KLCCP - Property sector driven by liquidity

Stock Name: KLCCP
Company Name: KLCC PROPERTY HOLDINGS BHD
Research House: KENANGA

Property sector
Maintain trading buy: Malaysia's residential property absorption rates are still below the eight-year average. Overhang rates in Selangor and Johor have improved due to stronger demand and a decreasing number of new launches. General affordability is still looking good. All price segments are reporting improved sales, driven by low interest rates, liquidity, innovative financing schemes, high savings rates, favourable lending environments, property as a preferred inflation hedge, EPF Account 2 monthly withdrawals for the repayment of one house and pent-up demand from the upgraders market. We expect the residential sector to register a new record sales level of RM52.9 billion (+26% year-on-year) in 2010. Large developers under our coverage, like S P Setia, IJM Land and Mah Sing Group, are reporting record high 2010 sales.

Malaysian house price index (HPI) trends indicate general residential prices have grown steadily and are moving in tandem with the consumer price index. But we do observe landed residential prices have gained momentum though we think it is confined to certain 'hot spots'. Anecdotal evidence indicates a growing divergence between primary and secondary market prices. Already, some slight price corrections are observed, which we think is healthy for the long run. Nonetheless, residential prices will continue to maintain their long-term uptrend since replacement costs continue to rise.

The Klang Valley commercial segment's looming incoming supply of circa 18 million sq ft in the medium term should limit rental growth. There is significant incoming supply for both retail and office space over next three or four years. Retail expects another three million sq ft supply in 2H10, or 13% of existing supply, and there will be 14.9 million sq ft of new office spaces in the next three or four years, equivalent to 21% of existing supply. This will add pressure on occupancy rates while potential tenants are spoilt for choice.

The government is mulling over capping loan-to-value (LTV) ratios for third property purchases onwards, progressive real property gains tax (RPGT) and cessation of international accounting standards (IAS) financings. We think implementation of progressive RPGT and cessation of IAS financings will be detrimental to property sales and sentiment.

Property stocks are 'sales driven'. Without strong headline numbers, it will be tough for property share prices to maintain the current momentum. Although 2010 residential sales value for Malaysia is estimated to be a 24% y-o-y increase, we expect 2011 sales to grow 7% y-o-y due to 2010's high base effect. Developers under our coverage are waiting for clarity in Budget 2011 before determining their FY2011/12 sales targets but maintain they will be able to sustain current levels.

Catalytic news flow and ample liquidity could push the Kuala Lumpur property price index (KLPRP) to peak cycle valuations of 1.3 times price-to-book value (PBV) from current mid-cycle 0.8 times PBV. Positive news flow (for example the MRT project) and high liquidity from the inflow of foreign funds, attracted to the stronger ringgit, are key share price drivers.

Maintain 'trading buy' until policy worries abate post Budget 2011. We are tending towards a possible upgrade for the sector to 'overweight' if developers under our coverage can target 15% to 20% y-o-y growth in FY2011/12 sales.

Stick to developers with high news flow, which provide excellent trading opportunities. Strong branding goes a long way as these developers are more equipped to grab market share in the event of softer demand and policy uncertainties. We maintain: (i) 'buy' on Mah Sing Group (target price: RM2.20); (ii) 'trading buy' on Eastern & Oriental (TP: RM1.26); (iii) 'trading buy' on Hunza Properties (TP: RM1.76); (iv) 'hold' on KLCC Property (TP: RM4.42 [RM3.36 if Lot C valued at net book value]). We are reviewing our calls on S P Setia (TP: RM4.78) and IJM Land (TP: RM2.80) pending Budget 2011and their guidance for FY2011/12 sales targets. ' Kenanga IB Research, Oct 14


This article appeared in The Edge Financial Daily, October 15, 2010.

HUNZPTY - Property sector driven by liquidity

Stock Name: HUNZPTY
Company Name: HUNZA PROPERTIES BHD
Research House: KENANGA

Property sector
Maintain trading buy: Malaysia's residential property absorption rates are still below the eight-year average. Overhang rates in Selangor and Johor have improved due to stronger demand and a decreasing number of new launches. General affordability is still looking good. All price segments are reporting improved sales, driven by low interest rates, liquidity, innovative financing schemes, high savings rates, favourable lending environments, property as a preferred inflation hedge, EPF Account 2 monthly withdrawals for the repayment of one house and pent-up demand from the upgraders market. We expect the residential sector to register a new record sales level of RM52.9 billion (+26% year-on-year) in 2010. Large developers under our coverage, like S P Setia, IJM Land and Mah Sing Group, are reporting record high 2010 sales.

Malaysian house price index (HPI) trends indicate general residential prices have grown steadily and are moving in tandem with the consumer price index. But we do observe landed residential prices have gained momentum though we think it is confined to certain 'hot spots'. Anecdotal evidence indicates a growing divergence between primary and secondary market prices. Already, some slight price corrections are observed, which we think is healthy for the long run. Nonetheless, residential prices will continue to maintain their long-term uptrend since replacement costs continue to rise.

The Klang Valley commercial segment's looming incoming supply of circa 18 million sq ft in the medium term should limit rental growth. There is significant incoming supply for both retail and office space over next three or four years. Retail expects another three million sq ft supply in 2H10, or 13% of existing supply, and there will be 14.9 million sq ft of new office spaces in the next three or four years, equivalent to 21% of existing supply. This will add pressure on occupancy rates while potential tenants are spoilt for choice.

The government is mulling over capping loan-to-value (LTV) ratios for third property purchases onwards, progressive real property gains tax (RPGT) and cessation of international accounting standards (IAS) financings. We think implementation of progressive RPGT and cessation of IAS financings will be detrimental to property sales and sentiment.

Property stocks are 'sales driven'. Without strong headline numbers, it will be tough for property share prices to maintain the current momentum. Although 2010 residential sales value for Malaysia is estimated to be a 24% y-o-y increase, we expect 2011 sales to grow 7% y-o-y due to 2010's high base effect. Developers under our coverage are waiting for clarity in Budget 2011 before determining their FY2011/12 sales targets but maintain they will be able to sustain current levels.

Catalytic news flow and ample liquidity could push the Kuala Lumpur property price index (KLPRP) to peak cycle valuations of 1.3 times price-to-book value (PBV) from current mid-cycle 0.8 times PBV. Positive news flow (for example the MRT project) and high liquidity from the inflow of foreign funds, attracted to the stronger ringgit, are key share price drivers.

Maintain 'trading buy' until policy worries abate post Budget 2011. We are tending towards a possible upgrade for the sector to 'overweight' if developers under our coverage can target 15% to 20% y-o-y growth in FY2011/12 sales.

Stick to developers with high news flow, which provide excellent trading opportunities. Strong branding goes a long way as these developers are more equipped to grab market share in the event of softer demand and policy uncertainties. We maintain: (i) 'buy' on Mah Sing Group (target price: RM2.20); (ii) 'trading buy' on Eastern & Oriental (TP: RM1.26); (iii) 'trading buy' on Hunza Properties (TP: RM1.76); (iv) 'hold' on KLCC Property (TP: RM4.42 [RM3.36 if Lot C valued at net book value]). We are reviewing our calls on S P Setia (TP: RM4.78) and IJM Land (TP: RM2.80) pending Budget 2011and their guidance for FY2011/12 sales targets. ' Kenanga IB Research, Oct 14


This article appeared in The Edge Financial Daily, October 15, 2010.

MAHSING - Property sector driven by liquidity

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

Property sector
Maintain trading buy: Malaysia's residential property absorption rates are still below the eight-year average. Overhang rates in Selangor and Johor have improved due to stronger demand and a decreasing number of new launches. General affordability is still looking good. All price segments are reporting improved sales, driven by low interest rates, liquidity, innovative financing schemes, high savings rates, favourable lending environments, property as a preferred inflation hedge, EPF Account 2 monthly withdrawals for the repayment of one house and pent-up demand from the upgraders market. We expect the residential sector to register a new record sales level of RM52.9 billion (+26% year-on-year) in 2010. Large developers under our coverage, like S P Setia, IJM Land and Mah Sing Group, are reporting record high 2010 sales.

Malaysian house price index (HPI) trends indicate general residential prices have grown steadily and are moving in tandem with the consumer price index. But we do observe landed residential prices have gained momentum though we think it is confined to certain 'hot spots'. Anecdotal evidence indicates a growing divergence between primary and secondary market prices. Already, some slight price corrections are observed, which we think is healthy for the long run. Nonetheless, residential prices will continue to maintain their long-term uptrend since replacement costs continue to rise.

The Klang Valley commercial segment's looming incoming supply of circa 18 million sq ft in the medium term should limit rental growth. There is significant incoming supply for both retail and office space over next three or four years. Retail expects another three million sq ft supply in 2H10, or 13% of existing supply, and there will be 14.9 million sq ft of new office spaces in the next three or four years, equivalent to 21% of existing supply. This will add pressure on occupancy rates while potential tenants are spoilt for choice.

The government is mulling over capping loan-to-value (LTV) ratios for third property purchases onwards, progressive real property gains tax (RPGT) and cessation of international accounting standards (IAS) financings. We think implementation of progressive RPGT and cessation of IAS financings will be detrimental to property sales and sentiment.

Property stocks are 'sales driven'. Without strong headline numbers, it will be tough for property share prices to maintain the current momentum. Although 2010 residential sales value for Malaysia is estimated to be a 24% y-o-y increase, we expect 2011 sales to grow 7% y-o-y due to 2010's high base effect. Developers under our coverage are waiting for clarity in Budget 2011 before determining their FY2011/12 sales targets but maintain they will be able to sustain current levels.

Catalytic news flow and ample liquidity could push the Kuala Lumpur property price index (KLPRP) to peak cycle valuations of 1.3 times price-to-book value (PBV) from current mid-cycle 0.8 times PBV. Positive news flow (for example the MRT project) and high liquidity from the inflow of foreign funds, attracted to the stronger ringgit, are key share price drivers.

Maintain 'trading buy' until policy worries abate post Budget 2011. We are tending towards a possible upgrade for the sector to 'overweight' if developers under our coverage can target 15% to 20% y-o-y growth in FY2011/12 sales.

Stick to developers with high news flow, which provide excellent trading opportunities. Strong branding goes a long way as these developers are more equipped to grab market share in the event of softer demand and policy uncertainties. We maintain: (i) 'buy' on Mah Sing Group (target price: RM2.20); (ii) 'trading buy' on Eastern & Oriental (TP: RM1.26); (iii) 'trading buy' on Hunza Properties (TP: RM1.76); (iv) 'hold' on KLCC Property (TP: RM4.42 [RM3.36 if Lot C valued at net book value]). We are reviewing our calls on S P Setia (TP: RM4.78) and IJM Land (TP: RM2.80) pending Budget 2011and their guidance for FY2011/12 sales targets. ' Kenanga IB Research, Oct 14


This article appeared in The Edge Financial Daily, October 15, 2010.

IOICORP - Laggard comes into play

Stock Name: IOICORP
Company Name: IOI CORPORATION BHD
Research House: ECMLIBRA

IOI Corporation Bhd
(Oct 14, RM5.80)
Upgrade to buy at RM5.74 with revised target price RM7.22 (from RM5.89): IOI has been rising for a good couple of months, increasing 8.3% since Sept 1. Wednesday's close of RM5.74 is close to our target price (TP) of RM5.89 and we view that given sector fundamentals, there is more upside for IOI. Year-to-date, IOI's 4.9% gain lags behind the FBM KLCI's gain of 17.3%.

We expect the local equity market to be driven by foreign net equity inflows in 4QCY10, and in this respect IOI is also a laggard. IOI's foreign shareholding hit a high of about 33% in mid-2008 before the commodity price crash. We estimate foreign shareholding at 20% currently, which indicates there may be upside should foreigners take further interest in the stock.

Key fundamental drivers for crude palm oil (CPO) prices at the moment are: (i) stronger exports driven by new demand from Pakistan and Egypt, as well as demand from the US and EU; (ii) production is weak, as October's production surge may not be sufficient to take the industry through the upcoming festive season and 1QCY11 cyclical downturn in production; and (iii) potential for a supply crunch in the soyabean market despite record crops in North America as supplies are being mopped up by China and from bio-diesel demand. We believe these three key factors will keep CPO prices buoyant.

We are raising our FY11 CPO average selling price (ASP) to RM2,700 per metric tonne from RM2,500 previously. This brings up our FY11 EPS by 8.2%. We also raise FY12 CPO ASP to RM2,700 from RM2,500 previously and EPS increases by 8.4%. Our yield assumption of 26mt per hectare remains status quo and fresh fruit bunch growth expectation of 1% is also unchanged for both years. To note, CPO futures closed at RM2,930 per mt on Oct 13.

When CPO prices reached past RM3,000 in early 2008, IOI traded at a rolling forward PER in excess of 30 times. Currently, IOI still trades at 19.9 times on FY11 EPS. As such we believe there is still room to run, given the fundamentals. Hence, we are raising our PER estimate by +1 standard deviation which gives a PER of 25 times. Pegging FY11 EPS to 25 times raises our TP to RM7.22 (RM5.89 previously on 22 times PER) which implies 26% upside from the current price. ' ECM Libra Investment Research, Oct 14


This article appeared in The Edge Financial Daily, October 15, 2010.

IJMLAND - IJM Land: Second wave of NAV expansion

Stock Name: IJMLAND
Company Name: IJM LAND BERHAD
Research House: AMMB

IJM Corporation Bhd
(Oct 14, RM2.68)
Maintain buy with fair value at RM3.88: We raise our fair value from RM3.60 per share to RM3.88 based on an unchanged 10% discount to our revised fully-diluted (FD) NAV of RM4.31 per share, which takes into account an estimated accretion of 31 sen per share (50% stake) from the acquisition of 2,000 acres of land at Canal City (GDV: RM6.5 billion).

The acquisition price of about RM5 psf is very attractive. Payment will be staggered over four years.

The maiden launch is expected to be in 4Q11.

The deal will give it a strong foothold in the lucrative township development in the Klang Valley.

The recent tender by the Penang government for 93 acres at Bayan Mutiara for RM200 psf may establish a new benchmark price for seafront land.

This may lead to a repricing of implied land values at Phase II (103 acres) of The Light, which should cost less than RM50 psf to reclaim.

The imminent debut of Light Collections II (GDV: RM260 million) next month is highly anticipated.

IJM Land is actively negotiating with anchor investors to pre-commit on its highly sought-after waterfront retail mall (GFA: 1.0msf) at Phase II.

Presales in the first six months of this fiscal year have reached RM900 million.

IJM Land looks likely to surpass its presales guidance of RM1.2 billion given its presales pipeline of a further RM700 million until end-FY11F. Unbilled sales now stand at RM1.1 billion.


This article appeared in The Edge Financial Daily, October 15, 2010.

PROTON - OSK raises Proton's FY10-FY11 forecast

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



OSK Research today raised Proton Holdings' revenue forecast for the 2010 and 2011 financial years by 1.8 per cent and 5.2 per cent, respectively.

"Given our earlier conservative forecast of 10,000 units of Inspira, against our new forecast of 14,400 units for next year, coupled with its higher average selling price, we are now raising our FY10 and FY11 revenue forecast," it said in a research note today.

Noting that a Lancer was only selling for RM60,000 in Langkawi, the research house said margins were compellingly lucrative for Proton once its boosts its localisation rate to 65 per cent next year, helped by the absence of excessive excise duty.

Following the higher revenue base due to increased pricing amid improved costs, OSK said it was consequently raising its bottom-line by 9.2 per cent and 10 per cent for FY11-FY12.

"This ultimately raises our fair value from RM5.67 to RM6.18 as we roll over our earnings base to FY12 at a lower multiple of 8.5 times (versus 9 times), with our "buy" call retained," it added. -- Bernama

KLK - KL Kepong raised to 'buy' at ECM Libra

Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
Research House: ECMLIBRA



Kuala Lumpur Kepong Bhd had its stock rating raised to "buy" from "hold" at ECL Libra Capital Sdn Bhd, which said the Malaysian plantation company will benefit from higher palm oil prices.

The share price estimate was increased to RM21.70 from RM16.20, analyst Bernard Ching said in a report today. -- Bloomberg

IJMLAND - AmResearch ups IJM Land FV to RM3.88

Stock Name: IJMLAND
Company Name: IJM LAND BERHAD
Research House: AMMB

KUALA LUMPUR: AmResearch has raised its fair value on IJM Land Bhd to RM3.88/share from RM3.60/share while maintaining its BUY on the stock.

'This is based on an unchanged 10% discount to our upward revised fully-diluted (FD) NAV of RM4.31/share (from RM4.00/share previously). The higher FD NAV stems from an estimated accretion of RM0.31/share (50% stake) from the acquisition of 2,000 acres of land at Canal City (GDV: RM6.5bil),' said the research house on Friday, Oct 15.

AmResearch said the significance of this deal is its attractive pricing, sheer size and immediate development potential given a large residential catchment.

Stemming from other value propositions, discount to NAV should narrow as IJM Land achieves its long-overdue status as a core portfolio holding.

DIGI - AmResearch reaffirms Hold on DiGi

Stock Name: DIGI
Company Name: DIGI.COM BHD
Research House: AMMB

KUALA LUMPUR: AmResearch reaffirms its HOLD on DIGI.COM BHD [], pending the release of its 3Q10 results at the end of the month.

Its fair value of RM22.60 a share ' based on a DCF valuation method ' hinges on its mobile broadband and the iPhone to drive revenue generation.

'We are looking at a net profit for the quarter in the range of RM270mil to RM275mil, or 34.7sen/share to 35.3sen/share, making our full-year expectation of RM1.05bil or 135.5sen/share. DiGi posted a net profit of RM556mil (71.6sen/share) in 1HFY10,' it said on Friday, Oct 15.

AmResearch said at the topline, it expects the strength to spill over to the 4QFY10, following what it believes has been a strong response to the iPhone 4 launch.

It said 3QFY10 lacked any exciting development to have a significant jump from the previous quarter. Revenue should register around RM1.29bil to RM1.3bil (to reach our full-year expectation of RM5.07bil).

AZRB - OSK Research: Buy on AZRB, TP RM1.45

Stock Name: AZRB
Company Name: AHMAD ZAKI RESOURCES BHD
Research House: OSK

KUALA LUMPUR: OSK Research expects AZRB's earnings to accelerate following a record RM876m worth of jobs secured last year.

The research house said on Friday, Oct 15 that AZRB remains a key beneficiary of government jobs.

'We see a slew of potential jobs from the Govt, private sector and overseas in the coming months. There is also potential for recurring income assets via the UIA Hospital and EKVE,' it said.

OSK Research's FY11-12 earnings are raised by 5%-7%, which pushes up its TP to RM1.45 (45% upside). Given the lagging share price performance YTD, it expects AZRB to catch up.

KENCANA - Kencana still a 'buy': Research houses

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



Kencana Petroleum Bhd is poised to ride on an up-cycle in new domestic oil and gas contract rollouts coupled with the listing of MISC Bhd's Malaysia Marine & Heavy Engineering Bhd (MHB).

In a report today, AmResearch Sdn Bhd said since the beginning of the year, Kencana has secured a total of RM681 million in new contracts, with a outstanding order book at RM1.6 billion.

"Based on our estimates, we expect Petroliam Nasional Bhd to award up to RM10 billion new contracts over the next six months."

Yesterday, Kencana secured a contract for the provision of single buoy mooring overhaul from Petronas Carigali for its Sarawak operations.

The one-off RM16.4 million contract is expected to commence by Jan 2011.

AmResearch said the government also planned to groom local fabricators to be able to effectively compete regional.

"This could mean that merger and acquisition could resurface for the company, further catalysing a re-rating on the stock," it said.

The research house said it would maintain a "buy" call on the ompany with an unchanged fair value of RM2 per share.

Meanwhile, OSK Research said it would also maintain its "buy" call on the company with a higher target price at RM2.06.

"Currently, the stock remains our top pick for the oil and gas sector as we like its strong delivery track record as well as strong orderbook and tenderbook, which total RM1.6 billion and RM2 billion respectively," it said. -- Bernama

HELP - HELP going down south

Stock Name: HELP
Company Name: HELP INTERNATIONAL CORPORATION
Research House: OSK

HELP International Corp Bhd
(Oct 13, RM2.44)
Maintain neutral at RM2.42 with target price of RM2.69: Yesterday, HELP announced that it has entered into a Memorandum of Understanding (MoU) with Seri Alam Properties SB (Seri Alam), a wholly owned subsidiary of United Malayan Land (UMLand). Under the terms of the MoU, Seri Alam will develop and lease to HELP an educational centre to be used as its Johor campus.

This announcement came as no surprise as it is in line with HELP's strategy to expand its presence outside the Klang Valley. The proposed campus marks its first Malaysian campus outside the Klang Valley. Under the MoU, HELP will establish an integrated technology and vocational training college in Bandar Seri Alam that will complement the government's initiative to develop the area into an education hub. The campus will be developed in four phases, with a built-up area of one million sq ft.

Phase 1, which will be completed by 2013, will have a built-up of approximately 250,000 sq ft. It will offer vocational training courses such as tourism and hospitality, culinary entrepreneurship, engineering, and multimedia and animation.

We believe the development of the physical campus infrastructure by UMLand will enable HELP to increase its student capacity without incurring massive capex. This will allow HELP to continue with its ongoing expansion strategy without stretching its balance sheet. To recap, its recent JV in China with AP Land was undertaken under the same mechanism ' AP Land will set up the physical infrastructure while HELP will provide the educational courses and programmes.

With the Phase 1 of the proposed Johor campus expected to be completed by 2013, we maintain our FY10 and FY11 earnings forecast. In addition, with the limited upside following the strong share price appreciation year-to-date, we maintain our 'neutral' recommendation at an unchanged target price (TP) of RM2.69 based on 14 times PER on FY11 EPS plus a net cash value per share of 42.5 sen. The share price and our TP have been adjusted downwards from RM4.30 after the three-for-five bonus issue that went ex on Oct 1. ' OSK Research, Oct 13


This article appeared in The Edge Financial Daily, October 14, 2010.

APM - Next leg-up is new models for auto parts sector

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

Auto Parts Sector
Maintain overweight: Our latest channel checks suggest that Ingress Corp Bhd's (not rated) Proton parts supply contract announced on Oct 12 is for the Persona replacement model and not for the Perdana. Checks with Proton confirm that it is launching the Persona replacement model in 2012.

To recap, Ingress announced it had secured a RM57 million contract to supply parts for a 'new Proton model'. The five-year contract ' typically lasting through the life-cycle of the model ' entails the supply of roof drip mouldings and door sashes. Supply of parts is expected to start in 4QCY11.

As we had indicated earlier, we believe this piece of news would have a positive bearing on APM Automotive Holdings Bhd (buy, fair value: RM6.80/share) as a Tier-1 supplier to Proton.

Proton's existing Persona model is one of its main volume contributors ' accounting for 28% of its total industry volume this year. During its early years, 2008 and 2009, the model generated a sales volume of more than 3,500 units per month.

Our projections have not factored in the contributions of this model to APM, but Proton is notably APM's second largest customer accounting for 16% of revenue in FY09. On a revenue per model basis, Proton contributes an average RM888 in top line to APM for every model it produces. At this rate, and based on the Persona's historical volume, we estimate that it could contribute up to RM37 million in revenue per year to APM.

Supply contracts for the Persona replacement aside, valuations of auto part players have lagged significantly to those of auto manufacturers during the sector run-up over the past 12 months. APM's discount to auto manufacturers has widened to 35% from a historical average of 29%. News flow on model introductions in the local market should provide the next catalyst for the auto parts sector.

We reiterate a buy on APM with fair value unchanged at RM6.80. Our valuation continues to peg APM at an ex-cash FY11F PER of seven times. APM currently trades at an undemanding six times FY11 earnings, the cheapest in our universe of auto stocks. Ex-net cash of RM313 million, APM trades at just four times FY11F EPS of 76 sen/share. More importantly, APM is close to breaking out of its small-cap status (less than RM1 billion market cap) which should give it much better visibility among institutional investors. ' AmResearch Sdn Bhd, Oct 13


This article appeared in The Edge Financial Daily, October 14, 2010.

TOPGLOV - Top Glove cautious over supply

Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Research House: MIDF

Top Glove Corp Bhd
(Oct 13, RM5.77)
Maintain neutral at RM5.65 with target price of RM5.14: Although the long-term outlook for the glove industry remains positive,'' supported by increasing demand, the management is cautious over near-term setbacks caused mainly by excess production'' capacity. In a glove supply surplus situation, we believe competitive pricing is one of'' the key factors to attract'' customers.'' Hence, this puts glovemakers in a less favourable position to pass on extra costs as compared with'' a supply shortage situation.'' ''

The management is confident of a 10% growth in global glove demand, and earnings growth for FY11 is targeted at a similar pace.'' It indicated that orders improved slightly compared with the previous month. We expect Top Glove's revenue to'' remain'' flat quarter-on-quarter for the next two quarters. We have noted that the inventory stock-up period has also normalised to two or three months from five or six months previously (post-H1N1 outbreak). World glove usage is expected to reach 150 billion pieces this year.

Despite accounting for 89% of the world population, Asia and Latin America's glove imports were only 32% of the world total. The management is positive on the demand'' prospects, especially from Asia and Latin America, given their glove consumed per'' user is still significantly lower than the developed countries like the EU and US. Note that in Asia and Latin America, latex gloves make up the bulk of their purchases as they are cheaper than nitrile gloves. Powdered and powder-free latex gloves accounted'' for 83% of the company's sales in FY10 (FY09: 80%), with the remaining from nitrile (7%), vinyl (6%), surgical (3%) and others (1%). ''

We maintain neutral and keep our target price unchanged at RM5.14 based on 13 times FY11 EPS, which is the average'' between 2001 and 2005 (the period prior to the share price rally for the industry). The supply surplus remains our main concern, taking into account our estimated additional glove production capacity growth for the industry of 15% to 20%.'' However, we expect Top Glove's share price to be well-supported at the current level, given its net cash position of 49 sen per share and potential earnings enhancement from mergers and acquisitions, specifically targeting nitrile glove manufacturers. ' MIDF Research, Oct 13


This article appeared in The Edge Financial Daily, October 14, 2010.

TIMECOM - HLG Research initiates coverage on Time DotCom with buy call

Stock Name: TIMECOM
Company Name: TIME DOTCOM BHD
Research House: HLG

HLG Research has initiated coverage on Time DotCom with a buy recommendation at 64 sen and target price 89 sen based on sum-of-parts.

The research house said the company has a good business model with regular recurring revenues and a high degree of operating leverage stemming from its underutilised fiber network.

HLG Research said it expects sustainable strong growth of 20% from Time DotCom's Data segment, stemming from the organic growth of Wholesale and Corporate & Government segments along with new growth areas from the fiberisation of mobile infrastructure and mobile backhaul.

"The company is undervalued relative to its business model, growth potential and assets.

"At current prices minus the discounted cash flow of core profits and DiGi shares, investors would be paying the equivalent of RM172 million for other assets worth RM800 million," it said.

It said Time DotCom is currently trading at a P/E of 22.3 times for FY10.

A multi-year growth period for the company should bring FY13 P/E valuations to within industry average levels of 13 times, it said.

PERWAJA - OSK maintains neutral call on Perwaja

Stock Name: PERWAJA
Company Name: PERWAJA HOLDINGS BERHAD
Research House: OSK




OSK Research Sdn Bhd has retained a neutral recommendation on Perwaja Holdings Bhd share with the target price unchanged at 97 sen.

It attributed the company's poor earning visibility as a factor for the neutral call.

In its research note here today, it said the fair value was derived from a blended valuation of 0.75 times net tangible assets/share and seven times earnings per share on financial year 2010 numbers.

Considering that some of the raw materials are procured on provisional contracts with uncertain final prices, the management is unable to assess the ultimate financial performance, the research house said.

It, however added that it was looking at the company's potential upstream investments for future benefits which could help enhance shareholder value. -- BERNAMA

SUNRISE - Sunrise glows beyond Mont' Kiara

Stock Name: SUNRISE
Company Name: SUNRISE BHD
Research House: MAYBANK

Sunrise Bhd
(Oct 12, RM2.13)
Upgrade to buy at RM2.12 with revised target price RM2.80 (from RM1.98): The stunning sales performance of Sunrise's recently-launched Canada project is a showcase of its ability to expand beyond Mont'Kiara. The project raises unbilled sales by 69% and makes Sunrise's RM1.3 billion FY11 sales target more achievable. Unbilled sales could be further lifted by a RM480 million en bloc office sale, expected to be concluded by end-2010. We raise forecasts by 5% to 46% and realised net asset value (RNAV) by 0.9%. Our target price (TP) is raised to RM2.80, a 30% discount to RNAV.

Sunrise's Quintet project in British Columbia marks a successful start to its overseas expansion. Phase 1 was fully sold within a month. Quintet has a gross development value (GDV) of RM1.2 billion at about RM1,730 psf. The size of the apartments ranges from 500 sq ft to 1,500 sq ft and the project will be developed in two phases. Given the strong sales recorded thus far, Sunrise will bring forward the launch of Quintet Phase 2. In our forecasts, we expect Quintet to contribute 4.3% to 28.1% of FY11/13 earnings before interest and tax (Ebit).

We understand that Sunrise is currently in talks with a local buyer for the en bloc sale of Menara Solaris (RM480 million initial GDV or RM818 psf; initially planned for strata office development). We are positive on these potential sales as it will reduce sales risks and enhance our forecasts by 5% to 11%.

We are upgrading Sunrise FY11/13 earnings forecasts by 5% to 46% to factor in changes in Quintet sales assumptions and profit recognition method as well as Menara Solaris GDV. Meanwhile, our estimated RNAV has been raised to RM4 per share (from RM3.97). We expect Ebit contributions from non-Mont'Kiara projects to increase from 4% (FY11) to 42% (FY13).

Sunrise is trading at an undemanding 7.2 times 2011 PER (against 11.3 times industry average), 4.1% and 47% discount to NTA and estimated RNAV/share, respectively. We believe lower concentration risk and better than expected sales thus far deserve a lower discount. We now value Sunrise at RM2.80 based on 30% discount to RM4 RNAV/share (from RM1.98, 50% discount to RM3.97 RNAV/share). Upgrade to 'buy'. ' Maybank IB Research, Oct 12


This article appeared in The Edge Financial Daily, October 13, 2010.

GAMUDA - Gamuda to see 18pc revenue growth by 2013

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



Gamuda Bhd is expected to see an average of 18 per cent growth in revenue over the FY11-FY13, says MIMB Investment Bank. It said top line growth would be mainly led by construction and property divisions.

"The ongoing catalyst for the construction division is the approval of the RM36 billion mass rapid transit (MRT) project, while growth in the property division is expected to be 55 per cent year-on-year, driven by property sales from Vietnam," MIMB said in a note today.

The research house said details of the MRT project is scheduled to be announced on Oct 26. "As this project is one of the very few mega projects in recent years, we believe it will attract a lot of interest. Gamuda being one of the favourite picks for this mega project, should boost its earnings prospect while the funding issue needs to be ironed out.

"As we believe the MRT project is long-term in nature and the valuation of Gamuda appears rich, we initiate coverage on this stock with a neutral rating," it said.

MIMB also raised Gamuda's target price to RM4.10 from RM3.83 previously. With a current order book of RM6 billion, it said Gamuda's construction division will be kept busy for the next few years, when the MRT project materialises.

Construction of Yen So Park will be operating at full pace after mid-FY11. But the full impact of the project revenue from Vietnam will be only felt in FY12, MIMB added.

"The Economic Transformation Plan (ETP) also mentions the construction of seven new highways. If these projects are open for tender, we believe Gamuda would be keen to participate and it should be one of the preferred parties, due to track record and financial muscle," it said. -- Bernama

TOPGLOV - OSK maintains 'neutral' call on Top Glove

Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Research House: OSK



OSK Research is maintaining a "neutral" call on Top Glove Corporation as the current operating environment of all rubber glove manufacturers is still unfavourable.

Top Glove in its analyst briefing yesterday highlighted issues such as the trend of high latex prices, forex issues and supply and demand for gloves.

OSK said the current high latex price of about RM7.50/kg would continue to erode all the rubber glove manufacturers' margins, until probably the second half of the current year 2011.
It believes the reversal in the current uptrend in price would likely come during the second half of the current year 2011 rather than in the immediate term.

"The Top Glove management did acknowledge, that it would be a matter of time before the uptrend in price reverses itself and although this seemed to comfort some of the investors, what was not mentioned was the timing of this reversal.

"This is due to most rubber glove manufacturers not having stocked up much on latex supply and hence, any latex price drop, would present a buying opportunity," it said in its research note today.

Going forward, OSK said it expects the dollar to restrengthen against the ringgit, although not substantially. Nonetheless, it added, this would be good news for all rubber glove manufacturers, since most of their transaction is in the dollar.

The current weakening of the dollar against the ringgit is not good for rubber glove players, as would be a time lag for them, to price the unfavourable movement into their new sales contracts, it explained.

Touching on why there was no 100 per cent latex cost pass through, OSK said it was due to the normalisation in demand for examination gloves and customers would expect the rubber glove manufacturer to bear part of the high latex price.

Meanwhile, MIDF Research said in the glove supply surplus situation, competitive pricing is a key factor to attract customers.

Hence, it explained, this placed glove makers in a less favourable position to pass on their extra costs as compared to when the supply shortage happened.

"We expect quarter-on-quarter, Top Gloves' revenue to remain flat for the next two to three months, from five to six months previously," it said. -- Bernama

CSCSTEL - Fundamentals of steel players likely to improve by year-end

Stock Name: CSCSTEL
Company Name: CSC STEEL HOLDINGS BERHAD
Research House: HLG

HONG Leong Investment Bank Bhd Research (HLIB Research) has initiated coverage on the steel sector with an overweight rating and said fundamentals of the steel players are likely to improve by end-4Q2010.

It attributed this to improvement in the near-term steel consumption outlook; concerns on oversupply would likely ease further in the near term; and prices of key steelmaking inputs (in particular, scraps and iron ore fines) likely to have bottomed.

HLIB Research said its top picks are Ann Joo Resources and CSC Steel.

"Ann Joo Resources (Buy, TP RM3.18) ' Likely to be the first to benefit from the steel price upswing, mini blast furnace will sharpen its competitive edge and diversify its product range.

"CSC Steel (Buy, TP RM2.17) ' Backed by a strong parent company (ie China Steel), an attractive yield play within the steel sector," it said in a note on Wednesday, Oct 13.

ANNJOO - Fundamentals of steel players likely to improve by year-end

Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Research House: HLG

HONG Leong Investment Bank Bhd Research (HLIB Research) has initiated coverage on the steel sector with an overweight rating and said fundamentals of the steel players are likely to improve by end-4Q2010.

It attributed this to improvement in the near-term steel consumption outlook; concerns on oversupply would likely ease further in the near term; and prices of key steelmaking inputs (in particular, scraps and iron ore fines) likely to have bottomed.

HLIB Research said its top picks are Ann Joo Resources and CSC Steel.

"Ann Joo Resources (Buy, TP RM3.18) ' Likely to be the first to benefit from the steel price upswing, mini blast furnace will sharpen its competitive edge and diversify its product range.

"CSC Steel (Buy, TP RM2.17) ' Backed by a strong parent company (ie China Steel), an attractive yield play within the steel sector," it said in a note on Wednesday, Oct 13.

STAR - Star up on special dividends

Stock Name: STAR
Company Name: STAR PUBLICATIONS (M) BHD
Research House: AMMB

KUALA LUMPUR: STAR PUBLICATIONS (M) BHD [] shares advanced on Wednesday, Oct 13 after it declared special dividends of 47.9 sen less tax and 4.7 sen per share, tax exempt for the year ending Dec 31, 2010.

At 9.20am, Star was up 27 sen to RM3.99 with 1.77 million shares traded.

AmResearch in a note on Wednesday reiterated its buy call on Star with a fair value of RM4.13.

"We continue to like Star for its stronghold on the adex market (24% of total print industry) as backed by continued advertiser preference for English print, stable circulation and market leadership in ad-rates," it said.

AIRPORT - Malaysia Airports downgraded to 'hold'

Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: KENANGA



Kenanga Research has downgraded Malaysia Airports Holdings Bhd (MAHB) recommendation to a ''hold'' from a "buy" citing the company''s recent activities as reasons.

The company recently awarded a 25-year RM486 million concession to WCT Bhd to Built-Operate-Transfer of retail space near the Low Cost Carrier Terminal (LCCT).

"We are positive on the news as this will grow MAHB's retail business in tandem with the growing passenger traffic, however there is no immediate impact but a positive long term," Kenanga said in a research note today.

It said, the joint-venture between WCT-MAHB will form a company with a 70:30 equity structure to undertake the project and is targeted to be completed by June 2012.

However, "MAHB will likely earn dividend income from the company but not until 2014 at the earliest based on our estimates," the research company said.

A two-year gestation period is estimated to allow the company to ramp up occupancy and undertake some cost recovery, generating RM240 million in revenue a year.

Kenanga, meanwhile, maintained the company's five per cent passenger growth and earnings forecast for the financial year ending 2010.

"Although we are positive on the potential retail income contributions and its growth prospect, timing, however will most likely be two years from now," it said.

Despite downgrading its recommendation, Kenanga has raised MAHB's target price to RM6.10 from RM5.84 previously.

Meanwhile, it expects the construction of KLIA to touch RM2.5 billion with the runway contract to be contracted out soon at an estimated RM400 million.

"MAHB is likely to utilise RM500 million from its recent RM3 billion bond issues to refinance its bridging loan facilities," it said. -- Bernama

HARTA - Rubber gloves closer to the bottom, value emerging

Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
Research House: MAYBANK

Rubber gloves
Upgrade to neutral from underweight: Following our downgrade on Sept 15, glove stocks fell by as much as 11% to 22% and then rebounded by 2% to 24% in the past one or two weeks. In this report, we examine the floor values, using worst case growth assumptions over 2011/13. We upgrade Kossan to a 'buy' with unchanged target price (TP) of RM3.60 but maintain ratings for Top Glove ('sell', revised TP RM4.90) and Hartalega ('hold', unchanged TP RM5.40).

To derive our rock bottom discounted cash flow (DCF) valuations, we have lowered our already conservative assumptions to a worst case scenario of slower global new demand growth and lower market share increment. Subsequently, our worst case DCF valuations could be cut by 13% to 22% to: Top Glove: RM4.72, Hartalega: RM5.03 and Kossan: RM3.17.

Both Hartalega and Kossan are already trading at our worst case scenario valuations. However, we see a potential 10% to 12% downside to Top Glove's share price. While we believe our base case fundamentals remain intact, the market could potentially look at trough valuations before glovemakers can deliver their fundamental results.

We are now buyers of Kossan because: (i) its share price has fallen 16% below our TP and is already at our worst case valuation; (ii) trading at a forward PER of seven times, Kossan is the cheapest big-cap glovemaker with comparable qualities; and (iii) its share price underperformance of 3% relative to Top Glove is unjustifiable, given that its EPS growth going forward is stronger than Top Glove's, coupled with more production in the increasingly sought-after nitrile segment. No change to our earnings forecasts and TP.

We maintain Top Glove at 'sell' because the company posted very weak 4QFY10 results last week (pretax profit: -47% year-on-year, -49% quarter-on-quarter) and is likely to see earnings contract next year. We cut our FY11/13 EPS by 8% to 9% and TP to RM4.90 from RM5.40. We continue to peg a 10% discount on our new RM5.40 DCF valuation (previously RM6) as we expect its earnings before interest, tax, depreciation and amortisation margin to revert to pre-Brazil/H1N1 levels of 15%. Based on our revised earnings forecasts, the stock now trades at relatively pricey valuation of 14 times CY11 PER (against its five-year historical average of 12 times and peers of five to 10 times) on a sector lowest three-year net profit CAGR of 4%.

Our 'hold' call on Hartalega remains, as the company appears to be more invincible than its peers with share price outperformance of 19%. Nevertheless, we would only be inclined to upgrade the stock when the oversupply situation has eased, likely in the next three months. No change to our earnings forecasts and TP. ' Maybank IB Bhd Research, Oct 11


This article appeared in The Edge Financial Daily, October 12, 2010.

TGOFFS - Tanjung Offshore vessel damages East Belumut pipeline

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

Tanjung Offshore Bhd
(Oct 11, RM1.69)
Maintain neutral at RM1.81 with target price RM1.73: Last Friday, Tanjung Offshore announced that its 100%-subsidiary, Tanjung Kapal Services Sdn Bhd (TKS) has been served a notice of claim dated Aug 3 by Newfield Peninsula Malaysia Inc (Newfield) for damages to a pipeline allegedly caused by one of its vessels at the East Belumut Field, block PM 323, offshore Malaysia. The claim amounts to approximately US$15.9 million (RM49.3 million) and includes costs associated with the repair and clean-up of the alleged damage to the pipeline.

According to our secondary research, we understand that Newfield shut-in oil production at its East Belumut field due to this sub-sea pipeline damage in July. To recap, the pipeline, which connects the East Belumut platform in the PM 323 block to the Tinggi platform, was damaged by a passing vessel which the industry now believes is Tanjung Offshore's. The PM 323 block is located about 260km offshore Peninsular Malaysia in 73m of water. It achieved its first production in 2008. Newfield is the operator of the block with 60% interest. Before being shut-in, we understand that the field was producing an average of 20,000 barrels per day.

TKS' insure has been notified of the claim and will investigate the allegation. If it is proven to be true, Tanjung Offshore expects the claim to be settled based on the terms and provisions of the TKS' protection and indemnity insurance policy.

Management does not expect a major negative financial impact on the company if the claim goes through. It only expects the insurance premium for that particular vessel to be higher in future renewals.

We are keeping our FY10/11 earnings forecast unchanged for now pending the result of claim. Our target price for the company remains unchanged at RM1.73 based on PER of 11 times FY11 EPS.' OSK Investment Research Sdn Bhd, Oct 11


This article appeared in The Edge Financial Daily, October 12, 2010.

WCT - WCT in the bag

Stock Name: WCT
Company Name: WCT BHD
Research House: OTHER

WCT Bhd
(Oct 11, RM3.25)
Recommend trading buy at RM3.20 with revised target price RM3.45 (from RM3.28): WCT announced it has been awarded the contract by MAHB to undertake the development of an integrated complex in the LCCT on a build-operate-transfer concession of up to 25 years. WCT will jointly undertake the job with MAHB via a special purpose vehicle. WCT will hold 70% equity interest and MAHB the remaining 30%.

The RM486 million integrated complex will be financed partly through internally generated funds and partly bank borrowings. The complex will comprise a transportation hub, retail mall with approximately 437,000sq ft of net lettable area and car parks. Overall, construction is expected to be completed by mid-2012.

The latest job is timely as the issue of order book replenishment has been plaguing the company for quite a while. So far this year, the group has only managed to secure around RM700 million worth of jobs (including the LCCT integrated complex). Nevertheless, during its recent analyst briefing, management reiterated its confidence that the RM2 billion order book target will be achieved by the end of this year. Therefore, we could expect more project announcements in the coming months. We had already factored into our earnings forecast the winning of some LCCT projects with an assumed margin of 6%. However, pending further explanation from management, we do not factor in any income from the concession into our earnings forecast for FY12 onwards.

Looking at the improvement in contract news flow, we are tweaking our target price from RM3.28 to RM3.45 by removing the 5% discount to its realised net asset value as we expect more projects will be announced by the group in the coming months. Given this, we are recommending a 'trading buy' call on the counter. ' BIMB Securities Research, Oct 11


This article appeared in The Edge Financial Daily, October 12, 2010.

AIRASIA - AirAsia yields the story now

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

AirAsia Bhd
(Oct 11, RM2.16)
Maintain outperform at RM2.17 with revised fair value RM3.01 (from RM2.57): Projected to end-FY10 in December with 53 aircrafts, AirAsia's fleet in Malaysia is expected to increase by only four aircraft in FY11 and five in FY12. This follows the deferment that will result in the receipt of only eight new A320 aircraft in FY11 against 25 originally, and 12 new A320 aircraft to be received in FY12 against 24 originally.

But there is a silver lining to the Malaysian operation's limited capacity growth in FY11/12. Overall yields will be boosted, as scarcity in new capacity means only the fastest-growing and highest-yielding routes will be allotted additional capacity.

AirAsia has only hedged forward 40% of its group fuel requirements for 4QFY10 at an effective average price of US$82/bbl (RM255/bbl) to US$83/bbl. It is looking to hedge forward 30% of its group fuel requirements for 1HFY11.

At present, AirAsia expects the initial public offering (IPO) exercises of 49%-owned Thai AirAsia could happen by 1HFY11, 49%-owned Indonesia AirAsia by 2HFY11, and 16%-owned AirAsia X by end-FY11 or early-FY12. We believe the news flow on these three IPOs is likely to sustain interest in AirAsia.

We are raising FY10/12 net profit forecasts by 15% to 28%, largely to reflect stronger yields that more than offset lower capacity growth.

Risks to our view include: (i) the recovery in the air travel sector failing to sustain, (ii) higher jet fuel costs, and (iii) outbreaks of pandemic diseases.

We maintain 'outperform' because we believe the airline sector is poised for improved prospects over the medium term in line with the recovery in the global economy. AirAsia is an attractive proxy, particularly given that it has also finally done the right things such as: (i) starting to deliver more consistent earnings; (ii) adopting a more measured and 'disciplined' growth strategy (less aggressive fleet expansion) to ensure that its gearing level is in check; and (iii) gradually taking back the financial and non-financial support lent to associates Thai AirAsia, Indonesia AirAsia and AirAsia X (via debt raising in their own capacity or IPOs). Indicative fair value is raised by 17% from RM2.57 to RM3.01 based on 12 times revised FY11 EPS, in line with Ryanair. ' RHB Research Institute Sdn Bhd, Oct 11


This article appeared in The Edge Financial Daily, October 12, 2010.

KULIM - OSK keeps 'neutral' call on planters

Stock Name: KULIM
Company Name: KULIM (M) BHD
Research House: OSK



OSK has kept its "neutral" call on the Southeast Asian plantation sector.

The research outfit noted that palm oil surged to its highest level since July 2008 although the Malaysian inventory level crept up.

"We believe this is a rally triggered the widening of spread against soybean oil and by relief that the stockpile did not climb faster than it could.

"Though we are skeptical on the longer term sustainability of the rise, we think the short-term momentum could carry prices higher," OSK said.

OSK added that it has upgraded the "target PE for plantation stocks from 15x to 18x against CY11 earnings resulting in increases in target prices across the board".

"We continue to favour Indonesian planters such as Golden Agri, Astra Agro Lestari, London Sumatra, First Resources, and Kencana Agri as valuations are more compelling.

Malaysian planters also made gains yesterday but were under performing their Indonesian peers, which was not surprising given the expensive valuations.

Of the stocks under coverage, only Kulim and Genting Plantations delivered respectable stock price performance on absolute and relative basis over the past 3 and 6 months.

"We have raised Kulim's TP to RM11.20 from RM10.30 previously after fine-tuning our sum-of-parts valuation. Should Kulim sell off all its assets, repay all its company borrowings and return the balance to shareholders, all shareholders will get RM14 per share. -- Reuters

SUNRISE - Sunrise a 'buy' at Maybank Invt

Stock Name: SUNRISE
Company Name: SUNRISE BHD
Research House: MAYBANK



Sunrise Bhd, a Malaysian developer, was upgraded to "buy" from "hold" at Maybank Investment Bank Bhd.

The company has enjoyed "better-than-expected" sales, analyst Wong Wei Sum said in a report today.

She raised her share price estimate to RM2.80 from RM1.98, according to the report. -- Bloomberg

SUNWAY - ECM Libra Research: Sunway remains top BUY for construction sector

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

KUALA LUMPUR: ECM Libra Research says SUNWAY HOLDINGS BHD [] remains its Top Buy for the CONSTRUCTION [] sector.

In its research report issued on Tuesday, Oct 12, it said this was based on the strong earnings growth of 67.6% in FY10; undemanding forward P/E valuation of 8.7 times; more landbank acquisition in the pipeline, and strength in securing overseas construction contracts.

'Our target price, which is based on 10 times P/E on mid FY11 EPS, remains unchanged at RM2.61 as impact on FY11 earnings is negligible.

'This is further supported by sum-of-parts valuation of RM3.12, which has been revised from RM3.14 previously,' it said.

On Monday, Sunway announced that its unit, SunwayMas Sdn Bhd had terminated the joint venture agreement with Monty PROPERTIES [] Sdn Bhd to undertake a property development project known as Puncak Jalil with a gross development value of RM120 million.

WCT - AmResearch upgrades WCT to Buy

Stock Name: WCT
Company Name: WCT BHD
Research House: AMMB

KUALA LUMPUR: AmResearch is upgrading its call on WCT BHD [] (WCT) from Hold to a Buy - with a higher fair value of RM3.95/share as it rolls forward its valuation base to FY11F.

The research house said on Tuesday, Oct 12 that despite the recent run-up in its share price, WCT's FY11F-12F valuations remain undemanding at 11 times to 14times - and trades at a 24%-47% and 30%-45% discount to IJM and Gamuda, respectively.

The stock's foreign shareholding (11%) also lags its two larger peers (more than 30%).

The company last Friday announced that it had secured a RM486 million BOT concession contract for the Integrated Complex at the new low cost carrier terminal (KLIA2) in Sepang under a 70:30 JV with Malaysia Airports Holdings Bhd (MAHB).

'The latest deal could herald the start of a re-acceleration in order flows in coming months - where WCT has maintained its year-end order book target of RM2 billion. We see several project catalysts unfolding in the near-term,' it said.

SIME - IOI Corp climbs on palm stock upgrades

Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: CIMB



IOI Corp led Malaysian palm oil producers higher in Kuala Lumpur trading after CIMB Investment Bank Bhd upgraded their stock ratings.

IOI climbed 1.8 per cent to RM5.60 at 4:23 p.m. local time, set for its steepest gain since Sept 14.

The stock was raised to "neutral" from "underperform" by analyst Ivy Ng. Sime Darby Bhd, which was upgraded to "trading buy" from "neutral," added 1.3 per cent to RM8.70. - Bloomberg

MUDAJYA - Mudajaya up as OSK lifts share estimate

Stock Name: MUDAJYA
Company Name: MUDAJAYA GROUP BHD
Research House: OSK



Mudajaya Group Bhd, a Malaysian builder, rose 2.1 per cent in Kuala Lumpur trading after OSK Research Sdn Bhd raised its share price forecast to RM7.22 from RM6 in a report today.

The stock climbed to RM4.48 at 9:11 am local time. The company signed an agreement to help develop a hydroelectric plant in Laos on October 8. -- Bloomberg

TOPGLOV - Malaysia rubber glove sector upgraded

Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Research House: MAYBANK



The Malaysian rubber glove industry was upgraded to "neutral" from "underweight" at Maybank Investment Bank Bhd following recent share price falls.

Kossan Rubber Industries Bhd was upgraded to "buy" from "hold" with an unchanged fair value of RM3.60, according to a report by Maybank analyst Lee Yen Ling today.

Top Glove Corp's fair value was cut to RM4.90 from RM5.40, with a "sell" call, Lee said. -- Bloomberg

KOSSAN - Malaysia rubber glove sector upgraded

Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
Research House: MAYBANK



The Malaysian rubber glove industry was upgraded to "neutral" from "underweight" at Maybank Investment Bank Bhd following recent share price falls.

Kossan Rubber Industries Bhd was upgraded to "buy" from "hold" with an unchanged fair value of RM3.60, according to a report by Maybank analyst Lee Yen Ling today.

Top Glove Corp's fair value was cut to RM4.90 from RM5.40, with a "sell" call, Lee said. -- Bloomberg

AIRASIA - HLG Research maintains Overweight on aviation

Stock Name: AIRASIA
Company Name: AIRASIA BHD
Research House: HLG

KUALA LUMPUR: HLG Research is maintaining its Overweight recommendation on the aviation sector following the Malaysian government's initiatives in developing KLIA as a strategic aviation hub in Southeast Asia.

It said on Monday, Oct 11 that the initiatives to boost the Tourism Industry (under 10th Malaysia Plan and ETP) would augur increasing air travels into Malaysia.

Additional aircrafts by MAS and Airasia supports the industry growth. Further, new aircrafts also allow lower unit cost due to higher fuel efficiency, lower maintenance and larger capacity.

'MAHB (BUY, TP RM6.58) ' Higher passenger traffic from government initiatives as well as the regional strong economic growth, will increase its aeronautical revenue and augment its non-aeronautical revenue due to higher spending per passenger, while not having direct impact from the fluctuations of jet fuel price.

'Airasia (BUY, TP RM2.54) ' Continued regional liberalization of air travel and strong regional economic growth will increase demand for air travel with strong competition among regional airlines, Airasia will stand out with the lowest unit cost and the largest network,' HLG Research said.

AIRPORT - HLG Research maintains Overweight on aviation

Stock Name: AIRPORT
Company Name: MALAYSIA AIRPORT HOLDINGS BHD
Research House: HLG

KUALA LUMPUR: HLG Research is maintaining its Overweight recommendation on the aviation sector following the Malaysian government's initiatives in developing KLIA as a strategic aviation hub in Southeast Asia.

It said on Monday, Oct 11 that the initiatives to boost the Tourism Industry (under 10th Malaysia Plan and ETP) would augur increasing air travels into Malaysia.

Additional aircrafts by MAS and Airasia supports the industry growth. Further, new aircrafts also allow lower unit cost due to higher fuel efficiency, lower maintenance and larger capacity.

'MAHB (BUY, TP RM6.58) ' Higher passenger traffic from government initiatives as well as the regional strong economic growth, will increase its aeronautical revenue and augment its non-aeronautical revenue due to higher spending per passenger, while not having direct impact from the fluctuations of jet fuel price.

'Airasia (BUY, TP RM2.54) ' Continued regional liberalization of air travel and strong regional economic growth will increase demand for air travel with strong competition among regional airlines, Airasia will stand out with the lowest unit cost and the largest network,' HLG Research said.

WCT - HDBSVR: Maintain Buy on WCT, SOP-derived RM3.60 TP

Stock Name: WCT
Company Name: WCT BHD
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research is maintaining its Buy on WCT and a sum-of-parts derived target price of RM3.60.

WCT had on Friday, Oct 9 was awarded a RM486m build-operate-transfer concession by Malaysia Airports is for an integrated complex at the new LCCT for 25 years starting Oct 7, with an option for a 10-year extension.

'With this win, our new order win assumption for FY10 is RM1.3bn, while its orderbook is 30% higher at RM2.1bn. We expect at least another sizeable contract win in Qatar and other local jobs by end-2010 for it to meet our forecast,' HDBSVR said in its research report on Monday.

'The Qatar job is for a government office building and at advanced stage. The Gamuda-WCT JV is also one of five contractors short-listed for the RM1bn Durkhan Highway. Meanwhile, we understand WCT is finalising land deals in the Klang Valley,' it said.

''