Bursa Malaysia Stock Watch

Masterskill Education - No catalyst in sight

2012-02-20T17:23:00.005+08:00

Masterskill Education; Fully Valued; RM1.16
Price Target: RM0.70; MASEG MK

FY11-13F earnings cut by 6.6%-7.1% after trimming new student intakes. News of jobless nurses could dampen new enrolments in nursing courses. Maintain Fully Valued with RM0.70 TP (pegged to 10x FY12F EPS).

Traders Spectrum – From the Chartroom
The FBM KLCI settled at 1,557.15 on Friday for a weekly decline of 4.5-point or 0.3%. Technically speaking, the benchmark FBM KLCI will probably show resilience before resuming its uptrend towards the psychological threshold of 1,600 going forward.

Source: HwangDBS Research 20 Feb 2012

HLIB Research 20 February 2012 (Sunway; Traders Brief)

2012-02-20T11:41:00.001+08:00

Sunway (BUY)

FY11 results to beat our estimates

§ Sunway is expected to release its FY11 results on Wed, 29 Feb-12 and we expect full year results to meet both ours and street's estimates of ~RM300.2m (23.2 sen/share) with a potential for a slight upside surprise. Of note, 9MFY11 results already made up 75% of our full year's forecast.

§ We believe that 4Q's earnings should be driven by the rebound in its construction division after the Raya festive break and Middle East summer holidays and expansion in property margins from 13% as development matures for Nexis and Velocity. New property sales were extremely strong, nearly doubling 9MFY11 new sales to come in at ~RM900m (based on effective stake), bringing its FY11 new sales to RM2bn.

§ Overall, with the latest developments, Sunway has an unbilled property sales of ~RM2.26bn, translating to ~4.2x FY10's property revenue. Meanwhile, its outstanding construction order book stands at RM2.36bn, translating to ~2.2x FY10's construction revenue.

§ We continue to see Sunway as a value play trading at only single digit P/E and discount to its peers. We maintain our BUY call on Sunway with a TP of RM3.12.

Market likely to extend its consolidation

§ KLCI is expected to further consolidate this week to neutralise overbought technical conditions and rebuild support for a sustained uptrend going forward.

§ Immediate resistance levels are 1570-1580 whilst supports fall on 1550 psychological level, 14-d SMA (1545), mid Bollinger band (1536) and 30-d SMA (1531).

UOADEV: More upside if it breaks the 20-d SMA resistance

§ Based on daily chart, we reckon that UOADEV is likely to find a short term bottom near RM1.38 (38.2% FR from high RM1.72 and low RM1.16).

§ Stronger support is RM1.30 (23.6% FR). After a brief consolidation, the next upswing is expected to push prices towards its 30-d SMA (RM1.47) and mid Bollinger band or 20-d SMA (RM1.50). A breakout above RM1.50 will push prices higher towards upper Bollinger band (RM1.56), rm1.62 (16 Jan 12's high) and 61.8% FR (RM1.72). Significant resistance is at 50% FR (RM1.89).

§ Cut loss below RM1.30.

Notion VTEC: Upgrade to Buy - Benefiting from the Thai floods

2012-02-20T10:49:00.003+08:00

Upgrade to Buy. Notion may post a minor loss of around RM5m in 1QFY12 (4QFY11: RM12m net profit) on flood-caused provisioning for its Thai plant. However, we see a strong rebound in sequential earnings (led by the HDD segment), which could prompt consensus to upgrade its FY12 estimates. We raise our FY12 EPS forecast by 12%, and now expect 6% YoY growth (-5% previously). We upgrade the stock to a Buy, with a higher TP of RM2.50 (+67%) on 4x EV/EBITDA.

Maybank Research 20 Feb 2012

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SapuraCrest Petroleum: Maintain Buy - Partners Seadrill for pipe-lay vessels

2012-02-20T10:48:00.005+08:00

We are positive on this symbiotic relationship; maintain Buy. Seadrill is a seasoned partner of SapCrest. It has a 24% stake in the latter and co-owns several drilling rig operations in Malaysia. Both will provide an equal contribution in this rewarding venture. Seadrill offers the business knowledge of the Brazilian offshore market, while SapCrest will provide the technical expertise in the installation, pipe-laying and facilities (IPF) field. Maintain Buy and RM5.62 TP.

Maybank Research 20 Feb 2012

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Padini Holdings: Maintain Buy - Growth drivers very much intact

2012-02-20T10:48:00.001+08:00

New stores and BOs drive growth. Brands Outlet (BO) sales is continuing its run at a pace of more than 25% pa, and already accounts for 16% of total sales (as at end-FY11). Double-digit growth in BO sales is expected to persist, while the addition of 10 new stores in FY12 provides further impetus for sales momentum growth over the next two years. We continue to like Padini for its decent valuations (2012 PER of 9.6x), strong balance sheet (net cash) and the reputable brands in its portfolio. Maintain Buy with a raised TP of RM1.60.

Maybank Research 20 Feb 2012

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RHBInvest Research Highlights 17th February 2012

2012-02-17T16:40:00.001+08:00

17th February 2012

	Malaysia Equities
Top Story
Taking Stock – Fundamentals Playing Catch-Up Market Update - Our expectations for the Dec 2011 quarter results are fairly neutral as we believe any bad news would have already been factored into earnings forecasts. However, we believe there is a possibility that some companies may use the market's low expectations to delay booking in revenue (or provide for higher costs) in the 4QCY11 to boost the current year's earnings.
	Corporate Highlights
	Digi – Looking Forward To LTE Outperform Visit Note - We remain positive on DiGi for potential to sustain future growth by monetising its 5.2m mobile Internet subscriber base through LTE. - We understand that competition has been stable so far in 2012. While DiGi noted that U Mobile's presence in the market has increased, since U Mobile is only a quasi-MVNO we do not expect competition to turn irrational anytime soon. TH Plantation – Joining the ranks of the mid-cap plantation stocks Outperform Visit Note - Four key points: 1) Strong FFB production growth for FY11 achieved; 2) Production costs to rise in FY12, on higher labour and fertiliser costs; and 3) Work has started on THP's new land acquisitions already; and 4) More acquisitions in 2012? TRC Synergy – Defect liabilities weigh down on 4QFY12/11 performance Outperform Results Preview - We expect TRC's FY11 net profit to miss expectations by 12-18% largely due to the recognition of additional defect liabilities in 4Q from certain recently completed projects. BAT – BAT's Market Share Grew In FY11 Market Perform (Upgraded) Results/Briefing Note - FY11 net profit (-1.6% yoy) was within expectations. BAT declared a fourth interim dividend of 66 sen, which brought its YTD dividend payout to 276 sen (including 30 sen special dividend paid in the 2QFY11).
	Malaysia Equities
	Top Story
	Taking Stock – Fundamentals Playing Catch-Up Market Update - Our expectations for the Dec 2011 quarter results are fairly neutral as we believe any bad news would have already been factored into earnings forecasts. However, we believe there is a possibility that some companies may use the market's low expectations to delay booking in revenue (or provide for higher costs) in the 4QCY11 to boost the current year's earnings.
	Corporate Highlights
	Digi – Looking Forward To LTE Outperform Visit Note - We remain positive on DiGi for potential to sustain future growth by monetising its 5.2m mobile Internet subscriber base through LTE. - We understand that competition has been stable so far in 2012. While DiGi noted that U Mobile's presence in the market has increased, since U Mobile is only a quasi-MVNO we do not expect competition to turn irrational anytime soon. TH Plantation – Joining the ranks of the mid-cap plantation stocks Outperform Visit Note - Four key points: 1) Strong FFB production growth for FY11 achieved; 2) Production costs to rise in FY12, on higher labour and fertiliser costs; and 3) Work has started on THP's new land acquisitions already; and 4) More acquisitions in 2012? TRC Synergy – Defect liabilities weigh down on 4QFY12/11 performance Outperform Results Preview - We expect TRC's FY11 net profit to miss expectations by 12-18% largely due to the recognition of additional defect liabilities in 4Q from certain recently completed projects. BAT – BAT's Market Share Grew In FY11 Market Perform (Upgraded) Results/Briefing Note - FY11 net profit (-1.6% yoy) was within expectations. BAT declared a fourth interim dividend of 66 sen, which brought its YTD dividend payout to 276 sen (including 30 sen special dividend paid in the 2QFY11).

HLIB Research 17 Feb 2012 (Power; Maxis; TWS Plant; Traders Brief)

2012-02-17T09:52:00.001+08:00

Power (Neutral)

Remain Burdened by Gas Issue

§ Expect Malaysia Power demand to increase by 4.0% in 2012, underpinned by 4.5% GDP growth.

§ Tenaga is expected to continue burdened (~RM3.3bn) by high alternative fuel cost, until Melaka regassification facility commences by Aug-Sept 2012.

§ Unclear fuel cost pass-through mechanism (as tariff revision schedule remain uncertain while final decision on the rat still within government's hand) continue to drag Tenaga.

§ No more PPA renegotiation (direct negotiation), where all new PPAs will be awarded through tendering system, will give advantage to Tenaga and disadvantage to YTL Power.

§ We are maintaining our Neutral rating on the overall power sector, given Tenaga's larger market captialization vis-a-vis YTL Power. Maintain Buy on YTL Power with lower TP of RM2.23 and Hold on Tenaga with higher TP of RM6.50.

Maxis (HOLD)

Sukuk and Broadband Tax Incentive

§ In a filing to Bursa Malaysia, Maxis proposed to establish an Unrated Islamic MTN Programme with an aggregate value of up to RM2.45bn and tenure of 30 years from the date of first issue of the sukuk.

§ First issuance of the sukuk is for RM2.45bn with maturity of 10 years for refinancing (RM1.45bn), CAPEX / working capital and other general purposes (RM1bn).

§ Similar to DiGi, Maxis also announced that it enjoys last mile broadband tax incentive of total RM320m.

§ Comments: The consolidated gearing will increase from 0.63x to 0.75x on proforma basis, based on 2010 audited accounts.

§ The tax benefit is perceived to be positive to Maxis relieving NGBB's front-loaded high CAPEX and cost. After some channel checking, Maxis NGBB business is not "flying" as Maxis has only managed to secure about 4,000 subscribers to date.

§ Tax incentive of RM97m for 9M11 translates into 23% effective tax rate (vs assumed tax rate of 26%) and directly boost earnings for FY11. We have assumed 23% for FY12 and FY13 as well.

§ Tax credit in respect of prior years is assumed to further reduce tax by RM44.6m for FY12-FY16.

§ Updated forecast with above mentioned assumptions. As a result, EPS for FY11 to FY13 are revised upward by 8.8%, 4.1% and 1.2% respectively.

§ We upgraded our DD-derived TP by 2.8% to RM5.54 from RM5.39 with WACC of 7.5% and TG of 0%.

Tradewinds Plantation (Buy; TP: RM5.04)

Disposes stake in rubber trading house

§ TWS Plant disposed its 45% stake in R1 International Pte Ltd via Mardec (a wholly-owned subsidiary) for US$25.9m (RM79.1m).

§ TWS Plant expects RM38m gain from this disposal.

§ Positive, as the disposal releases Mardec from its existing contractual obligations to trade exclusively through R1, and allows Mardec to unlock its value of its investment in R1. We note that the disposal is in line with TWS Plant's strategy in Mardec, i.e. to improve its plant' utilization rate and procurement efficiency.

§ TP maintained at RM5.04 (based on 11x 2012 FD core EPS of 45.8 sen). Despite the potential total return of only 9.3%, we are keeping our BUY recommendation on the stock for now.

KLCI: Crucial 1550 level

§ Overnight Dow's rally is expected to lift our market to stay above the crucial 1550 psychological support This level is crucial for sustainability as a close below would likely confirm a reversal and send the index back towards lower supports near 14-d SMA (1542), mid Bollinger band (1535) and 30-d SMA or uptrend line at 1529.

§ Immediate resistance levels are situated at 7-d SMA (1560), 15 Feb's high of 1567 and upper Bollinger band (1574).

OLDTOWN: More upside if 30-d SMA resistance is broken

§ The pullback from 52-wk high of RM1.40 (July 2011) appears to be at its tail end, as prices have been consolidating above the 50% FR (RM1.14), supported by its oversold slow Stochastics. Further strong support can be found near 38.2% FR (RM1.08) and RM1.00 (23.6% FR).

§ Buyers may start to nibble as hourly chart indicators are showing signs of bottoming up. A strong breakout above 30-d SMA (RM1.26) will spur greater upside towards RM1.32 (upper Bollinger band) and RM1.40. Significant resistance is 123.6% FR at RM1.52. Cut loss below RM1.13.

WINGTAI - Sizing up

2012-02-17T09:44:00.004+08:00

Wing Tai Malaysia; Fully Valued; RM1.68
Price Target: RM1.50; WING MK

2Q12 results above expectation, raise FY12-13F earnings by 16-17%. Looking for bigger parcels of land in Klang Valley. Maintain Fully Valued and RM1.50 TP.

Source: HwangDBS Research 17 Feb 2012

BAT - Flat earnings, but good dividends

2012-02-17T09:44:00.000+08:00

British American Tobacco; Hold; RM52.30
Price Target: RM46.60; ROTH MK

4Q11 earnings were within expectation; declares 4th interim dividend of 66sen per share. Challenging FY12 outlook due to high illicit trade and shrinking market size. Maintain Hold for yields.

Source: HwangDBS Research 17 Feb 2012

Rubber Value Chain - Time to restock

2012-02-17T09:43:00.002+08:00

2H12 restocking will benefit processors and logistics players alike. Our top BUY is Goodpack. Margin recovery for glove-makers is already priced-in; accumulate Top Glove on weakness. Lower natural rubber price forecasts will have limited impact earnings. Stick with volume plays. Risks: European debt crisis, volatile crude oil prices, government intervention.

Hartalega Holdings; Hold; RM7.92Price Target: RM7.70; HART MK
Taking a breather

TP raised to RM7.70 pegged to 13x CY12 EPS led by better growth visibility. Lower latex prices to have marginal impact on EPS as latex glove segment is small (10%); expect flat 3Q12, margins still under pressure. Downgrade to Hold on limited share price upside.

Top Glove Corporation; Hold; RM5.00
Price Target: RM4.80; TOPG MKValuation setback

Cut latex price assumptions by 8% and raised FY12-14F EPS by 2-3%. FY12 will be a recovery year with lower latex costs and better sales mix. Raised TP to RM4.80 pegged to 15.5x CY12 EPS; expectations of margin recovery and stronger earnings have been priced in; Maintain Hold.

Kossan Rubber Industries; Hold; RM3.44
Price Target: RM3.30; KRI MKPositives priced in

Cut latex price assumptions by 8% and raised FY13/14 EPS by 2-3%; FY11 earnings intact. Expect flat earnings in 4Q1. Raised TP to RM3.30 pegged to 9x CY12 EPS; Maintain Hold as positives have been priced in.

Source: HwangDBS Research 17 Feb 2012

BAT: Maintain Hold - The comeback

2012-02-17T09:40:00.001+08:00

Fairly reflected. BAT outperformed the industry in 2011, after eight years of market share contraction. However, we think BAT’s strong fundamentals are fairly reflected in its share price, with the stock trading at 19.2x 2012 PER, +1SD above mean. Maintain Hold at a marginally higher TP of RM50.40 (+6.1%) after reviewing our DCF parameters.

Maybank Research 17 Feb 2012

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KPJ Healthcare: Downgrade to Hold - Time to take a breather

2012-02-17T09:39:00.003+08:00

Near to fair level, downgrade to Hold. Since we initiated coverage on KPJ Healthcare on 30 November 2011, the stock has surged by 19.9% to its current share price of RM5.01, outperforming the KLCI by 12.5%. The stock price is currently near our target price of RM5.10. We downgrade our recommendation to Hold as we believe that stock valuation is reaching a fair level. With global economic conditions likely to remain uncertain at least in 1H12, now may be a good time for conservative investors to consider taking some profits off the table.

Maybank Research 17 Feb 2012

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WCT: Maintain Buy - News flow to turn positive

2012-02-17T09:38:00.006+08:00

Maintain Buy with a raised target price. 4Q 2011 results, due on 23 Feb, should at least meet our expectation for a full-year (2011) net profit of RM154m (+9% YoY). We also retain our 2012 forecast for a 9% growth in net profit, supported by strong property sales in 2011. With up to RM5b in its tender book, 2012 could turn out to be a more positive year for WCT in terms of job wins. We lift our SOP-based TP after pegging to stock to a higher 15x PER (+1SD above mean; previously 13x) on expectations of more news flow turning positive.

Maybank Research 17 Feb 2012

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MMHE: Maintain Hold - A blip in earnings?

2012-02-17T09:38:00.002+08:00

Weakness ahead? MMHE’s upcoming 3QFY11 results could miss our and consensus expectations, and there could be a knee-jerk reaction on its share price. While order visibility for 2012 is strong, it is unlikely to attract much interest vis-a-vis Kencana, for its ability to grow and capture new orders will be constrained by bottlenecks at its site. For this reason, MMHE remains a Hold with a RM5.70 TP (20x 2013 EPS).

Maybank Research 17 Feb 2012

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HLIB Research 16 February 2012 (Building Materials; Econs; Traders Brief)

2012-02-16T15:04:00.001+08:00

Building materials (Underweight)

Mixed prospects

§ Despite the recent uptick in regional steel prices, we continue to advocate our bearish view on both demand and prices for steel products in the region, underpinned by:

1. Weak near-term demand prospects for steel products in China, which would continue to have spillover effects on steel demand and prices in the region;

2. Still-high steel inventory in China, indicating that stock replenishing activities will remain subdued; and

3. Last but not least, the recent increase in iron ore prices (arising from weather constraint) that may further cap margins of steel producers.

§ Relative to the steel sub-sector, we are more bullish on demand prospects of the cement sub-sector, as it is the largest beneficiary from the implementation of ETP projects.

§ We are maintaining our Underweight rating on the overall building materials sector, given our less optimistic view on the steel sub-sector's near-term outlook. Between the steel and cement sub-sectors, we are of the view that cement players will likely enjoy better fundamentals.

Moderation in 4Q 2011 GDP Growth

§ Real GDP growth moderated to 5.2% yoy in 4Q (3Q: +5.8% yoy), affected mainly by slower expansion in the services and agriculture sectors. On the demand side, shrinking net exports and more moderate consumer spending contributed to the slower GDP expansion.

§ Growth in the services sector eased to 6.4% yoy (3Q: +7.0% yoy) affected mainly by slowdown in real estate & business activities (+2.3% yoy; +6.8% yoy), in line the less buoyant property and stock market activities in 4Q.

§ Construction growth more than doubled to 6.4% yoy (3Q: +3.0%) led mainly by residential and civil engineering.

§ Domestic demand expanded at a faster pace of 10.5% yoy (3Q: +9.0%) with stronger expansion in public consumption and gross fixed capital formation.

§ We retain our GDP growth forecast of 4.5% for 2012, with softer manufacturing growth cushioned by stronger construction activities and resilient consumer spending.

§ We reiterate our view that BNM will hold the OPR steady at 3.00% until end-2012 on resilient growth outlook with sticky inflation.

KLCI: Crucial 1550 support

§ Following overnight Dow's fall, the KLCI is likely to continue its consolidation for a while. Immediate supports are 7-d SMA (1558), followed by 10-d SMA (1548). A breakdown below 10-d SMA would likely confirm a reversal and send the index back towards 1534 (mid Bollinger band) and 1527 (30-d SMA).

Dow: Uptrend is losing steam

§ Technical indicators are weakening amid a rising wedge pattern.

§ The rising wedge pattern is characterized higher highs and higher lows with a contracting range, signalling an uptrend could end and a reversal pattern is in the pipeline.

§ A breakdown below uptrend line support near 30-d SMA (12658) will spur more downside towards lower Bollinger band (12582) and 50-d SMA (12434). More solid support is near 100-d SMA at 12015.

§ Resistance levels are situated at 10-d SMA (12840), 12929 and 13k psychological barrier.

AmanahRaya REIT: Maintain Buy - Results in line

2012-02-16T09:42:00.005+08:00

Maintain Buy. AAREIT's RM42.5m 2011 core net profit (+2.7% YoY) came in as expected. 2011 DPU of 7.2sen was also in line (7.8% yield; 97% payout). Positive earnings surprises could come from the potential sale of Wisma UEP while RM200m new assets target for 2012 would enlarge the earnings base. We fine-tune our earnings forecasts by +1.4-1.6% post actual 2011 results announcement. Our DCF-based target price remains intact at RM0.95.

Maybank Research 16 Feb 2012

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Sapura Kencana Petroleum Bhd: Maintain Buy - Co-owns FPSO Berantai

2012-02-16T09:42:00.001+08:00

Positive asset expansion. We are positive on SapCrest-Kencana's 49% investment in FPSO Berantai. The FPSO, to be deployed to the field by 2Q12, should contribute about 5% or RM40m p.a. (with a 7-year visibility) to the combined entity's 2013 net profit. Maintain Buy on SapCrest and Kencana, with target prices of RM5.60 and RM3.66 respectively, which are unchanged for now. Incorporating the Berantai FPSO contribution would lift these TPs by a further 6% and 5% respectively.

Maybank Research 16 Feb 2012

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CIMB Group Holdings: Maintain Sell - More upbeat this year

2012-02-16T09:41:00.001+08:00

Sell maintained. That management spent last year building liquidity and embarking on a cost efficiency drive is a positive, as is Dato' Sri Nazir's closer involvement in CIMB Niaga. Management is also more upbeat this year, which could lead to a little more growth traction. Strong fundamentals notwithstanding, our Sell call is largely premised on expectations of CIMB's valuations narrowing against that of its conventional banking counterparts (avg 1.8x P/BV for 2012), while its still-high foreign shareholding remains a drag, in our view. Our RM6.80 target price (1.8x 2012 P/BV, ROE: 15.1%) is maintained.

Maybank Research 16 Feb 2012

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MSM Malaysia Holdings: Maintain Hold - 4Q11 will be better than 3Q11

2012-02-16T09:40:00.002+08:00

Maintain Hold. MSM is expected to release its 4Q11 results in the fourth week of February. 4Q11 is a seasonally strong quarter due to the year-end school holidays and Christmas. Furthermore, MSM will reap the benefit of softening raw sugar prices in the quarter. We however estimate a mismatch in the new locked-in cost of raw sugar versus the new government subsidy. Maintain Hold, as we put our DDM-based target price of RM4.10/share under review pending clarifications.

Maybank Research 16 Feb 2012

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RHBInvest Research Highlights 15th February 2012

2012-02-15T10:21:00.001+08:00

15th February 2012

Malaysia Equities

Top Story

UMW – Still Expensive Underperform

Results Preview

- UMW is scheduled to report 4Q11 results after market close on 24 Feb. Our 2011 earnings estimates are nearly 5% below consensus and imply 4Q11 net profit of RM165m.

- We believe the 4Q11 results are relatively academic with the market focusing on 2012 prospects, signs of a turnaround at the oil & gas division in addition to the dividend payout.

Sector Update

Property – Singapore buyers brighten up property outlook in Johor Neutral

Sector Update

- The Iskandar region has come out with another RM80bn development that covers Danga Bay , the JB city centre and the Tebrau coast. Based on our checks, about half of the 3,000-acre site would require dredging/reclamation. As such, Nusajaya, which is already miles ahead, is in a better position to capture the immediate demand for properties

Corporate Highlights

QL Resources – MPM Margins To Recover; Further Expansion For Its ILF Division Outperform

Visit Note

- In the 1HFY03/12, MPM division margins dropped by 3.6%-pts yoy to 12.3% vs. 1HFY03/11 of 15.9% primarily due to weaker fish landing during the period. However, we understand that 3QFY03/12 fishing activities have been fairly stable.

Hektar REIT – Offers The Highest Yield Among Retail REITs Outperform

Briefing Note

- The Manager is confident that refurbishment works on Subang Parade and Mahkota Parade will yield fruition in FY12, driven by 20% rental reversion in FY12 and improvement in shopper traffic.

Dayang – New Talisman Contract Win Outperform

News Update

- Yesterday, the company announced that it had won a contract worth RM125m to provide general topside maintenance to Talisman Malaysia for 3+2 years. We are positive on the new win as it shows that the company continues to be one of the favourites for topside maintenance.

Dialog – Expect a stronger 2HFY12 Outperform

Results Note

- 2QFY06/12 results appear to be slightly below expectations, with 6MFY12 net profit accounting for 40.2% of our full-year forecast and 43.0% of consensus estimates. Nevertheless, we are keeping our forecasts as the company normally performs stronger in the 2H of the financial year.

AMMB – Results in line but CASA and NIMs Exhibit Positive Trend Market Perform

Results Note

- 3QFY03/12 results were in line with our and consensus expectations.

- Positive trends include: 1) NIM expanded 4bps qoq as AMMB continued to trade off loan growth for margins; 2) strong CASA growth (+13% qoq; +26% yoy); and 3) further improvement in asset quality. Gross loan growth rebounded (+2.3% qoq) after the qoq contraction in 2Q but annualised growth rate of 5.5% was in line with our 6% assumption. Loan growth was led by business and corporate loans. Main negative was weaker income level resulting in a 3% qoq net profit drop.

RCE Capital – Net loan book contracted further Market Perform

Results Note

- 3QFY03/12 results were in line with our expectations. QoQ, net profit fell 7.8% mainly due to higher loan impairment allowances (+365% qoq).

- RCE's net loan book as at end-Dec 2011 contracted 2.1% qoq (-17.8% yoy), the 4^th consecutive quarter where net loans have declined (qoq basis). We think this reflects the challenging environment the cooperatives are operating in due to competition and regulatory changes.

Regional Equities

Bank Danamon – No surprises Outperform

Results Note

- 4QFY11 results were in line with expectations. 4Q net profit was down 9% qoq mainly as credit cost rose 20bps qoq to 66bps.

- 2011 loan growth was 23%, underpinned by the SME and mass market (mainly 2- and 4-wheelers) segments. The micro lending loan book expanded by just 7.4% yoy, possibly due cautiousness towards that segment given that NPLs had been on the rise.

DIALOG - Steady recurring income

2012-02-15T10:17:00.003+08:00

Dialog Group; Buy; RM2.44
Price Target: RM2.95; DLG MK

2QFY12/1HFY12 earnings within our expectations, but below consensus’. Supported by robust Malaysian operations. Maintain Buy with RM2.95 TP (21% upside).

Source: HwangDBS Research 15 Feb 2012

AMMB - Slower quarter

2012-02-15T10:16:00.002+08:00

AMMB Holdings; Hold; RM6.11
Price Target: RM5.80; AMM MK

3QFY12 net profit of RM357m takes 9MFY12 profit to RM1,168m (78% of FY12F profit); in line. Loans
grew 2% q-o-q; CASA grew 21% but total deposit only inched up 1%; NIM improved. Management still
cautious of a weaker 4QFY12. Maintain Hold and RM5.80 TP.

Source: HwangDBS Research 15 Feb 2012

MAYBANK - Sustainable high dividends

2012-02-15T10:15:00.004+08:00

Maybank; Buy; RM8.50
Price Target: RM10.60; MAY MK

Expect higher dividend payout, as the bank takes advantage of tax credit up to CY13. Domestic engines buzzing; regional growth cranking up. Maintain Buy rating and RM10.60 TP; top pick for Malaysian banks.

Source: HwangDBS Research 15 Feb 2012

DAYANG - Clinched RM125m contract from Talisman

2012-02-15T10:15:00.000+08:00

Dayang Enterprise; Buy; RM1.95
Price Target: RM2.70; DEHB MK

Dayang announced that it has clinched a new contract from Talisman Malaysia Limited (Talisman) for topside maintenance services expected to be worth RM125m for a primary period of 3 years with 2 extension options of 1 year each.

The contract does not come as a surprise to us as we have mentioned previously that it was bidding for maintenance jobs from Talisman. We view its latest contract positively, boosting its outstanding order book to c.RM1.5bn which is more than enough to last for the next 3 years. Including the RM85m contract extension from Shell awarded in Jan12, Dayang has already secured RM210m worth of new contracts which bode well for its prospects going forward.

We reiterate our Buy call for Dayang with RM2.70 TP, based on 15x FY12 EPS, implying 42% upside potential. We continue to favour Dayang’s chances of clinching more contracts going forward as we expect the company to ride on the robust O&G activity in Malaysia by leveraging on its niche expertise in the hook-up commissioning and maintenance services.

Source: HwangDBS Research 15 Feb 2012

RCE Capital: Maintain Hold - Results within; proposes bonus & rights

2012-02-15T10:12:00.003+08:00

Maintain Hold and target price. 9MFY12 results were in line with core net profit down 13% YoY as net loans contracted 18% YoY due to the ceasation of KOWAJA lending activities for 6+ months. A 1-for-2 bonus and 2-for-5 rights issue of new RCPS will raise shares liquidity and give RCE the capacity to grow. Nonetheless, the operating environment remains tough with net loans continuing to retrace 2% QoQ despite the resumption of KOWAJA lending activities since Jun 2011. Our target price continues to peg the stock to 0.8x historical P/B.

Maybank Research 15 Feb 2012

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Dialog Group: Maintain Buy - No surprises; growth prospects intact

2012-02-15T10:11:00.005+08:00

Maintain Buy. Interim results are tracking expectations, with 1H accounting for 41% of our FY12 forecast. Looking ahead, its potential participation in the upcoming marginal field projects will be newsflow positive, while the expansion of its tank terminal operations will sustain earnings growth in the long term. Dialog offers a fine exposure to a respectable business model, focused management, attractive earnings growth with an increasing proportion of recurring income and a steady progressive dividend. Our Sum-Of-Parts TP is unchanged at RM3.05.

Maybank Research 15 Feb 2012

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AMMB Holdings: Maintain Hold - Guidance turns cautious

2012-02-15T10:11:00.001+08:00

Within expectations. While 9MFY12 net profit of RM1.17b (+14% YoY) was 79% of our full-year forecast and 77% of consensus, 4Q is typically a weaker quarter. Management is cautious ahead and has trimmed growth and ROE guidance. Our earnings are nevertheless raised by 3-10% for FY12-14 but with little to excite for now, our Hold call is maintained along with our TP of RM6.30 (2012 P/BV of 1.6x, 14.2% ROE).

Maybank Research 15 Feb 2012

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HLIB Research 15 Feb 2012 (Banking; AMMB; Traders Brief)

2012-02-15T10:08:00.001+08:00

Banking (OVERWEIGHT)

Indonesia – No Ownership Cap / Aabar To Sell RHB Cap?

§ News #1 – Indonesia will not implement a planned regulation to limit ownership in domestic banks.

§ News #2 - Aabar (owns 25% in RHB Cap) is exploring the sale of its stake with Sumitomo Mitsui Banking Carp.

§ News #1 would improve sentiment on both CIMB and Maybank, especially the former.

§ However, there are no fundamental changes as Indonesia's original plan is difficult and will need time to implement. Thus, no changes to our forecasts for CIMB and Maybank as we have not factored in any changes in stakes.

§ It will clear the path for RHB Cap and Affin to re-commence their proposed acquisitions. The impact will be more positive for RHB Cap as it will help to achieve its aspiration of 5-10% international earnings contributions.

§ News #2 likely to re-ignite merger speculation in RHB Cap as Aabar is unlikely to part with its stake below its entry cost of RM10.80.

§ Maintain Overweight.

§ While the latest news has no fundamental impact, we believe they could ignite trading interest in banks given that the sector has generally been lagging behind the market. We are not changing our top picks of Maybank and AFG. However, we believe that re-emergence of trading interest will be focus on CIMB and RHB Cap.

AMMB Holdings (HOLD)

Lower FY13-14 KPIs – Pressure On Top Line

§ 9MFY12 results in line with HLIB and consensus.

§ 3QFY12 results were characterized by continued improvement in NIM and lower loan loss provision. The latter help sustain yoy profit growth.

§ FY12 KPIs was maintained.

§ However, FY13-14 net profit growth and ROE KPIs were lowered as global economic downturn will exert pressure on revenue growth rather than deterioration in asset quality.

§ It maintains that asset quality (which continued to improve) will be intact. Internal stress tests show it is able to absorb the potential extreme trauma.

§ Capital ratios well positioned for BNM's guidelines on BASEL III, no impact on dividend policy of 40-50% payout.

§ Despite new lending guidelines, it is confident of own position and has not seen material impact at the moment.

§ Maintain Hold.

§ Target price unchanged at RM6.45 based on Gordon Growth (ROE of 13.7% and WACC of 10.5%).

KLCI: More sideways consolidation

§ We remain cautiously optimistic of KLCI resuming its uptrend after a mild profit taking consolidation as hourly chart is showing signs of bottoming up (FIG#2).

§ If the KLCI is able to sustain its posture above last week's high of 1565 pts for the next 2-3 days amid heavy deliveries following last week's average daily volume of 3.7bn shares, then the index is likely to retest our envisaged resistance targets near 1570-1580. Supports are 1561 (5-d SMA), 1550 and 1544 (10-d SMA).

AFG: Getting oversold

§ We advocate buy on weakness as the daily chart momentum and trend indicators are getting oversold (FIG#4) whilst the hourly chart indicators are showing signs of bottoming up (FIG#5). Hence, after a brief profit taking consolidation, AFG could test higher grounds to RM3.88 (mid Bollinger band) and RM3.99 (upper Bollinger band).

§ A more bullish outlook would only appear if AFG manages to close consistently above the Immediate supports are mid Bollinger band. The next upside targets is RM4.05. RM3.66 (38.2% FR) and RM3.54 (50% FR). Cut loss below RM3.54.

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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