PROTON - Proton, Lotus to sign deal with six lenders

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

Proton Holdings Bhd
(April 14, RM3.25)
Maintain buy at RM3.36 with target price of RM5.20: It was reported that Proton's 100%-owned Group Lotus will sign a syndicated financing deal with six lenders ' CIMB Group Holdings Bhd, Malayan Banking Bhd, Oversea-Chinese Banking Corp, Eon Capital Bhd, Exim Bank and Affin Holdings Bhd. The deal is to be concluded in April. There are no details on the amount agreed.

Recall that Group Lotus has allocated an investment fund of ''480 million (RM2.4 billion) for its five-year turnaround plan. The investment is to be spent on product development, upgrading existing production facilities and a revamp of the dealer network. The funding will be sourced from Proton as well as externally. Group Lotus will start its production of five new models ' Esprit, Elite, Elise, Eterne and Ethos ' in 2012. These new models are to be released from end-2013 onwards. It was noted that Group Lotus would need to increase its unit sales to 8,000 from 2,000 Lotus vehicles per year in order to break even on this investment.

Proton's cash pile has depleted to RM969.3 million (RM1.76 per share) as at end-December 2010, from RM1.6 billion (RM3 per share) as at end-March 2010, reflecting the channelled cash outflow on the Lotus turnaround plan. We expect that over'' the next few years, its capital expenditure will be about RM800 million to RM1 billion per year, including capex for Group Lotus and domestic R&D. Proton is likely to be in need of debt. If we were to'' assume a manageable debt-to-equity ratio of 0.3 times, Proton could raise up to RM1.6 billion to fund its capex spending.

We are neutral on this pending full details of the agreement. We reiterate our 'buy' recommendation with a target price of RM5.20 based on a price-earnings ratio of eight times FY12F earnings and a price-to-net tangible assets ratio of 0.4 times. The stock implies a potential total return from the current price of 55.9%, including dividend yield of 1.1%. ' MIDF Research, April 14


This article appeared in The Edge Financial Daily, April 15, 2011.

SPSETIA - Research houses reaffirm 'buy' call on SP Setia

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: AMMB

Research houses are in consensus that SP Setia Bhd's acquisition of a strata title development in Leong Bee Court, Singapore, for S$65 million (about RM159 million) will pave the way for the
company to become a regional property developer.

OSK Research said the development comprising 27 strata units and a common property on a 0.27 hectare-land has been proposed to be redeveloped into a multi-storey residential apartment building, with an estimated gross development value of S$130 million (RM318 million).

"Given the freehold status of the land, we believe SP Setia can potentially fetch an average selling price of around S$1,400 per square feet based on a 25 per cent premium on leasehold property," it said in a research note today.

Meanwhile, AmResearch said assuming an average selling price of S$1,100 per square feet and a breakeven cost of S$891 per square feet, the project is expected to yield a development margin of 19 per cent.

Furthermore, given that the project was a maiden venture into the island republic, it gives great opportunity for the group to demonstrate its capabilities in the Singapore market, it said in a research note.

Another research house, HwangDBS Vickers Research, said SP Setia's move to enter the Singapore market would give the Malaysian property developer a good platform to cross-sell its other projects and enhance the company's branding.

All research houses reaffirmed "buy" call on SP Setia.

AmResearch and OSK Research maintained their fair value on the property company at RM8.10 per share and RM7.23 per share, respectively, while HwangDBS Vickers held to its RM7.90 target price. -- Bernama

SPSETIA - Research houses reaffirm 'buy' call on SP Setia

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: OSK

Research houses are in consensus that SP Setia Bhd's acquisition of a strata title development in Leong Bee Court, Singapore, for S$65 million (about RM159 million) will pave the way for the
company to become a regional property developer.

OSK Research said the development comprising 27 strata units and a common property on a 0.27 hectare-land has been proposed to be redeveloped into a multi-storey residential apartment building, with an estimated gross development value of S$130 million (RM318 million).

"Given the freehold status of the land, we believe SP Setia can potentially fetch an average selling price of around S$1,400 per square feet based on a 25 per cent premium on leasehold property," it said in a research note today.

Meanwhile, AmResearch said assuming an average selling price of S$1,100 per square feet and a breakeven cost of S$891 per square feet, the project is expected to yield a development margin of 19 per cent.

Furthermore, given that the project was a maiden venture into the island republic, it gives great opportunity for the group to demonstrate its capabilities in the Singapore market, it said in a research note.

Another research house, HwangDBS Vickers Research, said SP Setia's move to enter the Singapore market would give the Malaysian property developer a good platform to cross-sell its other projects and enhance the company's branding.

All research houses reaffirmed "buy" call on SP Setia.

AmResearch and OSK Research maintained their fair value on the property company at RM8.10 per share and RM7.23 per share, respectively, while HwangDBS Vickers held to its RM7.90 target price. -- Bernama

DIGI - DiGi cut to 'neutral' at UOB-Kay Hian

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

DiGi.Com Bhd, a Malaysian mobile-phone operator, was cut to “hold” from “buy” at UOB-Kay Hian Holdings Ltd following recent gains in the stock.

There are “limited catalysts” for the stock in the near term, according to the report today. -- Bloomberg

MAS - CIMB Research maintains outperform call on MAS

Stock Name: MAS
Company Name: MALAYSIAN AIRLINE SYSTEM BHD
Research House: CIMB

KUALA LUMPUR: CIMB Research has maintained its Outperform rating on MALAYSIAN AIRLINE SYSTEM BHD [] (MAS) with a target price of RM2.30 based on an unchanged core P/E multiple of 7 times due to its continued long-term confidence in MAS's fleet renewal.

The research house said on Friday, April 15 that during the welcoming ceremony for MAS's first A330-300 delivery, the airline revealed measures to cope with higher fuel prices, including raising fuel surcharges to cover some 50% of the cost increase since the start of the year and scaling back its 2011 capacity growth from 10% to only 4%.

The fleet renewal programme was also continuing with the delivery of 12 new-generation planes by year-end, it said.

'Unfortunately, these measures will not come fast enough to prevent a set of weak 1H results due to cost pressures and the impact of Japan's earthquake on demand.

'Potential re-rating catalysts include continuing reforms to boost structural profitability. Our earnings forecasts are unchanged,' it said.

DRBHCOM - RHB Research initiates coverage on DRB-Hicom with outperform rating

Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD
Research House: RHB

KUALA LUMPUR: RHB Research has initiated coverage on DRB-HICOM BHD [] with an outperform recommendation at RM2.30 with a fair value of RM3.15 and said the company had significant dealflow potential that could continue to yield new business contracts going forward.

It said on Friday, April 15 that DRB-Hicom has largely flown under investors' radar since its acquisition by Etika Strategi and induction into the Albukhary Group of companies in 2005.

The ensuing years saw a makeover of the Group's businesses that included the acquisition of Bank Muamalat and Rangkai Positif and the disposal of non-core assets.

'DRB-Hicom is today an expansive industrial conglomerate with a dazzling array of assets grouped under three operating divisions that offer strong growth potential as well as a high degree of earnings resilience.

'We believe DRB-Hicom has significant dealflow potential that could continue to yield new business contracts going forward. ''DRB-Hicom has solid financials with significant balance sheet capacity to fund new businesses,' it said.

RHB Research said its sum-of-parts derived valuation of its various businesses amounted to RM4.20 per share.

'After ascribing a 25% holding company discount, we arrive at our fair value for the stock of RM3.15 per share.

'PER valuations of 7.7 times and 6.6 times FY12 and FY13 respectively are undemanding, considering the implied 3-year FY10-FY13 recurring net profit CAGR of 37.1%,' it said.

''

SPSETIA - Maybank IB ups target price for S P Setia to RM7.13

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: MAYBANK

KUALA LUMPUR: Maybank Investment Bank Bhd Research says it is positive on S P Setia Bhd's (SPSB) latest acquisition of Leong Bee Court in Singapore given its strategic location and fair pricing.

The research house maintained its buy recommendation on S P Setia at RM6.50 and raised its target price for the stock to RM7.13 (from RM7.10 previously)

It said that despite minimal impact to earnings and RNAV, this project was important as it would strengthen SPSB's brandname in Singapore and showcase its development capabities and this in turn, will boost demand for SPSB's PROPERTIES [] in Malaysia by Singaporeans.

'We fine-tune our FY11-13 forecasts for the acquisition and raise RNAV by 1 sen.

'Our new TP is RM7.13 (10% premium to RM6.48 RNAV; ex-bonus TP is RM4.75),' it said in a note April 15.

PROTON - MIDF keeps 'buy' call on Proton

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

Proton Holdings Bhd needs to borrow money as its capital expenditure (capex) spending is expected to be about RM800 million-RM1 billion annually, including that for its Group Lotus and domestic research and development, said MIDF Research.

In its research note here today, MIDF said Proton's cash pile has depleted to RM969.3 million at end-December 2010 from RM1.6 billion at end-March 2010, reflecting the channeled cash outflow on the Lotus turnaround plan.

"If we were to assume a manageable debt-to-equity ratio of 0.3 times level, Proton could raise up to RM1.6 billion to fund its capex spending," it added.

It was reported that Proton's 100 per cent-owned Group Lotus will sign a syndicated financing deal with six lenders and it is to be concluded tomorrow.

The six lenders are CIMB Group Holdings Bhd, Malayan Banking Bhd, Oversea-Chinese Banking Corp, Eon Capital Bhd, Exim Bank and Affin Holdings Bhd.

The research house, however, reiterated a "buy" call on Proton's stocks with a target price of RM5.20 based on the price earnings ratio eight times for financial year 2010 forecast earnings and price/net tangible assets ratio of 0.4 times.

It said the stock implies a potential total return of 55.9 per cent including dividend yield of 1.1 per cent, from the current price.

MIDF has forecast Proton's pre-tax profit for the financial year 2012 to be at RM400.7 million on a revenue of RM9.521 billion, while for this year, the forecast is a pre-tax profit of RM299.3 million on revenue of RM8.382 billion. -- Bernama

IJMLAND - Has IJM Land been forgotten?

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

IJM Land Holdings Bhd
(April 14, RM2.79)
Maintain outperform at RM2.80 with revised fair value of RM3.28 (from RM3.18): Following the unsuccessful merger between IJM Land and Malaysian Resources Corp Bhd (MRCB), IJM Land's share price has fallen from the peak of RM3.24 at end-December. Despite the continued gradual run-up in share prices in the property sector (the KL Property Index has risen 8% year-to-date) since January 2011, the performance of IJM Land's shares has been flattish (YTD -2%) against Mah Sing Group Bhd's +41% and S P Setia Bhd's +11%. Hence, the stock is largely a laggard among the key property stocks.

We believe the current valuations on IJM Land are very decent, given the company's unchanged, solid fundamentals, strategic landbank exposure and more importantly the expected over 50% net earnings growth in FY12, which is one of the highest among the property stocks under our coverage. Our forecast on IJM Land's FY12 earnings is only 3.3% higher than the consensus estimate. In comparison with UEM Land Holdings Bhd and S P Setia's price-to-book value of 3.3 times and three times, IJM Land is currently trading at only two times PB, similar to Mah Sing's 2.2 times.

The value of the 2,000-acre (809.4ha) Canal City land will be unlocked next year. We believe management's guided gross development value (GDV) is rather conservative at RM6 billion, which should give an upside on realisable net asset value (RNAV). We estimate the potential GDV from this land could be as high as RM10 billion, taking into account a reasonable efficiency ratio and average house price of RM500,000 per unit. We have therefore imputed a GDV estimate of RM8 billion for this project into our RNAV estimate. The project will be a township development, which should enhance IJM Land's long-term recurring earnings from sustainable bread-and-butter projects. As such, we would not be overly concerned over any delays or unexpected turns in the property cycle. Given IJM Land's established track record, we believe the project will be another successful big township project in the Klang Valley (apart from S P Setia's Setia Alam). First launch of the project is targeted in 2H12. This is slightly later than expected due to revisions in the development plan and concept and timing for submissions and approvals.

The risks include: (i) competition from peers; (ii) regulatory risk; (iii) rising building material costs; and (iv) country risk.

In our recent discussion with management, it was indicated that the parent company IJM Corp will be converting its RCULS soon. The net impact on our FY12/13 earnings per share forecasts is -15% to -17.5%, after accounting for the interest savings and larger share base.

We reiterate our 'outperform' call with a higher fair value of RM3.28 (from RM3.18), at its RNAV per share, accounting for the higher GDV estimate for the Canal City land as well as a larger share base. IJM Land is our top pick besides Mah Sing.'' ' RHB Research, April 14


This article appeared in The Edge Financial Daily, April 15, 2011.

SPSETIA - S P Setia going from strength to strength

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: AMMB

S P Setia Bhd
(April 12, RM6.50)
Maintain buy at RM6.56 with revised fair value of RM8.10 (from RM7.38): We maintain our 'buy' rating on S P Setia and raise our fair value from RM7.38 to RM8.10 per share, at parity to our revised fully-diluted (FD) net asset value (NAV) of RM8.10.

We lift our FD NAV from RM7.77 to RM8.10 to reflect more aggressive pricing assumptions, and remove the 5% discount to our FD NAV to arrive at our new fair value, given a strong scope for further NAV growth.

We have also raised our earnings estimate for FY11F by 3% to RM310 million, and by 5% for FY12F and FY13F. This is to account for higher average selling prices, translating into an increase in pre-sales to RM3.1 billion this year, from the previous forecast of RM3 billion.

S P Setia has again demonstrated its slick execution and uncanny ability to strike deals, despite the soft condominium and office sub-markets. At KL Eco City, it has completely sold out the 12 boutique office blocks (net sellable area: 750,000 sq ft) for RM800 million and a 30-storey strata-titled office tower (NSA: 300,000 sq ft) for RM300 million.

The average selling price was RM1,067 and RM1,200psf for the boutique and strata-titled offices respectively. This is about 7% to 8% higher than the previous guidance.

In May 2011, S P Setia will soft launch some 750 condominiums (gross development value: RM650 million) under Phase I of KL Eco City. The average selling price has been raised by 10% from RM1,070 to RM1,180psf. We expect Phase I to be another sell-out project, paving the way for Phase II to be launched towards end-2011.

Phase II comprises 1,000 condominiums with a combined GDV of RM1 billion. The average selling price will be raised by a further 10% to RM1,300psf. The built-ups, however, will be scaled down to 500 to 600 sq ft (Phase I: 800 sq ft) to support absolute affordability and lower entry cost.

Aside from S P Setia's strong fundamentals, we expect land acquisitions to be the primary valuation driver. Based on its township track record, the developer would be the leading candidate to co-develop a parcel of the prime residential land in Sungai Buloh with the Employees Provident Fund-owned Kwasa Land, leveraging on its successful Eco Park brand.

We believe S P Setia may play a pivotal role in transforming Jalan Bangsar in Kuala Lumpur into a modern commercial and residential hub. It was recently awarded the privatisation of the Ministry of Health land opposite KL Sentral. More land deals in the locality may be imminent.

We remain committed to our investment thesis on S P Setia. It is embarking on an accelerated growth cycle where a combination of strong pricing trends and value-accretive land acquisitions should fuel significant NAV expansion and by extension, the share price. ' AmResearch, April 12


This article appeared in The Edge Financial Daily, April 15, 2011.

KPJ - KPJ advances, upgraded to Trading Buy by MIDF Research

Stock Name: KPJ
Company Name: KPJ HEALTHCARE BHD
Research House: MIDF

KUALA LUMPUR: KPJ HEALTHCARE BHD [] shares rose in early trade on Thursday, April 14 and were up 10 sen to RM4.21 at 9.40am with 469,300 shares traded.

MIDF Research upgraded the stock to a Trading Buy with a higher target price of RM4.60 from RM3.51 previously based on EPS12.

The research house in a note April 14 said it was raising its implied PER for KPJ to 18 times (from 14 times previously), which is at the high-end of its historical PER band, due to positive newsflow and valuation rerating.

'We expect valuation re-rating to outweigh the impact of earnings dilution on warrants conversion. About 23.6% of the total warrants 2010/15 issued have been exercised.

'We revised marginally our forecast due to some housekeeping activities.

Continuous expansion locally with one or two new hospitals'' each year as well as potential venture into countries such as Vietnam, Cambodia and Myanmar will support the company's future growth and enhance its brand name regionally, MIDF Research said.

It said KPJ's management expects a strong double digit revenue growth in FY11

UEMLAND - RHB Research maintains Market Perform on UEM Land, FV RM2.80

Stock Name: UEMLAND
Company Name: UEM LAND HOLDINGS BHD
Research House: RHB

KUALA LUMPUR: RHB Research Institute has retained its forecasts, market perform call for UEM Land and fair value of RM2.80 at RNAV a share.

It said on Thursday, April 14 any share price weakness should represent a good trading opportunity of the stock.

'News flow on UEM Land is expected to be strong over the next few months. Apart from the ongoing land disposal, given its backing of major shareholders as well as the strengthening execution ability after the consolidation of Sunrise, we think UEM Land is a prospective candidate to participate in some of the government projects in Klang Valley, which include the RRI land in Sg Buloh and others, as part of its landbank/development diversification effort,' it said.

RHB Research said investors should also anticipate the announcement of UEM Land's involvement in the development of the land parcels in Singapore over the next few months.

COASTAL - Coastal secures RM61mil sale of tugs

Stock Name: COASTAL
Company Name: COASTAL CONTRACTS BHD
Research House: AMMB

Coastal Contracts Bhd
(April 12, RM3.40)
Maintain hold at RM3.42 with fair value of RM3.35: Coastal Contracts has secured the sale of 11 twin-screw tugboats worth RM61 million to a buyer based in Central America. Nine units are powered by 2,400 BHP (brake horse power) engines and are between 29m and 30m in length. One unit is 26m in length of close to 1,650 BHP, while the remaining unit is of the 24m and 1,200 BHP class.

The revenue from these vessel sales will be mostly recognised this year. These tugs, which are widely deployed for both harbour and coastal use, will unlikely be employed in the oil and gas industry, which uses higher premium anchor-handling tugs with higher safety specifications and engine capacities.

On average, these twin-screw tugboats are worth below US$2 million (RM6.06 million) per unit, while a 5,000 BHP anchor handling tug and supply vessel is priced at US$12 million to US$15 million each. As such, we expect the pre-tax margins from the sale of these vessels to be lower than the 30% registered by Coastal's shipbuilding segment in FY10.

With the fresh tugboat sales, Coastal's outstanding order book has risen by 10% to RM665 million currently ' which is expected to be recognised until FY12F.
As this represents only one time FY11F revenue, we maintain FY11F to FY13F earnings for now.

The recent ODS Petrodata conference indicated that charter rates for anchor handling tugs and platform supply vessels are only expected to improve towards end-FY12F and end-FY13F respectively, given that an estimated 400 vessels are expected to be delivered globally over the next two to three years.

As such, we do not expect a significant increase in additional vessel sales this year despite Coastal securing cumulative sales of RM329 million to date this year, which translates into 50% of FY11F revenue.

While the group hopes to venture into fabrication of oil and gas structures, this hinges on Coastal's proposed joint-ventures or potential merger with a licensed domestic operator. But these M&A plans are currently at an exploratory stage with no firm commitments from any parties.

Coastal currently trades at an FY11F price-earnings ratio (PER) of six times, which is at a 50% premium to the group's three-year average of four times.

Hence, we maintain our 'hold' call on Coastal with an unchanged fair value of RM3.35 based on FY11F PER of six times, at parity to its seven-year average. ' AmResearch, April 12


This article appeared in The Edge Financial Daily, April 13, 2011.

F&N - Much goodness in store at F&N, potential M&A?

Stock Name: F&N
Company Name: FRASER & NEAVE HOLDINGS BHD
Research House: AMMB

Fraser & Neave Holdings Bhd
(April 13, RM15.98)
Maintain buy at RM15.96 with revised fair value RM17.40 (from RM17.20): We re-affirm our 'buy' rating on Fraser & Neave (F&N) with a higher fair value of RM17.40 (against RM17.20 previously) based on a price-earnings ratio (PER) of 18 times CY11F earnings, after raising our FY11F to FY13F earnings forecasts by 4% to 6%.

We expect F&N to continue to benefit from robust consumption trends, in light of sustained sales volume growth seen thus far. We remain bullish about the group's earnings prospects for its key soft drinks and dairy businesses, well underpinned by: (i) juice beverages product expansion and; (ii) capacity boost from upcoming RM350 million Pulau Indah dairy plant. The manufacturing hub is set to alleviate supply constraints for the local and export markets upon commencement by end-2011.

Admittedly, we expect some margin normalisation owing to rising raw input costs. As an indication, prices of whey, skim milk, and aluminium have surged 16% to 22% year-to-date. However, the strengthening ringgit and sustained volume expansion should partially mitigate the risk of volatile prices. Alternatively, the group should be able to pass on additional costs, if necessary by leveraging on its market share leadership and strong brand equity.

Core operations aside, we believe potential earnings accretive M&A is a wild card which would provide some excitement over the medium term. We reckon food-based businesses remain a key area of interest as F&N seeks to increase its exposure to other F&B segments, in addition to its 23% stake in Cocoaland Holdings.

Net cash as at Dec 31, 2010 was a strong RM846 million. In the absence of a suitable target, investors can look forward to special dividends. Free cash flow for FY11F is an estimated RM235 million (70 sen per share).

Further ahead, a structural earnings transformation is inevitable as property development in its Petaling Jaya mixed commercial project kicks off, upon relocation of operations to Pulau Indah.

The 12.7-acre (5.1ha) factory land has an estimated gross development value of over RM1 billion, with Phase I comprising commercial and residential properties to commence in 2012. We have yet to factor this into our earnings model.

Our valuation continues to peg the raised CY11F earnings to a PER of 18 times ' close to the stock's three-year historical average of 17 times. We continue to like the stock for its strong fundamentals in a sustainable food industry, as proven by its consistent earnings delivery track record. ' AmResearch, April 13


This article appeared in The Edge Financial Daily, April 14, 2011.

AIRPORT - MAHB's fundamentals intact

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

Malaysia Airports Holdings Bhd
(April 13, RM6.15)
Maintain buy at RM6.16 with target price RM7.60: We understand that Middle East passenger volume has risen 6% year-on-year (y-o-y) at KLIA in January and February. This signals that travel to Malaysia has not been affected by the political turmoil in the Middle East.

In fact, we believe passengers could have switched their holiday and/or business destination to Malaysia due to the unrest. Passenger traffic from Middle East accounted for 8% of total passengers at KLIA. Last month's earthquake and tsunami in Japan has had minimal impact as passengers from Japan only contribute to 2% of KLIA passenger numbers.

We cut FY11F earnings by 6%, mainly after downgrading passenger growth assumptions and raising incentives. But higher rental income mitigated the impact. We gather that 1Q11 passenger traffic was strong with double-digit y-o-y growth, but passenger volume on full-service carriers might have dropped due to high oil prices.

However, MAHB should be able to capture the shift in passenger traffic to low-cost flights. Passenger volume at Malaysian airports should remain resilient, as in 2008/09 when MAHB still registered strong 7% to 8% passenger growth despite a weak air travel market due to the global economic downturn.


MAHB highlighted in its FY10 annual report that the total area for development within the KLIA Aeropolis would be expanded to 6,750 acres (2,731.6ha). This is 2.5 times larger than the existing 2,730 acres that we value at 90 sen per share. ' HwangDBS Vickers Research, April 13


This article appeared in The Edge Financial Daily, April 14, 2011.

MAHSING - Mah Sing proposes Tanjung Kupang land acquisition

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

Mah Sing Group Bhd
(April 13, RM2.60)
Maintain buy at RM2.59 with target price RM2.90: MSGB announced the proposed acquisition of nine parcels of contiguous prime freehold land in Tanjung Kupang, Johor Bahru, for a total cash consideration of RM54.7 million. The land measures approximately 205.7 acres (83.2ha), placing its value at an average of'' RM6.10 psf.

The tract is strategically located within the Iskandar Development Region in close proximity to Flagship Zone C, where the key economic activities are port and marine services, warehousing, logistics, engineering, hi-tech manufacturing, food'' production, petrochemicals and entrepot'' trade. It is a mere 1km from the Port of Tanjung Pelepas and 23km to Jurong Industrial Estate in Singapore.

MSGB proposes to develop the land into an integrated industrial and business park named Mah Sing i-Parc. It may comprise semi-detached factories, detached factories and shopoffices with an estimated gross development value (GDV) of RM610 million.

There will also be some plots of factory land measuring approximately 0.5 to one acre per lot for sale within the industrial park. The development is expected to commence in 4Q11 and will be developed over five years.

MSGB intends to fund the land acquisition through internally generated funds and bank borrowings. If we were to assume that 80% or RM43.8 million of the purchase price is financed through bank borrowings, the pro forma net gearing position of MSGB as at FY10 would be only 0.26 times.

The proposed i-Parc development is expected to generate total earnings of about RM92 million during the next five years (or approximately RM18 million per year). This acquisition is part of MSGB's ongoing landbanking strategy to achieve sustainable long-term earnings growth.

Maintain 'buy' with a target price of RM2.90. Our TP is derived from Mah Sing's realisable net asset value (RNAV) parity. While the'' proposed i-Parc development is expected to be value accretive, its inclusion into our RNAV calculation shall be upon its definite launch. As at 1Q11, Mah Sing had a combined GDV balance and unbilled sales of RM8.2 billion and RM1.3 billion respectively. ' MIDF Research, April 13


This article appeared in The Edge Financial Daily, April 14, 2011.

LIONIND - Lion Industries Corp hives off China tyre business

Stock Name: LIONIND
Company Name: LION INDUSTRIES CORPORATION
Research House: OSK

Lion Industries Corporation Bhd
(April 13, RM1.74)
Maintain neutral at RM1.76 with target price RM1.57: Lion Industries' 73%-owned subsidiary Lion Forest Industries (LFI) announced to Bursa Malaysia that its wholly owned subsidiary Lion Rubber Industries Sdn BHd (LRI) has entered into a conditional share and receivable transfer agreement with Toyo Tire & Rubber Co Ltd for the proposed disposal of 75% equity interest in Shandong Silverstone LuHe Rubber & Tyre Co Ltd (Shandong Silverstone) for a cash consideration of US$21.6 million (RM65.9 million), subject to adjustments and a settlement of intercompany debts of US$24.4 million to LRI.

Simultaneously, LRI has entered into a joint-venture agreement as well as a put and call option agreement with Toyo Tire on the remaining 25% stake in Shandong Silverstone.

We are not surprised by management's decision to dispose of Shandong Silverstone, especially after its earlier decision to dispose of the profit-making tyre business in Malaysia, Silverstone Bhd, in October 2010. LRI's cost of investment in the 75% equity interest in Shandong Silverstone in December 2004 was US$30 million plus a cost of US$6.6 million to acquire the remaining 25% stake in this unit in January 2011.

Shandong Silverstone has been loss-making since its inception owing to the fierce competition in China's commercial tyre business. Therefore, we believe the initial disposal consideration, arrived at on the basis that the consolidated net asset value (NAV) of Shandong Silverstone of 142.67 million yuan (RM66.06 million), is fair.

Furthermore, Toyo Tire will settle intercompany debts due to LFI amounting to US$24.4 million, which will help to recoup this long outstanding amount.

As for the remaining 25% stake in Shandong Silverstone, LRI will be granted a put option by Toyo Tire to require Toyo to acquire the 25% balance over a duration of one year after a holding period of three years. However, Toyo Tire will also have the option to call on LRI to dispose of the 25% equity interest in Shandong Silverstone.

The settlement pricing will be based on the actual NAV on completion, plus 5% simple interest per year for the entire duration of the option period.

We welcome the latest development as: (i) the group has finally managed to hive off the loss-making unit; and (ii) the disposal also returns huge cash proceeds amounting to RM140.3 million. We are not overly excited, however, as we do not expect any cash to flow to the holding company or minority shareholders, taking the cue from the disappointing cash repayment of only approximately 13% from the net proceeds of Silverstone Bhd's disposal last year.

The proposals are also expected to result in a loss of about RM2 million. Furthermore, we remain cautious of the recent announcement of direct investments of 29% and 20% JV stakes in Lion Blast Furnace Sdn Bhd (LBF) by Lion Industries and its subsidiary LFI respectively, as this large-scale investment poses a high investment risk to the JV partners and Lion Group as a whole.

Therefore, we maintain our 'neutral' recommendation, with a fair value of RM1.57, derived from five times price-earnings ratio and 0.43 times price-to-net tangible assets ratio on CY11 figures. ' OSK Research, April 13


This article appeared in The Edge Financial Daily, April 14, 2011.

KIMLUN - OSK Research: KimLun main winner in Iskandar Malaysia

Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD
Research House: OSK

KUALA LUMPUR: OSK Research said from a CONSTRUCTION [] angle, it views KimLun (BUY, FV: RM2.32) as the primary beneficiary from more job flows at Iskandar Malaysia.

It said on Wednesday, April 13 this is by virtue of: (i) its extensive track record of jobs within Johor and (ii) its Johor based status which provides an advantage as some Iskandar jobs are only limited to such contractors. With Iskandar at its tipping point, we expect to see more private sector development taking place.

'Given KimLun's established clientele base of reputable listed developers, we expect it to secure more contracting jobs for new launches,' it said.

BJTOTO - OSK Research downgrades BToto to Neutral, Fair Value RM4.65

Stock Name: BJTOTO
Company Name: BERJAYA SPORTS TOTO BHD
Research House: OSK

KUALA LUMPUR: OSK Research has downgraded BERJAYA SPORTS TOTO BHD [] (BToto) from Trading BUY to Neutral but maintains its Fair Value at RM4.65.

It said on Wednesday, April 13 BToto's core operational growth is likely to remain subdued as it continues to face stiff competition from Magnum, coupled with a matured domestic NFO market, while its stock price is already trading close to its fair value of RM4.65 which already implies a fairly rich 16.5x FY12 PER,' it said.

On Tuesday, a Reuters report said BToto may be considering selling a 49% stake in its unlisted gaming unit for roughly US$1bn (RM3.02bn) and has hired Citigroup Inc as adviser. The potential sale is expected to generate interest from private equity firms, including the likes of Carlye group and Providence Equity Partners.

OSK Research said although further news on the potential stake sale of its gaming assets could continue to excite the company's share price in the near term, the upside is likely to be limited and would be fairly close to our fair value of RM4.65, and the loss in material earnings contribution from a 49% stake sale in its jewel Sports Toto Malaysia Sdn Bhd will more or less offset the potential special dividend upside arising from the sale proceeds.

'Risks to our view are: i) a higher than expected price paid for its 49% stake and hence stronger special dividend upside potential to offset loss of earnings and recurring dividend payouts, and ii) potential privatization over and above our and market fair value of the stock,' the research house said.

BURSA - Positive sentiment continues for Bursa Malaysia Bhd

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

Bursa Malaysia Bhd
(April 12, RM8.04)
Maintain buy with target price raised to RM9.90 (from RM9.60): Trading interest in Bursa Malaysia has been resilient amid external challenges such as rising crude and commodity prices, political unrest in the Middle East and North Africa and nuclear crisis in Japan.

Average daily turnover volume in 1Q11surged 41% quarter-on-quarter to 1.7 billion shares, while average daily turnover value rose 25% q-o-q to RM2.1 billion. Velocity improved to 39% from 4Q10's 35%.

Kickers from the Economic Transformation Programme could further fuel positive sentiment in the stock market. The strong stock market activity was domestic-driven as foreign participation in equities remained flat at circa 24%.

The number of contracts traded in 1Q11 grew 32% q-o-q and 54% year-on-year. The migration of Bursa's derivatives trading platform to CME Globex (since September 2010), coupled with the recent commodity rally, seemed to attract foreign interest in derivatives products.

Foreign participation in FKLI and FCPO had risen to 37% and 30% respectively, against 33% and 25% in 2010. The CME Globex platform should promote greater visibility and spur stronger trading interest.

Given robust equities and derivatives turnover, we expect Bursa's 1Q11 results (due April 19) to be stronger with net profit at RM35 million to RM40 million.

As such, we raise FY11/13F assumptions for daily turnover volume to 1.3 billion to 1.6 billion (from 1.0 billion to 1.2 billion) and daily turnover value to RM1.8 billion to RM2.2 billion (from RM1.5 billion to RM1.8 billion).

We also raise operating costs to include higher technology and depreciation charges. All in, we nudge up FY11/13F net profit by 2% to 6% and our discount dividend model-based target price to RM9.90. ' HwangDBS Vickers Research, April 12


This article appeared in The Edge Financial Daily, April 13, 2011.

UNISEM - Further consolidation in the semiconductor industry?

Stock Name: UNISEM
Company Name: UNISEM (M) BHD
Research House: RHB

Semiconductor sector
Maintain neutral: Texas Instruments (TI) will acquire National Semiconductor Corp (NS), a semiconductor producer that specialises in analogue devices, for US$6.5 billion (RM19.7 billion) in cash. This follows its second acquisition within a year after purchasing two fabrication plants in Japan from Spansion Inc.

While TI is already the world's biggest analogue player (15% of global market share), the acquisition could further boost its market share substantially with NS' 3%. This implies that TI could control at least 18% of the global analogue market. In addition, this may also elevate TI to the third position among the global semiconductor players after Intel Corp and Samsung Electronics.

The acquisition could also see a change in the competitive landscape of the analogue market. Currently, TI's closest competitors, Analog Devices Inc and Maxim, each holds 6% market share, less than half of TI's implied market share. Therefore, we believe this could lead to further M&A as other major players seek to consolidate market share.

Given that NS is currently not a customer of Unisem (M) Bhd and Malaysian Pacific Industries Bhd (MPI), we believe the takeover could translate into higher volume loading for the two packaging players from TI, which is an existing customer. Note that Unisem and MPI's current product range includes analogue and power management chips ' QFN and X-3 MLP (transient voltage suppression technology).

Similarly, this could encourage Unisem and MPI to diversify into the higher-margin industrial segment as TI could gain a stronger foothold in the industrial segment given that NS specialises in the industrial market with 46% of total revenue in FY10 (against 14% of total revenue for TI). Note that Unisem and MPI produce around 12% to 15% of their chips for the industrial segment.

Risks to our view include: (i) weaker-than-expected economic recovery; (ii) strengthening of ringgit against the US dollar, and (iii) higher raw material cost.

While we highlight that the consolidation of TI and NS could be positive for the semiconductor industry, in particular for third-party packaging and assembly houses, we are keeping our forecasts for Unisem and MPI until the effects of the takeover filter into the market.

We reiterate our 'neutral' call on the sector with a positive bias, as we believe the semiconductor sector remains on track for stronger growth, underpinned by the pick-up in demand from the US and European Union in addition to the robust demand from Asia-Pacific. Our pick for the sector is Unisem ('outperform'; fair value, RM2.65). ' RHB Research, April 12


This article appeared in The Edge Financial Daily, April 13, 2011.

COASTAL - AmResearch 'hold' call on Coastal stays

Stock Name: COASTAL
Company Name: COASTAL CONTRACTS BHD
Research House: AMMB

AmResearch is maintaining a "hold" recommendation on Coastal Contracts Bhd with an unchanged fair value of RM3.35 per share.

The company has secured the sale of 11 tugboats worth RM61 million to a buyer based in Central America and with this, its outstanding order book has risen by 10 per cent to RM665 million currently.

"As this represents only one time of final year of 2011 forecast revenue, we maintain the financial year 2011- 2013 earnings forecast for now," it said in a research note.

It also said that they do not expect a significant increase in additional vessel sales this year despite Coastal Contracts securing cumulative sales of RM329 million to date this year, which translates to 50 per cent of the final year 2011 revenue.

AmResearch said the group also hopes to venture into the fabrication of oil and gas structures, which hinges on its proposed joint-ventures or potential merger, with a licensed domestic operator.--Bernama

GENM - OSK 'neutral' on Genting Malaysia

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

OSK Research is maintaining its "neutral" call on Genting Malaysia Bhd with an upgrade fair value (FV) of RM4.05 from RM3.24.

In its research note today, OSK said it was also maintaining the earnings forecast for Genting, which incorporates the earnings lift from the group's US racino operation scheduled for completion in the second half of this year.

"Our FV implies a relatively high 17.1 times financial year 2011 price earnings ratio (PER) versus the group's historical PER multiple of 14.9 times, suggesting, the growth potential from its US operation has been included in our valuation," it said.-- Bernama

BURSA - OSK raises target price for Bursa

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

OSK Research has upgraded its target price for Bursa Malaysia Bhd to RM9.90, from RM9.60, previously as it remained bullish of the local bourse's prospects.

"Given robust equities and derivatives turnover, we expect Bursa's results for the first quarter of 2011, due April 19, to be stronger with net profit of between RM35 million and RM40 million," the research house said today.

It had also raised FY11-FY13 assumptions for daily turnover volume to between 1.3 billion and 1.6 billion from between 1.0 billion and 1.2 billion.

It said daily turnover value was expected between RM1.8 billion and RM2.2 billion from RM1.5 billion and RM1.8 billion previously.

OSK also raised operating costs to include higher technology and
depreciation charges and nudged up FY11-13 net profit forecast between two and six per cent.

"We expect more initiatives from Bursa. There were talks that it might launch sukuk and conventional bonds to meet retail investors' demand for fixed income instruments. We think retail participation in the bond market will accelerate Bursa's velocity.

"There were also talks of collaboration with London Stock Exchange to trade each other's shares. If this happens, it could further increase market liquidity," it added. -- Bernama

IOICORP - OSK maintains 'sell' call on IOI Corp

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

OSK Research is maintaining its "sell' call on IOI Corp Bhd at a fair value of RM4.41.

"As IOI is an established developer like City Development, we have little doubt that the venture into the Singapore property market will be profitable.

"However, as with its previous venture into property development outside Malaysia, the market does not reward the company in terms of stock price appreciation, as investors invest in IOI not for its property exposure, particularly outside Malaysia," the research house added.

IOI recently purchased 49.9 per cent equity in Scottsdale Properties from Ascent View Holdings for RM276 million and through this equity purchase, it will be involved in the development of South Beach, a mixed use development land parcel located along Beach Road, Singapore.

The group expects to invest up to RM1.96 billion on the project. While the initial outlay of RM276 million is small relative to IOI's net debt of RM1.275 billion, the total investment of RM1.96 billion will result in its net gearing jumping to 20 per cent in the next 12 months.

"This is assuming that IOI generates RM1 billion in operating cash flow during the period. "Otherwise, the company's net gearing will rise to a high of 29 per cent," it added. -- Bernama

MAHSING - CIMB Research maintains Mah Sing target price at RM3.30

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

KUALA LUMPUR: CIMB Equities Research said MAH SING GROUP BHD [] remains a BUY and its top pick in the property sector.

It said on Tuesday, April 12 that it was also keeping unchanged its target price of RM3.30 which is based on its target market P/E of 14.5 times.

It said that a three-day Europe roadshow with Mah Sing struck the right chord and its positive view on the company was reinforced by the strong sales that it is chalking up and the likelihood that it will soon secure new earnings-accretive landbank.

'Including bookings, total YTD sales top RM1bn, already'' putting it halfway to its RM2bn-RM2.5bn sales target for the full year,' it said.

CIMB Research said the roadshow reaffirms its strong conviction in the stock. Potential rerating catalysts include 1) record sales from strong take-up of new large projects, 2) robust newsflow due to aggressive landbanking and 3) increasing investor awareness of Mah Sing's cheap valuations and transformational moves.

WCT - WCT a cost-efficient contractor

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

WCT Bhd
(April 11, RM3.04)
Recommend buy at RM3.08 with target price RM4.15: We believe WCT is the front runner for at least one package of the light rail transit (LRT) extensions Phase 2, given its lean cost structure and execution record (evident in two perceived low-margin jobs ' the low-cost carrier terminal earthworks and Medini Residences infrastructure ' it clinched in 2009 that are reaping 7% margins now).

The total package size for Phase 2 is about RM2.2 billion. We understand WCT was a close second for Phase 1 which was won by TRC Synergy Bhd and Bina Puri Holdings Bhd. It continues to guide for RM2 billion new order wins for 2011 split equally between local and Middle East jobs.

WCT's largest job in its RM3.1 billion order book is a RM1.4 billion contract to build a government office in Qatar with 8% pre-tax margin and 20% advance payment. Its total Middle East exposure is 52% of its order book, but its focus is now Qatar, where infrastructure spending is expected to surge over the next few years as it will host the Fifa 2022 World Cup.

This includes a US$25 billion (RM75.5 billion) urban rail project in the pipeline. Qatar has not been affected by the political unrest in the region because it is a rich nation ' in 2010 it had the world's highest per capita GDP and its economy grew by 19.4%, the fastest in the world.

We understand there is a RM1 billion outstanding tender for a media centre in Doha, Qatar's capital, for which WCT is one of five bidders.

WCT will have a more aggressive property launch pipeline this year, RM400 million against RM220 million in 2010. The successful maiden launch of 1 Medini Residences with RM200 million sales (average selling price US$130psf) will remove scepticism over high rise development in Iskandar Malaysia.

We expect property investment revenue to quintuple by 2013 to about RM161 million once Paradigm PJ and the LCCT build-operate-transfer is completed.

We understand WCT is finalising the concession terms but our back-of-the-envelope calculation suggests it could generate 8.4% project internal rate of return. ' HwangDBS Vickers Research, April 11


This article appeared in The Edge Financial Daily, April 12, 2011.

TENAGA - Tenaga: Clarity in Integrax's management

Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Research House: AMMB

Tenaga Nasional Bhd
(April 11, RM6.05)
Maintain hold at RM6.11 with fair value RM7.20: We reiterate our 'hold' call on Tenaga Nasional Bhd with an unchanged discounted cash flow-derived fair value of RM7.20.

Tenaga's 22%-owned Integrax appears to be resolving the management conflict between the two brothers that had resulted in lawsuits. This is expected following Tenaga's recent acquisition of Harun Halim Rasip's 22% stake in Integrax for RM106 million cash to resolve the Rasip brothers' conflict, which was affecting the decisions and operations of its 80%-owned Lekir Bulk Terminal (LBK). LBK is presently dedicated to coal-handling services for Tenaga's Janamanjung power plant, which is being expanded from 2,100MW currently to 3,100MW.

Harun has been redesignated sole CEO of Integrax from joint-CEO, while his younger brother Amin has been redesignated from joint-CEO to non-independent non-executive director. Tenaga chief financial officer Mohamed Rafique Merican Mohd Wahiduddin Merican was also appointed a non-independent non-executive director of Integrax.

We understand that Tenaga's management has yet to decide on whether to resume Integrax's proposed iron-ore transhipment agreement ' which lapsed last year ' with Brazil's Vale SA, one of the world's largest producers of iron ore and pellets, raw materials for the steel industry, and one of the largest producers of nickel.

The aborted transhipment agreement involved the building of a RM300 million deepwater bulk terminal on Pulau Lekir Satu, Teluk Rubiah, which could accommodate cargo vessels of up to 400,000 deadweight tonnes and handle up to 30 million tonnes of iron ore.

But Harun, who was opposed to the 10-year transhipment agreement, appears to have the support of Tenaga. He believed the investment returns from the expansion of LBT would be too low.

We remain neutral about Tenaga's investment in Integrax and maintain FY11F to FY13F earnings. The stock currently trades at a fair CY11F price earnings ratio of 12 times, within Tenaga's four-year average forward PER band of 11 to 16 times. ' AmResearch, April 11


This article appeared in The Edge Financial Daily, April 12, 2011.

FABER - Faber a potential bidder for healthcare support concession

Stock Name: FABER
Company Name: FABER GROUP BHD
Research House: RHB

Faber Group Bhd
(April 11, RM2.14)
Maintain outperform at RM2.24 with target price RM2.79: According to news reports over the weekend, Khazanah Nasional plans to sell its healthcare support concessions, valued at around RM150 million, to focus on its core healthcare services business.

Recall our Nov 6, 2009 report in which we had raised the possibility that Faber could be one of the bidders. In that report we highlighted why it would make sense: (i) Synergies ' We believe there would be synergies and cost savings if there is a merger between the two concessionaires, in terms of procurement of materials and manpower, HQ support services and even laundry and medical waste treatment and disposal facilities; and (ii) Competitive landscape unaffected ' The current industry structure is driven not by competition but by service benchmarks, and these are continuously audited by external consultants. Therefore a merger of two concessionaires would not imply less competition.

Although there is less than a year left to the end of the hospital support services concession, we are confident that the government will renew it, similar to the renewal of Pharmaniaga's medical supply concession this year. Moreover, Faber has consistently met or exceeded service benchmarks without raising service fees over the last 14 years.

Risks to our view include: (i) a failure to secure an extension to the concession agreement with the government; and (ii) delays in property launches and approvals, which could affect revenues from the property segment.

Our earnings projections remain unchanged and we maintain our fair value of RM2.79 (based on sum-of-parts valuation). Our forecast and fair value estimate do not include Pantai Medivest, but we believe Faber stands a good chance of acquiring it given its strong financial position and good track record. We reiterate our 'outperform' call on the stock. ' RHB Research, April 11


This article appeared in The Edge Financial Daily, April 12, 2011.

IOICORP - Kenanga lowers IOI Corp target price

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

Kenanga Research is maintaining its "market perform" stance on IOI Corp Bhd, but has lowered the target price to RM5.63, from RM5.86, previously because of anticipated reduced crude palm oil earnings for financial year ending Dec 31, 2012.

In a research note today, it also remained neutral on IOI's investment in Singapore City Development (CDL) and its joint venture with CDL to develop South Beach Consortium.

"Despite South Beach'S strategic location, we think the huge total investment cost up to S$816.9 million, at a time when the Singapore government is trying to cool the property sector, may affect demand for the project. -- Bernama

DRBHCOM - DRB-Hicom falls to seven-day low of RM2.30

Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD
Research House: HWANGDBS

KUALA LUMPUR: Shares of DRB-Hicom fell to a seven-day low of RM2.30 in late afternoon on Monday, April 11, in line with the cautious market as investors took profit.

At 3.03pm, the FBM KLCI was down 11.71 points to 1,545.78. Turnover was 885.58 million shares valued at RM1.09 billion. Declining stocks hammered advancers 629 to 168 while 247 counters were unchanged.

DRB-Hicom fell 16 sen to RM2.30 the lowest since March 31. There were 14.59 million units done.

Its recent high was RM2.48 on April 6.'' Its net asset per share as at Dec 31, 2010 was RM2.54.

There are expectations that the successful bidder of Khazanah Nasional Bhd's 32% stake in POS MALAYSIA BHD [] would be announced at the Invest Malaysia conference on Tuesday-Wednesday.

Hwang DBS Vickers Research said DRHB-Hicom was expected to be among the front runners for the stake and it recently had a Buy with a Target Price of RM3.80.

The others seeking a stake in Pos Malaysia are Nationwide Express (Not Rated) and Amanah REIT-Malaysia Pacific Corp venture (Not Rated).

PARKSON - HwangDBS maintains 'buy' call on Parkson

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

HwangDBS Vickers Research has maintained "buy" recommendation on Parkson Holdings Bhd and has raised its realisable net asset value-based target price to RM6.50 from RM6 earlier.

The research house said it viewed positively Parkson's expansion to Indonesia by tapping local expertise, which would combine its retail operations in Malaysia and Vietnam, with an existing chain in Indonesia.

"Based on the preliminary numbers, we estimate the Indonesian operations, which will add eight outlets to the group's existing 89 stores network, will contribute incremental revenue to RM347 million and RM12.9 million net profit in FY12," it said in a research note.

It said while the immediate net impact would probably be "neutral" after considering its diluted stakes in Malaysia and Vietnam, earnings could be significant in the long run as it tapped on the huge demand from 240 millionpopulation in Indonesia.

Meanwhile, MIDF Research said it was maintaining a "neutral" call on Parkson, with an unchanged RM5.90 target price, despite the Indonesian deal, as it was cautious over China and Vietnam's economies going forward.

It said Parkson would benefit directly from the immediate penetration into the Indonesian retail market by controlling existing PT Tozy Bintang Sentosa Group's five Centro Lifestyle Department Stores and one Kem Chicks Supermarket.

"Indonesia's departmental store sales were valued at US$3 billion in calendar year 2010, growing at five year compound annual growth rate (CAGR) of 9.2 per cent year-on-year and the currency risk is lower compared to Vietnam.

Meanwhile, MIDF Research said it expected Indonesia's business to contribute less than three per cent to Parkson's bottom line, while China's business was still dominating, accounting for 88 to 90 per cent of its revenue.

However, Indonesia's contribution might surpass Vietnam's in the near-term, it said, adding that the proposed collaboration was expected to be completed in the second half of this year. -- Bernama

AIRPORT - Kenanga keeps 'outperform' call on MAHB

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

Kenanga Research has maintained "outperform" recommendation for Malaysia Airports Holdings Bhd (MAHB) with M6.64 target price as MAHB is still the "winner" above all airlines' uncertainties.

The research firm said higher operating costs and the gestation period needed for KLIA 2 (new low cost carrier terminal) and its losses from associates are main earnings setbacks for the next two years.

"We expect more contributions from retail and rental business from financial year 2012 onwards.

"We laud MAHB's overseas ventures as future earnings booster since the prospects for domestic airport business expansion is limited," it said in a research note.

The RM1.2 billion KLIA 2 is slated for completion in the second quarter of next year.

However, at this juncture, Kenanga Research did not see any earnings implication as the Low Cost Carrier Terminal's (LCCT) current capacity was sufficient for the moment. -- Bernama

MAYBANK - 'Buy' rating for Maybank affirmed

Stock Name: MAYBANK
Company Name: MALAYAN BANKING BHD
Research House: AMMB

AmResearch has affirmed its "buy" rating for Maybank with an unchanged fair value of RM10.40 per share.

This is pegged to an unchanged fair price/book value of 2.3 times, based on a forecast calendarised Return On Equity (ROE) of 15.8 per cent for 2011.

The research house said the rerating catalysts include the ability to achieve a loans growth of 10-12 per cent, higher than expected ROE and higher than expected dividends.

Maybank will be trading ex its interim Gross Dividen Per Share of RM0.28 tomorrow.

To recap, Maybank had earlier announced that the issue price of new Maybank shares to be issued pursuant to the dividend reinvestment plan (DRP) in relation to the interim cash dividend, was fixed at RM7.70 per new share.

The issue price of RM7.70 was based on the five-day volume weighted average market price (VWAMP) of RM8.80 per share, up to and including March 30, 2011.

As at 12.00pm today, Maybank declined three sen to RM9.17.

Meanwhile, Kenanga Research gave a "outperform" rating for Maybank with a target price of RM9.70.

It said Maybank's earnings upside could come from lower than expected loan loss provisions.

"Over the medium term, the acquisition of Kim Eng is expected to offer solid and steady fee-based income, from the Asean region," Kenanga Research said in a research note.

At this juncture, Maybank owns 51 per cent of Kim Eng Holding.

If the acquisition of Mitsubishi UFJ Securities Holdings' 29.9 per cent stake in Kim Eng is successful, Maybank's stake in it should increase to 81 per cent.

This suggests a good chance to fully acquire Kim Eng Holding.

Maybank will launch a Mandatory of General Offer (MGO) today and it is expected, the acquisition will be completed by end-May this year. -- Bernama

IOICORP - IOI Corp slips, RHB Research lowers TP to RM5.60

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

KUALA LUMPUR: IOI Corp shares slipped in morning trade on Monday, April 11, in line with the weaker broader market, but sentiment could had also been dampened by analysts' concerns about its Singapore venture and the government's measures to check the property market.

At 12.09pm, IOI Corp was down five sen to RM5.60 with 622,500 shares done.

The FBM KLCI lost 9.24 points to 1,548.07. Turnover was 692.87 million shares done valued at RM792.18 million. Losers beat gainers 541 to 187 while 262 stocks were unchanged.

Last Friday, April 8, IOI announced the acquisition of a 49.9% stake in Scottsdale PROPERTIES [] from City Developments Ltd (CDL) and has entered into a JV with CDL to develop the South Beach project in Singapore.

RHB Research Institute said all in, IOI will have to cough up S$816.8 million (RM1.96 billion) for its 49.9% stake.

The South Beach project is located between Raffles Hotel and Suntec City and next to the Esplanade MRT Station.

'We will impute the impact of this acquisition once the shareholder approvals have been obtained. However, our estimates suggest this acquisition would have an immediate negative earnings effect of 4% to 5% per annum from the interest expense incurred, given that earnings from this property development would not come in until 2015.

'We have, however, reduced our sum-of-parts based target price to RM5.60 (from RM5.90), after taking into account the cash outlay of RM1.96 billion. While we are glad that the price IOI paid was not excessive vs. other recent transactions, we are still concerned of the impact the Singapore government's cooling measures would have on the property market in the medium term and therefore IOI's ability to make a decent return on its investment. No change to our Underperform call on the stock,''' RHB Research said.

MAMEE - OSK Research recommends Mamee minority shareholders accept offer

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

KUALA LUMPUR: OSK Research recommends that minority shareholders of Mamee-Double Decker accept the offer of RM4.39 per share under the proposed privatisation move by the major shareholders.

OSK Research said on Monday, April 11the offer price is attractive considering that this would be a good exit strategy for the remaining shareholders given that the stock's price performance could have been lackluster due to the potentially poor margins in the near term if not taken private.

'Also, a PE of 15x is only slightly lower than the PE of about 17x commanded by F&N, which is much larger than Mamee in terms of revenue and net profit. Hence, we recommend that investors accept the offer. Due to lingering concerns of margins pressure, we had a NEUTRAL recommendation on the stock at a FV of RM3.44 (based on 11x FY11 EPS) prior to the announcement. We raise our FV to the offer price of RM4.39. Upgrade to BUY,' it said.

MASTEEL - CIMB Research sees iron-clad prospects for Malaysia Steel Works

Stock Name: MASTEEL
Company Name: MALAYSIA STEEL WORKS (KL)BHD
Research House: CIMB

KUALA LUMPUR: CIMB Research sees iron-clad prospects for Malaysia Steel Works (KL) Bhd which is on an expansion programme that is set to double its earnings to RM80m-RM90m by FY12, lowering its FD P/E to below 5 times or 60% below the KLCI P/E.

CIMB Research said on Monday, April 11 the target is achievable as it is expanding capacity to meet rising demand from property launches and ETP infrastructure project starts.

'On P/NTA basis, the stock is cheap at 0.6x CY10, 40% below the sector. We value Masteel at 10.2x forward P/E, 30% below our 14.5x target market P/E. This works out to RM2.95, more than double its current price,' it said.

The research house said Masteel's valuation discount is wider than Ann Joo's 10%. Should it succeed in its bid for the Iskandar rail project, FY12 FD core EPS would rise by 29% to 37.4 sen, implying a value of RM3.80 or hefty upside of 170%.