TENAGA - OSK keeps 'buy' call on Tenaga

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

OSK Research Sdn Bhd has maintained its "buy" call for Tenaga Nasional Bhd with a fair value of RM7.03 backed by previous fundamental views.

In a research note today, OSK said based on its first quarter financial year 2011 results, TNB had indicated that there was a possibility of a tariff hike in June. -- Bernama

COASTAL - Coastal slips but cancellation of MoU with Ramunia minimal impact

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

KUALA LUMPUR: Shares of COASTAL CONTRACTS BHD [] fell in late afternoon on Friday, May 20 in line with a lacklustre market while analysts viewed the cancellation of the MoU with Ramunia Bhd would have minimal impact.

At 3.43pm, Coastal was down seven sen to RM3.57 with 371,000 shares done, off the intra-day high of RM3.65.

On Thursday, Ramunia said Coastal's unit Pleasant Engineering Sdn Bhd and Ramunia had both agreed not to proceed with the MoU signed on Jan 28, 2010 for the proposed collaboration to undertake tendering, bidding and fabrication in relation to structures for the O&G industry.

OSK Research said its fair value for Coastal remained unchanged at RM4.85 based on the existing price-to-earnings ratio (PER) of 8.0 times FY11 earnings.

'We continue to like Coastal for its strong delivery track record and we think its performance would be sustainable as it still has a strong orderbook of RM760 million which can keep the company busy over the next 12 months while it proceeds to enhance its shareholders' value by finding a business partner for the O&G opportunities,' it said.

TOPGLOV - Top Glove advances, RHB Research lowers stock to Underperform

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

KUALA LUMPUR: Shares of Top Glove Corp Bhd rose in late afternoon, Friday, May 20 on some fund buying despite the stock had been downgraded due to the weaker earnings outlook.

At 3.18pm, it was up 15 sen to RM5.33 with 1.08 million shares done.

The FBM KLCI rose 0.51 of a point to 1,544.53. Turnover was 593.35 million shares valued at RM791.60 million. There were 319 gainers, 365 losers and 317 stocks unchanged.

RHB Research said in its research note that it recently spoke with management and understand that customers continue to hold back their orders in view of the high latex prices.

'Consequently, this suggests that 3Q revenue could remain flat qoq. Bottomline, however, could be adversely impacted given that latex prices remain high and US$ continues to weaken against the ringgit,' it said.

It also said Top Glove management had stated that capacity expansion plans have been pushed back by two to eight months respectively.

'As we expect no significant improvement in its 3Q results and coupled with the delay in its capacity expansion plans, we have cut our FY11-13 revenue forecasts by 2.8-8.5% respectively,' it said.

'We have lowered our fair value to RM4.09 (from RM5.38), based on lower target PER of 15x (from 17x previously). Given the weaker earnings outlook, we downgrade our call to Underperform,' it said.

KOSSAN - Kossan dips in early trade

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

KUALA LUMPUR: KOSSAN RUBBER INDUSTRIES BHD [] shares declined in early trade on Friday, May 20 after its net profit for the first quarter ended March 31, 2011 fell 24.4% to RM22.96 million from RM30.38 million a year earlier partly due to buyers holding lower stock levels due to the increase in raw material, as well as higher latex cost.

At 9.15am, Kossan lost eight sen to RM3.15 with 2,000 shares traded.

Revenue for the quarter declined to RM256.45 million from RM262.77 million in 2010. Earnings per share was 7.18 sen.

CIMB Equities Research has reduced its target price for Kossan from RM5.14 to RM4.59.

It said on Friday, May 20 that Kossan's 1Q11 annualised net profit was a letdown due to weak demand and high costs as it came in at 70% of its and consensus estimates.

'We cut our FY11-13 EPS forecasts by 5-12% after scaling back FY11 capacity by 10% to 12.5bn pieces and lowering our cost pass-through assumption. This reduces our target from RM5.14 to RM4.59, still based on 10.15x forward P/E or a 30% discount to our target market P/E. Kossan's 7x forward P/E is undemanding considering its 13% 3-year EPS CAGR.

'We continue to rate it a BUY and our top pick. Demand should recover given the steady decline in natural rubber prices, which is encouraging customers to restock. The stock may be catalysed by 1) new contracts, 2) Cleanera acquisition and 3) higher nitrile sales,' it said.

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TGOFFS - AmResearch has Sell on Tanjung Offshore, cuts fair value to RM1

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

KUALA LUMPUR: AmResearch reaffirms its Sell rating on Tanjung Offshore and cut its fair value to RM1 a share from RM1.33'' a share previously) ' pegging its FY11F earnings to a PE of 20 times ' following another set of weak numbers.

'We are cutting our estimates for FY11F-FY13F by 45%-54% to RM16mil-RM18mil following lower margin assumptions from 8%-9% to 7%-7.5% and cuts in revenue assumptions by 20%-30%,' it said on Friday, May 20.

AmResearch said Tanjung was in the red for the second consecutive quarter, with a larger magnitude of RM3mil for 1QFY11.

The losses are attributable to about RM3mil in losses from its UK-subsidiary Citech Ltd. Currently the unit has only about US$15mil in orderbook for the next 18 months and this is not sufficient to cover its sizeable operating costs.

Another factor is the weaker earnings from vessel chartering division. Three vessels were lying idle during 1QFY11, translating into a utilisation rate of about 80%. Nonetheless, it has since been operating at full capacity although six of the vessels are currently under spot contracts.

AmResearch said the losses for the quarter was also contributed by a net loss of RM4.7mil incurred from the disposal of its stake in Hercules Tanjung Asia s/b, a rigs provider.

AIRASIA - OSK maintains 'buy' call for AirAsia

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

OSK Research maintains a "buy" call on AirAsia following the strong load factor and the potential set up of Singapore
AirAsia.

By optimising its fleet via longer utilisation hours and short-haul routes, the budget airline continued to succeed in sustaining above 80 per cent load factor in April, exceeding the forecast, OSK said.

On the potential set up of Singapore AirAsia, the company would be night stopping its aircraft at the Changi International Airport in the near term, in accommodating early morning flights departing from Singapore.

In a research note today, OSK said the recruitment of cabin crew was already ongoing and this could be a prelude to the setup which would be a boost to earnings for AirAsia given that Changi was an international transit point and a sweet spot in luring passengers.

Meanwhile, OSK viewed the airline's move to shift its regional headquarters to Jakarta sometime this year as to gain more recognition from the Indonesian government.

Indonesia AirAsia is the only airline operating in the country within a clean safety track record.

"This would lead to securing more new routes given the buoyant demand for air travel," it added. -- Bernama

IJACOBS - Ideal Jacobs just 9 sen above offer price in late afternoon

Stock Name: IJACOBS
Company Name: IDEAL JACOBS (M) CORPORATION B
Research House: RHB

KUALA LUMPUR: Shares of Ideal Jacobs (M) Corp Bhd was trading at 36 sen in heavy trade in the late afternoon on Thursday, May 19 as traders took profit after it listing on Wednesday.

At 4.16pm, the industrial labels manufacturer's share price was down seven sen to 36 sen with 19.19 million shares done.

At 36 sen, it is just nine sen above it offer price of 27 sen when it was listed on the ACE Market on Wednesday.

The FBM KLCI is up 2.53 points to 1,543.80. Turnover was 726.14 million shares valued at RM1.097 billion. There were 321 gainers, 373 losers and 336 stocks unchanged.

RHB Research Institute had accorded a fair value of 39 sen per share which was derived by applying 10.2 times target price-to-earnings ratio (in line with estimated peers' average) to its FY11 EPS forecast of 3.9 sen.

'All in, our fair value represents an upside of 46% from its IPO price,' it said.

JCY - JCY slumps on weak 2Q earnings, but improvement ahead?

Stock Name: JCY
Company Name: JCY INTERNATIONAL BERHAD
Research House: UBS

KUALA LUMPUR: Shares of hard disk drive manufacturer JCY International Bhd fell to 62.5 sen in afternoon trade on Thursday, May 19 on the weak earnings in the second quarter ended March 31, 2011.

At 3.44pm, it was down 2.5 sen to 62.5 sen, with 2.98 million shares done.

JCY reported net profit of RM12.5 million in 2Q (up 26% on-quarter but down 81% on-year) and RM22.3 million for 1HFY11 (down 84% on-year) from RM143.4 million in 1HFY10.

UBS Research said the H1 FY11 net profit was 31% of UBS estimates full year forecast and 17% of'' consensus estimates.

'We are expecting sequentially better numbers in 2H FY11 and thus are keeping our numbers unchanged,' it said.

It said JCY was still impacted by US dollar weakness and higher input prices. The dollar weakness, lower 2Q volumes, higher aluminium and steel prices and increased labour costs continue to depress margins although recent cost down'' initiatives have pushed margins'' on-quarter higher at 5.6% in 2QFY11 versus 3.8% in 1QFY11.

'Near term outlook remains hazy. In the results statement, management remains tentative on its earnings outlook. With the lack of visibility over PC demand recovery, and a potential shortage in the HDD component supply chain due to the Japanese tsunami, HDD output may remain weak. We have already inbuilt flat volumes into our model for 2011.

'However, JCY continues to intensify cost management initiatives and we expect to see the impact of the better control efforts and increased productivity flow through in subsequent quarters, thus sequential earnings improvement,' it said.

UBS Research said it had a 12-month price target of 70 sen 'based on a DCF methodology on a COE of 10.8%. Our price target implies PE of 20.1x and 8.4x for FY11 and FY12 respectively'.

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KLK - KL Kepong at 3-month high, CPO price up

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

KUALA LUMPUR: Shares of KUALA LUMPUR KEPONG BHD [] rose to the highest in three months to RM21.94 in afternoon trade on Thursday, May 19 on a higher target price and also recovery in crude palm oil (CPO) futures prices.

At 3.27pm, KLK was up 44 sen to RM21.94 with 593,400 shares done.

The FBM KLCI rose 4.78 points to 1,546.05. Turnover was 576.58 million shares valued at RM824.30 million. There were 306 gainers, 366 losers and 302 stocks unchanged.

UBS Malaysia Research has a target price of RM24 for KLK, an upside of 11.6% from Wednesday's closing price of RM21.50.

CPO for third month delivery rose RM35 to RM3,332 per tonne.

TCHONG - Tan Chong climbs on positive 1Q results

Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD
Research House: MIDF

KUALA LUMPUR: TAN CHONG MOTOR HOLDINGS BHD []'s ''shares rose on Thursday, May 19 after its net profit rose 14.5% to RM74.08 million in the first quarter ended March 31, 2011 from RM64.67 million a year ago, boosted by the sale of its Nissan Teana.

At 9.45am, Tan Chong was up eight sen to RM4.38 with 1,000 shares traded.

Revenue increased by 29.8% to a record high of RM1.13 billion from RM870.36 million. Earnings per share were 11.35 sen from 9.91 sen a year ago.

MIDF Research maintained its Neutral recommendation on Tan Chong with fair value RM4.94 given the weak sentiment towards the automotive sector due to concerns over auto supply shortages.

'Nonetheless, we are still positive on Tan Chong's aggressive regional market expansion which is still on track,' it said on May 19.

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JCY - JCY declines after 2Q net profit slump

Stock Name: JCY
Company Name: JCY INTERNATIONAL BERHAD
Research House: OSK

KUALA LUMPUR: JCY International Bhd shares declined in early trade on Thursday, May 19 after its net profit for the second quarter ended March 31, 2011 slumped 81% to RM12.46 million from RM65.88 million a year ago.

At 9.30am, JCY was down 1.5 sen to 63.5 sen with 614,100 shares traded.

The decline in earnings were due mainly to increase in the cost of production resulting from increase in the cost of raw materials like aluminium and stainless steel and also increase in labour cost.

JCY's revenue for the quarter fell 27.7% to RM397.43 million from RM549.69 million. Earnings per share were 0.61 sen while net assets per share was 43.08 sen.

For the six months ended March 31, JCY's net profit tumbled to RM19.97 million from RM143.36 million, while revenue fell to RM836.34 million from RM1.08 billion in 2010.

OSK Research maintained its sell recommendation on JCY and slashed its fair value to 41 sen from 58.5sen.

The research house said JCY's 1HFY11 earnings of RM20 million were way below market consensus and its forecast, comprising only 15.3% and 15.1% of the estimates respectively.

'Taking an increasingly conservative stance as a result of the dismal showing, we cut our FY11 topline estimate by 9.1% and correspondingly our FY11 EPS sinks by 29.4%.

'We think flattish industry growth, unfavorable forex and escalating raw material prices will continue to exert downward pressure on earnings,' it said on May 19.

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TCHONG - Tan Chong Motor a 'sell' at Maybank

Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD
Research House: MAYBANK

Tan Chong Motor Holdings Bhd was cut to “sell” from “buy” at Maybank Investment Bank Bhd after the Malaysian vehicle assembler announced first-quarter earnings that were below expectations.

The share price estimate was reduced to RM4 from RM5.75, Wong Chew Hann, a Kuala Lumpur-based analyst at Maybank, wrote in a report today. -- Bloomberg

TGOFFS - Tanjung Offshore cut to 'neutral'

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

Tanjung Offshore Bhd was downgraded at OSK Research Sdn Bhd, which said the Malaysian oil and gas services provider may have slipped to a loss in the first quarter because of cost overruns.

The stock was cut to “neutral” from “trading buy” and its fair value reduced to RM1.29 from RM2.18, Jason Yap, a Kuala Lumpur-based analyst at OSK, wrote in a report today. -- Bloomberg

TCHONG - Tan Chong comes in below expectations

Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD
Research House: MAYBANK

Tan Chong Motor Holdings Bhd
(May 19, RM4.30)
Downgrade to sell at RM4.30 with revised target price of RM4 (from RM5.75): Results in 1Q11 were weaker than initially expected and subsequent earnings should weaken as the supply chain disruption issue kicks in from 2Q. As such, we have cut our 2011 forecasts by 14.2%, tactically lowered our target price to RM4 and downgraded our call to 'sell'.

Recurring net profit of RM79.5 million in 1Q (+42% quarter-on-quarter [q-o-q]; +15% year-on-year [y-o-y]) accounts for 26% of our initial full-year forecast of RM304.9 million. However, this is below expectation for we expect a weaker 2H owing to the supply chain disruption affecting the auto industry post the Japan earthquake and tsunami in March.

TCM reported stronger q-o-q and y-o-y results, at the revenue (+35.5% q-o-q; +30% y-o-y) and net profit levels. It sold 9,463 units (+12.9% q-o-q; +10% y-o-y) in 1Q according to statistics from the Malaysian Automotive Association.

Management has guided for a 15% to 20% q-o-q earnings contraction in 2Q. With the full impact from the supply chain disruption to be felt in 2H, the weakness in sequential earnings is expected to extend up to 4Q.

We cut our 2011 earnings forecasts by 14.2%, taking into account further weakness ahead. We have lowered vehicles sales expectation for 2011 by 5.3% to 36,000 units and average selling price by 2% to RM98,000.

Our RM4 target price is based on a reduced 2011 price-earnings ratio of 10 times, which represents the lower end of its historical PER range (from 14 times previously). Our 40 sen earnings per share is below 45 sen guidance (management's guidance is unchanged post briefing). ' Maybank IB Research, May 19


This article appeared in The Edge Financial Daily, May 20, 2011.

TCHONG - Tan Chong comes in below expectations

Stock Name: TCHONG
Company Name: TAN CHONG MOTOR HOLDINGS BHD
Research House: MAYBANK

Tan Chong Motor Holdings Bhd
(May 19, RM4.30)
Downgrade to sell at RM4.30 with revised target price of RM4 (from RM5.75): Results in 1Q11 were weaker than initially expected and subsequent earnings should weaken as the supply chain disruption issue kicks in from 2Q. As such, we have cut our 2011 forecasts by 14.2%, tactically lowered our target price to RM4 and downgraded our call to 'sell'.

Recurring net profit of RM79.5 million in 1Q (+42% quarter-on-quarter [q-o-q]; +15% year-on-year [y-o-y]) accounts for 26% of our initial full-year forecast of RM304.9 million. However, this is below expectation for we expect a weaker 2H owing to the supply chain disruption affecting the auto industry post the Japan earthquake and tsunami in March.

TCM reported stronger q-o-q and y-o-y results, at the revenue (+35.5% q-o-q; +30% y-o-y) and net profit levels. It sold 9,463 units (+12.9% q-o-q; +10% y-o-y) in 1Q according to statistics from the Malaysian Automotive Association.

Management has guided for a 15% to 20% q-o-q earnings contraction in 2Q. With the full impact from the supply chain disruption to be felt in 2H, the weakness in sequential earnings is expected to extend up to 4Q.

We cut our 2011 earnings forecasts by 14.2%, taking into account further weakness ahead. We have lowered vehicles sales expectation for 2011 by 5.3% to 36,000 units and average selling price by 2% to RM98,000.

Our RM4 target price is based on a reduced 2011 price-earnings ratio of 10 times, which represents the lower end of its historical PER range (from 14 times previously). Our 40 sen earnings per share is below 45 sen guidance (management's guidance is unchanged post briefing). ' Maybank IB Research, May 19


This article appeared in The Edge Financial Daily, May 20, 2011.

HELP - HELP's valuations reflect potential

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

HELP International Corp Bhd
(May 19, RM2.63)
Downgrade to neutral at RM2.63 with fair value of RM2.82: With 11,000 students registered in its Malaysian campuses and 2,000 scholars under its regional franchises, HELP's student growth came in at more than 10% annually over the last three years. We expect the momentum to persist, with growth from its overseas contribution likely to outshine its domestic operations.

Other than its existing presence in Vietnam, Indonesia, and Maldives, HELP will open its self-owned college in Sydney, Australia, by July and help to operate vocational schools in Phnom Penh and Siem Reap, Cambodia, by mid-2011. Leveraging on its established reputation, we expect more tie-ups to materialise this year as the group is actively in talks with education providers in China and the Middle East to assist in management or to establish its franchise models.

To expand its presence in the increasingly competitive landscape on the local front, HELP is diversifying away from its conventional strong foothold in commerce, law and psychology courses into technical or vocational offerings. Recall that HELP has recently signed an MoU with Naza Group to set up an automotive college offering comprehensive courses from car design to business development. Its HICT Fraser campus (due for official opening in June) and the proposed HELP Iskandar campus (ready by 2015) will also focus on technical and vocational training courses. We remain adamant that the move will prove fruitful in the long run as this will allow HELP to capture different market segments and demographies based on its locations as well as to diversify its student profile.

We understand that HELP is considering various sources of financing to fund its budgeted RM150 million to RM200 million capital expenditure allocated for Phase 1 of its Subang 2 campus in Sungai Buloh. Judging from its balance sheet strength and the magnitude required, we believe it could involve a hybrid of equity issuance and debt drawdown and also potentially a sales-and-leaseback arrangement. We expect a decision to be made at the latest by 3QCY11.

We maintain our forecasts and reiterate our fair value of RM2.82 based on 14 times FY12 price-earnings ratio plus its net cash of 32 sen per share as at end-FY10. Its share price has since caught up with our valuation and given the potential dilution impact arising from equity issuance, we take a more conservative stance for now and downgrade our call to 'neutral'. ' OSK Research, May 19


This article appeared in The Edge Financial Daily, May 20, 2011.

SAPCRES - SapuraCrest creating two core divisions

Stock Name: SAPCRES
Company Name: SAPURACREST PETROLEUM BHD
Research House: AMMB

SapuraCrest Petroleum Bhd
(May 19, RM3.81)
Maintain buy at RM3.80 with fair value of RM4.75: We reiterate our 'buy' call on SapuraCrest Petroleum (SapCrest) with an unchanged fair value of RM4.75 based on an unchanged FY12F price-earnings ratio (PER) of 22 times.

We do not expect any change in direction or strategy from the realignment in SapCrest's management as its major shareholder, executive vice-chairman and president Datuk Shahril Shamsuddin, remains in his executive role for the group.

Following the award of the risk service contract for the Berantai marginal oilfield development on Jan 31, SapCrest's management has been divided into two separate divisions, Energy Ventures & Operations and Oil & Gas Construction Services.

SapCrest's current group CEO Rohaizad Darus has been redesignated with immediate effect as the CEO for the Oil & Gas Construction Services Division while Reza Abdul Rahim is the CEO for Energy Ventures & Operations.

Rohaizad has been involved in the oil and gas industry for the past 22 years, beginning his career with Petronas Gas Bhd and later with Esso Production Malaysia Inc. He has been with the Sapura Group for the past nine years and has been its chief operating officer from mid-2008 until his appointment as CEO on Feb 1, 2010.

SapCrest's outstanding orders are currently worth RM8.6 billion, which will last for another three years. But the group's Pan-Malaysian transport and installation project has the option for two annual renewals. Hence, the group's net order book could be added to by another RM3 billion to RM12 billion ' which remains by far the largest order book in Malaysia's O&G industry.

Given SapCrest's dominance in the installation of pipeline and facilities (IPF) services in Malaysia, we maintain our view that SapCrest is likely to secure additional offshore installation jobs from Petroliam Nasional Bhd's prolific captial expenditure rollout, potentially up to RM250 billion over the next five years. The recent turnaround in the group's marine division adds further sizzle to the stock's attractive valuations, reacceleration of order book accretion and improving earnings delivery.

The stock currently trades at an attractive CY11F PER of only 17 times vis-''-vis over 20 times for Dialog Group Bhd, Malaysia Marine and Heavy Engineering Sdn Bhd and Kencana Petroleum Bhd. ' AmResearch, May 19


This article appeared in The Edge Financial Daily, May 20, 2011.

LINGUI - Lingui turning over a new leaf

Stock Name: LINGUI
Company Name: LINGUI DEVELOPMENT BHD
Research House: RHB

Lingui Developments Bhd
(May 19, RM1.90)
Initiate coverage at RM1.87 with outperform call and fair value of RM2.71: Lingui has annual log production volume of about one million cu m and an estimated annual plywood and veneer production capacity of about 600,000 cu m. Lingui also owns 35,000ha of forest plantation in New Zealand and a 38.33% stake in Glenealy Plantations (Malaya) Bhd.

Similar to other timber players, Lingui's log export selling prices for April have risen to US$280 (RM845.60) to US$300 per cu m. However, Lingui cautioned that as the spike in log prices was due to a short-term log shortage, it is not likely to be sustainable and believes that log prices will decline when production normalises.

Management said its logging operations have not been affected by the flooding from the Bakun dam impoundment as its forest concessions are not located near that area.

Due to weak softwood prices, Lingui's New Zealand forest plantation operation has been in the red, which has dragged down the performance of the group in the past. Given the current rising prices of radiata pine log, however, Lingui's New Zealand operation will likely see a significant turnaround in the next few years together with the gradual ramp-up in harvesting volume.

According to the latest Japan Lumber report, radiata pine log prices are now at US$170 per cu m C&F (estimated at about US$120 to US$130 per cu m FOB). This compares with the production cost (including depletion expenses) of US$90 to US$100 per cu m.

For 9MFY11, average selling price (ASP) achieved was about US$500 per cu m, while the unit cost of production was slightly higher at US$510 per cu m. This led to losses in Lingui's plywood division. Although plywood prices have been improving in the past nine months, this has been offset by the strengthening of the ringgit against the US dollar.

Nevertheless, we expect Lingui's plywood division to turn around to profitability from 4QFY11 onwards due to the surge in plywood prices after the Japanese earthquake, which will more than offset the increase in production costs.

Risks include: (i) a drop in timber and CPO prices; (ii) lower than expected improvement in Japan's housing starts; (iii) bad weather conditions; and (iv) significant increase in crude oil-related glue and logistics costs.

Our sum-of-parts-derived fair value for Lingui is RM2.71. We valued Lingui's timber business based on a target price-earnings ratio (PER) of 12 times FY12 timber earnings and its 38.3% stake in Glenealy based on current market value.

Despite the 40% run-up in share price since March, following the Japan earthquake, valuations continue to be attractive, vis-'' vis its peers, which are trading at an average CY11 PER of 9.5 times. As such, we initiate coverage on Lingui with an 'outperform' call. ' RHB Research, May 19


This article appeared in The Edge Financial Daily, May 20, 2011.

KPJ - More M&A in the healthcare sector?

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

KPJ Healthcare Bhd
(May 18, RM4.22)
Maintain outperform at RM4.17 with fair value of RM4.94: According to a recent news report, Australia's Ramsay Health Care is scouting for Malaysian companies to jointly develop its Malaysia and Indonesia healthcare presence.

Ramsay Health Care is Australia's largest private hospital operator, with over 66 hospitals and day surgery units and a 30% share of the Australian healthcare market. It has a market capitalisation of over A$3.6 billion (RM11.62 billion) and it is trading at a FY11/12 price-earnings ratio (PER) of 17.3 times and 15.5 times.

The group also has exposure in the UK, Europe as well as Indonesia and is keen to expand into Malaysia's growing healthcare market. The group believes that it is uniquely positioned, given its three Indonesian hospitals, to help develop healthcare tourism here by bringing Indonesian patients to Malaysian hospitals.

We checked with KPJ and TMC Life Sciences Bhd and both said they have not received any expressions of interest from Ramsay. But they agree that the potential entry of Ramsay into the Malaysian healthcare market would enhance the competition among the healthcare players here. In addition, it would help Malaysia grow its medical tourism industry.

In 2010, Malaysia received 400,000 health tourists who generated over RM380 million in revenue. The majority of patients came from Indonesia (approximately 30%), followed by China and the Middle East. Other healthcare players in Malaysia include Sime Darby Holdings Bhd, Pantai Holdings Bhd (under Parkway Holdings Ltd) and Columbia Asia Sdn Bhd (30%-owned by the Employees Provident Fund).

We make no change to our earnings forecasts for KPJ which assume no change to our earnings forecasts, assuming: (i) the opening of at least two new hospitals per year; (ii) 6% to 9% out-patient and in-patient growth per year; and (iii) three-year earnings per share compound annual growth rate of 14.6%.

The risks to KPJ's earnings include lower than expected patient numbers, which could be due to slower than expected economic recovery and serious disease outbreaks (such as SARS or swine flu) in Malaysia as well as slower than expected turnaround in loss-making hospitals.

We believe more mergers and acquisitions in the sector would support our view that there is significant growth potential for the healthcare sector in the region. Given KPJ's leading position and expansion plans in Malaysia's growing healthcare market, we believe the stock's valuation discount to regional peers should continue to narrow.

As such, we maintain our fair value for KPJ at RM4.94, based on an unchanged FY11 PER of 19 times (a 10% discount to regional peers' average of 21.5 times to reflect the stock's relatively lower market cap). We reiterate our 'outperform' call on the stock. ' RHB Research, May 18


This article appeared in The Edge Financial Daily, May 19, 2011.

GUANCHG - Guan Chong sees richer cocoa margin boost

Stock Name: GUANCHG
Company Name: GUAN CHONG BHD
Research House: HWANGDBS

Guan Chong Bhd
(May 18, RM3.08)
Maintain buy at RM3.08 with target price of RM3.60: Guan Chong (GC) reported 1QFY11 net profit of RM30.1 million (+52.5% year-on-year) on the back of RM290 million revenue (+7.8%) which was driven by higher sales volume, better margins and lower effective tax rate. Earnings before interest, tax, depreciation and amortisation (Ebitda) margin continued to inch up to 13.3% against FY10's 10.6% and our FY11F of 11.4%.

We attribute this to higher average selling prices and better economies of scale. Bottom line was also lifted by a lower effective tax rate (ETR) of 10.8% as the manufacturer of cocoa-based food ingredients utilised most of the outstanding export tax incentives (circa RM35 million as at end-2010) upfront in 1Q11.

We expect a rise in ETR (our full-year estimate is 19.3%) would be more than covered by increasing contributions from its new plant in Batam, Indonesia. GC has unveiled a dividend policy to pay out at least 25% of net profit (our FY11 assumption is 30%).

GC's new grinding facility in Batam, completed at end-February 2011 with a 60,000 tonne annual capacity, would contribute about 40% of quarterly sales volume from 2QFY11 onwards. As at 1QFY11, its Batam plant is already churning an operating profit of RM1.5 million despite barely one month of operation (excluding its indirect contribution to the Singapore marketing arm, which made an operating profit of RM4.4 million in 1Q).

We understand that GC's current running capacity of 140,000 tonnes (Pasir Gudang and Batam) is fully taken up, thus providing earnings visibility for FY11.

We reaffirm our 'buy' call. Our RM3.60 target price is pegged to 10 times fully diluted FY12F earnings per share. The stock has climbed 5% since our initiation report on April 29. We still like GC as an undervalued global manufacturer of cocoa ingredients as capacity boost (to 200,000 tonnes by mid-2012) and secured orders are expected to drive earnings momentum (two-year compound annual growth rate of 16%) ahead. ' HwangDBS Vickers Research, May 18


This article appeared in The Edge Financial Daily, May 19, 2011.

IOICORP - IOI Corp is within expectations

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

IOI Corp Bhd
(May 18, RM5.31)
Upgrade to buy at RM5.19 with higher target price of RM7.02 (from RM6.34): Net profit in 3QFY11 increased by 19.6% year-on-year (y-o-y) to RM656.7 million mainly due to: (i) higher average selling price (ASP) for crude palm oil [CPO] (RM3,019 per tonne against RM2,480 in 3QFY10) and palm kernel (RM2,772 per tonne against RM1,337) partially offset by lower fresh fruit bunches (FFB) production; (ii) higher profit contributions from resource-based manufacturing (largely due to a fair value gain of RM99.1 million) and property development (due to RM22 million compensation for land acquisition); and (iii) a lower effective tax rate (due to non-taxable income). Sequentially, 3QFY11 net profit increased by 26.2% mainly due to higher profit contribution from resource-based manufacturing, further boosted by a lower effective tax rate.

Net profit in 9MFY11 increased by 12.5% y-o-y to RM1.67 billion, mainly due to higher profit contribution from plantation (higher ASP partially offset by lower FFB production) and property (gain on disposal of RM61 million and compensation of RM22 million), partially offset by lower profit from resource-based manufacturing (lower margins from oleochemical and speciality fats) but boosted by a lower effective tax rate due to non-taxable income.

No interim dividend has been declared in 3QFY11. A higher interim single-tier dividend of'' eight sen per share in 1HFY11 (1HFY10: seven sen) has been paid. We expect a final net dividend per share of'' five sen to bring full-year net DPS to 13 sen (yield of 2.5%).

Core net profit for 9MFY11of RM1.39 billion amounted to 67% of our full-year FY11 core net profit forecast of RM2.09 billion and 64% of consensus average of RM2.19 billion. Even though 9MFY11 looks slightly short percentage-wise, we expect IOI Corp to meet our FY11 core net profit forecast on the back of stronger plantation and property profit in 4QFY11. Our FY11/13 profit forecasts, which are based on a CPO ASP assumption of RM3,200 per tonne are hence maintained.

Rolling forward our valuation from 18 times CY11 earnings per share of 35.6 sen to 18 times CY12 EPS of 39 sen, our target price is raised from RM6.34 to RM7.02. At a current price of RM5.19, return of 35%, we upgrade our stock call from 'add' to 'buy'. ' Affin Investment Bank Research, May 18


This article appeared in The Edge Financial Daily, May 19, 2011.

GNEALY - Glenealy Plantations shows signs of production recovery

Stock Name: GNEALY
Company Name: GLENEALY PLANTATIONS (M) BHD
Research House: OSK

Glenealy Plantations (Malaya) Bhd
(May 18, RM5.27)
Maintain buy at RM5.10 with revised target price of RM6.40 (from RM6.05): Glenealy's 9MFY11 core earnings surged 91.2% year-on-year (y-o-y) to RM53 million, representing 87.1% of our full-year forecast. Earnings before interest, tax, depreciation and amortisation (Ebitda) rose 59.8% while profit before tax leaped by 89.3%.

Ebitda margins were much stronger at 60.9% from last year's 46.7% due to sharply higher palm oil prices and lower expenses. Revenue was up by 22.7% to RM181.8 million and accounts for 72.2% of our revenue forecast, which we consider in line. Deviation from our earnings estimates came from lower than expected cost of sales and operating expenses, which decreased 5.5% y-o-y despite the higher revenue. We had initially expected costs to rise 7.1%. We will seek further clarification from management on the matter.

Glenealy's 9MFY11 fresh fruit bunches (FFB) production was down 2.6% y-o-y, in line with our full-year estimates for a 2.2% decrease. Crude palm oil (CPO) production decreased by 10.8%.

The company has, however, shown signs of a recovery in production in the past few months. In 3QFY11, FFB production was up 4% y-o-y after a poor 2QFY11 when production dropped by 14.9% y-o-y. For February and March 2011 combined, FFB production was clearly stronger y-o-y, higher by 17.8%.

We trim down our cost assumptions for both FY11 and FY12, thus increasing our FY11 earnings forecast by 12.2% to RM68.3 million from RM60.9 million previously. Our FY12 earnings forecast is raised by 7.2% to RM61.7 million from RM57.6 million. Pegged at 12 times FY12 earnings per share, we maintain our 'buy' call and have a revised fair value of RM6.40 for the stock.

The stock is currently trading at 9.5 times FY12 EPS and US$5,850 (RM17,667) earned value per hectare. ' OSK Research, May 18


This article appeared in The Edge Financial Daily, May 19, 2011.

AMMB - AMMB slips after FY end March 31 earnings within consensus

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

KUALA LUMPUR: Shares of AMMB HOLDINGS BHD [] slipped in late morning trade on Wednesday, May 18 after it announced its net profit for the financial year ended March 31, 2011 at RM1.34 billion.

At 11.06am, it was down three sen to RM6.37.'' The FBM KLCI rose 4.96 points to 1,541.23. Turnover was 346.10 million shares valued at RM670.59 million. There were 260 gainers, 288 losers and 267 stocks unchanged.

OSK Research, in its review of AMMB's financial performance, said the FY ended March 31, 2011 earnings were within consensus.

'The results were lifted by lower provisions, bond investment gains and forex income. The group has done well in diversifying its loans mix with floating rate loans now making up a larger 52% of its total loans base vs just 38% 2 years ago.

'However its low CASA ratio of 12% could jeopardise margins under the current rising interest rate environment coupled with continued escalation in deposit competition. We are maintaining our TP of RM6.90 (1.80x FY12 PBV, 13.4% ROE) and NEUTRAL recommendation,' it said.

IOICORP - IOI Corp gains after 3Q net profit rises 19.6% to RM656.71m

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

KUALA LUMPIR: IOI CORPORATION BHD [] shares rose on Wednesday, May 18 after its net profit for the third quarter ended March 31, 2011 rose 19.6% to RM656.71 million from the RM549.02 million a year ago, boosted by the better overall performance of the group, especially PLANTATION []s.

At 9.45am, IOI Corp rose five sen to RM5.24 with 479,000 shares traded.

Its 3QFY11 pre-tax profit of RM780.86 million was 10% higher than the RM709.27 million a year ago. Revenue rose 37.7% to RM4.34 billion from RM3.15 billion while earnings per share were 10.25 sen versus 8.6 sen.

For the nine-months ended March 31, 2011 (9MFY11), it said net profit was RM1.74 billion compared with RM1.52 billion a year ago. Revenue was higher at RM11.83 billion versus RM9.48 billion.

MIDF Research maintained its Buy call on IOI Corp with target price of RM6.24.

'We employ sum-of-parts valuation to set our target price for IOI Corp. We peg our valuation to FY12 earnings and set our target price at RM6.24.

'We reiterate our Buy call for IOI Corp and believe that its future earnings growth will be supported by steady growth of FFB and CPO,' it said on May 18.

IOICORP - OSK keeps 'sell' call on IOI Corp

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

OSK Research has maintained a "sell" call on IOI Corporation and lowered the target price to RM4.39 from RM4.41 due to aging trees despite the higher crude palm oil (CPO) and palm kernel oil
(PKO) prices.

OSK Research in a research note today said the aging trees combined with the adverse weather had reduced the palm oil fresh fruit bunch production for the nine-month period by 10.4 per cent.

"IOI will continue to struggle with its production due to aging trees, which caused its production to decline for the past two consecutive years," it said.

However, the weaker production was offset by the higher CPO and PKO prices, resulting in the plantation segment, recording a 21.8 per cent earnings before interest and taxes growth, it added.

Meanwhile, HwangDBS Vickers Research has maintained a "hold" call on IOI Corporation on expectations that there would be no near-term catalyst for the stock, as the plantation company's improving capability is believed to have been already priced in. -- Bernama

MMCCORP - OSK Research keeps MMC Corp Trading Buy, FV at RM3.62

Stock Name: MMCCORP
Company Name: MMC CORPORATION BHD
Research House: OSK

KUALA LUMPUR: OSK Research said MMC Corp Bhd mentioned that two of its subsidiaries and its unit are up for listing namely Gas Malaysia, Malakoff and Johor Port although the company has yet to submit any applications to the Securities Commission.

It said on Wednesday, May 18 that although their listings are not a surprise, MMC's guidance for Gas Malaysia and Johor Port's market caps are almost twice what it currently valued these subsidiaries at.

'Attributing these market cap guidance values could potentially raise our SOP FV to RM4.38. For now, pending more concrete listing details, we keep our FV at RM3.62 and MMC remains a Trading Buy,' it said.

MRCB - CIMB Research has Buy on MRCB at RM2.20

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

KUALA LUMPUR: CIMB Equities Research has a technical Buy call on MALAYSIAN RESOURCES CORP [] Bhd at RM2.20 at which it is trading at FY12 price-to-earnings of 30.6 times and price-to-book value of 2.4 times.

It said on Wednesday, May 18 that MRCB appears to be trapped in a sideways consolidation triangle, similar to the one forming on the FBMKLCI. The triangle could potentially be on its final leg lower to complete this pattern.

'If we are right, the stock is poised for strong rally once this pattern ends. Prices could pull back towards RM2.12-2.17 and traders would likely do well getting in long at those levels. Cut losses if prices fall below RM2.09.

'Technical landscape is flat, supporting the sideways triangle view. A breakout above RM2.30 would mean that prices are heading towards RM2.41 and RM2.47 next, where the latter is its 78.6%FR of its 2007-2008 drop,' it said.

CENTURY - Century Logistics' top up, bottom down

Stock Name: CENTURY
Company Name: CENTURY LOGISTICS HOLDINGS BHD
Research House: OSK

Century Logistics Holdings Bhd
(May 13, RM1.96)
Maintain buy at RM1.99 with target price of RM2.43: Century Logistics (CLH) posted earnings of RM6.4 million (year-on-year [y-o-y]: - 2.5%, quarter-on-quarter [q-o-q]: -23.4%) on the back of RM66.8 million in revenue. Revenue accounted for 19% of our full-year estimates, given the seasonally weaker quarter due to the low number of working days.

We consider these commendable results, noting that the remaining three quarters will be strong on new contracts.

CLH has just started another two major logistics contracts last month, which according to management have contributed substantial revenue to the group for this segment.

CLH's oil and gas logistics segment also continues to see buoyant growth and demand for its bunkering services remains solid and resilient despite the hike in oil prices.

CLH's bottom line was down by 23.4% q-o-q and 2.5% y-o-y falling short of our and consensus views by 20% and 16% if annualised. Earnings before interest and tax (Ebit) margin was down by 2.5 percentage points q-o-q.

We consider this in line due to the seasonally lower 1Q net profit owing to lower number of working days.

Furthermore, the much lower bottom line is also due to the higher tax charges for the quarter given that its Incentive Tax Allowance tenure has ended. Note that CLH's tax rate for the previous quarter was much lower owing to the non-taxable gain from the group's sale of property.

We continue to like CLH and expect numbers to remain strong going forward. Apart from its strong and steady growth in its oil logistics, we expect its contract logistics business to grow credibly and to secure more contracts from multinational companies such as F&B players and some large electrical and electronic companies. We are optimistic that CLH will continue to do well. Management has also guided that this segment will remain one of the company's key growth areas in the future.

We maintain our earnings forecast for now and reiterate our 'buy' call on CLH with fair value at RM2.43 based on 5.1 times FY11 earnings per share. CLH has also guided that it will declare a dividend payout ratio of 20% to 25% for the full-year. ' OSK Research, May 13


This article appeared in The Edge Financial Daily, May 16, 2011.

MAYBANK - Maybank driven by regional expansion

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

Malayan Banking Bhd
(May 13, RM8.85)
Maintain buy at RM8.74 with target price of RM10.80: Net profit of RM1.1 billion in 3QFY11 (+2% quarter-on-quarter; +11% year-on-year) takes 9M11 earnings to RM3.3 billion (76% of our full year FY11F). Net interest income edged down 2% q-o-q due to net interest margin (NIM) compression (2.16% against 2.31% in 2QFY11) that was prevalent in all regions. Loans surged 7% q-o-q led by Singapore and Indonesia. Provisions fell sharply (-45% q-o-q) due to an improving loan portfolio, absence of some non-recurring allowances, and higher recoveries. Tier-1 and risk-weighted capital asset ratio stood at 11.6% and 14.1%, respectively (incorporating dividend reinvestment plan reinvestment rate of 91%).

Maybank has completed the acquisition of Kim Eng Holdings (KEH), it now owns 50.2%, and launched a mandatory general offer for the remaining shares. It also offered to buy out Kim Eng Securities (Thailand), currently 55.3%-owned by KEH, at 16 baht per share. We expect the privatisation to be successful. Strong revenue and loan traction at Bank Internasional Indonesia, MCB Bank Ltd and its Singapore operations should drive growth going forward. However, NIM is likely to remain soft, although overall asset quality should generally improve. There could be short-term pressure on PT Wahana Ottomitra Multiartha Tbk's (WOM Finance) motorcycle non-performing loans.

We raise FY11/13F loan growth to 15% to 18% (from 13% to 14%), reduce FY11 credit charge to 40 basis points (from 47bps), and imputed potential income (circa RM200 million) from Kim Eng in FY12/13F.

Maintain 'buy' and RM10.80 target price based on the Gordon Growth Model with the following assumptions: 16.5% return on equity, 7% growth and 10.8% cost of equity. ' HwangDBS Vickers Research, May 13


This article appeared in The Edge Financial Daily, May 16, 2011.

GNEALY - OSK rates Glenealy a 'buy'

Stock Name: GNEALY
Company Name: GLENEALY PLANTATIONS (M) BHD
Research House: OSK

Glenealy Plantations (Malaya) Bhd is bound to see strong production growth at least for the next few years, in view of its young age profile and further expansion plans in Indonesia, says OSK Research.

"We are initiating coverage on Glenealy with a 'buy' rating and a 12 months fair value of RM6.05," the research firm said in note today.

Glenealy has a planted area of 28,537 hectares in Sabah and Sarawak and its trees are largely young, with 51 per cent at or younger than five years, based on June 30, 2010 figures.

The research firm said 60 per cent of the company's trees are below peak production age, so there is ample room for fresh fruit bunch (FFB) production growth moving forward.

Glenealy currently has about 11,000 hectares of plantable area in Kalimantan Timur, of which about 2,000-3,000 hectares will be planted annually.

Together with another 2,000-3,000 hectares annual planting in Sarawak, it will bring the company's planted area expansion to about 4,000-6,000 hectares per annum.

This,OSK said, will fuel planted area growth by 15-22 per cent for this financial year and by 13-18 per cent for the next.

"We estimate Glenealy to register double-digit FFB production growth of between 11-15 per cent in financial year 2012-2013," it added.

OSK said should the company plant at a more aggressive 6,000 hectares annual rate, it expects the financial year 2014-2016 FFB production CAGR to be 10 per cent.

It said production will remain stagnant starting in 2014 if the company chooses not to expand its existing planted area (zero new planting).

Glenealy has recorded steady production growth for the past decade, rising from 207,334 tonnes in 2001 to 316,667 tonnes in 2010, which represents a five per cent CAGR. -- Bernama

PARKSON - Parkson fair value lifted, stock climbs

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

Parkson Holdings Bhd, a Malaysian department store operator, rose the most in almost two weeks after OSK Research Sdn Bhd raised the stock’s fair value to RM7.42 from RM6.31 to reflect its growth prospects.

The stock climbed 1.2 per cent to RM5.74 at 9:35 a.m. local time in Kuala Lumpur trading, set for its steepest increase since May 4. -- Bloomberg

SUPERMX - OSK keeps 'buy' call on Supermax

Stock Name: SUPERMX
Company Name: SUPERMAX CORPORATION BHD
Research House: OSK

OSK Research has maintained its "buy" call on Supermax Corporation although its first quarter financial year 2011 results were below expectations.

The research house believes the earnings of Supermax stand a strong chance to re-rate within a six-12 month horizon.

"Within this period and provided the latex price does not break its recent high of about RM11 per kg and continues the uptrend of late, we think the earnings of Supermax stand a strong chance to re-rate.

"It can then pass on the latex cost increase to its customers in a more accurate and timely manner," it said in a research note today.

The results of Supermax were lower owing to the higher latex price, forex losses and slower-than-expected demand for examination gloves from certain countries. -- Bernama

TOPGLOV - CIMB Research cuts Top Glove's earnings estimates, lowers TP to RM5.57

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

KUALA LUMPUR: CIMB Equities Research has reduced its FY11-13 net profit numbers for Top Glove Corp Bhd by 4%- 27%, having overestimated the glove maker's cost pass-through ability and it had been too optimistic about the recovery of glove demand.

'We also cut our FY11-12 capacity assumptions by 3-7% to reflect management's latest expansion plans. The adjustments of our cost and capacity assumptions lead to a fall in our target price from RM5.98 to RM5.57. We continue to value the stock at our target market P/E of 14.5 times,' it said on Monday, May 16.

CIMB Research said despite the lower target price, it reiterated its NEUTRAL rating as Top Glove's share price has fallen 3% since its last update.

The research house said it does not deny that within the sector, Top Glove is most leveraged to lower rubber prices. 'But its 1-year forward P/E of 19.3x is two standard deviations above its 6-month average,' it said.

CIMB Research said since March 2009, Top Glove's share price has rarely traded at such a premium for long and we expect its valuation multiple to revert to the mean in the quarters ahead.

'Also, our revised FY11 forecasts are 31% below consensus. We believe that over the next few weeks, there could be profit downgrades by the market as Top Glove's 3Q reporting period comes to a close at the end of May,' it said.

DIALOG - CIMB Research: Dialog remains Outperform, TP RM3.27

Stock Name: DIALOG
Company Name: DIALOG GROUP BHD
Research House: CIMB

KUALA LUMPUR: CIMB Equities Research keeps DIALOG GROUP BHD [] an Outperform with the potential share price catalysts being an announcement of marginal field development, and new markets including Saudi Arabia.

The research house said on Monday, May 16 Dialog's CONSTRUCTION [] of the RM5bn independent deepwater petroleum terminal in Pengerang, south Johor is set to start in mid-CY11 as scheduled.

'Having received approval from the Department of Environment (DOE) last month, the company inked on Friday a JV that marks the start of land reclamation works. We expect the construction portion to start contributing in 1QFY6/12.

'We maintain our forecasts and SOP-based target price of RM3.27,' it said.

CSCSTEL - OSK Research keeps CSC Steel fair value of RM1.97

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

KUAL LUMPUR: OSK Research said on the back of encouraging numbers reported by CSC Steel for the first quarter, it expects the steel-based company to likely to generate reasonable profit for FY11 despite the sketchy outlook in the 2H.

'Therefore, we retain our estimates for now and keep our fair value of RM1.97 derived from 6x EPS plus net cash per share on FY11 numbers,' it said on Monday, May 16.

'We think CSC still justifies a Trading BUY with its strong balance sheet and generous dividend payout commitment,' it added.

OSK Research said the fact that CSC possesses an experienced and sound management team are other carrots for investors to add this stock to their portfolios, on top of a 13.2% upside based on its last close to its fair value.

KENCANA - OSK Research ups Kencana TP to RM3.17

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

KUALA LUMPUR: OSK Research has upgraded KENCANA PETROLEUM BHD [] to Buy with revised fair value of RM3.17.

The research house said on Monday, May 16, it viewed positively Kencana's plan to acquire Allied Marine & Equipment Sdn Bhd for RM400m from Worldclass Inspiration Sdn Bhd and Allied Asset Holdings Sdn Bhd.

OSK Research said the purchase would be satisfied by the issuance of 149.3m new shares of Kencana at RM2.68 a share.

'This acquisition also comes with a profit guarantee of RM40m. The entire exercise is expected to be completed by 3QCY11.

'We view this acquisition positively as it would help Kencana to expand vertically. Upgrade to Buy with revised fair value of RM3.17,' it said.