August 26, 2011
Company Name: GENTING BHD
|Research House: MAYBANK||Price Call: HOLD||Target Price: 10.20|
KUALA LUMPUR: Maybank Investment Bank Bhd Research has downgraded GENTING BHD  to Hold from Buy previously, and cut its target price for the stock to RM10.20 from RM12.76, and said Genting's 1H11 results were largely within expectations.
It said in a note Aug 26 that Genting's 2Q11 core net profit of RM634 million (-19% y-o-y, - 26% q-o-q) brought 1H11 core net profit to RM1.5 billion (+21% y-o-y) which was within expectation at 47% of its full year estimate.
The research house said that excluding Resorts World New York (RWNY) development revenue, 1H11 revenue of RM8.7 billion (+21% y-o-y) was also within expectations at 48% of its 2011 estimate.
The interim dividend per share of 3.5 sen less tax (1H10: 3.3 sen less tax) was also within expectations, it said.
Maybank IB Research said weaker earnings year-on-year were due to poor VIP win rate at 52% owned Resorts World Sentosa (RWS) and 49% owned Genting UK (GENUK).
'We trim our earnings estimates by 6%-9% on lower share of Singaporean VIP volume for RWS.
'Volatile equity markets do not favour this high beta stock. Its share price will also be affected by sentiment at Genting Singapore,' it said.
HLIB Research 26 August 2011 (SIME; DRB-Hicom; YTL-P; Maxis; TimeDotCom; HSL; TRC; Traders Brief) Part2
Company Name: TIME DOTCOM BHD
|Research House: HLG||Price Call: BUY||Target Price: 0.97|
Stock Name: HSL
Company Name: HOCK SENG LEE BHD
|Research House: HLG||Price Call: BUY||Target Price: 2.44|
Time DotCom (BUY)
Entering Margin Expansion Phase
'''' EBITDA margin expansion in 2Q11 due to the increased contribution from data segment and slower than expected capex spending. Management expects EBITDA margin to average above 30% for FY11.
'''' TDC to focus on strategies to expand data revenues (+6% yoy, +23% qoq) from wholesale, corporate and global bandwith sales
'''' Under Astro partnership, TDC to incur huge capex in FY11
'''' Management guided whole year capex of RM250m for FY11 and RM80-120m for FY12.
'''' The acquisition exercise of AIMS Group, GTC and GTL are expected to be completed in 4Q11.
'''' TDC is entering into a multi-year growth cycle with a high degree of operating leverage. By tapping into new growth areas the company is poised to become a regional growth telco.
'''' At the current price, Time DotCom is trading at an estimated PER of 12.8x, 11.4x and 10.0x for FY11, FY12 and FY13 respectively.
'''' Raised Target Price to RM0.97 (Previously RM0.95) based on SOP.
Hock Seng Lee (BUY)''''''
2Q11 continues to deliver
'''' 2Q PATAMI came in at RM20.9m (+18% QoQ), translating to 3.78 sen/share. As of 1H11, cumulative PATAMI was RM38.6m, translating to 6.97 sen/share, making up 43% of our forecast.
'''' On a YoY and QoQ basis, 2Q revenue grew by 34% and 20% respectively. On the other hand, YoY and QoQ PATAMI only grew by 16% and 18% respectively. Cumulatively, revenue and PATAMI grew by 34% and 22% respectively. We believe that the company is on track to deliver earnings growth of >20% for FY11.
'''' As of 2Q11, we estimate that HSL has ~RM880m worth of orderbook outstanding, which translates to ~1.9x FY10's revenue and ~1x order book-to-market cap ratio. YTD, HSL has secured RM153.7m worth of new orders.
'''' Maintain BUY as the company has a niche market for itself in land reclamation/dredging works and healthy balance sheet to take on bigger projects. Target Price of RM2.44 based on 14x average FY11 and FY12 earnings maintained.
TRC Synergy (BUY)
2Q11 weighed down by LRT delays
'''' 2Q PATAMI plunged by 57% QoQ to RM2.5m, translating to 0.55 sen/share. As of 1H11, cumulative PATAMI was 20% lower compared to a year ago at RM8.4m (1.83 sen/share after adjustment), making up only 32% of our estimates and 30% of street's estimates.
'''' The reason for the deviation is due to slower than anticipated progress for the LRT project and lower GP margins due to a mixture of projects which are at the tail end and while others are at the initial stages. Hence, lower value added works were recognised during the quarter. We see this weakness in 2Q as temporary and foresee construction activities to accelerate once the issue has been resolved.
'''' We estimate that TRC's current outstanding order book remains healthy at ~RM1.1bn, translating to ~2.9x FY10's revenue and ~4x order book-to-market cap ratio.
'''' Despite 2Q's setback, we believe that this is just a timing issue in profit recognition. We are maintaining our BUY call with a Target Price of RM0.83 based on 13x FY12 earnings.
FBM KLCI - Cautious ahead of long holidays and Bernanke speech
'''' In the wake of unresolved external woes, moderating global economic growth outlook and long holidays next week, we remain vigilant and would like to caution investors about potential kneejerk correction on Bursa Malaysia if Bernanke speech tonight fails to live up to market expectations.
'''' The bearish engulfing candle formation on 24 Aug, negative technical readings and the failure to defend supports at 1470 and 50% FR (at 1467 pts) yesterday could exert more downward pressure on the FBM KLCI. A breakdown below 61.8% FR (now at 1456) subsequently will pressure the index to retest 1443 (76.4% FR) and 9 Aug pivot low at 1423 pts.
Dow Jones - All eyes on Bernanke speech
'''' Technically, a fall below the 10-d SMA yesterday and the failure to surpass the mid Bollinger bad at 11133 and 11530 (17 Aug high) could derail the current rebound, especially if Bernanke speech fails to live up to market expectations of more dramatic action rather than outline gradualist measures.
'''' Immediate resistance levels are 11530 and 11987 (200-d SMA) whilst supports are situated near 10801 (19 Aug low) and 11000.
HLIB Research 26 August 2011 (SIME; DRB-Hicom; YTL-P; Maxis; TimeDotCom; HSL; TRC; Traders Brief) Part1
Company Name: SIME DARBY BHD
|Research House: HLG||Price Call: BUY||Target Price: 10.60|
Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD
|Research House: HLG||Price Call: BUY||Target Price: 2.97|
Stock Name: YTLPOWR
Company Name: YTL POWER INTERNATIONAL BHD
|Research House: HLG||Price Call: BUY||Target Price: 2.33|
Stock Name: MAXIS
Company Name: MAXIS BERHAD
|Research House: HLG||Price Call: HOLD||Target Price: 5.51|
Sime Darby (Buy)
FY06/11 result: above our expectation
'''' FY06/11 core net profit of RM3,808.5m beat our expectation, accounted for 110.5% of our full-year forecast.
'''' Main deviations are higher-than-expected contribution from the plantation, industrial, and motor divisions.''
'''' FY06/12-13 net profit forecasts raised by 0.1-3.1%, largely to reflect higher margin assumptions at both the industrial ad motor divisions, and slightly higher FFB output growth assumption in Malaysia.
'''' SOP-derived TP cut by 3.7% from RM10.99 to RM10.60 to reflect higher holding company discount that more than offset an upward revision in our forecasts.
DRB-HICOM (BUY '')
Forward with Strong Earnings Recovery
'''' 1QFY3/12 core profit of RM90.8m in line with our expectation (18.6%), but below consensus (16.8%).
'''' Impact of Japanese crisis on DRB automotive division was substantial in 1QFY3/12.
'''' Supply constraint has gradually eased off since July, in line to meet its FY3/12 target
'''' Expect strong earnings from 2QFY3/12 onwards due to recovery of automotive division, maiden contribution from POS, and effective implementation of Hire Purchase Act amendment and Waste Management Act amendment.
'''' Maintain BUY with unchanged TP of RM2.97.
YTL Power (BUY '')
4Q11 Results in Line
'''' Reported 4QFY6/11 core earnings of RM379m bringing FY11 to RM1,216m, inline with our expectation (96.1%) and'' consensus (102.1%).
'''' Strong contribution from Power Seraya in Singapore on the back of strong GDP growth, which offsets the lower contribution from Wessex (due to depreciation of UK'') and losses from YTLC (due to high initial capex outlay).
'''' YTLP will recognize RM210m gain on disposal in 1QFY6/12 from the sale of 15% Java Power. However, the contribution from Java Power will be reduced to RM150m in FY6/12 and RM130m in FY6/13 onwards, from original RM225m pa.
'''' Proposed 1.875 sen net dividend, taking FY6/12 dividend to 9.375 sen, below our expectation.
'''' Reduced FY6/12-13 earnings by 6-7%.
'''' Maintain BUY with lower TP of RM2.33 after accounting for lower earnings and imputing 10% holding discount.
1H11 results: In line wirh our expectation
'''' 1H11 reported core net profit of RM1,090m (-3.7%) came in within our expectation, at 48.2% of our full-year forecast. Against consensus, the results came in below, accounted for only 45.4% of the full-year estimates.
'''' 2011-13 net profit forecasts and our DDM-derived TP of RM5.51 maintained.
August 25, 2011
Company Name: KOSSAN RUBBER INDUSTRIES BHD
|Research House: AMMB||Price Call: HOLD||Target Price: 3.54|
Kossan Rubber Industries Bhd
(Aug 25, RM2.71)
Maintain hold at RM2.78 with revised fair value of RM3.54 (from RM3.71): We maintain our 'hold' rating on Kossan Rubber Industries but with a lower fair value of RM3.54 (RM3.71 previously), post 4%-16% downward earnings revisions on dismal 2QFY11 results.
Kossan's 2QFY11 net profit of RM21 million missed both our and market expectations. Net profit of RM44 million (year-on-year: -27%) at half-time accounted for only 38% of our full-year forecast and 37% of consensus.
The group posted a sequentially higher revenue for 2QFY11, up 8% quarter-on-quarter (q-o-q) on an upward revision to average selling price (ASP). However, volume of gloves sold declined to about two billion pieces versus an average of 2.2 billion previously, given the lack of a meaningful improvement in demand for natural rubber (NR) gloves. Production mix for NR is still a high of 57%, while the balance is in synthetic variants.
Further margin normalisation was seen this quarter, with earnings before interest, tax, depreciation and amortisation (Ebitda) margin declining 2.1 percentage points q-o-q to 13%. We suspect the business operating environment remains competitive with price undercutting activities rife, particularly within the basic NR glove segment.
The earnings underperformance mimics the trend seen in recent results of peers, underpinning our long-standing view that it may be too premature to turn constructive on the sector.
On the flipside, the group's strategy in focusing on better margin glove variants would reduce its exposure to latex price volatility. The group aims to boost production of synthetic gloves from 43% to about 60% moving forward. As it is, production mix of synthetic gloves as at August has increased to 50%. Synthetic gloves, namely nitrile variants, use butadiene as the main input.
All in, we cut our earnings forecasts by 16% for FY11F, and a smaller 3% to 4% for FY12F-13F, following lower margin assumptions, lower utilisation rates and revised latex prices. We are now projecting FY11F net profit to contract 15% year-on-year (y-o-y), before rebounding by 19% y-o-y in FY12F.
For exposure to the rubber gloves sector, we prefer Kossan for its more balanced product mix and cheap valuation. Current valuation is attractive, with the stock trading at a forward PE of 7.5 times. Our valuation continues to peg FY12F earnings to a fair PE of 10 times ' at a 30% discount to its 10-year mean. ' AmResearch, Aug 25
This article appeared in The Edge Financial Daily, August 26, 2011.
Company Name: GENTING PLANTATIONS BERHAD
|Research House: MIDF||Price Call: BUY||Target Price: 8.72|
KUALA LUMPUR: MIDF Research has revised upward the earnings forecast on Genting Plantation Bhd by five per cent and seven per
cent respectively for financial years 2011 and 2012.
The higher earnings revision was based on the increase in mature hectarage and higher yield assumption that will provide higher potential production growth, it said in a research note today.
MIDF Research has reiterated its "buy" call on Genting Plantation with an unchanged target price of RM8.72.
Meanwhile, ECM Libra Investment Research has maintained its "trading buy" call on Genting Plantation and upgraded the target price to RM8.64 from RM8.57 previously.
On the crude palm oil price outlook, the research firm expects prices to gyrate within the RM2,900-RM3,100 per tonne level over the second half of this year.
"Supply and demand dynamics appear to be relatively balanced at this juncture and there have been no reports of impending poor weather prospects that could hurt production," it added. - Bernama
KUALA LUMPUR: Genting PLANTATION s Bhd shares advanced on Thursday, Aug 25 after its net profit for the second quarter ended June 30, 2011 surged 96% to RM139.9 million from RM71.38 million a year earlier, due mainly to higher palm products prices and increased FFB production.
At 10.45am, Genting Plantations rose four sen to RM7.08.
Genting Plantations declared a gross interim dividend of 4.25 sen per share of 50 sen each to be paid on Oct 18.
It said on Wednesday, Aug 24 that revenue for the quarter rose 57.6% to RM364.38 million from RM231.17 million in 2010. Earnings per share rose to 18.44 sen from 9.41 sen, while net assets per share was RM4.03.
OSK Research upgraded Genting Plantations from Neutral to Buy with fair value tweaked down to RM7.87.
The research house said on Aug 25 that production growth had been stronger than expected prompting management to guide up on targeted growth this year to 8 ' 9%.
'With its Indonesia estates starting to hit maturity this year, we believe Genting Plant will continue to show respectable growth in the next 5 years.
'The company is also the second biggest landowner in Iskandar Development Region in Johor and the launch of its premier outlet in November should boost land value,' it said.
Company Name: GENTING PLANTATIONS BERHAD
|Research House: OSK||Price Call: BUY||Target Price: 7.87|
KUALA LUMPUR: OSK Research is upgrading Genting PLANTATION s from Neutral to Buy with fair value tweaked down to RM7.87.
It said on Thursday, Aug 25 production growth has been stronger than expected prompting management to guide up on targeted growth this year to 8% to 9%.
'With its Indonesia estates starting to hit maturity this year, we believe Genting Plant will continue to show respectable growth in the next five years,' it said.
OSK Research said Genting Plantations is also the second biggest landowner in Iskandar Development Region in Johor and the launch of its premier outlet in November should boost land value.
Company Name: RHB CAPITAL BHD
|Research House: OSK||Price Call: BUY||Target Price: 9.90|
KUALA LUMPUR: OSK Research is maintaining its Buy call on RHB CAPITAL BHD , with fair value at RM9.90.
It said on Thursday, Aug 25 RHB Capital reported annualised 1HFY11 results that were largely in line with its full year estimates.
OSK Research said the 1HFY11 earnings rose 13% on-year and 3% on-quarter, with earnings growth largely topline-driven, as total income rose 12.5% on-year while pre-provision operating profit rose 9.6% on-year and 8.8% on-quarter.
'Despite its relatively impressive earnings traction, we have taken a more prudent view on future economic headwinds and its potential negative impact on the asset quality of its unseasoned Easy Banking loans portfolio (2.6% of total group's loans base) which caters largely to the lower income mass market,' it said.
OSK Research said it was'' consequently increasing its credit cost for both FY11 and FY12 prompting a downward revision in FY11 and FY12 earnings by 2.3% and 6.8% respectively and a corresponding downgrade in fair value from RM10.16 to RM9.90.
'Our new fair value is based on 1.76 times FY12 PBV and underpinned by 14.1% ROE. As current valuation of 1.60 times FY12 PBV and 11.6x PER is already at a discount to industry's 1.85 times PBV and 13.6 times PER despite having ROEs that are in line with industry's, we see any further selling pressure as an opportunity to accumulate, Maintain BUY,' it said.
Company Name: PADIBERAS NASIONAL BHD
|Research House: MAYBANK||Price Call: BUY||Target Price: 3.90|
KUALA LUMPUR: ''Padiberas Nasional Bhd (Bernas) shares advanced on Thursday, Aug 25 after Maybank IB Research initiated coverage on the stock with a Buy rating with a target price of RM3.90.
At 9.50am, Bernas added 10 sen to RM2.90 with 32,000 shares traded.
The research house said in a note that Bernas was Malaysia's custodian of rice and paddy with a 50% market share, adding that its business model was simple yet low risk: it buys paddy from local farmers, mills it and distributes it across the country.
'The deficit of local supply is supplemented by imports - of which Bernas has a monopoly. Profit growth are secured due to Malaysia's insatiable demand for rice and cost reductions from on-going plant modernisation.
'We initiate with a BUY, with a target price of RM3.90/share based on 8.1x 2011 PER,' it said.
Company Name: KOSSAN RUBBER INDUSTRIES BHD
|Research House: CIMB||Price Call: HOLD||Target Price: 3.25|
KUALA LUMPUR: CIMB Equities Research is downgrading KOSSAN RUBBER INDUSTRIES BHD  from Outperform to Neutral.
The research house said on Thursday, Aug 25 that while valuations are cheap, this is balanced by overcapacity and higher energy costs.
'Although Kossan has been our top pick since Apr 2011, the stock has underperformed the sector. Hartalega is now our top pick,' it said.
CIMB Research said the 1H FY11 results were disappointing, making up only of 39% of its forecast and 37% of consensus estimates. As expected, no dividends were declared.
'We believe the poor results were due to volatile input costs and overcapacity in the sector. We are cutting our FY11-13 EPS forecasts by 15-16% as our utilisation assumptions were too optimistic.
'Our target price falls from RM3.87 to RM3.25, still based on a forward P/E of 9.1 times or a 30% discount to Top Glove's 13.1 times benchmark P/E,' it said.
HLIB Research 25 August 2011 (RHB Cap; IJM Corp; Genting Plantations; TimeDotCom; UM Land; TM; IOI; Traders Brief) Part 1/2
Company Name: IJM CORPORATION BHD
|Research House: HLG||Price Call: BUY||Target Price: 6.61|
Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD
|Research House: HLG||Price Call: BUY||Target Price: 10.20|
Stock Name: TIMECOM
Company Name: TIME DOTCOM BHD
|Research House: HLG||Price Call: BUY||Target Price: 0.95|
Stock Name: GENP
Company Name: GENTING PLANTATIONS BERHAD
|Research House: HLG||Price Call: BUY||Target Price: 8.80|
Stock Name: UMLAND
Company Name: UNITED MALAYAN LAND BHD
|Research House: HLG||Price Call: BUY||Target Price: 2.30|
RHB Cap (BUY)
ROE KPI Intact But Face NIM Pressure
'''' 2QFY11 results slightly below HLIB (due to lower NIM) and consensus expectations.
'''' Interim dividend of 8 sen (17% payout), all under DRP.
'''' Encouraging results except continued NIM erosion (higher funding cost ' though unlikely to decline significantly, still pressurize by intense competition for deposits) and jump in provision for several SMEs (unlikely to recur).
'''' Loans and deposits growth continued to be ahead of industry average while credit charge to stay within 50-60bps.
'''' Although ROE slightly behind, FY11 KPI of 15.2-15.8% unchanged amidst downward pressure from NIM.
'''' Liquidity position is healthy and has no US$ funding issue while IB pipeline remains decent.'' However, near term pressure on MTM and potential risk to big ticket items and IB deal delay towards 4Q.''
'''' EASY now contributes 2.3% of pre-provision profit with low gross impaired loan ratio of 0.8%.
'''' Acquisition of Mestika unlikely this year, pending clear rule on Indonesia foreign shareholding limit.
'''' Asset quality improved despite higher net impaired loans formation while capital ratio also improved.
'''' FY11-13 forecasts cut by 4.7-5% to account for lower NIM, consequently, target price cut to RM10.20 from RM10.96 based on Gordon Growth.
IJM Corp (BUY)
Improved 1Q results
'''' 1Q12 PATAMI came in at RM115m, translating to an EPS of 8.51 sen/share. Earnings made up ~24% and ~23% of ours and streets' estimates respectively.
'''' On a QoQ and YoY basis, 1Q12 core earnings jumped by 11% and 34% respectively against the back of improved performances in nearly all division, especially the plantation division which was lifted by bumper harvest and improved earnings margin. ~65% of IJM's PBT during the quarter came from the property and plantation division.
'''' The construction PBT margins remained uninspiring at 2.8% during the quarter after improving to ~3.5% last financial year. However, it was the second consecutive quarter of construction revenue growth, indicating that construction activities may have recovered and margins may improve further going forward. Outstanding order book stands at
RM3.7bn, translating to ~2.8x FY11's construction revenue.
'''' Upgraded to BUY in view of slightly >10% upside from our target price of RM6.61 based on SOP valuation.
Genting Plantations (BUY)
1H11: Beat expectations
'''' 1H11 net profit of RM234.2m beat expectations, accounted for 53.6-56.8% of our and consensus full-year estimates.
'''' The RM200/month increment for plantation workers will raise Genp's production cost by RM5m per annum.
'''' Given the strong FFB output growth recorded, management raised FFB growth guidance for 2011 from 5-7% to 8-9%.
'''' Genp has planted only 1,537ha of oil palm in Indonesia in 1H11, due mainly to social and land issues. Management is confident that it would be able to accelerate its planting programme to 3,000-4,000ha in 2H, making up to ~5,000ha in 2011.
'''' Management guided a lower capex of RM300m in 2011 (vs. RM360m that it previously guided).
'''' 2011-13 net profit forecasts raised by 2.7-3.8%, largely to reflect: (1) Higher FFB output growth assumption; and (2) Higher production costs.
'''' TP raised by 2.9% to RM8.80 based on 17x revised 2012 EPS of 51.8 sen. Upgrade from Hold to Buy.
Time DotCom (BUY)
1H11: Beats our expectation
'''' 1H11 net profit beat our expectation, accounted for 67.9% of our full-year forecast.
'''' Earnings forecasts and TP of R0.95 (based on SOP) maintained for now, pending further details on today's conference call.
'''' Net profit rose 18% yoy, while 1H net profit rose 89% yoy to RM24m, or 46% of our estimate.''
'''' We regard this as in-line with our expectation, due to seasonality.''
'''' The RM189m Puteri Harbour condo was slated for 3Q launch, but has been pushed back to 4Q as building approval is still pending.''
'''' We continue to like UMLand for their undemanding valuations and earnings growth story.'' UMLand continues to trade at 70% discount to RNAV and single-digit P/E, providing investors with an opportunity to accumulate before earnings re-rating takes place in 2012, which we estimate to be circa 30%.
'''' The bonus issue shares from the 1 for 4 bonus issue will be listed today, and we adjust our price target from RM2.87 to RM2.30 accordingly. Maintain BUY.
'''' 1H11 core net profit of RM344.6m (+32%) came in within expectations, accounted for 48% of our forecast. Against consensus, the results came in above expectations, at 62.6% of full-year estimates.''
'''' TP remains unchanged at RM4.20 (based on DDM, WACC of 6.3%, TG 0%). Downgrade from Buy to Hold as the recent share price run-up has capped potential capital upside on the stock.
IOI Corporation (Hold)
FY11: Below expectations
'''' FY06/11 core net profit of RM1,996.7m came in below expectations, at 90-92.4% of our and consensus full-year estimates.
'''' FY06/12-13 net profit forecasts cut by 2.8-2.9% to reflect lower EBIT margin assumptions at both the property development and manufacturing divisions.''
'''' SOP-derived TP cut by 3.7% to RM5.27 following the downward adjustments to our earnings forecasts.'' ''
FBM KLCI - Unresolved uncertainties and long holidays to cap rebound
'''' We remain vigilant and would like to caution investors about potential downward correction if Bernanke speech this Friday fails to live up to market expectations as well as long holidays ahead next week. Immediate resistance levels remain near 1,500-1,530 whilst supports are around 1456-1466 pts.
Stock to watch - MASTEEL: Limited downside amid strong 1H11 results and oversold positions''
'''' Signs of bottoming up in weekly & daily slow Stochastics indicators coupled with its strong 1H11 results bode well for a possible technical rebound towards RM1.14 (30-d SMA) and 1.22 (200-d SMA) in the medium term. Supports are RM0.92-1.00. Cut loss below RM0.92.
August 24, 2011
Company Name: MMC CORPORATION BHD
|Research House: HWANGDBS||Price Call: BUY||Target Price: 3.70|
HwangDBS Vickers Research has maintained its "buy" call on MMC Corporation Bhd with a target price of RM3.70 despite lowering its estimation for the company's 2011-2013 earnings by six to 16 per cent.
In its Company Focus, the research house said it had cut forecast earnings for MMC after imputing higher tax rates.
It said MMC's second quarter net profit of RM82 million was below its estimate "as the absence of deferred tax income related to the aeromall construction in Senai resulted in a higher effective tax rate for the first half of 2011.
"Pre-tax profit was in line."
It said MMC's core operations remained robust with first half pre-tax profit up 44 per cent to RM553 million. - Bernama
Company Name: AIRASIA BHD
|Research House: HLG||Price Call: BUY||Target Price: 4.50|
Hong Leong Investment Bank expects AirAsia's passenger yield to increase in the second half of this year, citing a seasonally higher demand and the elimination of competition from Firefly and
Malaysia Airlines as reasons.
In a note today, it also said it expects AirAsia's ancillary income to improve further with the implementation of counter check-in charges effective September 1, the launching of loyalty programme, offer of duty free products and the joint venture with Expedia.
The research firm maintained a "Buy" call on AirAsia with an unchanged target price of RM4.50.
Meanwhile, MIDF research has also maintained a "Trading Buy" call on AirAsia with a lower target price of RM4.15, after rolling over the airline's valuation to financial year 2012.
AirAsia reported that its number of passengers carried in the second quarter this year rose by 14.9 per cent compared with the corresponding quarter of last year.
"We believe that the good operational performance will stir interest in the stock in the near term.
"While we expect the global economy to remain uncertain, we believe that AirAsia is well situated to weather the storm due to its position as a low cost carrier," it said. -- Bernama
Company Name: CIMB GROUP HOLDINGS BERHAD
|Research House: MIDF||Price Call: BUY||Target Price: 9.00|
Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
|Research House: HLG||Price Call: BUY||Target Price: 9.00|
Hong Leong Investment Bank (HLIB) has cut its forecasts for CIMB Group Holdings Bhd's financial years 2011-2013 by 5.2-5.6 per cent to reflect the lower-than-expected loan growth, on-interest income and net interest margin.
In a note today, the bank said the second quarter FY11 net profit of RM970 million took first half FY11 net profit to RM1.886 billion, or only 44.1 per cent of HLIB's and 45.1 per cent of consensus forecasts.
It said non-interest income may fall short if the capital markets were to soften and this would result in unexpected jump in impaired loans, lower-than-expected loan growth and impact on non-interest income.
HLIB said it would maintain its "buy" call on CIMB, backed by the potential returns which were expected to stay above 10 per cent.
However, it has cut the target price to RM9 from RM9.58.
Meanwhile, MIDF Research said CIMB's loan growth decelerated in the first half FY11 as gross loans increased by only 11 per cent year-on-year at the end of June compared with 13.8 per cent at the end of first quarter FY11.
"CIMB's loan base has expanded to RM176 billion, driven by 25.9 per cent growth at CIMB Niaga, 13.7 per cent growth of Malaysian consumer loans, and 8.8 per cent growth in CIMB Thailand," it said in a note today.
It said corporate loans, however, declined by 5.3 per cent.
MIDF said it would maintain its "buy" call on CIMB with the target price cut to RM9 from RM9.60. -- Bernama
Company Name: FABER GROUP BHD
|Research House: MIDF||Price Call: BUY||Target Price: 3.00|
Faber Group Bhd
(Aug 24, RM1.80)
Maintain buy at RM1.79 with target price of RM3: Faber's 2QFY11 net profit grew commendably by +16.6% quarter-on-quarter (q-o-q) to RM16.5 million. The negative year-on-year number (-49.1% y-o-y) was not comparable as a result of the non-renewal of infrastructure and low-cost houses maintenance contracts in UAE. Net earnings for 1HFY11 were RM30.7 million, accounting for 40.4% of our full-year figure. We consider this within our estimate as we expect higher property division contribution, continued growth in government hospital support services (HSS) and sustained profit margins in 2HFY11. As such, we are keeping our FY11 profit forecast.
Faber's 2QFY11 revenue declined 5.9% q-o-q to RM186.4 million, weighed down by lower contribution from the integrated facilities management (IFM) non-concession division. However, pre-tax earnings were higher (+12.3% q-o-q to RM28.8 million), lifted by higher property and IFM concession businesses contribution, and overall better margin (+2.5 percentage points to 15.4%). The property division's revenue surged 70.5% y-o-y or 64.5% q-o-q to RM35 million in 2QFY11 due to higher progress billings for the projects in Kepong, Taman Desa and Kota Kinabalu. We believe that new launches of Villa Prima Phase 1A (gross development value [GDV] of RM148 million) in February 2011 also contributed positively to the company's top line. In addition, the IFM concession segment recorded higher revenue at RM137.2 million (+4.9% y-o-y or +0.8% q-o-q).
This was attributed to higher orders and additional facilities at the government hospitals within Faber's concession area.
Faber is likely to secure the HSS concession renewal, supported by the company's proven track record, technical expertise, sound management and government-linked status. Most importantly, following the clinical waste mishandling by an HSS provider (refer to our report dated Aug 2, 2011), Faber's operational integrity offers the company a strong competitive edge against its competitors. Factoring in all aspects, we reaffirm our view that Faber's government HSS concession expiring October 2011, will be extended. Hence earnings visibility for another 15 years. The management indicated that the concession agreement is still pending a decision by the Health Ministry. We expect the property segment to perform well, driven by: (i) Laman Rimbunan Phase 4 and 5 package 3 (estimated GDV of RM100 million and expected launch date in 3Q11); and (ii) mid to high-end condominium located on a 1ha plot of land in Jalan Gurney, Kuala Lumpur (estimated GDV of RM197 million and expected launch date in September). We gather that current GDV and unbilled sales as at March 2011 were still healthy at about RM566 million and RM420 million.
We reiterate our 'buy' recommendation on Faber supported by our firm view that Faber's government HSS concession will be renewed. Our target price for Faber is unchanged at RM3 based on sum-of-parts valuation, implying 14 times 2011 price-earnings ratio (PER). Faber is currently trading at 8.6 times FY11 earnings per share with estimated 3.5% dividend yield. We like Faber's cash rich position with a war chest of RM158 million or 43.5 sen net cash per share (1QFY11: 39 sen). Ex-net cash, the company is currently trading at an undemanding 6.5 times 2011 PER. ' MIDF Research, Aug 24
This article appeared in The Edge Financial Daily, August 25, 2011.
Company Name: PARKSON HOLDINGS BHD
|Research House: AMMB||Price Call: BUY||Target Price: 6.79|
Parkson Holdings Bhd
(Aug 24, RM5.60)
Maintain buy at RM5.60 with revised fair value of RM6.79 (from RM6.60): We reiterate our 'buy' recommendation on Parkson Holdings Bhd (PHB), with a raised sum-of-parts fair value of RM6.79 (RM6.60 previously) upon rolling forward our valuation base year to CY12F and fine-tuning our earnings forecast by -4% to -5% post full-year results.
PHB posted a higher net profit of RM346 million (year-on-year [y-o-y]: +21%) for FY11. Results met consensus estimates, but came in 8% below our 12-month forecast due to a larger than expected variance owing to currency translation from unfavourable foreign exchange movements (strengthening ringgit against the yuan and the Vietnamese dong). Hence, we deem results to be broadly in line with our expectations.
The improved performance in FY11 was mainly due to: (i) Healthy same-store sales growth (China: +12%, Malaysia: +10%, Vietnam: +21%); (ii) Enlarged network of outlets (China: +4 to 47, Malaysia: +1 to 36, Vietnam: +1 to 7) and; (iii) Earnings before interest and tax (Ebit) margin improvement of one percentage point y-o-y to 29% on better cost control and merchandise mix.
On a sequential basis, revenue and net profit in 4QFY11 declined 11% and 33% owing to seasonally lower consumer spending from the absence of Chinese New Year.
Moving forward, our three-year compounded annual growth rate of 22% for FY12F/FY13F will be well underpinned by the management's accelerated expansion in gross floor area (GFA) by 51.5%-owned Parkson Retail Group. Certainly, a more aggressive strategy to add 20% to 25% GFA against 15% per year previously should lower its average store age and help lift same store sales growth of Parkson outlets in China.
Besides China, PHB's earnings growth would also be buoyed by contributions from additional outlets in Malaysia, Vietnam and Indonesia (under Kem Chicks and Centro brands). We maintain our annual new store forecasts of two each in Malaysia and Vietnam, and four in Indonesia. Total merchandise margin should remain flattish at circa 19.5% to 20%, while fashion and apparel as well as cosmetics and accessories are expected to dominate with 70% to 89% of group revenue.
Despite a moderating macroeconomic outlook in China, we remain positive about PHB's long-term earnings growth trajectory. Expect news flows from the proposed listing of 90.1%-owned Parkson Asia to provide some excitement in the medium term. ' AmResearch, Aug 24
This article appeared in The Edge Financial Daily, August 25, 2011.