GENM - GenM Aqueduct bid not bolting out of the gates yet

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Research House: ECMLIBRA

Genting Malaysia Bhd
(July 8, RM2.54)
Upgrade to hold from sell at RM2.62 with target price RM2.48: Early yesterday morning, the New York Lottery announced that it had disqualified SL Green and Penn National Gaming from the Aqueduct racino bid. That leaves GenM as the sole bidder. GenM appears to conform to all requirements of the bid submission process and will continue to be evaluated. If GenM ultimately is not approved by the Aug 3 deadline, the bidding process will be restarted.

The two were disqualified because they submitted bids which contained material deviations from the prescribed MOU. That said, SL Green and Penn National's concerns that the US$300 million (RM960 million) licensing fee is not refundable should the bid winner eventually terminate the licence, still fluid tax regime, refusal to guarantee that no other gaming facility will be opened within 50 miles and profitability are alarming.

According to our rudimentary analysis, in its first full year of operations, the Aqueduct will generate US$23.2 million (RM74.2 million or 6% of FY10F net profit) in net profit. Assuming 3% growth per year (World Economic Outlook long-term GDP per capita forecast for USA) over the 30-year concession period and ascribing our GenM weighted average cost of capital of 10.8%, it will yield a discounted cash flow (DCF) value of US$265.7 million, or US$34.3 million short of the licensing fee. SL Green and Penn National Gaming's concerns are not totally unfounded.

We maintain our earnings estimate for now pending the results of the bid and finalisation of Aqueduct's tax regime. Overall, we are neutral to marginally negative on the bid. We would be concerned should GenM be required to invest more than the licensing fee into the Aqueduct. Management explained that New York may introduce table games at racinos going forward, ala Pennsylvania which will be introducing table games, but we find it presumptuous to assume so yet.

We maintain our RM2.48 target price based on DCF of existing operations only. As there is now only less than 5% downside risk, we revise our call from sell to hold. Although we believe that GenM's share price may have hit the trough, its uninspiring investment track record to date, in our opinion, does not warrant a buy call. ' ECM Libra Research, July 8




This article appeared in The Edge Financial Daily, July 9, 2010.

E&O - E&O on higher ground

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD
Research House: HWANGDBS

Eastern & Oriental Bhd
(July 8, 92 sen)
Maintain buy at 92 sen with target price RM1.40: E&O will be attending our Pulse of Asia conference on July 8. E&O is one of our top buys for the Malaysian property sector.

FY10 sales surged 91% to RM780 million while unbilled sales tripled to RM540 million. And with the completion of its rights issue in November 2009, net gearing improved significantly to 37% from 1QFY09's 84% with cash reserves at RM560 million. E&O is in a strong position to accelerate launches and seek opportunistic landbank acquisitions.

Take-up rates at on-going launches have reached 65%, that is St Mary (Tower C: 85% @ RM900psf; Tower A: 50% @ RM1,350psf) and Quayside STP condo (ASP: RM685psf). We expect earnings momentum to pick up (three-year CAGR of 53%) with: (i) Scurve recognition of profits as construction progresses; (ii) RM2.5 billion-launch pipeline in Penang and Kuala Lumpur; (iii) Straits Quay retail marina rental from December 2010 onwards (but potential start-up losses); and (iv) completion of Penang hotels expansion.

E&O is trading at a 55% discount to its realised net asset value (RNAV) of RM2.07 against the sector's 40%. We have yet to factor in the 740-acre STP Phase 2 (yet to be reclaimed) which could add RM1.58 to RNAV. Aside from robust sales, potential catalysts include approval for Kemensah Heights and STP Phase 2, en-bloc sales/international JV partner for its larger projects and prime landbank acquisitions (for example, participation in government land redevelopment as a credible JV partner given E&O's strong brandname and track record). ' Hwang DBS Vickers Research, July 8




This article appeared in The Edge Financial Daily, July 9, 2010.

QL - QL Resources pathway paved for next growth phase

Stock Name: QL
Company Name: QL RESOURCES BHD
Research House: RHB

QL Resources Bhd
(July 8, RM4.05)
Maintain outperform at RM4.05 with higher fair value of RM4.90 (from RM4.60): Indonesia plantation earnings to start contributing by FY11. QL's 74.5%-owned plantation is expected to start contributing more meaningfully to the plantation division (more than 60% of plantation earnings) by FY13 arising from the maturing age profile of its plants and additional milling profits from the operation of its crude palm oil (CPO) mill in Indonesia (third CPO mill for the group), which is expected to be completed by December 2011.

Currently producing 2.5 million eggs per day, QL targets to increase egg production four million eggs per day (+60%) by FY13. This will come from its expansion plans in Malaysia (+500,000, or +20%, in FY11), Indonesia (+500,000, +20%, in FY12) and Vietnam (+500,000, +20%, by end-FY12). We are overall positive on the overseas integrated lifestock farming (ILF) ventures given: (i) the large population size in Indonesia and Vietnam of 227 million and 86 million respectively against Malaysia's 27 million; and (ii) potential increase in egg consumption in both Indonesia and Vietnam as urbanisation continues, given its current low consumption of only 50 eggs per person per year versus Malaysia's 280 eggs.

QL started the construction of its new surimi plant on 10ha of land in Surabaya, Indonesia, in April 2010. The new plant has two lines with a total initial capacity of 5,000mt per year. Earnings contribution from this new plant is expected to come in by early-FY12.

Our earnings forecasts have been reduced by 0.1%-5.0% in FY11-13 after: (i) tweaking our earnings model; (ii) assuming earnings for the Indonesia and Vietnam operations to only come in by mid- to end-FY12 instead of early-FY12 previously; and (iii) increasing our capital expenditure (capex) assumptions to RM200 million (from RM150 million) in FY11 and RM150 million (from RM140 million) in FY12 following management's higher guidance. We maintain our capex assumption at RM150 million in FY13. The risks include: (i) decline in consumer spending power; and (ii) intensifying competition.

In our view, QL's proven track record, together with its staple food-based business, offers investors resilient earnings that would be able to withstand economic downturns and recessions.

Our fair value has now been increased to RM4.90 (from RM4.60) based on higher PER target of 14.5 times CY11 (from 13 times CY11), to be in line with the consumer sector target PER. ' RHB Research Institute, July 8




This article appeared in The Edge Financial Daily, July 9, 2010.

KENCANA - Kencana keeping the momentum

Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD
Research House: OSK

Kencana Petroleum Bhd
(July 8, RM1.45)
Maintain buy at RM1.46 with target price RM2.06: Kencana announced on Wednesday that its 100%-subsidiary, Kencana HL SB, has secured a contract from Houston, Texas-based Newfield Peninsula Malaysia Inc for the provision of procurement and construction of topsides. The contract, valued at about RM201.1 million, will involve procurement and construction of a wellhead platform topside, central processing platform topside, living quarters and bridge for the PM329 East Piatu Development Project, located off Peninsular Malaysia. This one-off contract is expected to be delivered in stages within 3QCY11.

We understand that this block, covering about 310 sq km in the Malay Basin, is located about 350km offshore Kerteh, Terengganu. We also gather from Newfield's April 22, 2009 publication that the first oil production is expected next year, with Newfield having 70% working interest. However, we are unsure whether there would be any delay in this project since the news has been circulating for about a year, but at least there is some positive development on this project involving the construction of its O&G platform structures.

Hit rate increases to about 35% of total industry awards. This includes the RM201 million topsides contract from Newfield, in addition to Kencana's existing RM422 million secured earlier, against the total contract value awarded to other listed O&G companies in Malaysia, which we gather should total about RM1.8 billion.

We are keeping our FY10-11 forecasts unchanged as the new job order is within the order book replenishment guidance from management. In fact we are looking at a revenue of close to RM2 billion for FY11.

Our target price for Kencana remains unchanged at RM2.06, based on a calendarised PER of 16 times FY11 EPS. Kencana remains our top pick for the sector. We like its strong delivery track record, which we think puts it in a position to benefit from new fabrication jobs from Petronas and its PSC contractors. We believe its current order book would now increase to RM1.8 billion while its tender book should be replenished back to about RM2 billion. ' OSK Investment Research, July 8



This article appeared in The Edge Financial Daily, July 9, 2010.

BRDB - OSK maintains 'trading buy' call on BRDB

Stock Name: BRDB
Company Name: BANDAR RAYA DEVELOPMENTS BHD
Research House: OSK



OSK Research Sdn Bhd maintains "trading buy call" on Bandar Raya Developments Bhd following its involvement in Puteri Harbour Project in Nusajaya and several property launches.

Bandar Raya is replacing Limitless Holdings Pte Ltd as UEM Land Holdings Bhd's majority partner in the 111 acres (44.4 hectares) development of "Residential North" of the Puteri Harbour in Nusajaya, Johor.

It will buy Limitless' 60 per cent stake in Haute Property Sdn Bhd, a joint- venture company, which has been granted development rights by UEM Land to develop properties for RM75 million.

"As the project is still at a preliminary stage and there are yet to be any details on the launches, we are not imputing its prospects into our earnings forecast and valuation for the time being," it said in a research note today.

OSK Research said Bandar Raya would launch phase one of its Hartamas II mid-end condominiums worth RM300 million and CapSquare Condos Two projects valued at RM250 million in the second half of this year.

The company would also be launching its two prime luxury projects in Taman Duta and Bukit Bandaraya in early next year, it said.

"With these projects all lined up for launch in the second half of 2010, Bandar Raya is poised to ride high in the impending 2011 upcycle," it said.

OSK Research expects the property market to only start to warm up in the second half of this year before the 2011 upcycle.
Jupiter Securities said the proposed 60 per cent acquisition in Haute Property reflects Bandar Raya's focus on positioning the company in property development.

"Bandar Raya is attempting to re-establish its focus on Iskandar Malaysia," its research head Pong Teng Siew told Bernama. Bandar Raya owns large land bank at the Permas Jaya township development and the latest deal provides "a big boost to the company," he said. -- Bernama

MRCB - MRCB a 'buy' at RM2.25: HwangDBS

Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP
Research House: HWANGDBS



HwangDBS has reiterated its "buy" call on MRCB with a target price of RM2.25.

The research firm says MRCB remains on "our high conviction list as we expect its appointment as master developer of RRIM land together with a construction and developer role to transform the fortunes of the company considerably".

Another potential catalyst, HwangDBS says, is the surge in construction flows where its has only imputed a conservative RM320 million in new order wins for MRCB.

KNM - KNM remains a 'sell' at AmResearch

Stock Name: KNM
Company Name: KNM GROUP BHD
Research House: AMMB



AmResearch has maintained its "sell" recommendation on KNM Group with an unchanged fair value of RM0.42 per share.

The research firm notes that "KNM trades at a premium FY10F PE of 15x compared to its peers 10x".

"We think that this is unjustified given that a major portion of the group's FY10F earnings stem from a Borsig deferred tax writeback," says AmResearch.

DELLOYD - Delloyd a diversified group with steady earnings, says OSK

Stock Name: DELLOYD
Company Name: DELLOYD VENTURES BHD
Research House: OSK

Delloyd Ventures Bhd
(July 7, RM2.77)
Initiating coverage with buy call at RM2.75 with target price of RM3.90: We see exciting times for Delloyd. While its domestic segment will continue to be resilient, owing to strong vehicle sales and new models in the pipeline, we believe the group's earnings momentum will come from its automotive (including bus manufacturing) and plantation divisions in Indonesia.

After a steep decline in TIV in both Indonesia and Thailand, we expect the strong recovery in demand for vehicles in 2010 to benefit auto component makers across the board. This will see demand sustaining for the next few years given the low vehicle penetration in emerging markets, such as Indonesia, which are experiencing growing affluence.

Having delivered 42 buses over the past three years, the management expects to secure orders for 48 new buses by year-end. The number of buses secured over the coming years will continue to be spurred by expansion of the transportation networks in Jakarta and other major cities in Indonesia. This will in turn boost revenue and income contribution significantly.

We anticipate growth over the next few years to be robust, as Delloyd's plantation estates in Pulau Belitung in Indonesia experience growing yield in the immediate term. As at end-2009, 54% of its estates are planted with oil palm of 6-11 years old. Furthermore, the commencement of its CPO processing mill in mid-May'' kicked off the sale of CPO (previously FFBs) which will enhance profitability margins.

We initiate coverage on Delloyd with a buy recommendation and a target price of RM3.90, based on a 12-month rolling EPS pegged at a PER of eight times, which is slightly higher than our auto parts sector valuation of seven times owing to its palm oil exposure and growing earnings base in the immediate term. We see limited downside risks to the stock as it is well supported by share buyback activities as well as the compelling and attractive valuation compared with other auto counters after taking into account the landbank valuation of its plantations. ' OSK Research, July 7


This article appeared in The Edge Financial Daily, July 8, 2010.

MAMEE - Mamee is crisp of the crop

Stock Name: MAMEE
Company Name: MAMEE-DOUBLE DECKER (M) BHD
Research House: INTER PACIFIC

Mamee-Double Decker Bhd
(July 7, RM3.35)
Reiterate outperform at RM3.35 with higher target price of RM3.76 (from RM3.63): We reiterate our outperform and revise upwards our target price to RM3.76 (previously RM3.63) based on 36.5 sen FY2011 EPS and PER of 10.3 times as we tweaked our net earnings by 4.5% for FY2010 and 3.6% for FY2011.

We believe Mamee-Double Decker (MDD)'s bottom line will improve further, benefiting from (i) strong demand for its new and existing products, in particular the snack segments; (ii) economies of scale which diluted its advertising and promotion cost; and (iii) net cash.

The removal of the subsidy on raw materials like sugar and flour is expected to have a minimal impact on MDD's production. The reason being, (i) MDD does not use subsidised flour; and (ii) the rise in the cost of sugar will have a minimal effect on its beverage segment.

MDD's plan to achieve total sales of RM1 billion within five years is viable, backed by (i) a strong brand name and heavy advertising and promotion (A&P) of its products (MDD spends roughly 9% of revenue on A&P); (ii) increasing global market reach with Australia contributing to revenue; (iii) strong support to/by its local distributor; and (iv) constant new product launches (Mr Potato Rice Crisps and Mee Indonesia) to spur sales. MDD currently tops the snack segment in Peninsular Malaysia, with about 31.1% of the market share.

Its closest competitor, Kraft Food, enjoys 23.3%. MDD's Mr Potato snack has been in this position since January 2009, with 7.5% market share as at April 2009. Its main competitors, Pringles has a 4.3% market share and Jacker 2.7%.

The Mr Potato production lines are currently operating at near full capacity of 95%, higher than their usual 85%, in view of the overwhelming demand for the new Mr Potato Rice Crisps. The fourth production line in the Subang plant is expected to be up and running this month, while the automation of one of MDD's existing lines is well on track. This new line will be used to produce Mr Potato Rice Crisps to meet the higher-than-expected local demand and for the product launch in Singapore in 2HFY2010.

MDD's beverage, Cheers, is successful in the northern region and east coast. The management now plans to concentrate on the southern end. Its focus will be coffee shops and retailers as a way to compete on a more level playing field. We expect 3QFY2010 to have a more significant contribution in view of the Hari Raya Aidilfitri festive season which tends to amplify beverages sales.

MDD recently bought a three-acre tract of land at RM60 per sq ft in Subang to accommodate its growing need for a warehouse. The facility will act as a collection point prior to the shipment of its goods. ' Inter-Pacific Research, July 7


This article appeared in The Edge Financial Daily, July 8, 2010.

CBIP - RHB Research maintains outperform on CBIP

Stock Name: CBIP
Company Name: CB INDUSTRIAL PRODUCT HOLDING
Research House: RHB

CB Industrial Product Holdings Bhd (CBIP)
(July 7, RM2.59)
Maintain outperform at RM2.60 with fair value of RM3.70: CBIP has obtained four contracts from Wilmar to construct and supply four modipalm mills in Indonesia for a total of RM53.93 million. These contracts are for the supply of the machinery only and do not include the installation and commissioning of the mills.

The four mills have a total capacity of 135 tonnes per hour (t/hr). Three will have a 30t/hr capacity and one 45t/hr, which makes the cost translate to about RM400,000 per tonne capacity.

This is much lower than the average RM700,000 to RM900,00 per tonne capacity that CBIP normally charges, due mainly to the exclusion of the installation and commissioning costs. We are positive on this model of operation as it will solve CBIP's management and skilled technician shortage problem. It could give CBIP better margins, as 50% of the contract amount is paid up front and the rest upon delivery, as opposed to other projects which are billed progressively.

This would also help save some interest costs, as CBIP would be able to use the upfront payment to purchase the raw materials for the mills without having to use its own funding first.

This contract would bring the total contracts CBIP has obtained year to date 2010 to an estimated RM82.6 million. We understand CBIP's unbilled order book now stands at about RM350 million, which should last the company approximately 18 months. As we have already forecast CBIP to record revenue of RM250 million to RM300 million from its oil mill engineering division in FY2010/11, this new contract will not have any impact on our earnings projections.

The main risks include: (i) a significant decline in oil mill engineering contracts due to slower-than-expected economic recovery and plantation investment in Indonesia as well as Malaysia; (ii) a stronger-than-expected rise in steel prices and weakening of the US dollar, resulting in weaker-than-expected margins for the oil mill engineering division; (iii) a fall in CPO and other global vegetable oil prices caused by weather abnormalities; and (iv) a reversal in crude oil prices and thus CPO prices.

No change to our forecasts. Our sum-of-parts-based target price is unchanged at RM3.70 and we maintain our outperform recommendation on CBIP. Note our fair value reflects the dilution from the 10% proposed private placement, which has not been completed yet. ' RHB Research Institute, July 7


This article appeared in The Edge Financial Daily, July 8, 2010.

PROTON - Auto firms' 2010 record sales

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: HWANGDBS

Automotive companies
Maintain buy calls on Proton, MBM Resources: Total vehicles sales are forecast to grow 8% year-on-year (y-o-y) to 578,000 in 2010, against a 2% decline to 536,000 in 2009. Year-to-date sales in May 2010 grew 20% y-o-y partly due to the low base in 2009 created by the financial crisis. We expect Perodua sales to grow by 8% this year, Proton by 8%, Toyota by 8%, Nissan by 10% and Honda by 6%.

DBS Bank forecasts 8% GDP growth this year for Malaysia, while the ringgit is expected to remain stable against the US dollar in 2H2010, and strengthen against the Japanese yen. Proton is a key beneficiary of the weak yen. Interest rates are expected to rise by another 50 basis points in 2H2010, which will have minimal impact on loan repayment, hence vehicle sales. Sales in 3Q2010 will benefit from consumers rushing to buy new cars ahead of further interest hikes. More importantly, there will be increasing demand for new cars ahead of the Hari Raya Aidilfitri festive season in September. However, demand in 4Q2010 is expected to be seasonally slow. The introduction of new models will drive sales for Proton and Toyota in 2H2010.

Maintain buy on Proton. Proton's share price remains attractive at only 0.45 times CY2011F NTA versus 0.65 times historical average. We maintain our RM4.85 price target based on a conservative 0.5 times CY2011F NTA. Higher utilisation rate of its plants from higher sales (exports and strategic partnership) is a catalyst.

Reiterate buy on MBM with a target price of RM4.05 (six times FY2011F PER). Healthy Perodua sales and a RM20 million budget to beef up showrooms and service centres for its luxury lines (Volvo and VW) are signs of better times ahead. MBM's current PER of only 4.5 times FY2011F is cheap against a historical average of six times and +1SD of 8.5 times. ' HwangDBS Vickers Research, July 7


This article appeared in The Edge Financial Daily, July 8, 2010.

MBMR - Auto firms' 2010 record sales

Stock Name: MBMR
Company Name: MBM RESOURCES BHD
Research House: HWANGDBS

Automotive companies
Maintain buy calls on Proton, MBM Resources: Total vehicles sales are forecast to grow 8% year-on-year (y-o-y) to 578,000 in 2010, against a 2% decline to 536,000 in 2009. Year-to-date sales in May 2010 grew 20% y-o-y partly due to the low base in 2009 created by the financial crisis. We expect Perodua sales to grow by 8% this year, Proton by 8%, Toyota by 8%, Nissan by 10% and Honda by 6%.

DBS Bank forecasts 8% GDP growth this year for Malaysia, while the ringgit is expected to remain stable against the US dollar in 2H2010, and strengthen against the Japanese yen. Proton is a key beneficiary of the weak yen. Interest rates are expected to rise by another 50 basis points in 2H2010, which will have minimal impact on loan repayment, hence vehicle sales. Sales in 3Q2010 will benefit from consumers rushing to buy new cars ahead of further interest hikes. More importantly, there will be increasing demand for new cars ahead of the Hari Raya Aidilfitri festive season in September. However, demand in 4Q2010 is expected to be seasonally slow. The introduction of new models will drive sales for Proton and Toyota in 2H2010.

Maintain buy on Proton. Proton's share price remains attractive at only 0.45 times CY2011F NTA versus 0.65 times historical average. We maintain our RM4.85 price target based on a conservative 0.5 times CY2011F NTA. Higher utilisation rate of its plants from higher sales (exports and strategic partnership) is a catalyst.

Reiterate buy on MBM with a target price of RM4.05 (six times FY2011F PER). Healthy Perodua sales and a RM20 million budget to beef up showrooms and service centres for its luxury lines (Volvo and VW) are signs of better times ahead. MBM's current PER of only 4.5 times FY2011F is cheap against a historical average of six times and +1SD of 8.5 times. ' HwangDBS Vickers Research, July 7


This article appeared in The Edge Financial Daily, July 8, 2010.

GENM - Genting Malaysia upgraded at ECM Libra

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Research House: ECMLIBRA

Genting Malaysia Bhd had its stock rating raised to "hold" from "sell" at ECM Libra Capital Sdn Bhd, which said there is less risk for a decline in its share price.

ECM Libra upgraded the company "as there is now only less than 5 per cent downside risk," it said in a report today. - Bloomberg

TGOFFS - Acquisition on the cards for Tanjung offshore

Stock Name: TGOFFS
Company Name: TANJUNG OFFSHORE BHD
Research House: HWANGDBS

Tanjung Offshore Bhd
(July 6, RM1.25)
Maintain buy at RM1.26 with lower target price of RM1.40 (from RM1.45): Tanjung Offshore (TOFF) may acquire deepwater assets to move up the value chain. The next deepwater fields (Malikai and Kebabangan) earmarked to come onstream will cost over RM10 billion to develop.

We believe Ekuinas' entry as strategic investor at RM1.30 per share (pending EGM) will place the company on a stronger footing to expand its marine operation through acquisitions. In our view, TOFF can leverage on Ekuinas' financial muscle to acquire assets that were not possible with its own capacity by extending financing or taking strategic stakes in the assets.

Next quarter, 2Q10, will see the full earnings impact from TOFF's fleet of 16 vessels. To recap, in 1Q10 TOFF secured five long-term charter contracts worth about RM265 million for its newbuilds. CITECH, whose losses had weighed down FY09 earnings, has also returned to profit in 2Q10. Overall, we expect strong earnings turnaround in 2010.

We raised FY10-11F earnings by 4% and 7% after imputing higher fleet utilisation as well as interest savings as placement proceeds were used to repay debt. Adjusting for the enlarged share base post placement, our target price is trimmed to RM1.40/share (from RM1.45 previously), pegged to nine times FY11F EPS. Our buy rating is maintained as the stock is still grossly undervalued relative to its peers. Since listing, TOFF has been trading at average 16.9 times PER and 1.5 times PBV. ' HwangDBS Vickers Research, July 6




This article appeared in The Edge Financial Daily, July 7, 2010.

UMW - UMW Toyota not affected by Toyota recalls

Stock Name: UMW
Company Name: UMW HOLDINGS BHD
Research House: INTER PACIFIC

UMW Holdings Bhd
(July 6, RM6.34)
Reiterate neutral at RM6.24 with target price of RM6.40: The worldwide recall of eight of Toyota's luxury Lexus and Crown Sedan models for an engine fault could affect up to 270,000 cars.

The defective V8 (4.6-litre) and V6 (3.5-litre) engines were installed in eight top-line models, including some hybrids ' Lexus LS460, Lexus LS600h, Lexus LS600hL, Lexus GS350, Lexus GS450h, Lexus GS460 and Lexus IS350 as well as Toyota Crown sedans. The models marked by 'h' are gasoline-electric hybrids.

UMW Toyota Motor will conduct a service campaign to address the improper functioning of valve springs found in some of the V8 (4.6-litre) and V6 (3.5-litre) engines manufactured between August 2006 and July 2008. Because of the defect, there is a small possibility of abnormal noise or unstable idling, and in rare cases the engine could shut down while driving.

There are about 100 units of Lexus LS460 affected in Malaysia. UMW Toyota Motor will notify all owners and will carry out the necessary corrective measures. All other Lexus or Toyota models are not involved. We believe the amount spent on the campaign will not be substantial, given that Lexus sales account for a small fraction, 0.6%, of Toyota's total sales. In our view, however, the recall could adversely affect Toyota's reputation and possibly its market share, as well as dampen the excitement over its upcoming models.

Our FY10-FY11 forecast remains intact. We reiterate neutral with our target price remaining at RM6.40.

We used SOP valuation with the implied FY10 PER for UMW's automotive division at 13 times, oil and gas division at 15 times and manufacturing and equipment division at 10 times. ' Inter-Pacific Research, July 6

''

This article appeared in The Edge Financial Daily, July 7, 2010.

MAHSING - Maybank IB positive on Mah Sing's Kinrara land deal

Stock Name: MAHSING
Company Name: MAH SING GROUP BHD
Research House: MAYBANK

Mah Sing Group Bhd
(July 6, RM1.69)
Maintain buy at RM1.66 with target price of RM2.20: We are positive on Mah Sing's purchase of 13.2 acres (5.34) of 98-year leasehold residential land in Kinrara for RM35.4 million. The land cost of RM61.60 psf is fair, given: (i) estimated locked-in sales of circa RM44 million (44% of gross development value), (ii) substantially completed infrastructure with no low-cost housing, open space and bumiputera quota requirements, and (iii) its strategic location.

This project, with an estimated RM100 million GDV over three years of development, is expected to boost our FY10/12 earnings forecasts by 2% to 4.5%. There is marginal change to our forecasts; immaterial impact on our RNAV-based target price. Maintain buy.

The land comprises 180 units of vacant terrace house lots. Year to date (YTD), the development has achieved 44% take-up or an estimated RM44 million sales (including booking) since its launch last April. The main infrastructure has been substantially completed by the landowner. We understand that the land is cleared and levelled and is ready for construction to begin. The land is in an established location with good accessibility and amenities, and is surrounded by matured housing townships.

Mah Sing is buying the land from Medan Damai Sdn Bhd, 100%-owned by Mahajaya Bhd. Assuming a pre-tax margin of 15%, as well as raising our earnings forecasts it will raise our RNAV per share by one sen. Upon the completion of the land acquisition, Mah Sing's net gearing is expected to increase marginally from 5% (1QFY10) to 9%.

This is the company's fourth land acquisition in FY10. Mah Sing has has expanded its landbank and enhanced its total GDV by 6.6% and 17.9% to 634 acres and RM5.4 billion, respectively.

Even with these acquisitions, Mah Sing's net gearing remains healthy at 9%. This suggests that there is still significant potential for future landbanking exercises. The management is now studying the potential investment in government lands. ' Maybank IB Research, July 6




This article appeared in The Edge Financial Daily, July 7, 2010.

PLUS - AmResearch maintains 'buy' on PLUS

Stock Name: PLUS
Company Name: PLUS EXPRESSWAYS BHD
Research House: AMMB

KUALA LUMPUR: AmResearch is maintaining its "buy" call on PLUS Expressways with an unchanged fair value of RM4 per share.

It said on Wednesday, July 7 that at RM4, the share price is pegged to a 15% discount to its DCF value (WACC: 7.5%). This is well supported by strong free cash flow generation and alluring FY10F-12F yields of 5%- 7%.

'Key re-rating catalyst for the stock would include: (i) Stronger-than-expected traffic growth trajectory in 2H 2010; (2) Scheduled tariff hike in 2011F; and (3) Potentially value-accretive investments abroad,' it said.

PLUS EXPRESSWAYS BHD [] (PLUS) announced that Ministry of Works has approved its unit Projek Lebuhraya Utara-Selatan Bhd's (PLUS) request to undertake CONSTRUCTION [] of a fourth lane along certain stretches of its expressways.

The expressways concerned are the North-South Expressway (NSE) and New Klang Valley Expressway (NKVE). The expansion of an additional lane is for certain stretches along both expressways. This would include Shah Alam to Rawang, Shah Alam to Jalan Duta and a section from Nilai (North) to Seremban.

Estimated cost of the project is RM1.1bil. Funding details and further disclosures are currently still under review. However, we reckon PLUS will likely to tap into its existing Islamic Medium Term Notes facilities to raise part of the required funding. We forecast PLUS' net gearing levels at 128% in F10F against 134% in FY09.

APM - AmResearch affirms 'buy' on APM

Stock Name: APM
Company Name: APM AUTOMOTIVE HOLDINGS BHD
Research House: AMMB

KUALA LUMPUR: AmResearch has affirmed its "buy" on APM Automotive Holdings (APM) and maintain its fair value of RM5.40 a share.

It said on Wednesday, July 7 that Nissan Motor Indonesia has announced plans to invest over US$20mil to expand its existing plant in Indonesia.

APM is a key beneficiary of Nissan Motor Indonesia's aggressive expansion plans given its status as a Tier-1 supplier to Nissan Motor Indonesia's via its 50% stake in the JCI-Armada-APM consortium.

Nissan Motors' expansion plan in Indonesia comes hot on the heels of its plans to establish a strategic presence in Vietnam commencing with its first locally assembled model, the Grand Livina. Earnings revision cycle for APM remains strongly intact.

APM's strong net cash position of RM278mil (RM1.38/share) suggests potential special dividends considering available tax credits amounting to RM89mil, which will expire over the next three years.

APM's leverage to the auto sector and solid balance sheet positions it as an inexpensive yet quality alternative exposure to a solid recovery in the auto sector, Ex-cash, APM trades at just 4x FY10F EPS - at 67% and 56% discount to UMW (12x FY10F EPS) and Tan Chong (10x FY10F EPS).

BURSA - Bursa slips on Kenanga Sell call

Stock Name: BURSA
Company Name: BURSA MALAYSIA BHD
Research House: KENANGA

KUALA LUMPUR: BURSA MALAYSIA BHD [] share price fell on Wednesday, July 7 after Kenanga Investment Bank Bhd Research maintained its sell rating on the stock and price target of RM6.90.

At 10.25am, Bursa shares shed three sen to RM6.92 with 35,700 shares traded.

Kenanga Research said its sell rating was mainly due to FBM30 [] was trading at rich valuation of 15 times forward PER, suggesting that the market had limited upside from here.

'As a result, we see market has little excitement to further boost Bursa ADT (average daily trading) from here.

'Upside potential for the ADT appears limited now and the noise levels from the external front have the capability to drag the turnover lower than here,' it said.

PROTON - HwangDBS keeps 'buy' call on Proton, MBM

Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
Research House: HWANGDBS

HwangDBS says Proton's share price to remain attractive and maintains its RM4.85 price target.

This it said is due to the higher utilisation rate of Proton plants from higher sales due to exports and strategic partnership.

Meanwhile, HwangDBS reiterates a buy call for MBM. It said that the healthy Perodua sales and a RM20 million budget to beef-up showrooms and service centres for luxury lines (eg Volvo and VW) are signs of better times ahead. - Reuters

TM - TM sets UniFi target

Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Research House: OSK

Telekom Malaysia Bhd
(July 5, RM3.36)
Maintain neutral at RM3.35 with a target price of RM3.28: According to news reports over the weekend, TM set a target of 6% to 8% subscribers out of its total of 750,000 premises for its high-speed broadband service, UniFi, by end-2010. It was reported that there are currently close to 5,000 subscribers comprising residential and business customers. TM added 18 new exchange areas in July to complement the four residential areas in which the service was rolled out on March 24.

The target of 60,000 subscribers by year-end reflects the maiden guidance from management and implies a monthly addition of about 7,000 to 9,000 per month, or 1,600 to 2,200 subscribers per week, in 2H2010. This compares with our forecast of 20,000 subscribers by end-2010 (premised on 2,500 additions per month from July-December) and the current Streamyx gross additions of about 5,000-7,000 per week. We consider the target to be somewhat stretched as: (i) UniFi's addressable market comprises existing Streamyx users, who are paying RM70-RM90 per month on average; (ii) the fact that UniFi is positioned as a niche product (subscription starts from RM149 per month); and (iii) potential inbound competition from Maxis (see point below). It would suggest that management is eyeing a bigger proportion of subscribers upgrading from their current Streamyx plans. In our June 29 report on TM, we said that the take-up on UniFi may have been diluted by the current 'Super Upgrade' promotion, which is a retention programme devised by TM to compel existing subscribers to upgrade to higher tier plans and the 'Blockbuster' promotion, which is a bundled package offering fixed line and broadband.

Maxis has revealed its intention to roll out high-speed broadband and IPTV to homes by 3Q2010, which in our opinion could pose a longer term threat to TM given that it could potentially bundle mobile services and content from sister company, Astro, effectively providing a quadruple-play value proposition to subscribers. Maxis has immediate access to 12 million mobile subscribers and three million pay-TV (Astro) subscribers to up-sell its services versus TM's 1.3 million premises targeted by UniFi under Phase 1 by end-2012. Maxis is currently in discussion with TM on the lease of wholesale access from UniFi and previously said it could roll out its service to 65,000 premises by end-3Q2010.

We are maintaining our projection on UniFi at this juncture and see revenue from the new service contributing a small 0.8%-2% of TM's group revenue over the next two FYs. The key risk to our forecast is the higher than anticipated take-up in the following months. TM remains a neutral due to its expensive valuations, trading at 19.5 times FY2011 earnings, amid emerging concerns over a potential threat from Maxis, which is also rolling out its fibre-to-the-home (FTTH) service. Maxis benefits from a strong brand name, marketing track record and compelling content from Astro. ' OSK Investment'' Research, July 5


This article appeared in The Edge Financial Daily, July 6, 2010.

GAMUDA - RHB Research upgrades construction sector to overweight

Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: RHB

Construction sector
Upgrade to overweight: We are upgrading the construction sector to overweight from neutral as we foresee construction stocks will generally outperform the market in 2H2010, buoyed by news flow, particularly, from: (1) The RM36 billion KL mass rapid transit (MRT) project; (2) The RM7 billion Ampang and Kelana Jaya light rail transit (LRT) line extension project; and (3) Federal land deals.

Gamuda to ride on news flow from KL MRT. A series of events with regards to the KL MRT can buoy Gamuda's share price including: (1) the expected almost daily doses of news and commentaries on the project; (2) Cabinet approval; (3) the thumbs up for the project from businesses and the public; and (4) the commencement of the actual physical works.

Also, the market is likely to react positively to the announcement on the formal awards of federal land parcels to 'master developers' and the subsequent farming out of the subdivided smaller land parcels to various developers. Given the scale of the projects and that most construction boys are already involved in the property business, they are likely to get a slice of the action.

While we believe the market is fully aware that certain negative elements are still lingering in the sector, we feel that it is likely to 'brave' these negative elements and forge ahead with its move to position itself ahead of the curve, underpinned by the collective 'buy-first-on-news' mentality.

Our top 'tactical' pick for the sector is Gamuda (trading buy, FV = RM3.85) as we believe its share price will be buoyed by the sustained news flow from the RM36 billion KL MRT project. Our top 'value' pick for the sector is Sunway (outperform, FV = RM2.35) due to its undemanding valuation of 7-8 times 1-year forward earnings on a fully-diluted basis, coupled with its strong earnings visibility stemming from its firm construction margins and growing non-construction profits. ' RHB Research Institute, July 5


This article appeared in The Edge Financial Daily, July 6, 2010.

JOBST - Strong earnings momentum to continue in 2Q2010

Stock Name: JOBST
Company Name: JOBSTREET CORPORATION BHD
Research House: HWANGDBS

JobStreet Corporation Bhd
(June 30, RM2.03)
Maintain buy at RM2.03 with a target price of RM3.30: Resumption of hiring as regional economies recover will continue to drive earnings momentum in 2Q2010. Malaysia, which commands more than 60% of group revenue, posted an average of 16,000 to 17,000 jobs per month on JobStreet's portal for April to June against 13,000 to 14,000 per month (+23% quarter-on-quarter) in January-March. Singapore also shows strong job posting sales of about 18,000 jobs currently, close to its all-time high, and higher than 1Q2010's 14,000 per month. 2Q2010 will also benefit from maiden associate earnings from 104 Corp, in which the group has a 20% interest.

Potential sales and market share gain with more marketing spends. JobStreet embarked on its aggressive marketing plan in April this year to build brand awareness mainly in Singapore. It plans to spend about 5% of sales in marketing, still a far cry from its major shareholder SEEK Ltd's 25%-30% of sales. JobStreet advertises in places with high public visibility such as the MRT, buses and taxis. While it is still early days, we understand it is closing its gap with JobsDB to 2,000 jobs posted per month, down from a 3,000 to 4,000-job gap previously.

Migration from print to online job advertising will boost online postings as: (i) broadband penetration increases; and (ii) more adoption of portable gadgets such as iPhone and iPad. The Malaysian government expects the broadband penetration rate to reach 75% by end-2015 (from 31% in 2009). According to a World Bank study, a 10% increase in household broadband penetration can raise GDP growth by more than 1%. Maintain buy on JobStreet with a RM3.30 target price based on 1 times PER. It is currently trading at 25% discount to its regional peers. ' HwangDBS Vickers Research, July 5


This article appeared in The Edge Financial Daily, July 6, 2010.

LMCEMNT - Lafarge mulls minority stake sale

Stock Name: LMCEMNT
Company Name: LAFARGE MALAYAN CEMENT BHD
Research House: MAYBANK

Lafarge Malayan Cement Bhd
(July 5, RM6.49)
Maintain hold at RM6.60 with target price of RM6.40: French parent, Lafarge SA, is considering selling up to 11.2% of its total 62.2% stake in LMC to pare down its net debt of '14.6 billion (RM59 billion). We remain neutral on LMC as it is already trading at peak-cycle EV/tonne among Malaysian cement producers. Hence, we believe there will not be much upside to the valuation for any potential sale of a minority stake. Target price of RM6.40 (12 times 2011 PER) is retained.

Post-disposal, Lafarge SA would remain the majority shareholder, with a minimum 51% shareholding. It would also retain management control of LMC. There is no indication of who the potential buyer is yet. This stake sale, worth RM628 million based on last Friday's closing price, is part of Lafarge SA's 2010 divestment programme.

In June 2009, there were news reports that Indonesia's largest cement maker, PT Semen Gresik (Gresik), planned to acquire Cement Industries Malaysia Bhd (CIMA). Gresik indicated that it had set aside more than IDR3 trillion (RM1.25 billion) for a 2-3mmt local cement maker (size of CIMA or Tasek), but no such transaction has occurred. We do not think Gresik is the potential buyer for a minority stake in LMC as: (i) Gresik should be looking for a controlling stake to create synergy with its group; and (ii) given that Gresik exports its extra capacity and is ramping up its capacity (+26% by 2012) for domestic growth, we believe its acquisition aim is not to raise supply in the Indonesian market, but to derive a central coal procurement strategy. Among the largest four Malaysian cement makers, only LMC has an Asia-Pacific coal procurement arm, through the Lafarge Group.

Potential buyers could be the bumiputera funds, but we note that LMC was not able to meet the Foreign Investment Committee's requirement for a minimum bumiputera interest in the past, and LMC was granted an exemption for the bumiputera equity requirement in February 2009. We see little upside to its current share price, as its current peak-cycle EV/tonne valuation of US$207 is at a 74% premium to its local peers. LMC's EV/tonne discount of 28% to its Indonesian peers is also justified by a low domestic growth and overcapacity environment. ' Maybank IB Research, July 5


This article appeared in The Edge Financial Daily, July 6, 2010.

SUNWAY - RHB Research upgrades construction sector to overweight

Stock Name: SUNWAY
Company Name: SUNWAY HOLDINGS BHD
Research House: RHB

Construction sector
Upgrade to overweight: We are upgrading the construction sector to overweight from neutral as we foresee construction stocks will generally outperform the market in 2H2010, buoyed by news flow, particularly, from: (1) The RM36 billion KL mass rapid transit (MRT) project; (2) The RM7 billion Ampang and Kelana Jaya light rail transit (LRT) line extension project; and (3) Federal land deals.

Gamuda to ride on news flow from KL MRT. A series of events with regards to the KL MRT can buoy Gamuda's share price including: (1) the expected almost daily doses of news and commentaries on the project; (2) Cabinet approval; (3) the thumbs up for the project from businesses and the public; and (4) the commencement of the actual physical works.

Also, the market is likely to react positively to the announcement on the formal awards of federal land parcels to 'master developers' and the subsequent farming out of the subdivided smaller land parcels to various developers. Given the scale of the projects and that most construction boys are already involved in the property business, they are likely to get a slice of the action.

While we believe the market is fully aware that certain negative elements are still lingering in the sector, we feel that it is likely to 'brave' these negative elements and forge ahead with its move to position itself ahead of the curve, underpinned by the collective 'buy-first-on-news' mentality.

Our top 'tactical' pick for the sector is Gamuda (trading buy, FV = RM3.85) as we believe its share price will be buoyed by the sustained news flow from the RM36 billion KL MRT project. Our top 'value' pick for the sector is Sunway (outperform, FV = RM2.35) due to its undemanding valuation of 7-8 times 1-year forward earnings on a fully-diluted basis, coupled with its strong earnings visibility stemming from its firm construction margins and growing non-construction profits. ' RHB Research Institute, July 5


This article appeared in The Edge Financial Daily, July 6, 2010.

PETRA - Petra Perdana sees entry of new shareholder Nam Cheong

Stock Name: PETRA
Company Name: PETRA PERDANA BHD
Research House: CIMB

Petra Perdana Bhd
(July 2, RM1.24)
Maintain outperform at RM1.28 with lower target price of RM1.92 (from RM1.96): Petra Perdana has completed the 10% private placement of new shares to Nam Cheong. Priced at RM1.32 per share, the exercise raised RM39.3 million worth of gross proceeds, which will be used as the deposit for two new vessels.

The new shares was listed July 2. We scale back our FY2010-12 EPS forecasts by 2% to 5%, as contribution from the two new vessels cannot fully offset the dilution from the new shares.

Consequently, our sum-of-parts (SOP)-based target price is lowered from RM1.96 to RM1.92. Petra Perdana remains an outperform, with the potential re-rating triggers being 1) an end to the boardroom tussle, 2) delivery of new vessels, and 3) improved vessel utilisation rate.

Petra Perdana raised gross proceeds of RM39.3 million from the private placement exercise. The proceeds will be used to pay for the deposit of two new vessels, namely Petra Marathon and Petra Superior.

Petra Marathon is a 12,240HP anchor handling tug supply vessel while Petra Superior is a work barge that can accommodate 300 men. Essentially, a work barge is a 'floating hotel'.

The shareholders approved Petra Perdana's proposal to place out new shares to Sarawak-based shipbuilder Nam Cheong at the June 28 AGM.
We view positively the entrance of Nam Cheong as a major shareholder. Nam Cheong has access to shipyard capacity in Malaysia and China, which Petra Perdana could tap for its ongoing fleet expansion.

Nam Cheong is an experienced and reliable builder, supplying vessels not just to Petra Perdana but also to Kencana Petroleum, Bumi Armada, Borcos and Lembaga Tabung Haji's TH Tech, among others.

Following the placement, Nam Cheong is now Petra Perdana's fifth-largest shareholder. It will, however, not be able to vote when the AGM continues on July 20 and deliberates on the re-election of four directors, namely MD Shamsul Saad, Surya Hidayat Abdul Malik, Raja Anuar Raja Abu Hassan and Idris Zaidel.

[Petra Perdana issued a statement last Friday, announcing that the reconvened AGM would consider Resolution 11 on the election of Hamdan Rasid (a Lembaga Tabung Haji representative) and additional Resolutions No 12, 13 and 14 regarding the election of (nominees) Datuk Syed Norulzaman Syed Kamarulzaman, Suhaimi Badrul Jamil and Datuk Shaik Sulaiman S Mohamed Ismail]
The nominees were originally rejected on the grounds that they did not meet the minimum 5% shareholding requirement.

The new shares dilute our earnings forecasts by 4.8% in FY2010 and 9.1% in FY2011-12, but contribution from the two new vessels partly offsets the dilution. Imputing the earnings dilution from the new shares and contribution from the new assets, we reduce our EPS forecasts by 2.5% in FY2010, 3.2% in FY2011 and 4.1% in FY2012.

The earnings downgrade has the effect of lowering our SOP-based target price from RM1.96 to RM1.92. Nonetheless, we hold the view that Nam Cheong will prove to be a strategic partner for Petra Perdana.

Congestion at the shipyard is often cited by marine support players as the cause of delay in vessel deliveries. With Nam Cheong as a major shareholder, the risk of late deliveries by Petra Perdana could lessen. As at March 31, Petra Perdana's net tangible asset stood at RM1.70 per share. ' CIMB Research, July 2

''

This article appeared in The Edge Financial Daily, July 5, 2010.

GENM - Another related party transaction at Genting

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Research House: KENANGA

Genting Malaysia Bhd
(July 2, RM2.62)
Maintain buy at RM2.74 with lower target price of RM3.40: Genting Malaysia is buying Genting Singapore plc's UK casino operations (Genting UK) for ''340 million (RM1.67 billion) at 1.2 times price-to-book value and enterprise value/earnings before interest, taxes, depreciation and amortisation of 11.5 times.

The rationale is that it provides access into the UK and European Union gaming market at reasonable valuations given the clean up and cost down process that Genting Singapore had undertaken over the years. Transaction should be completed towards end-2H10 and subject to approval of shareholders of Genting Malaysia and Genting Singapore, who are not connected to the companies' controlling shareholders or senior management team.

As such, dissenting shareholders still can frustrate the transaction if they secure sufficient votes. Bank Negara Malaysia's approval to make payment to a foreign party is also required. In the UK, special consent is also needed from the Gaming Commission to change the ownership of casinos. The transaction will be fully financed by internal funds. Net cash hoard, which stood at RM5.27 billion at end-1Q10 will be reduced to RM3.61 billion but we do not think that historical dividend of seven sen to nine sen per annum will be affected.

Original investment of ''699 million (RM3.43 billion) was written down to ''289 million at the latest Genting Singapore 1Q10 quarterly announcement. This would reduce the risk of a large impairment in the near future, especially since the UK casino market is turning around.

We are maintaining our FY10 and lowering FY11 net profit forecast by 6.8% to RM1.23 billion from RM1.32 billion.

Maintain buy with lower target price of RM3.40. With RM3.6 billion left, the group will actively continue to evaluate business opportunities. While we believe share price may react negatively to the proposed acquisition, the fundamental valuation remains intact. ' Kenanga Research, July 2

''

This article appeared in The Edge Financial Daily, July 5, 2010.

CAROTEC - Risks at Carotech materialise

Stock Name: CAROTEC
Company Name: CAROTECH BHD
Research House: OSK

Hovid Bhd
(July 2, 17 sen)
Downgrade to sell at 20.5 sen with lower target price of 21 sen (from 28 sen): Hovid announced on Bursa Malaysia on July 1 that its 58%-owned subsidiary Carotech has defaulted on its principal and interest servicing in respect of certain banking facilities from financial institutions.

According to Hovid, it does not have any obligation with regard to the defaulted loans by Carotech. The latter is currently working directly with the financial institutions with assistance from the Corporate Debt Restructuring Committee (CDRC) to construct and implement a Debt Restructuring Plan.

As we had been highlighting in our previous reports, Carotech's high-net-gearing level exceeding 1.5 times was of grave concern, although the stock trading was at an attractive price-earnings ratio (PER).

Although Hovid does not have any obligation on the defaulted loans by Carotech, we believe the default may trigger a cross default with regard to Hovid's other lenders. Other than the interest costs, Carotech is also exposed to forex risk given that the bulk of its borrowings is in US dollars.

To recap, between 2006 and 2008, Carotech invested more than RM300 million to increase its capacity from 18,000 tonnes to 120,000 tonnes per annum to cater to increasing demand for phytonutrients and oleochemical products as the time.

However, the significant increase in commodity prices in late 2008, particularly the price of crude palm oil (which is the main material for Carotech's products), and the subsequent global economic turmoil dampened underlying demand and reduced the Carotech's ability to generate the cash flow to meet its debt obligations.

As such, we believe the default arose mainly due to over-expansion of capacity, a significant rise in working capital and the company's inability to clear stocks owing to reduced demand arising from poor economic conditions in Europe and the US, which are its major markets.

With such developments, we have cut our PER valuation from eight times to six times PER on FY11 earnings per share and arrive at a lower target price of 21 sen from 28 sen previously.

Despite the lack of downside on the stock, we have downgraded our recommendation from trading buy to sell, due to the negative sentiment arising from the default and amid uncertainties on the future. ' OSK Investment Research, July 2

''

This article appeared in The Edge Financial Daily, July 5, 2010.

SUNWAY - Malaysia construction sector upgraded

Stock Name: SUNWAY
Company Name: SUNWAY HOLDINGS BHD
Research House: RHB

Malaysia's construction industry was upgraded to "overweight" from "neutral" at RHB Research Institute Sdn Bhd on expected government rail and land contracts.

Gamuda Bhd was named RHB's top tactical pick as it may win a mass rail project in Kuala Lumpur, the research house said in a report today. RHB rates the stock "trading buy" with a fair value of RM3.85.

Sunway Holdings Bhd was its top value pick with an "outperform" rating and fair value of RM2.35, the report said. -- Bloomberg

GAMUDA - Malaysia construction sector upgraded

Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: RHB

Malaysia's construction industry was upgraded to "overweight" from "neutral" at RHB Research Institute Sdn Bhd on expected government rail and land contracts.

Gamuda Bhd was named RHB's top tactical pick as it may win a mass rail project in Kuala Lumpur, the research house said in a report today. RHB rates the stock "trading buy" with a fair value of RM3.85.

Sunway Holdings Bhd was its top value pick with an "outperform" rating and fair value of RM2.35, the report said. -- Bloomberg