TOPGLOV - Top Glove falls, worries over 3Q results

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

KUALA LUMPUR: Shares of Top Glove Corp Bhd fell in afternoon trade on Friday, June 10 on concerns about weaker earnings when it releases it third-quarter results next week.

At 3.04pm, it was down 11 sen to RM5.29 with 1.04 million shares done.

The FBM KLCI was up 6.75 points to 1,557.64. Turnover was 495.26 million shares valued at RM723.16 million. Advancing counters beat decliners 333 to 284 while 320 stocks were unchanged.

At the midday break, the company announced it would release the''third quarter financial results for the period ended''May 31, on June 17.

AmResearch said in recent report it was maintaining its Sell rating on the glove maker and cut its fair value from RM4.30 share to RM3.90, based on a price-to-earnings of 15 times CY12F earnings ' at parity to the stock's 10-year mean.

'We are again slashing our FY11F-13F earnings forecasts, by 13%-14% this time around. This represents our third earnings downgrade in the past nine months, underpinning our view that earnings have yet to hit the trough,' it said.

AmResearch said it anticipated Top Glove's 3Q results would again undershoot market expectations.

RCECAP - RCE Capital's fair value lifted, stock climbs

Stock Name: RCECAP
Company Name: RCE CAPITAL BHD
Research House: RHB

RCE Capital Bhd, a Malaysian consumer credit provider, rose the most in more than six months in Kuala Lumpur trading after RHB Research Institute Sdn Bhd raised its fair value for the stock to RM1.10.

Its shares climbed 6 per cent to 53 sen at 9:05 a.m. local time, set for their biggest increase since Nov. 22. -- Bloomberg

SPSETIA - S P Setia advances in early trade

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

KUALA LUMPUR: S P Setia Bhd shares advanced in early trade on Friday, June 10 after the company declared an interim gross dividend of 5 sen per share, and said it was confident of meeting its RM3 billion sales target this year.

The company has so far recorded sales of RM1.66 billion in the first seven months of the year.

Its net profit for the second quarter ended April 30, 2011 surged 80% to RM92.22 million from RM51.21 million a year earlier, due including to gain from the disposal of an investment property.

Revenue for the quarter rose to RM496.75 million from RM409.07 million a year earlier. Earnings per share were 5.55 sen while net assets per share was RM1.78.

CIMB Research has maintained its Outperform recommendation on the stock and target price of RM5.37 based on an unchanged 30% premium over its FD RNAV of RM4.13.

'Potential re-rating catalysts include 1) continued robust sales, 2) newsflow on landbanking and 3) strong earnings growth. SP Setia remains a core holding in the property sector,' it said in a note June 10.

MHB - MIDF Research maintains Positive on oil and gas sector

Stock Name: MHB
Company Name: MALAYSIA MARINE AND HEAVY ENG
Research House: MIDF

KUALA LUMPUR: MIDF Research has maintained its positive stance on the oil and gas sector, with Petronas Gas and KENCANA PETROLEUM BHD [] among its top picks.

In a note Friday, June 10, MIDF Research said that taking into account higher than previously announced capex and rising long-term demand for oil and gas namely from Asia, it was holding its Positive view on the sector.

'Petronas Gas (Buy, TP: RM13.10) and Kencana (Buy: TP: RM3.16) are among the top picks. Petronas Gas is expected to benefit from Petronas' aggressive expansion in gas business and liberalisation in gas industry.

'Fabricators like Kencana and MMHE (Neutral: TP: RM6.70) will also gain on increasing demand for offshore platform structures,' it said.

KENCANA - MIDF Research maintains Positive on oil and gas sector

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

KUALA LUMPUR: MIDF Research has maintained its positive stance on the oil and gas sector, with Petronas Gas and KENCANA PETROLEUM BHD [] among its top picks.

In a note Friday, June 10, MIDF Research said that taking into account higher than previously announced capex and rising long-term demand for oil and gas namely from Asia, it was holding its Positive view on the sector.

'Petronas Gas (Buy, TP: RM13.10) and Kencana (Buy: TP: RM3.16) are among the top picks. Petronas Gas is expected to benefit from Petronas' aggressive expansion in gas business and liberalisation in gas industry.

'Fabricators like Kencana and MMHE (Neutral: TP: RM6.70) will also gain on increasing demand for offshore platform structures,' it said.

PETGAS - MIDF Research maintains Positive on oil and gas sector

Stock Name: PETGAS
Company Name: PETRONAS GAS BHD
Research House: MIDF

KUALA LUMPUR: MIDF Research has maintained its positive stance on the oil and gas sector, with Petronas Gas and KENCANA PETROLEUM BHD [] among its top picks.

In a note Friday, June 10, MIDF Research said that taking into account higher than previously announced capex and rising long-term demand for oil and gas namely from Asia, it was holding its Positive view on the sector.

'Petronas Gas (Buy, TP: RM13.10) and Kencana (Buy: TP: RM3.16) are among the top picks. Petronas Gas is expected to benefit from Petronas' aggressive expansion in gas business and liberalisation in gas industry.

'Fabricators like Kencana and MMHE (Neutral: TP: RM6.70) will also gain on increasing demand for offshore platform structures,' it said.

FITTERS - Fitters' 2.5m shares done off-mkt at RM1.02 apiece, RHB Research FV RM1.28

Stock Name: FITTERS
Company Name: FITTERS DIVERSIFIED BHD
Research House: RHB

KUALA LUMPUR: FITTERS DIVERSIFIED BHD [] saw 2.5 million of its shares traded off-market at RM1.02 a share on Thursday, June 9.

Stock market data showed that at RM1.02, this was three sen lower than Wednesday's closing price of RM1.05.

At 2.34pm, Fitters was down two sen to RM1.03 in normal trade. There were 177,500 shares done at prices ranging from RM1.01 to RM1.05.

RHB Research Institute had on Wednesday said Fitters management appeared confident about meeting the FY ending Dec 31, 2011 turnover and net profit forecasts of RM490.7 million and RM35.5 million.

'We are fine-tuning the numbers to RM474.2 million and RM36 million,' said the research house.

RHB Research said the production of dry long fibre and biofuel pellet has started in Fitters' palm oil mill in Kedah, temporarily powered by diesel and electricity generated from the steam boiler pending the installation of a biogas plant.

'Fitters hopes to sign up at least four third-party palm oil mills over the next one to two months for the conversion into 'green' palm oil mills,' it said, adding its fair value was RM1.28.

SUPERMX - Affin Research cuts earnings outlook for glove makers

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

KUALA LUMPUR: Affin Investment Bank Research has downgraded the earnings forecasts for Malaysian glove makers by up to 21% as higher energy costs and high latex prices would continue to weigh.

It said on Thursday, June 9 that after last week's 7% to 28% increase in natural gas tariffs, the glove makers were expected to pass through the higher costs to the customers via higher average selling prices (ASPs).

'We estimate that to offset the entire 7% increase in the natural gas tariff, ASPs would have to rise by about 1%,' it said, adding the impact on earnings would be seen from time lags in cost pass through.

Affin IB Research said its talks with management also revealed that the earnings recovery would likely be later than initially expected. The slower-than-expected recovery would be due a higher gas tariff and time lags in cost-pass through, both with respect to the stubbornly high latex prices (currently at RM9.41/kg) and the higher natural gas costs.

'Given that order lead time for glove manufacturers is between 45-60 days, we believe impact of the tariff hike will be seen in the 2QCY11 results,' it said.

Affin IB Research said after taking into account the factors, it was downgrading its FY11-13 net earnings forecasts for Top Glove, Supermax, Kossan and Hartalega by up to 21%.

'Accordingly, we are lowering our target prices for Supermax to RM4.85 (previously, RM5.67), Top Glove to RM4.62 (from RM4.92), Kossan to RM4.39 (previously, RM4.78) and Hartalega to RM7.33 (previously, RM7.46).

'Notwithstanding the lower TPs, there are no changes to our ratings. Supermax, Kossan and Hartalega are still rated as BUY, while Top Glove remains as a REDUCE,' it said.

In spite of our earnings downgrade, it remained OVERWEIGHT on the rubber glove sector, as demand fundamentals remain sound. As a basic medical necessity, demand for gloves will continue to grow at the typical annual pace of 8%-10%, in tandem with growing global healthcare awareness.

'We also expect demand for nitrile gloves to grow at a faster pace, as high latex prices and, consequently, higher ASPs induce a stronger shift in demand to synthetic gloves. Thus, our top picks for the sector are Hartalega and Kossan,' it said.

MRCB - CIMB Research has Buy on MRCB at RM2.19

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

KUALA LUMPUR: CIMB Equities Research has a Buy on MALAYSIAN RESOURCES CORP [] Bhd (MRCB) at RM2.19 at which it is trading at a FY12P/E of 30.3 times and P/BV of 2.3 times.

It said on Thursday, June 9 that MRCB remains trapped within its sideways consolidation triangle despite what it believes is the final leg lower that completed the pattern.

'Prices are also swirling around the moving averages, which supports the sideways view. Technical landscape is flat, which is in line with the sideways triangle view. However, both indicators are building a firm base above their respective support,' it said.

CIMB Research said MRCB could be poised for strong rally soon and breakout of this triangle pattern. Closing above the triangle support at RM2.30 would likely confirm that prices are headed towards RM2.41 and RM2.47 next, where the latter is its 78.6%FR of its 2007-2008 drop.

LATEXX - Latexx raised to 'trading buy' at CIMB

Stock Name: LATEXX
Company Name: LATEXX PARTNERS BHD
Research House: CIMB

Latexx Partners Bhd, a Malaysian rubber glove maker, was raised to “trading buy” from “neutral” at CIMB Investment Bank Bhd after the company agreed to a revised offer to merge with the YTY group.

The share estimate was increased to RM2.60 from RM2.28, Kuala Lumpur-based analyst Terence Wong wrote in a report today.

The stock rose to its highest level in almost three weeks in Kuala Lumpur trading, gaining 3.1 per cent to RM2.34 at 9:03 a.m. local time, set for its highest close since May 23. -- Bloomberg

MBMR - MBM Res untraded after stock upgrade

Stock Name: MBMR
Company Name: MBM RESOURCES BHD
Research House: RHB

MBM Resources Bhd, a Malaysian car distributor, was untraded at 9:16 a.m. in Kuala Lumpur after the stock was upgraded to “outperform” at RHB Research Institute Sdn Bhd with a higher fair value of RM3.75.

Its shares gained 1 per cent to close at RM3.13 yesterday, its highest close since March 3. -- Bloomberg

JOBST - 'Huge growth potential for JobStreet'

Stock Name: JOBST
Company Name: JOBSTREET CORPORATION BHD
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research sees a huge growth potential for JobStreet Corp, an online recruitment market, with job advertisement volume still registering double-digit growth rates.

In a note today, the research firm said the full growth potential for online recruitment services was yet to be realised.

"This could be unlocked through the increasing broadband/Internet
penetration in the Asia-Pacific region, migration from print to online advertising given its better value proposition, and growing demand for convenient and efficient services," it said.

Hwang said JobStreet was one of few online job recruitment providers with a stable profit track record and was leading in its operating territories.

"It will be a prime beneficiary of industry consolidation," it added.

The research firm maintained a "buy" call for JobStreet with a target price of RM3.60. - Bernama

KENCANA - UOB Kay Hian Research Overweight on Malaysian O&G fabrication yards

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

KUALA LUMPUR: UOB Kay Hian Research has initiated with an Overweight on Malaysia's oil & gas (O&G) fabrication yards as the industry is undergoing a strong cyclical recovery.

It said on Tuesday, June 7 that Petroliam Nasional Bhd (Petronas) had pledged to spend RM50 billion to RM55 billion per year for the next five years, a big increase of 35%-48% from 2010 capex of RM37 billion.

'The rate of increase in Petronas spending is a good gauge of the industry's prospective growth which could be in the region of 20%-30% this year,' it said.

UOB Kay Hian estimated Petronas' capex spending in 2011 would exceed the government's 2011 budgeted development expenditure of RM49 billion.

The three major O&G upstream players' (Marine and Heavy Engineering (MMHE), SAPURACREST PETROLEUM BHD [] and Kencana Petroleum'' Bhd) combined top-line of RM10 billion (which includes overseas contribution) is dwarfed by Petronas' spending plans.

The research house initiated coverage on MMHE with a BUY. It said MMHE wass the closest proxy to Petronas spending as Petronas still had a 40% indirect stake in MMHE after its IPO.

'We project MMHE to deliver net profit CAGR of 24% over the next few years and will be a leading consolidation play. Our target price of RM8.80 is based on 21 times FY12F PE. MMHE's monopoly over deepwater fabrication in Malaysia is its strong point.

As for Kencana, it has initiated coverage on Kencana Petroleum with a HOLD.

'Our target price is RM2.44, based on 18 times FY12F PE, a discount to MMHE's, due to its smaller size. We believe most of its recent contract wins have been factored in its current share price. Entry price is RM2.20,' it said.

UOB Kay Hian said under the Economic Transformation Programme (ETP), the government has proposed the O&G sector to consolidate so that Petronas can create a healthy and growing secondary O&G services industry.

It said Malaysia's fabrication yards give out a good portion of work to subcontractors, surrendering margins. Industry consolidation will reduce fabrication yards' reliance on subcontractors and eliminate execution risks associated with outsourcing.

'MMHE's proposed acquisition of Sime Darby's Ramunia yard would effectively double its Pasir Gudang yard's capacity to 130,000 million tonnes and also raise its share of domestic capacity to 50%.

'Equity partners such as Kencana are moving into a utility-based model where cash flows are more certain. Developing marginal fields with short lifespan also requires the mobilisation of floating production systems (FPS) and mobile operating and storage units (MOPU). Both MMHE and Kencana have the capability to fabricate and convert rigs into FPS and MOPU,' it said.

MHB - UOB Kay Hian Research Overweight on Malaysian O&G fabrication yards

Stock Name: MHB
Company Name: MALAYSIA MARINE AND HEAVY ENG
Research House: UOB

KUALA LUMPUR: UOB Kay Hian Research has initiated with an Overweight on Malaysia's oil & gas (O&G) fabrication yards as the industry is undergoing a strong cyclical recovery.

It said on Tuesday, June 7 that Petroliam Nasional Bhd (Petronas) had pledged to spend RM50 billion to RM55 billion per year for the next five years, a big increase of 35%-48% from 2010 capex of RM37 billion.

'The rate of increase in Petronas spending is a good gauge of the industry's prospective growth which could be in the region of 20%-30% this year,' it said.

UOB Kay Hian estimated Petronas' capex spending in 2011 would exceed the government's 2011 budgeted development expenditure of RM49 billion.

The three major O&G upstream players' (Marine and Heavy Engineering (MMHE), SAPURACREST PETROLEUM BHD [] and Kencana Petroleum'' Bhd) combined top-line of RM10 billion (which includes overseas contribution) is dwarfed by Petronas' spending plans.

The research house initiated coverage on MMHE with a BUY. It said MMHE wass the closest proxy to Petronas spending as Petronas still had a 40% indirect stake in MMHE after its IPO.

'We project MMHE to deliver net profit CAGR of 24% over the next few years and will be a leading consolidation play. Our target price of RM8.80 is based on 21 times FY12F PE. MMHE's monopoly over deepwater fabrication in Malaysia is its strong point.

As for Kencana, it has initiated coverage on Kencana Petroleum with a HOLD.

'Our target price is RM2.44, based on 18 times FY12F PE, a discount to MMHE's, due to its smaller size. We believe most of its recent contract wins have been factored in its current share price. Entry price is RM2.20,' it said.

UOB Kay Hian said under the Economic Transformation Programme (ETP), the government has proposed the O&G sector to consolidate so that Petronas can create a healthy and growing secondary O&G services industry.

It said Malaysia's fabrication yards give out a good portion of work to subcontractors, surrendering margins. Industry consolidation will reduce fabrication yards' reliance on subcontractors and eliminate execution risks associated with outsourcing.

'MMHE's proposed acquisition of Sime Darby's Ramunia yard would effectively double its Pasir Gudang yard's capacity to 130,000 million tonnes and also raise its share of domestic capacity to 50%.

'Equity partners such as Kencana are moving into a utility-based model where cash flows are more certain. Developing marginal fields with short lifespan also requires the mobilisation of floating production systems (FPS) and mobile operating and storage units (MOPU). Both MMHE and Kencana have the capability to fabricate and convert rigs into FPS and MOPU,' it said.

MAS - MIDF Research retains sell call on MAS

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

KUALA LUMPUR: MIDF Research has retained its sell call on Malaysia Airlines (MAS) and said that while the national carrier's membership of the oneworld alliance would help boost its revenue and lessen costs, any favourable results will only be noticed in 2013 onwards.

The research house said it was making no changes to its earnings forecast for now till 2012.

'Due'' to'' limited'' implied ''upside potential as well as headwinds'' from escalating'' fuel prices and ''some'' impact'' from'' the'' MENA'' civil'' unrest'' and'' Japanese'' natural ''disasters, we are expecting the coming 2Q11 numbers to be impinged.

'Therefore we reaffirm Sell with a target price of RM1.24, derived by pegging ''its EPS11 to 13.6x PER, which is the average PER of its peers,' said MIDF Research in a note June 7.

''

CENSOF - Century's fair value lifted at OSK

Stock Name: CENSOF
Company Name: CENTURY SOFTWARE HOLDINGS BHD
Research House: OSK

Century Software Holdings Bhd, a Malaysian software company, rose to a record in Kuala Lumpur trading after OSK Research Sdn Bhd said it increased its fair value to 98 sen.

The stock gained 4 per cent to 78.5 sen at 9:16 a.m. local time. -- Bloomberg

MBMR - MBM Resources upgraded to 'buy'

Stock Name: MBMR
Company Name: MBM RESOURCES BHD
Research House: OSK

MBM Resources Bhd, which owns a stake in Malaysian automaker Perusahaan Otomobil Kedua Sdn Bhd, rose to a three-month high in Kuala Lumpur trading after OSK Research Sdn Bhd upgraded the stock to “buy” with a higher fair value of 3.80 ringgit.

Its shares increased 1.3 per cent to RM3.14 at 11:40 a.m. local time, set for their highest close since March 2. -- Bloomberg