Company Name: MALAYSIA AIRPORT HOLDINGS BHD
| Research House: HLG | Price Call: BUY | Target Price: 6.50 |
Terminates RM830m land deal
'''' IOI issued a notice to Pertama Land & Development Sdn Bhd (a unit of DutaLand Bhd) to terminate the sale and purchase agreement (SPA) to acquire 11,977.9ha of oil palm plantation land in Sabah for RM830m, due to "non-compliance of certain terms and conditions which had been communicated to Pertama Land".
'''' According to IOI's announcement, OSK Trustees Bhd (the stakeholder of DutaLand Bhd) will have to refund IOI the RM83m deposit (10% of the purchase price) and interest accrued.
'''' However, DutaLand, on the other hand, said it does not accept IOI's reasons for termination of the SPA, and it has notified OSK Trustees not to remit the deposit paid by IOI.
'''' Worst case scenario, assuming IOI's 10% down payment is not refundable, it would reduce IOI's FY06/12 net profit by 3.5% to RM2,285.8m. However, it is still premature to determine if IOI will lose its deposit given the absence of further details in the announcement.
'''' TP (based on SOP) maintained at RM4.57 for now, and our Hold recommendation for IOI maintained.''
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MAHB (BUY; TP: RM6.50)
Expect Strong 4Q11
'''' Slightly below our numbers '9M11 core earnings to RM289.9m (66.2% of HLIB's FY11 estimates and 74.0% of consensus).
'''' We expect strong result in 4Q11 given seasonally stronger period and the absence of RM30m airlines incentive provision in 4Q11.
'''' SGIA continued to make losses, while being offsets by MALE profits.
'''' Received one-off dividend payout of RM22m from its investment in Gas Distilled Cooling.
'''' MAHB highlighted possibility of lower dividend payout as it needed to reserve cash flow for KLIA2 construction.
'''' Cut FY11 earning by 4.4%, but raised FY12-13 earnings by 10.7% and 8.4% after accounting for higher passenger growth.
'''' Upgrade to BUY and TP of RM6.50 based on DCF.
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More consolidation ahead
'''' Despite disappointment in ironing out a detailed masterplan at yesterday's EU Summit, overnight gains on Dow and news that China will buy bonds issued by the EFSF should bode well for the broader markets.
'''' Maintain SELL INTO RALLY or TAKE PROFITS near our envisaged resistance targets of upper Bollinger band (now at 1478 pts) and 100-d SMA (at 1497). Immediate pullback supports are 1436 (50-d SMA), 1410 (30-d SMA) and the 1400 psychological levels.
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CPO price: Poised for a further breakout
'''' To recap, CPO prices jumped 2.1% to RM2951/MT on 25 Oct and had rebounded 6.5% from 52-wk low of RM2771 on 7 Oct.
'''' After surpassing its 30-d SMA and a breakout of the downtrend line (DTL) from 52-wk high, near term CPO outlook has turned better amid strengthening weekly and daily technical readings. Immediate upside resistance targets are RM3040-3217. Immediate supports are mid Bollinger band (now at RM2856) and lower Bollinger band of RM2763 levels.
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