-based TP. We maintain our Hold recommendation, as total return is less than 15%.

Maybank Research 9 Feb 2012

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Media Prima: Maintain Sell - Cost cutting helps 2011 but risks remain

2012-02-09T09:05:00.005+08:00

Still cautious. FY11 core earnings may exceed expectations due to TV direct cost rationalisation in light of poor adex sentiment and easing newsprint prices. We tweak our FY11 earnings estimate upwards by 6% but leave our FY12 and FY13 earnings estimates relatively unchanged, as the impact of mediocre adex growth going forward will be offset by higher content costs. Maintain Sell.

Maybank Research 9 Feb 2012

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Malaysia Airports Holdings: Maintain Buy - 4Q11: Expect a strong result

2012-02-09T09:05:00.001+08:00

Maintain Buy. MAHB will release its 4Q11 results in the third week of February. 4Q is seasonally the strongest quarter for the year. Based on the operating statistics published, we expect a core net profit (less forex translation and all other non-cash items) of RM139.8m (+35.5% YoY, +6.6% QoQ). Maintain Buy, with a slightly higher DCF-based TP of RM7.10, after imputing a higher passenger growth forecast of 6.7% in 2012 (previously 5%) and contributions from MAHB’s 30%-owned KLIA2 integrated complex (KLIA2 IC) concession beginning 2013.

Maybank Research 9 Feb 2012

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CIMB Group Holdings: Maintain Sell - Bidding for RBS' Asian equities biz?

2012-02-09T09:04:00.004+08:00

Little impact. We see little impetus for CIMB to acquire RBS' Asian equities and advisory businesses but even if it did, pricing is likely to be decent enough, with little impact to CIMB's financials. We maintain our Sell call on CIMB with an unchanged RM6.80 target price (1.8x 2012 P/BV, ROE: 15.1%).

Maybank Research 9 Feb 2012

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WCT: Maintain Buy - Sizeable job win, finally

2012-02-09T09:02:00.003+08:00

Good start for the year. A RM300.5m job win has lifted WCT's order book by 11% to RM2.97b, we estimate. This provides some comfort on near-term earnings visibility after very small job wins in the whole of 2011. We maintain our earnings forecasts having imputed job win assumptions for 2012. No change to our sum-of-parts target price pegged to 13x 2012 earnings plus 20sen value increment from KLIA2 retail concession. The stock remains a Buy.

Maybank Research 9 Feb 2012

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Multi-Purpose Holdings: Maintain Buy - No smoke without fire

2012-02-09T09:01:00.002+08:00

More asset disposals to come? We understand that TheEdge report on Plaza Magnum (PM) potentially being sold is not without basis. Also, Multi-Purpose Holdings' (MPHB) 33% stake in Philippines Racing Club could be sold, and part of the proceeds may be distributed as special dividends. MPHB may also pay higher recurring dividends in 2012 after degearing. Earnings estimates trimmed by 6%-7% on higher tax rates. Maintain Buy with a lower RM3.54 SOP based TP (-3%).

Maybank Research 9 Feb 2012

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HwangDBS Equity Research: Malaysia Power Companies

2012-02-09T00:17:00.002+08:00

Racing to power up the nation

TNB will gain more from competitive pricing under new supply agreements; efficient IPPS will win in open tender system. Buy TNB for stronger earnings ahead and Petgas for growing gas demand and a visible growth pipeline in new regas and power plants. Hold YTLP for 4% yield and longer term upside from new acquisitions and power plant.

Tenaga Nasional; Buy; RM5.99
Price target: RM7.00; TNB MK
Better earnings visibility

Turned in core profit after gas supply improved. RM2bn compensation will be booked in 2Q; TNB will continue to claim if gas supply is below 1,350mmscfd. Maintain Buy and RM7.00 TP for strong earnings recovery in FY12.

Petronas Gas; Buy; RM16.20
Price target: RM16.90; PTG MK
Ascending to new heights

Gas shortage creates opportunities for Petgas. Ample catalysts from Petronas’ rising gas capex and development of new regas plants. Resilient domestic earnings with visible growth pipeline; maintain Buy with higher RM16.90 TP.

YTL Power; Hold; RM1.84
Price target: RM2.20; YTLP MK
Marubeni partnership could lead to more global ventures

New power plant in Malaysia and future acquisitions are longer term catalysts. YES is a drag in near term earnings growth. Hold for reasonable valuations and 4% net yield; RM2.20 TP is derived from SOP valuation.

Source: HwangDBS Equity Research 8 Feb 2012

Wah Seong Corp: Venturing into upstream plantation in Congo

2012-02-09T00:14:00.003+08:00

Wah Seong Corp; Buy; RM2.10
Price target: RM2.50; WSC MK
Venturing into upstream plantation in Congo

Wah Seong announced that it will be acquiring a 51% stake in Atama Resources Inc (ARI) in 2 stages for a total amount of US$25m (~RM75m) from 2 private companies (Silvermark Resources Inc and Giant Dragon Group Limited) registered in the British Virgin Islands.

ARI has been granted an initial 30-year oil palm plantation concession (extendable for as many terms as required by ARI) by the Government of the Republic of Congo to undertake upstream oil palm planting on 470,000 ha of federal land in Congo. Feasibility study has been completed and 180,000 ha has been identified to be developed for oil palm plantation which is estimated to take up 15 years in 10 phases with commencement in 2Q13.

Although a potential M&A to beef up Wah Seong’s non-O&G earnings contribution (O&G contributed 92% earnings for 9M11) has been largely anticipated, we are slightly taken aback by this plantation acquisition given the considerable risks including geo-political risk and execution risk. We understand that the FFB yield in Congo is lower than that of Indonesia and Malaysia while CPO production cost could be 10% higher than the average of RM1,000-RM1,300/ MT in Malaysia and Indonesia.

While the estimated price of the massive land appears to be undemanding at US$104/ha relative to Indonesian green-field plantation land of US$300-400/ha, high initial capex requirement may be a concern for investors. Given this latest development, our Buy recommendation and RM2.50 TP is under review, pending an analyst briefing from Wah Seong to clarify its plantation project in Congo. Nevertheless, we remain positive on its O&G business, premised on the increasing capex spending in Malaysia and Australia.

Source: HwangDBS Equity Research: 8 Feb 2011

HLIB Research 8 February 2012 (Construction; GenM; Traders Brief)

2012-02-08T11:17:00.001+08:00

Construction (OVERWEIGHT)

Relook into Gamuda and MRCB's valuation

§ YTD, KLCON Index is up +9.8% vis-à-vis the KLCI's +0.5%. We believe that the strong outperformance is due to improved newsflow for the sector and return of risk appetite from investors.

§ Gamuda and MRCB have seen their existing TP of RM3.81 and RM2.22 breached respectively. Hence, this report relooks into both companies' valuation as to where it may potentially touch if things materialise as planned.

§ We upgrade Gamuda's TP by 16% to RM4.41 from RM3.81 and MRCB's TP by 19% to RM2.64 from RM2.22 to take advantage of the current buoyant sentiment in the construction sector, which tends to result in share prices overshooting. However, we caution that our newly assigned TP will be revised downwards if things do not pan out as planned.

§ We MAINTAIN our OVERWEIGHT stance on the sector as we believe that more ETP projects should materialise this year to mitigate slowing economic growth.

§ Top Picks in order of preference:

Sunway (TP: RM3.12)

Gamuda (TP: RM4.41)

Mudajaya (TP: RM4.61)

MRCB (TP: RM2.64)

Genting Malaysia (HOLD)

Destination Resort Bill Stalled

§ According to Reuters, the legislation that would allow three new resort-style casinos in Florida has been withdrawn before a House subcommittee could hold their vote. The bill has failed to pass at least one committee; hence the measure is dead for 2012.

§ This has turned out to be a disappointment for GenM. However, GenM's RWM remains positive with its mission to build a destination resort in Florida and will continue to work with the legislature and community to bring this mission into reality.

§ If the legislation is not approved, GenM will still continue with the US$3.8bn development, spreading it across 10-15 years. With this, GenM will incure approximately US$253-380m additional capex p.a., which should not be an issue given its net cash of RM2.2-4.8bn and free cash flow of RM0.8-1.8bn in FY11-13.

§ No changes made to our forecast. Maintain HOLD with TP of RM4.07.

KLCI: To retest 1550 zones after the 1530 breakout

§ As KLCI continued to stay decisively above the major SMAs support levels, it is poised to unfold a follow-through rebound. Following last week's rally that partially filled the large gap of 1,529-1,546 pts, the index may continue its ascending trend today to retest immediate resistance target at 1550.

§ Immediate supports are Immediate supports are 1530 (31 Dec 11), 10-d SMA (1523) and 1520 (mid Bollinger band).

RCECAP: More technical rebound ahead

§ Technically, RCECAP short to medium term outlooks are positive as daily, weekly and monthly charts (FIG#3, 4 & 5) are strengthening. The strong breakout of the neckline resistance near RM0.52 will spur greater upside towards RM0.55-0.58 targets. Post RM0.58, more formidable resistance is RM0.62 (76.4% FR). Immediate supports are situ RM0.48 (30-d SMA), RM0.47 (100-d SMA) and RM0.46 (daily lower Bollinger band).

§ Cut loss below RM0.46.

RHBInvest Research Highlights 08th February 2012

2012-02-08T10:30:00.001+08:00

08th February 2012

Top Story

Indonesia Banks – All Set For Lift Off Overweight (Upgraded)

Sector Update

Bank Rakyat – Fair value IDR8,200 Outperform (Upgraded)

Bank Mandiri – Fair value IDR7,900 Outperform (Upgraded)

BCA – Fair value IDR7,500 Market Perform (Upgraded)

Bank Danamon – Fair value IDR5,500 Outperform (Upgraded)

Sector Update

Semiconductor – Dec chip sales slips, but more upbeat outlook Neutral

Sector Update

Unisem – Fair value raised to RM1.53 based on 1x forward FY12 P/BV Market Perform

MPI – Fair value maintained at RM3.47 based on 1x forward CY12 P/BV Market Perform

Corporate Highlights

CIMB – 2011 ROE to end up between 16-17% Underperform

Company Update

- CIMB held a small group meeting for analysts last Friday.

- For APH, the main focus was to find investors to complete the project. No further provision required at this juncture and although the loan has not been fully provided for, the balance required is not much while the upside from recoveries could be quite decent.

Genting Malaysia – Hitch In Miami Casino Gaming Law Approval Outperform

Company Update

- Genting Malaysia's plans to build a US$3.8bn 5,200-room resort overlooking Miami's Biscayne Bay has stalled, as a Florida House of Representatives committee postponed a vote on a bill to expand casino gambling.

Wah Seong – Transforming The Renewable Energy Division Market Perform

News Update

- The company announced that its wholly-owned subsidiary has entered an agreement to purchase 51% of Atama Resources for US$25m (approximately RM76.3m). Atama Plantation has a 30-year concession agreement to develop an oil palm plantation and industrial complexes on 470,000 hectares of federal land in Congo .

Fraser & Neave Holdings: Maintain Sell - Coping with life after Coca-Cola

2012-02-08T09:54:00.002+08:00

Below expectations. 1QFY12 recurring net profit plunged 62% YoY, battered by the massive flood in Thailand last October, coupled with the cessation of the Coco-Cola franchise. 1QFY12 recurring net profit of RM41.6m was below our expectations and made up just 13% of our and consensus full-year estimates. We have reduced our net profit forecasts for FY12 and FY13 by 25% and 5%. Sell maintained with a lower TP of RM15.40 on the back of the earnings downgrade (16.5x CY13 target PER vs 16x previously, on higher peer valuations).

Maybank Research 8 Feb 2012

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Hock Seng Lee: Maintain Buy Take another look

2012-02-08T09:53:00.005+08:00

Maintain Buy. HSL’s share price underperformed in 2011, falling 23% (+13% 2012-YTD). At current levels, the stock trades at 8.4x one-year forward PER, a level not seen since 2H 2009. Near-term earnings will be supported by a decent RM1b outstanding order book. We recommend that investors reposition for a pick-up in infrastructure construction activities in Sarawak. Maintain Buy with an unchanged RM2.10 target price, pegged to 12x 2012 earnings.

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Wah Seong Corporation: Maintain Hold Eyes Congo palm oil venture

2012-02-08T09:53:00.000+08:00

Maintain Buy with a RM3.10 target price. We reckon WSC’s venture into palm oil operations in Congo is part of the Group’s agenda to anchor its non-O&G operations once the O&G business spins off from the Group. While this could provide long-term growth prospects, country and operation risks are the concerns, for little is known of Congo’s suitability for oil palm cultivation, its economic strength and legislation stability. That aside, we remain positive on its pipe-coating business. Our TP is based on 14x 2012 EPS.

Maybank Research 8 Feb 2012

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Genting Malaysia: Maintain Hold Hasta la vista Miami (See you later Miami)

2012-02-08T09:52:00.002+08:00

Better luck next year. As the “destination resort” bill for 2012 was all but terminated last Friday, Genting Malaysia (GENM) is unlikely to receive a casino license in Miami this year. The bill may be reintroduced in 2013 but with the overall unemployment rate in the United States falling to a three-year low, its appeal will likely diminish. Our RNAV-based TP incorporates 24 sen/sh cost of the Miami property, without the earnings potential. Maintain Hold and RM3.88 TP for now.

Maybank Research 8 Feb 2012

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COASTAL - Breaking boundaries

2012-02-04T09:16:00.000+08:00

Coastal Contracts; Buy; RM2.29
Price target: RM3.25; COCO MK
Breaking boundaries

Sustainable 2012 order book; upsides may follow. FPSO and LNG contracts may quadruple orderbook. Reiterate Buy with RM3.25 TP.

Source: HwangDBS Research 3 Feb 2012

AXIATA: India court moves to cancel 122 cellphone licenses

2012-02-04T09:15:00.001+08:00

Axiata Group; Hold; RM4.73
Price target: RM4.80; AXIATA MK
India court moves to cancel 122 cellphone licenses

The India Supreme Court ruled that 122 cellphone licenses that were issued in 2008 be revoked, including Idea Cellular’s nine licenses and four from Spice Communications Ltd, which Idea has a 41% stake in. Axiata owns c.20% in Idea Cellular.

However, the company would be allowed to continue operations for the next four months until a new auction for licenses is conducted. We understand this ruling is due to corrupt practices in the sale of the licenses at lower than market prices, costing the Indian treasury as much as US$36bn in revenue.

We expect minimal earnings impact from this as it is not a major contributor to Axiata’s bottom line (Idea contributes associate income to Axiata; it made RM598m in 2010 which translated to a share of RM119m (or 3.7%) to Axiata’s FY10 pretax profit). We maintain our Hold call with RM4.80 TP pending further updates on the matter.

Source: HwangDBS Research 3 Feb 2012

HLIB Research 3 February 2012 (Axiata; Traders Brief)

2012-02-04T09:03:00.001+08:00

Axiata (HOLD)

Complicated and Challenging India

§ Reuters reported that India's Supreme Court has ordered the government to revoke 122 telecoms licenses issued under a scandal tainted 2008 sale.

§ Idea Cellular's (which Axiata has 19.7% stake) 13 licenses will be revoked.

§ On the bright side, Idea may be allowed to continue operation for the next 4 months, until regulators come out with new market rules or new auctions are conducted.

§ Financial impact: Idea claimed that the decision may reduce up to 4%

§ Comments: This news will definitely have a negative impact Axiata's investment in India pending India government's decision going forward.

§ The punishment maybe in the forms of auctioning the revoked licenses or penalty payment. We view the former option as the worst case scenario as other incumbent players may take part and elevate the cost of the scarce spectrum.

KLCI: To retest 1550 zones after the 1530 breakout

§ Fresh excitement could also be in store for Asian equities following Fed's decision on 25 Jan to keep the fed rate at exceptionally low till late 2014, as investors will be tempted to leverage on the USD as a cheap source of funding to invest in overseas financial markets that offer potentially higher returns, particularly in Asia.

§ With the index staging a strong breakout above 1531 (31 Dec 11 closing) and upper Bollinger band, a challenge of the 1550 zones is back on the radar. Immediate supports are 1519-1531 levels.

CIMB: Technical rebound in the pipeline

§ Currently, the momentum and trend indicators are grossly oversold and are showing signs of bottoming up. Hence, the stock could test higher ground over the next few sessions to RM7.04 (540-d SMA) and RM7.12 (middle Bollinger band). Nevertheless, a more bullish outlook would only appear if share price manages to close consistently above RM7.12. The next upside targets are RM7.40 (upper Bollinger band) and RM7.64 (200-d SMA) levels.

§ Immediate supports are RM6.83 (lower Bollinger band), RM6.64 (24 Nov 11 low) and RM6.56. Cut loss below RM6.64 .

RHBInvest Research Highlights 03rd February 2012

2012-02-04T09:01:00.001+08:00

03rd February 2012

Top Story

KPJ Healthcare – An Exciting Year Ahead

Outperform

Visit Note

- The anticipated listing of Integrated Healthcare Holdings (IHH) in mid-2012 is expected to stir up investor interest and drive a rerating of the healthcare sector.

- We expect KPJ's valuations to move closer to the new benchmark set by IHH over the longer term.

- Furthermore, KPJ's aggressive local expansion plans should help the company maintain its dominance in Malaysia over the longer term.

Sector Update

Rubber Gloves – Improving Outlook Ahead Neutral

Sector Update

- Following our Top Glove upgrade last month, latex prices have rebounded to around RM7.50/kg due to price supporting measures by rubber producing countries.

- Nevertheless, latex prices should continue to weaken further towards the RM7.00/kg mark over the next few months as worldwide demand for rubber remains weak.

Corporate Highlights

CIMB – CIMB to end up as shareholder in APH? Underperform

News update

- According to the Financial Daily, Muhibbah Engineering and CIMB could end up as shareholders in Asia Petroleum Hub (APH) through a debt-to-equity swap and take charge of the Johor hub. The daily reported that APH owes CIMB RM840m, which was part of a RM1.4bn bridging loan facility provided back in 2006.

MBSB – Earnings momentum losing steam?

Market Perform

Results note

- MBSB's 4Q11 results were in line with our and consensus expectations.

- Pre-tax profit was down 22% qoq due to weaker net interest income (-5.5% qoq) and non-interest income (-25% qoq) and higher loan impairment allowances (+26% qoq). 4Q11 net profit (-12% qoq), however, was cushioned by a lower effective tax rate of 17% (3Q11: 27%).

HwangDBS: Southern Steel - Persistent cost pressure

2012-02-02T16:45:00.001+08:00

Southern Steel; Buy; RM2.05
Price target: RM2.60; SSB MK
Persistent cost pressure

RM5.5m net loss in 2QFY12 was larger than our and consensus estimates, hurt by high operating costs. Cut FY12F/13F earnings by 21%/16% after imputing higher scrap costs. Maintain Buy and RM2.60 TP pegged to 1.2x FY12 NTA.

Source: HwangDBS Research - 2 Feb 2012

HwangDBS: Guan Chong - Challenging times

2012-02-02T16:44:00.001+08:00

Guan Chong; Buy; RM2.33
Price target: RM2.80 (Prev RM3.60); GUAN MK Price Target
Challenging times

Trimmed FY12-3F earnings after imputing weaker output and margins. An extended global economic slowdown could crimp earnings. Maintain Buy, TP cut to RM2.80 (pegged to FY12F fully diluted P/E of 8x).

Source: HwangDBS Research 2 Feb 2012

HwangDBS: TNB and Petronas to invest in Sabah gas power plant and LNG terminal

2012-02-02T16:43:00.001+08:00

Tenaga Nasional; Buy; RM6.00
Price target: RM7.00; TNB MK
TNB and Petronas to invest in Sabah gas power plant and LNG terminal

The gas-fired power plant will be majority owned by TNB, with Petronas taking the lead to set up the LNG terminal. These projects are targeted for completion in 2015.

The new power plant will increase generation capacity in Sabah to address the frequent breakdowns occuring in Sabah. We estimate investment of RM1bn by TNB with bulk of the investment to be funded by internal cash. We expect TNB’s annual capex to increase from RM4bn p.a. currently to c.RM5bn p.a. over the next 3 FYs due to new investments in the new coal and gas-fired power plants. TNB’s net gearing remains reasonable at 0.4x.

We maintain our Buy rating for TNB with RM7.00 TP for strong earnings recovery in FY12. We expect TNB’s earnings to recover strongly in FY12F following the RM2bn gas compensation and increase in gas supply to 1,150mmscfd for FY12. The gas shortages issue should also be resolved following the completion of the new regas plant by Petgas in Jul 2012.

Source: HwangDBS Research 2 Feb 2012

Hartalega: Maintain Buy - Low liquidity to be tackled; raising TP

2012-02-02T16:41:00.001+08:00

Buy this stock. Although its share price has risen by an impressive 30% YTD, we see more upside. Hartalega’s 2013 PER of 10x is still a 45% discount to Top Glove’s 19x, despite industry-beating profitability over the last two years. Most importantly, we see a major re-rating catalyst from a potential bonus issue. Fundamentally, Hartalega’s operating environment remains impeccable owing to favourable input costs. The stock remains our top sector pick, with TP upgraded 25% to RM8.50 on a conservative 12x 2013 PER (DCF previously), still a 30% discount to Top Glove’s 5-year average PER.

Maybank Research 2 Feb 2012

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RHBInvest Research Highlights 02nd February 2012

2012-02-02T16:32:00.001+08:00

02nd February 2012

Top Story

Hiap Teck – Waiting for earnings contribution from blast furnace Market Perform (Upgraded)

Visit Note

- We believe Hiap Teck's manufacturing division will continue to be weak due to lacklustre domestic demand in the absence of significant water-related projects. This is evidenced by its low capacity utilisation rate of 50%.

- Demand for steel slabs produced by Eastern Steel is not likely to be an issue as there is a ready buyer. We estimate that Phase 1 of the blast furnace project could contribute roughly RM35-46m to Hiap Teck's FY07/14 net profit.

Corporate Highlights

MPI – Seeing some signs of bottoming? Market Perform

Briefing Note

- MPI expects 3QFY06/12 revenue to be flat or at best record modest growth on qoq basis. This is contrary to some of its peers that 1QCY12 revenue would decline 5-10% qoq.

- In addition, the company highlighted that key customers Texas Instruments, Freescale have indicated that the industry is on the verge of bottoming-out in 1QCY12.

- Thus, this supports our view that the sector may have passed (or is close to) its worst and poised for a recovery in the 2H2012. Fair value of RM3.47 and forecasts maintained.

Regional Equities

PT Adaro : Coal production volume increased by 13% yoy Outperform

News Update

- For full year 2011, Adaro managed to increase its coal production volume by 13% yoy to 47.7m tonnes (vs. 42.2m tonnes in 2010) mainly due to better weather conditions. This is within our forecast of 47.0m tonnes for Adaro's coal production in 2011.

- Overburden removal increased by 32% yoy to 299.3m bank cubic metre (vs. 225.9m bcm in 2010). Based on production volume of 47.7m, we estimate that the blended strip ratio of Adaro's mines has increased to 6.3x in 2011 (vs. 5.5x in 2010). Adaro guided for a blended strip ratio of 6.4x for 2012, higher than our estimate of 6.1x. We suspect this could be due to higher-than-expected strip ratio at Tutupan mine.

- Forecasts maintained, pending the release of its 4Q11 results. Indicative fair value remains unchanged at IDR2,350 based on target PER of 12x FY12 EPS.

- Related story: Indonesia Coal Sector Initiation – Resilient In Times of Uncertainty (18 Nov 2011)

Macro

Money Supply - Broad Monetary Aggregate Picked Up And Loan Growth Strengthened In Dec

Economic Highlights (published 2 Feb 2012)

- The broader money supply, M3, picked up to 14.4% yoy in December, after bouncing back to grow by +12.4% in November, while loans growth strengthened to a three-month high of 13.6% yoy in December, following a moderation to +12.8% in November and compared with +13.1% in October. This suggests that the economy is still in expansion.

- Going forward, we expect the banking system's loans to expand at a slower pace of 8-9% in 2012, after strengthening to 13.6% in 2011, in line with a slowdown in economic growth and policy tightening implemented by the Central Bank.

Interest Rates – Bank Negara Maintained The OPR At 3.0%

Economic Highlights (published 2 Feb 2012)

- The Central Bank kept the Overnight Policy Rate (OPR) unchanged at 3.0% for the fourth consecutive meeting on 31 January, as the urgency to ease monetary policy has been reduced significantly of late given that global economic activities held up relatively well and monetary policy remains accommodative in the country.

- Still, there is room for BNM to cut OPR by 25-50 basis points in 1H 2012, if global economic conditions were to worsen.

HwangDBS Malaysia Equity Research - 31 Jan 2012 (Part 2)

2012-02-01T12:47:00.001+08:00

Highlights

Regional Gaming
A tale of three cities

GENS: Stronger 2H12 will full opening of RWS. GENM: Strong free cashflow from Malaysia’s resilient mass market will underpin US expansion plans. GENHK: GGR growth at RWM will remain strong as operations ramp up and future competition is likely to be delayed. GENS and GENT remain our top picks; GENHK’s valuation is attractive.

Result Snapshot

Public Bank; Buy; RM13.44Price target: RM14.90; PBKF MK
Sustained healthy momentum

FY11 result was within expectations; slight deviation in non-interest income. Earnings driven by consistent loan growth, stable asset quality and best cost-to-income ratio. Declared 28sen DPS, taking full year dividend to 48sen or 48% payout; future payout at c.50%. Maintain Buy with RM14.90 TP.

HwangDBS Malaysia Equity Research - 31 Jan 2012

2012-02-01T12:44:00.001+08:00

Malaysia Airport Holdings; Hold; RM5.75
Price target: RM6.70; MAHB MK
Fund raising to cover higher costs of klia2

Malaysia Airports Holdings (MAHB) has proposed a private placement of 110m new shares, equivalent to 10% of its issued share capital of 1.1bn, in an effort to part finance klia2 which is slated to begin operations in April 2013. The pricing for the placement has not been determined yet and potential investors will be identified via a book building exercise later.

Assuming MAHB issues its new placement shares at RM5.50 per share, it would be able to raise RM605m, which would be used to finance the construction of new klia2. At this pricing level, the funds raised would be higher than our initial assumption of RM550m previously. This would reduce the additional borrowings required by MAHB. The Group expects to complete this fund raising exercise by 1H2012.

Tenaga Nasional; Buy; RM5.97
Price target: RM7.00; TNB MK
TNB’s CEO will not renew contract upon expiry in June

Tenaga Nasional Bhd (TNB) CEO Datuk Seri Che Khalib Mohd Noh will not be renewing his contract when it expires in June this year after heading the national utility for the past seven years. TNB’s board has accepted his request and has begun finding a replacement.

It is reported that the most suitable replacement would be TNB’s chief operating officer/executive director Datuk Azman Mohd, but TNB is also getting consultants to identify potential candidates. An internal candidate would ensure smooth transition, while a new candidate may bring new excitement to TNB. Nevertheless, we expect minimal impact to TNB’s stock price as the development is not new. The CEO has indicated earlier that he will not renew his contract upon expiry. In addition, the Energy Commission has taken a more proactive role recently to look into problems related to the power sector and take charge of the competitive bidding process for the new power plants. The Energy Commission is also responsible for the tariff review proposal.

We maintain our Buy rating for TNB with RM7.00 TP for strong earnings recovery in FY12. We expect TNB’s earnings to recover strongly in FY12F following the RM2bn gas compensation and increase in gas supply to 1,150mmscfd for FY12. The gas shortages issue should also be resolved following the completion of the new regas plant by Petgas in Jul 2012.

HLIB Research 31 January 2012 (Public Bank; MAHB)

2012-01-31T10:54:00.001+08:00

Public Bank (HOLD)

Continued To Deliver

§ 4QFY11 results were in line with HLIB and consensus.

§ 2^nd interim single-tier dividend of 28 sen. FY11 total of 48 sen (48.3% payout), in line with HLIB's projection and company's unchanged dividend policy of circa 50%.

§ FY11 loans growth of 13.5% yoy slightly behind target of 14-15% and our assumption of 14% mainly due to overseas operations (only 7%) while domestic growth was 14.1%.

§ Targeting 12-13% FY12 loans and deposits growth (vs. HLIB's 11%) to offset anticipated 10-15bps erosion in NIM.

§ Asset quality continued to improve and remained stable. Guidance is for both asset quality and credit charge to stay stable with boost from full adoption of FRS139.

§ No issue meeting Basel III requirements and will strive to maintain a lean capital structure. BNM's concept paper on counter-cyclical capital buffer is expected by 2014.

§ FY12-13 forecasts raised by 1.4-1.9% following final results while we introduced FY14 forecast.

§ Thus, target price raised to RM13.90 (Gordon Growth with ROE of 24.3% and WACC of 9.6%) vs. RM13.45.

MAHB (BUY)

§ MAHB has proposed raise RM600m for its revised RM3.6-3.9bn capex (previously RM2bn) of KLIA2, through private placement exercise involving new share issuance of up to 10% of issued share capital or 110m shares.

§ The exercise is expected to be completed within 1H12.

§ The proposed private placement was within our expectation.

§ We have estimated earnings dilution impact of 4.6% in 2012 (half year impact) and 9.1% in 2013.

§ We are positive on the long term prospect of KLIA2 development backed by the continuous expansion of low cost airlines and strong demand for regional budget travelling.

§ Maintain Buy with unchanged target price of RM6.80.

Public Bank (Buy): On a stable growth path

2012-01-31T10:02:00.002+08:00

Solid results. 2011 results were yet another testament to Public Bank's solid management capabilities and its unwavering position as Malaysia's premier retail bank. 4Q11 net profit rose 4% YoY to RM877m, contributing to a full-year earnings growth of +14% YoY to RM3.48b. Public Bank continues to be a safe haven amid current volatility, with impeccable fundamentals. Our Buy call is unchanged, as is our TP of RM14.60 (2012 P/BV of 2.8x, ROE: 22.3%).

Maybank Research 31 Jan 2012

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RHBInvest Research Highlights 31st January 2012

2012-01-31T09:36:00.001+08:00

31st January 2012

Top Story

Wah Seong – A Quiet 2012? Market Perform

Visit Note

- We met up with Wah Seong's management recently and came away positive on: 1) news that the domestic pipe-coating contracts are picking up; 2) the progress with the Insituform JV; and 3) the ongoing endeavour to segregate the two core business, with the aim for better operational focus.

- However, our concerns are: 1) the uncertainty of the domestic pipe-coating contract awards; and 2) the lack of a large international project to anchor earnings for 2012.

Sector Update

Motor – Storm In A Teacup Neutral (Upgraded)

Sector Update

DRB-HICOM – Fair value raised to RM3.45 Outperform (Upgraded)

UMW – Fair value at RM6.20 Underperform

- Recent media reports suggest that banks are considering measures to tighten HP lending, including restricting buyers to a maximum of two car loans at any one time reducing the margin of financing for the second HP loan (65-70%) and also for loans for "luxury" makes (50%).

- We understand that there is no official directive from Bank Negara (BNM). In our opinion, the possible measures are not likely to have a significant impact on auto sales given that the majority of HP borrowers have only one car loan.

Corporate Highlights

Public Bank – Results in line but dividend slightly disappointing Outperform

Results / Briefing Note

- Public Bank's 4Q11 results were in line with our and consensus estimates but the interim net DPS of 28 sen declared was below our expected 31.5 sen. Full-year net payout was 48.3% was below our 52.5% assumption, which we suspect was partly to conserve capital as BNM has yet to announce its stand on the countercyclical buffer.

TDM - Unheralded rising star

2012-01-30T09:46:00.003+08:00

Underappreciated. Since we highlighted TDM as an undervalued stock in our 2012 outlook report of 6 Jan 2012, share price has appreciated +15%. Still, it remains deep in value, trading at 8.7x 2013 PER with an EV/planted ha of just c.RM27,900 (sector average: RM72,000). The market has also ignored TDM’s long-term growth catalysts, namely the potential doubling of planted area and tripling of hospital beds. TDM could be a strategic privatization target for its relatively low valuation. We attach a fair value of RM5.50 (based on 11x 2013 PER) to TDM. A further re-rating could come in in 2014 when it reaps the benefits of recently planted landbank and its extended hospital chain.

Maybank Research 30 January 2012

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Carlsberg Brewery (Hold): Brewing Asahi locally

2012-01-30T09:45:00.002+08:00

Maintain Hold and our DCF-based TP of RM8.30. We are positive on the move to brew Asahi locally, for this should contribute to some margin enhancement over the medium term. In the near term, however, no material impact is expected given that the super premium segment is not a meaningful contributor to overall sales just yet. No dividend policy has been established hence we maintain our net dividend payout assumption of 58-62% for FY12-13 - a net yield of 3.8% for FY12.

Maybank Research 30 January 2012

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RHBInvest Research Highlights 30th January 2012

2012-01-30T09:40:00.001+08:00

30th January 2012

Top Story
Shifting Trends – Corporate Survey Market Update - From our visits, briefings and conference calls with companies in Jan, half appeared to be optimistic about their outlook, and only a handful was neutral-to-negative. - Consumer, education and REIT companies remained resilient amidst the global economic downturn, and we note the signs of optimism for rubber gloves, technology and oil & gas sectors.

Corporate Highlights
Public Bank – Expecting a strong end to FY11 Outperform Results Preview - Public Bank will announce its 4QFY11 results at midday today. Our full-year net profit estimate of RM3.5bn (+1% vs. consensus) implies that 4Q11 net profit could be down by 3.5% qoq but up 2.5% yoy. That said, we would not be too surprised if the actual results turn out slightly ahead of our and consensus estimates. Historically, 4Q tends to be a stronger quarter for the group.

Axiata – No Surprises For XL's 4Q Market Perform Company Update - Axiata's 67%-subsidiary, XL Axiata (XL) full year FY11 core net profit of Rp3,167bn (+4.7%) came in within our and consensus full-year estimates.

HLIB Research 30 Jan 2012 (Plantations; Traders Brief)

2012-01-30T09:19:00.001+08:00

Plantations (Neutral)

Highlights from MPOB Seminar

§ MPOB expects 2012 CPO production in Malaysia to increase to increase to 19.3m tonnes from 18.9m tonnes in 2011 on the back of: (1) Higher FFB yield; (2) Higher OER; and (3) More matured areas coming into production from replanting in 2009. As for Indonesia, industry expert expects CPO production in 2012 to expand to 26m tonnes from 24.55m tonnes in 2011.

§ Besides having a direct negative impact on refiners' profitability and capacity utilization in Malaysia and India, the revised export taxes for palm products in Indonesia will also have an indirect impact to the upstream segment. This is mainly because India relies heavily on imported CPO for its downstream processing industry, and lower refined palm product prices from Indonesia will further weaken India refiners' price competitiveness and processing margin (of which the country is already suffering from low capacity utilization), hence reducing India's demand for CPO. This in turn means any reduction in the import of CPO from India will raise palm oil stockpile in Malaysia, hence affecting both demand and prices for CPO.

§ Despite the current economic turmoil, most speakers expect CPO price to sustain at high level. MPOB expects CPO price to average at between RM3,100 and RM3,500 in 2012 assuming: (1) Crude oil price remains at US$100/barrel; and (2) Soybean oil price remains at US$950/tonne.

§ We are keeping our Neutral stance on the plantations sector, given: (1) The unattractive valuation (in particular, the bigger plantation players) relative to their regional peers; and (2) Our less optimistic view on the downstream segment's fortunes. For exposure in the sector, our top picks are Tradewinds Plant. (BUY; TP: RM5.04) and TSH Resources (BUY; TP: RM2.13).

KLCI: Lower liners and penny stocks to shine

§ Unless KLCI stages a breakout above the 1531 level (31 Dec 11 high), market is likely to consolidate further with attention remain on lower liners and penny stocks as more investors return from CNY holidays. Immediate support is 1500 while resistance are the huge gap between the 1529-1546 levels dated 5 Aug 11.

BPPLAS: Awaiting a neckline resistance breakout

Downside risks are limited with strong potential to rerate higher due to its cheap valuations, in the wake of its savvy management, strong average 4-year net profit margins of 7.6% (TGUAN: 5%; GWPLAST: 6.4%), superior 4-year ROE of 11.7% (TGUAN: 6.4%; GWPLAST: 7.4%) and compelling valuations at 6.9x trailing P/E (industry: 8.8x). Ex-cash, BPPLAS is only trading at 3.8x P/E. Moreover, BPPLAS dividend is also the highest at 6.2% against industry 3.1%.

§ Technically, BPPLAS medium to long term outlooks are positive as weekly and monthly indicators are on the mend. A breakout above RM0.68 (neckline resistance) will spur greater upside towards RM0.74 (61.8% FR) and RM0.83 (76.4% FR). Immediate supports are situated near RM0.58 (38.2% FR) and RM0.60 (weekly mid Bollinger band5). Cut loss below RM0.58.

HLIB Research 27 Jan 2012 (Trading Idea)

2012-01-27T22:23:00.001+08:00

Stock to watch – CUSCAPI:

CUSCAPI (RM0.42 – Accumulate): Ripe for a breakout soon

§ Base on the mixed technicals on daily charts, Cuscapi is likely to consolidate for a short while before trending higher. However, any weakness is a good chance to accumulate as it is ripe for further upside after a brief consolidation, reflected by its bottoming hourly and weekly technical indicators.

§ There is a good chance that prices may swing higher if the downtrend line channel around RM0.43 is taken out strongly.

Immediate upside targets are RM0.45 (61.8% FR), RM0.475 (50% FR) and RM0.50 (38.2% FR). If RM0.50 is taken out, more significant resistance levels are RM0.53 (23.8% FR) and RM0.58 (52-wk high). Major supports are RM0.40 (mid Bollinger band) and RM0.37. Curt loss below RM0.37.

Stock to watch – BOILERM:

BOILERM (RM0.80 – Accumulate): Poised for a triangle breakout

§ BOILERM is still consolidating in a huge triangle pattern but the stock is ripe for a breakout above the downtrend line channel near RM0.81 and RM0.84 levels (upper band) soon.

Once these levels are taken out, the next target is RM0.87 set on 16 Dec 11 before retesting the RM0.90 (23.6% FR). Significant resistance is RM1.00 (historical high). Technical landscape is on the mend, which bodes well for greater heights. As long as prices stay above the immediate uptrend line support or near the lower Bollinger band at RM0.78 levels, we will continue to stick with the bull's camp. More solid support is RM0.74 (61.8% FR). Cut loss below RM0.74.

HLIB Research 25 Jan 2012 (SP Setia)

2012-01-27T11:55:00.001+08:00

SP Setia (HOLD)

Revised takeover offer

§ The CEO, Tan Sri Liew Kee Sin ("TSL") and PNB, are making a joint revised offer for SP Setia Bhd, and have provided much-need clarity on the future of the company.

§ The new offer price has been revised to RM3.95 per share from RM3.90 while the offer for the warrants has been revised to 96 sen per warrant from 91 sen.

§ The most important part of the offer is a 3-year management agreement for TSL to have a free hand in running SP Setia. When asked, TSL also said he does not intend to inject other PNB-related property developers such as Pelangi and I&P into SP Setia. Also, PNB did not impose their KPI on SP Setia.

§ TSL also said that they expect to complete the land acquisitions for Bangsar and Federal Hill shortly.

§ TSL will hold on to his 8% stake, and PNB will provide TSL with a put option to sell his 8% stake to PNB in progressive tranches at RM3.95 per share.

§ Maintain HOLD, and raise target price by 5 sen to RM3.95, which is the revised offer price.

Alam Maritim Resources (Hold): RM115m contract win to start 2012

2012-01-27T10:23:00.001+08:00

Positive but not yet a re-rating prospect. Securing Samsung's RM115m contract is newsflow-positive, and should contribute about 17.4% to 2012 earnings (which we have already factored in). While the contract flow momentum brought on by PETRONAS' capex plans is building up, Alam's stretched balance sheet will continue to curtail its growth potential (i.e. expansion of fleet size). Until this is addressed, Alam remains a Hold with a RM0.85 target price (9x 2012 EPS).

Maybank research (27 January 2012)

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IJM Corporation (Buy): Major wins

2012-01-27T10:22:00.004+08:00

Upgrade to Buy. Two major pieces of news today - MRT job win and WCE concession win by Kumpulan Europlus - are positive for IJM, in terms of order book enhancement. However, we retain our earnings forecasts and RNAV-based target price pending details. Share price has come off since our last update and at current levels, the stock offers a 14% upside to our target. We upgrade our call to a Buy.

Maybank research (27 January 2012)

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RHBInvest Research Highlights 27th January 2012

2012-01-27T09:51:00.001+08:00

27th January 2012

Top Story

MBSB – Watch out for NIM and credit cost Market Perform

Results Preview

- MBSB is expected to release its 4QFY11 results early-Feb. Our full-year net profit estimate of RM316m may appear conservative relative to MBSB's 3QFY11 results as it implies that 4Q net profit would contract about 20% qoq (+>480% yoy) mainly due to NIM compression and higher loan impairment charges.

Sector Update

Media – A Seasonal Boost In December Underweight

Sector Update

- Dec's gross advertising expenditure (adex) for TV and print media was relatively stable with 2.9% yoy growth (Nov was the weakest in 2011 at +2.2% yoy). On mom basis, adex jumped 16% mainly due to festivities and seasonality.

DIGI.com (Hold): Helped by well-timed tax benefits

2012-01-20T10:15:00.004+08:00

Within expectations. Digi ended FY11 strongly but only due to some well-timed tax benefits. Net of this, earnings were within expectations, down slightly from FY10. In 2012, competitive pressures are expected to rise and valuations are stretched but management was optimistic, guiding for mid to high single-digit topline growth and sustained EBITDA. Further, dividends should be sustained as Digi is likely to undertake more capital management measures. Maintain Hold with a raised EV-derived TP of RM3.74 (+8%) after incorporating forward guidance of lower effective tax rate.

Maybank research (20 January 2012)

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Pavilion REIT (Hold): Asset enhancement for the longer term

2012-01-20T10:14:00.002+08:00

Positive asset enhancement. We are positive on Pavilion REIT's (PREIT) latest asset enhancement initiatives in transforming the existing TANGS Fashion Lifestyle Store area (68,000 sqft NLA or 5% of Pavilion Mall's total NLA) into a new high street fashion precinct, which will enhance the rental yield. Significant contributions should come in from 2013 onwards. No change in our earnings forecasts for now. Our DCF-based TP is unchanged at RM1.10. Hold.

Maybank research (20 January 2012)

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HLIB Research 20 Jan 2012 (Digi; Traders Brief)

2012-01-20T10:03:00.001+08:00

DiGi.Com (SELL)

4Q11 Results

§ FY11 reported revenue of RM5,964m and PBT of RM1,561m came within expectation, accounting for 100% and 101% of our full-year forecast respectively.

§ The only deviation was net profit which registered RM1,255m exceeded our expectation, accounting for 110% of our full-year forecast but is much below consensus whereby it only account for 87%.

§ This is mainly due to effective tax rates on approved tax incentives related to mobile broadband network facilities for FY09-FY11.

§ Declared 4^th interim tax exempt dividend of 6.5 sen, translating to a payout ratio of 128.2%. Total declared dividend for FY11 was 17.5 sen vs. 16.3 sen in 2010.

§ Minor tweaks on earnings forecast imputing guided tax rate for FY12-13 with consideration of voice products' ARPU and MOU trends. As a result, FY12-FY13 EPS were adjusted by +16.1% and +14.9% respectively.

§ DDM-derived TP is maintained at RM3.17 (based on WACC of 7.4% and TG of 0%).

KLCI: Sideways ahead of CNY holidays next week

§ Ahead of the CNY holidays next week, we expect more sideways movement as bigcaps continue its consolidation whilst lower liners and ACE counters to remain in the limelight. Immediate supports are 1512 (mid Bollinger band), 1502 and 1492 (lower Bollinger band).

Dow Jones: Still upside bias

§ Following the triangle breakout, current uptrend remains intact as long as the Dow is able to maintain its posture above the mid Bollinger band or uptrend line supports near 12350. Further support is 12068 (50-d SMA) and 200-d SMA at 11962.

§ Immediate resistance targets 12753 (Jul 2011 high) and 12876 (May 2011 high), followed by a more formidable resistance near 13000 psychological barrier.

RHBInvest Research Highlights 20th January 2012

2012-01-20T09:38:00.000+08:00

20th January 2012

Top Story

Carlsberg – Ended 2011 on a good note, 2012 earnings outlook clearer Market Perform

Visit Note

- Carlsberg's 4QFY11 results will be out on the 28 Feb. We understand that 4Q earnings should be fairly strong, underpinned by the earlier timing of Chinese New Year, even though 4Q revenues are normally weakest during the FY.

- Given that FY12 capex plans are minimal, comprising mainly replacement capex of around RM30m, we believe Carlsberg could potentially pay out 90-100% of its FY11 earnings.

Corporate Highlights

Digi – Ends On A High Outperform (Upgraded)

Results/Briefing Note

- DiGi's reported FY11 net profit of RM1.25bn (+6.5% yoy) exceeded our and consensus expectations, mainly due to a tax writeback of RM4.9m in 4Q. Management attributed this to approved tax incentives related to mobile broadband network facilities.

Quill Capita Trust (Hold): Growing organically

2012-01-19T14:19:00.002+08:00

Defensive but not exciting yet. QCT's 2011 recurring net profit of RM34.3m (+5.4% YoY) was within our expectations. FY12 dividend yield forecast of 7.8% is above the industry average of 6.8%, but we see limited upside due to concerns on oversupply in the office market. Hold maintained, with an unchanged DCF-based TP of RM1.10.

Maybank research (19 January 2012)

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Pavilion REIT (Hold): A Malaysia retail icon

2012-01-19T14:18:00.001+08:00

A class of its own. Pavilion REIT's (PavREIT) key attraction lies in its asset portfolio and the jewel in its crown, Pavilion Kuala Lumpur (KL) Mall. Strategically located in the heart of Kuala Lumpur's prime tourist and shopping district, this mall caters predominantly to the upper middle to high income group, and is one of only 4 prime retail malls in the country. We initiate coverage on PavREIT with a Hold rating and RM1.10 DCF-based target price. It currently trades at a 5.5% yield.

Maybank research (19 January 2012)

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HLIB Research 19 Jan 2011 (Lafarge; Economics; Traders Brief)

2012-01-19T13:54:00.001+08:00

Lafarge (M) Cement (Hold; TP: RM7.11)

Largest Beneficiary from ETP

§ Our investment highlights for Lafarge are:

1. Our favourable outlook on the construction sector, and cement sector is the major direct beneficiary from the construction sector;

2. As the largest player in Malaysia, Lafarge will be the largest beneficiary from ETP implementation; and

3. Strong balance sheet.

§ We are projecting Lafarge's net profit in 2012-13 to rise by 32.7% and 10.8% to RM366.2m and RM405.7m from a projected net profit of RM276.0m in 2011.

§ We are initiating coverage on Lafarge with a HOLD recommendation and TP of RM7.11 based on 16.5x 2012 EPS of 43.1 sen.

December Inflation Report

§ CPI growth eased further to 3.0% yoy in Dec 2011 (Nov: +3.3% yoy), slightly below the consensus estimate of 3.1%, due mainly to lapse of fuel price hike effected a year ago. Accordingly, price increase of the transport category eased sharply to 1.9% yoy (Nov: +3.9% yoy).

§ The lapse of fuel price hike contributed to a 0.3ppt reduction in the CPI growth. December inflation rate would have remained at 3.3% yoy if Pemandu had continued with its subsidy removal in Dec 2011.

§ Stable mom CPI growth of 0.1% and easing of services inflation (3.1% yoy; Nov: 3.2% yoy) provided a relief that price pressure on the ground has begun to stabilise.

§ We now lower our inflation forecast for 2012 to 2.7% from earlier forecast of 3.0% as Pemandu did not perform any subsidy removal for Dec 2011 as anticipated.

§ We expect BNM to keep the OPR at 3.00% until end-2012 given the resilient economic growth with sticky inflation.

Holding well above the key 200-d SMA support

§ We reiterate that as long as KLCI continues to remain its posture above the crucial 200-d SMA (now at 1502), the benchmark index is still likely to gradually refill the huge gap of 1529-1546 resistance recorded on 5 Aug 11, probably as early as next week. Ahead of the CNY holidays next week, we expect more sideways consolidation above the 200-day SMA. Breaking the key 200-d SMA will drag index lower to 30-d SMA (1496) and 50-d SMA (1484) levels.

Medium to long term positive after recent consolidation

§ Following the breakout above the downtrend line formed since 2002 coupled with improving technical readings on the monthly chart, BOXPAK is expected to rally further towards the 50% FR (at RM2.36) and 38.2% FR (RM2.65), which is also the 52-wk high. A breakout above RM2.65 will drive prices higher to a more formidable resistance near RM3.00.

§ We believe BOXPAK could find its floor soon amid signs of bottoming up on its hourly chart and share prices also retraced back to below the 50% FR (daily chart). Immediate supports are RM2.06 (61.8% FR-daily chart) and RM2.00 (monthly mid Bollinger band). Cut loss below RM2.00.