RHBInvest Research Highlights 4th November 2011

Stock Name: UNISEM
Company Name: UNISEM (M) BHD

Research House: RHB

Price Call: SELL

Target Price: 0.92

Stock Name: MPI
Company Name: MALAYSIAN PACIFIC INDUSTRIES

Research House: RHB

Price Call: SELL

Target Price: 2.19

4th November 2011

 

Top Story: Genting Malaysia ' The Big Apple buzz                             Outperform

Visit Note

''       Resorts World New York (RWNY) opened on 28 Oct with much fanfare. The initial response to the racino was largely positive with 20k eager patrons waiting in line to get into the casino. All in, GM would spend a total of US$830m (US$380m for the licence and US$450 for capex), including the US$250m government grant. Applying RWNY's closest competitor, Empire City 's net win per day of US$330/VLT to its 5,000 machines, RWNY's gaming revenue could be c. US$600m p.a.. Management believes it should be able to make a similar EBITDA as Empire City of about US$80-100m once it is fully operational. We have now imputed earnings for RWNY into our forecasts.

 

Sector Call

 

Semiconductor: Moving to P/BV valuation methodology                      Underweight

Sector Update

Unisem: New fair value of RM0.92                        Underperform

MPI: New fair value of RM2.19                               Underperform

''       With the poor earnings visibility on the back of weak guidance by major players in the industry, the outlook for 2012 remains in doubt amidst the bearish outlook in the global economy. Furthermore, post Unisem's analyst briefing recently, there was lack of conviction as to whether the guided 4Q2011 revenue decline would be short-term, with a quick a recovery in 2012, although management appeared optimistic on such a scenario.

 

Corporate Highlights

 

Parkson: Positive earnings and valuation impact after PRA listing      Outperform (up from MP)

Company Update

''       Parkson Retail Asia's (PRA) listing on the SGX yesterday effectively resulted in Parkson Holdings (PHB) becoming a full holding company with a 51.5% ownership of HK-listed Parkson Retail Group (PRG) and 70.5% ownership of PRA.

''       Our earnings model has been changed to impute PRA's earnings as a group, with the same assumptions as we had in our IPO note dated 3 Nov.     

 

MMHE: Tapis EOR project finally in; but downside risks persist            Underperform

News Update

''       Yesterday, MMHE announced that it had won the Exxonmobil Tapis EOR fabrication project worth RM1.4bn. The project is expected to be completed by end-2013.

''       We are not surprised by the news. We understand that revenue recognition will begin in FY12. Based on our 9.5% EBIT margin assumption, the project will contribute around RM66.5m over its 2 year period.

''       Now that it has acquired the Sime Engineering yard, MMHE has put its yard optimisation plans on hold. As such, tax credits for the year will be minimal and the company's effective tax rate will rise on a yoy basis.

 

Lingui: Core net profit fell by 56% qoq                 Underperform (down from MP)

1QFY12 Results

''       1QFY06/12 core net profit of RM24.2m came in within expectations at 23% of our full-year forecasts and 22% of the full-year market consensus.