September 2, 2011
2QFY11 results in line with expectations. Maintain Buy.
Stock Name: KIMLUN
Company Name: KIMLUN CORPORATION BERHAD
Company Name: KIMLUN CORPORATION BERHAD
| Research House: ZJ | Price Call: BUY | Target Price: 1.84 |
2QFY11 results exceeded expectations. Maintain Buy.
Stock Name: SMRTECH
Company Name: SMR TECHNOLOGIES BHD
Company Name: SMR TECHNOLOGIES BHD
| Research House: ZJ | Price Call: BUY | Target Price: 0.25 |
Sarawak Plantation Berhad RR 2Q FY11
Stock Name: SWKPLNT
Company Name: SARAWAK PLANTATION BHD
Company Name: SARAWAK PLANTATION BHD
| Research House: WILSON & YORK | Price Call: BUY | Target Price: 2.60 |
NPC Resources Bhd RR 2Q FY11
Stock Name: NPC
Company Name: NPC RESOURCES BHD
Company Name: NPC RESOURCES BHD
| Research House: WILSON & YORK | Price Call: BUY | Target Price: 2.80 |
EPF steps up accumulation of AirAsia shares
Stock Name: AIRASIA
Company Name: AIRASIA BHD
KUALA LUMPUR: The Employees Provident Fund (EPF) Board continued to raise its stake in AIRASIA BHD [], with the latest acquisitions involving nearly 10 million shares.
A filing with Bursa Malaysia showed the EPF bought 4.277 million shares on Aug 25 and 5.720 million shares the next day.
The latest acquisitions saw the EPF increasing its shareholding to 346.047 million shares or 12.47%.
AirAsia share price closed at RM3.47 on Aug 25 and at RM3.34 the next day.
The stock was among those with high foreign shareholdings which were sold down by foreign funds.
OSK Research is maintaining AirAsia as one of its Top 10 Buys given its resilient business model that will benefit from downtrading and lower oil prices. It raised its forecasts by between 9% and 16% and its fair value to RM5.18
Company Name: AIRASIA BHD
| Research House: OSK | Price Call: BUY | Target Price: 5.18 |
KUALA LUMPUR: The Employees Provident Fund (EPF) Board continued to raise its stake in AIRASIA BHD [], with the latest acquisitions involving nearly 10 million shares.
A filing with Bursa Malaysia showed the EPF bought 4.277 million shares on Aug 25 and 5.720 million shares the next day.
The latest acquisitions saw the EPF increasing its shareholding to 346.047 million shares or 12.47%.
AirAsia share price closed at RM3.47 on Aug 25 and at RM3.34 the next day.
The stock was among those with high foreign shareholdings which were sold down by foreign funds.
OSK Research is maintaining AirAsia as one of its Top 10 Buys given its resilient business model that will benefit from downtrading and lower oil prices. It raised its forecasts by between 9% and 16% and its fair value to RM5.18
Underweight on plantations
Stock Name: IJMPLNT
Company Name: IJM PLANTATIONS BHD
Stock Name: SIME
Company Name: SIME DARBY BHD
KUALA LUMPUR: UOB Kay Hian Malaysia Research is maintaining is Underweight stance on the PLANTATION [] sector and keeping its net profit forecasts and 2011-2012 crude palm oil (CPO) average selling price (ASP) assumptions of RM2,900 a tonne (US$980) and RM2,700 (US$900) respectively.
It said on Friday, Sept 2 that the sector catalyst would be an ufavourable weather which would impact the production of oil crops and palm oil.
However, the risks included a potential new plantation export tax structure in Indonesia that would negatively affect the margin for Malaysia-based refineries while a slowdown in global economy might affect demand for CPO products. Another factor would the weather's impact on global oilseed production.
In its comments on the plantations sector, it said the April to June 2011 quarterly results were mostly in line with expectations, with the exception of Sime Darby.
UOB Kay Hian Research said Sime Darby posted stronger-than-expected results on the back of strong performance from its motor and industrial divisions, and this was coupled with improved margins from its plantation division on better cost control.
'Overall, 2Q11 results posted strong year-on-year growth due to strong fresh fruit bunches (FFB) production and high CPO selling price, with the exception of IOI Corporation which posted lower earnings year-on-year on the back of weaker contribution from its resource-based manufacturing segment (-54.1% on-quarter, -37.6% on-year) that was suffering from lower sales and lower margins.
However, the downstream business posted negative on-quarter growth for all companies
The research house, in maintaining its Underweight recommendation on the sector, said it was'' less bearish on CPO price but the decreasing CPO price trend might stretch into 1Q12 on the back of high inventory level as demand is unable to catch up with the strong supply.
UOB Kay Hian Research said its top sell was IJM Plantations (Target: RM2.30) given its high valuation. Its only Buy for this sector in Malaysia was Sime Darby (Target: RM10.40) for its turnaround in operations leading to stable earnings growth. A potential catalyst could come from potential enhancement M&A domestically and globally.
To recap, it said all plantation companies recorded stronger fresh fruit bunches (FFB) production in 2Q11 due to strong yield recovery in Malaysia and high ASP. Strong yield recovery in Malaysia especially in Sabah and Sarawak has enhanced production in Sabah estates.
However, it raised concerns about the lower margin and lower sales for the downstream segments.
Companies such as IOI Crop, Kuala Lumpur Kepong and Sime Darby recorded weaker on-quarter profit for their downstream business.
This might due to: a) limited ability to pass down earlier high raw material costs that resulted from the sharp correction in CPO price in the last two weeks of June 2011, and b) thin or negative refining margins due to the sharp fall in RBD palm stearin price.
In its assessments of Sime Darby and IJM Plantations were the top performers in 2Q11. IJM Plantation benefitted from the strong yield recovery in Sabah and its active forward selling policy which enabled it to lock in higher prices.
Sime Darby's performance was boosted by the better-than-expected growth in its plantation (+88.4% on-quarter , +221.8% on-year), industrial (+52.4% on-quarter, +69.9% on-year) and motor (+16.9% on-quarter +31.4% on-year) divisions.
UOB Kay Hian Research said IOI Corporation was the weakest performer. It recorded a negative on-quarter growth of 16.6% and flat on-year net profit growth in 2Q11. This was mainly due to the lower contribution from its downstream business which were affected by the lower sales and margins across all segments.
Meanwhile, it upgraded Sime Darby from a Hold to Buy with a higher target price of RM10.40 from RM9.75 based on sum-of-the-parts (SOTP).
'We have raised our earnings forecasts for FY12 and FY13 by 6.5% and 9.3% respectively to factor in the stronger-than-expected performance for its industrial and motor divisions,' it said.
As for IJM Plantations, it cut the target price to RM2.30 to factor in the higher interest expense. This is caused by its debt funding for the new planting investment of RM600 million in Indonesia over the next four years, which offsets its upward revision of FFB production growth to 6%-7% on-year from 5%.
On the outlook for CPO, it said the CPO prices were expected to be stable in 3Q11 due to the slowdown in production as a result of less harvesting days during the Hari Raya festive holidays and biological effect after the strong production in 2Q11. Also, demand for palm oil products from China and energy producers in Europe would remain strong in 3Q11 before entering the cooler weather season in 4Q11.
However, it said a delay in the next peak production season to 4Q11 which also coincides with the low demand season could result in a further decline in CPO prices as they react negatively to rising inventory level.
On the weather, it raised concerns that excessive rainfall in 1H11 might affect the pollination in 2H11. For instance, Sabah received higher-than-average rainfall from January to April.
While sufficient rainfall was important for palm oil productivity, excessive rainfall could also affect the pollination and fruits, and hence affect the FFB production in Sabah estates, it said.
Company Name: IJM PLANTATIONS BHD
| Research House: UOB | Price Call: SELL | Target Price: 2.30 |
Stock Name: SIME
Company Name: SIME DARBY BHD
| Research House: UOB | Price Call: BUY | Target Price: 10.40 |
KUALA LUMPUR: UOB Kay Hian Malaysia Research is maintaining is Underweight stance on the PLANTATION [] sector and keeping its net profit forecasts and 2011-2012 crude palm oil (CPO) average selling price (ASP) assumptions of RM2,900 a tonne (US$980) and RM2,700 (US$900) respectively.
It said on Friday, Sept 2 that the sector catalyst would be an ufavourable weather which would impact the production of oil crops and palm oil.
However, the risks included a potential new plantation export tax structure in Indonesia that would negatively affect the margin for Malaysia-based refineries while a slowdown in global economy might affect demand for CPO products. Another factor would the weather's impact on global oilseed production.
In its comments on the plantations sector, it said the April to June 2011 quarterly results were mostly in line with expectations, with the exception of Sime Darby.
UOB Kay Hian Research said Sime Darby posted stronger-than-expected results on the back of strong performance from its motor and industrial divisions, and this was coupled with improved margins from its plantation division on better cost control.
'Overall, 2Q11 results posted strong year-on-year growth due to strong fresh fruit bunches (FFB) production and high CPO selling price, with the exception of IOI Corporation which posted lower earnings year-on-year on the back of weaker contribution from its resource-based manufacturing segment (-54.1% on-quarter, -37.6% on-year) that was suffering from lower sales and lower margins.
However, the downstream business posted negative on-quarter growth for all companies
The research house, in maintaining its Underweight recommendation on the sector, said it was'' less bearish on CPO price but the decreasing CPO price trend might stretch into 1Q12 on the back of high inventory level as demand is unable to catch up with the strong supply.
UOB Kay Hian Research said its top sell was IJM Plantations (Target: RM2.30) given its high valuation. Its only Buy for this sector in Malaysia was Sime Darby (Target: RM10.40) for its turnaround in operations leading to stable earnings growth. A potential catalyst could come from potential enhancement M&A domestically and globally.
To recap, it said all plantation companies recorded stronger fresh fruit bunches (FFB) production in 2Q11 due to strong yield recovery in Malaysia and high ASP. Strong yield recovery in Malaysia especially in Sabah and Sarawak has enhanced production in Sabah estates.
However, it raised concerns about the lower margin and lower sales for the downstream segments.
Companies such as IOI Crop, Kuala Lumpur Kepong and Sime Darby recorded weaker on-quarter profit for their downstream business.
This might due to: a) limited ability to pass down earlier high raw material costs that resulted from the sharp correction in CPO price in the last two weeks of June 2011, and b) thin or negative refining margins due to the sharp fall in RBD palm stearin price.
In its assessments of Sime Darby and IJM Plantations were the top performers in 2Q11. IJM Plantation benefitted from the strong yield recovery in Sabah and its active forward selling policy which enabled it to lock in higher prices.
Sime Darby's performance was boosted by the better-than-expected growth in its plantation (+88.4% on-quarter , +221.8% on-year), industrial (+52.4% on-quarter, +69.9% on-year) and motor (+16.9% on-quarter +31.4% on-year) divisions.
UOB Kay Hian Research said IOI Corporation was the weakest performer. It recorded a negative on-quarter growth of 16.6% and flat on-year net profit growth in 2Q11. This was mainly due to the lower contribution from its downstream business which were affected by the lower sales and margins across all segments.
Meanwhile, it upgraded Sime Darby from a Hold to Buy with a higher target price of RM10.40 from RM9.75 based on sum-of-the-parts (SOTP).
'We have raised our earnings forecasts for FY12 and FY13 by 6.5% and 9.3% respectively to factor in the stronger-than-expected performance for its industrial and motor divisions,' it said.
As for IJM Plantations, it cut the target price to RM2.30 to factor in the higher interest expense. This is caused by its debt funding for the new planting investment of RM600 million in Indonesia over the next four years, which offsets its upward revision of FFB production growth to 6%-7% on-year from 5%.
On the outlook for CPO, it said the CPO prices were expected to be stable in 3Q11 due to the slowdown in production as a result of less harvesting days during the Hari Raya festive holidays and biological effect after the strong production in 2Q11. Also, demand for palm oil products from China and energy producers in Europe would remain strong in 3Q11 before entering the cooler weather season in 4Q11.
However, it said a delay in the next peak production season to 4Q11 which also coincides with the low demand season could result in a further decline in CPO prices as they react negatively to rising inventory level.
On the weather, it raised concerns that excessive rainfall in 1H11 might affect the pollination in 2H11. For instance, Sabah received higher-than-average rainfall from January to April.
While sufficient rainfall was important for palm oil productivity, excessive rainfall could also affect the pollination and fruits, and hence affect the FFB production in Sabah estates, it said.
Masterskill extends losses on poor result, downgrade
Stock Name: MEGB
Company Name: MASTERSKILL EDUCATION GROUP
KUALA LUMPUR: Masterskill Education Group Bhd (MEGB) extended its losses on Friday, Sept 2 after its disappointing second quarter financial results and weaker outlook.
At 11.15am, Masterskill fell eight sen to RM1.24 with 3.2 million shares done.
Its second quarter results fell 48% to RM11.57 million from RM22,430 a year ago while its revenue declined 14.7% to RM65.78 million from RM77.11 million. For the first half, its earnings declined by 30.4% to RM34.16 million from RM49.11 million.
CIMB Equities Research had downgraded the stock from Outperform to Neutral, reducing its target price and also slashing its earnings per share (EPS) forecast.
CIMB Reseach on June 29 said Masterskill's annualised 1H11 core net profit was a letdown, coming in at 43% below its forecast and 40% below consensus because of poor student numbers and a 10.8 percentage points shortfall in EBITDA margin due to surprisingly high operating costs.
'The 44% year-on-year plunge in net student intake was a negative surprise and should be equally weak in 2H. In the medium term, student intake prospects are unexciting and margins will be under pressure,' it said.
CIMB Research also slashed its FY11-FY13 EPS forecasts by 43%-45% and dividends per share (DPS) forecasts by 53%-54%.
The research house also said it had cut the target price from RM3.48 to RM1.71 as it raised its discount to the 14.5 times market P/E from 30% to 40%, which lowered its target CY12 price-to-earnings from 10.2 times to 8.7 times.
'Our rating is downgraded from Outperform to NEUTRAL. The stock's sole attraction is its dividend yield of 5%-7%,' it said
''
Company Name: MASTERSKILL EDUCATION GROUP
| Research House: CIMB | Price Call: HOLD | Target Price: 1.71 |
KUALA LUMPUR: Masterskill Education Group Bhd (MEGB) extended its losses on Friday, Sept 2 after its disappointing second quarter financial results and weaker outlook.
At 11.15am, Masterskill fell eight sen to RM1.24 with 3.2 million shares done.
Its second quarter results fell 48% to RM11.57 million from RM22,430 a year ago while its revenue declined 14.7% to RM65.78 million from RM77.11 million. For the first half, its earnings declined by 30.4% to RM34.16 million from RM49.11 million.
CIMB Equities Research had downgraded the stock from Outperform to Neutral, reducing its target price and also slashing its earnings per share (EPS) forecast.
CIMB Reseach on June 29 said Masterskill's annualised 1H11 core net profit was a letdown, coming in at 43% below its forecast and 40% below consensus because of poor student numbers and a 10.8 percentage points shortfall in EBITDA margin due to surprisingly high operating costs.
'The 44% year-on-year plunge in net student intake was a negative surprise and should be equally weak in 2H. In the medium term, student intake prospects are unexciting and margins will be under pressure,' it said.
CIMB Research also slashed its FY11-FY13 EPS forecasts by 43%-45% and dividends per share (DPS) forecasts by 53%-54%.
The research house also said it had cut the target price from RM3.48 to RM1.71 as it raised its discount to the 14.5 times market P/E from 30% to 40%, which lowered its target CY12 price-to-earnings from 10.2 times to 8.7 times.
'Our rating is downgraded from Outperform to NEUTRAL. The stock's sole attraction is its dividend yield of 5%-7%,' it said
''
CIMB raised to 'buy' at Deutsche Bank
Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
CIMB Group Holdings Bhd, a Malaysian banking group, rose the most in more than two months after Deutsche Bank raised the stock rating to "buy" from "hold" with a price target of RM8.20.
The stock gained 2.6 per cent to RM7.25 at 9:10 a.m. in Kuala Lumpur trading, set for the biggest increase since June 28. -- Bloomberg
Company Name: CIMB GROUP HOLDINGS BERHAD
| Research House: DEUTSCHE | Price Call: BUY | Target Price: 8.20 |
CIMB Group Holdings Bhd, a Malaysian banking group, rose the most in more than two months after Deutsche Bank raised the stock rating to "buy" from "hold" with a price target of RM8.20.
The stock gained 2.6 per cent to RM7.25 at 9:10 a.m. in Kuala Lumpur trading, set for the biggest increase since June 28. -- Bloomberg
Weak Sales for Steel Tubes and Cold Rolled Coils
Stock Name: MELEWAR
Company Name: MELEWAR INDUSTRIAL GROUP BHD
Company Name: MELEWAR INDUSTRIAL GROUP BHD
| Research House: TA | Price Call: SELL | Target Price: 0.59 |
OSK Research drops YNH Property from coverage
Stock Name: YNHPROP
Company Name: YNH PROPERTY BHD
KUALA LUMPUR: OSK Research has dropped YNH Property from its coverage with a Not Rated recommendation. It previously had a Buy recommendation on YNH with a fair value of RM3.03.
The research house said on Friday, Sept 2 YNH's 1HFY11 results came in below its and consensus expectations, accounting for around 40.7% and 39.1% of its and consensus FY11 net profit forecasts.
'Year-on-year revenue was down by 34.8% due to lower contribution from CONSTRUCTION [] revenue, but net profit was only 2.1% lower year-on-year owing to better operating margins. Nevertheless, due to resource re-allocation and portfolio reshuffling, we are ceasing our coverage on YNH with a Not Rated recommendation,' it said.
OSK Research said YNH reported a net profit of RM30.1 million for 1HFY11, which was below expectations, as the 1HFY11 net profit only accounted for around 40.7% of its FY11 forecast.
Year-on-year revenue fell 34.8%, driven by significantly lower construction revenue. However, net profit was only down by a far smaller 2.1%, attributed to higher margins as the result of lower construction revenue, which typically commands lower margins.
'EBIT margin for 1HFY11 improved significantly to 43.6% versus 30.4% over the same period last year. Quarter-on-quarter revenue was down by 12.2%, attributed to flat progress billings as well as the absence of sales of shop lot land parcels in Manjung in 1QFY11,' it said.
Company Name: YNH PROPERTY BHD
| Research House: OSK | Price Call: BUY | Target Price: 3.03 |
KUALA LUMPUR: OSK Research has dropped YNH Property from its coverage with a Not Rated recommendation. It previously had a Buy recommendation on YNH with a fair value of RM3.03.
The research house said on Friday, Sept 2 YNH's 1HFY11 results came in below its and consensus expectations, accounting for around 40.7% and 39.1% of its and consensus FY11 net profit forecasts.
'Year-on-year revenue was down by 34.8% due to lower contribution from CONSTRUCTION [] revenue, but net profit was only 2.1% lower year-on-year owing to better operating margins. Nevertheless, due to resource re-allocation and portfolio reshuffling, we are ceasing our coverage on YNH with a Not Rated recommendation,' it said.
OSK Research said YNH reported a net profit of RM30.1 million for 1HFY11, which was below expectations, as the 1HFY11 net profit only accounted for around 40.7% of its FY11 forecast.
Year-on-year revenue fell 34.8%, driven by significantly lower construction revenue. However, net profit was only down by a far smaller 2.1%, attributed to higher margins as the result of lower construction revenue, which typically commands lower margins.
'EBIT margin for 1HFY11 improved significantly to 43.6% versus 30.4% over the same period last year. Quarter-on-quarter revenue was down by 12.2%, attributed to flat progress billings as well as the absence of sales of shop lot land parcels in Manjung in 1QFY11,' it said.
August 29, 2011
1QFY12: A strong quarter
Stock Name: LITRAK
Company Name: LINGKARAN TRANS KOTA HOLDINGS
Company Name: LINGKARAN TRANS KOTA HOLDINGS
| Research House: ECMLIBRA | Price Call: BUY | Target Price: 4.42 |
4QFY11: Within expectations
Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD
Company Name: HONG LEONG BANK BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 13.62 |
Below expectations
Stock Name: YNHPROP
Company Name: YNH PROPERTY BHD
Company Name: YNH PROPERTY BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 1.60 |
Cocoaland Holdings Bhd RR 2Q FY11
Stock Name: COCOLND
Company Name: COCOALAND HOLDINGS BHD
Company Name: COCOALAND HOLDINGS BHD
| Research House: WILSON & YORK | Price Call: BUY | Target Price: 2.60 |
PPB Group Bhd RR 2Q FY11
Stock Name: PPB
Company Name: PPB GROUP BHD
Company Name: PPB GROUP BHD
| Research House: WILSON & YORK | Price Call: BUY | Target Price: 20.28 |
1Q/FY12 results. Revenue below expectations. Revise to Hold Call.
Stock Name: DATAPRP
Company Name: DATAPREP HOLDINGS BHD
Company Name: DATAPREP HOLDINGS BHD
| Research House: MERCURY | Price Call: HOLD | Target Price: 0.19 |
4QFY11 results review
Stock Name: MALTON
Company Name: MALTON BHD
Company Name: MALTON BHD
| Research House: NETRESEARCH | Price Call: BUY | Target Price: 1.60 |
2Q11 results review
Stock Name: SINDORA
Company Name: SINDORA BHD
Company Name: SINDORA BHD
| Research House: NETRESEARCH | Price Call: SELL | Target Price: 3.00 |
2Q11 results review
Stock Name: TRC
Company Name: TRC SYNERGY BHD
Company Name: TRC SYNERGY BHD
| Research House: NETRESEARCH | Price Call: BUY | Target Price: 0.80 |
4Q/FY11 results. Within expectations. Maintain Buy Call.
Stock Name: XINQUAN
Company Name: XINGQUAN INT SPORTS HLDG LTD
Company Name: XINGQUAN INT SPORTS HLDG LTD
| Research House: MERCURY | Price Call: BUY | Target Price: 1.61 |
No Immediate Catalyst
Stock Name: KWANTAS
Company Name: KWANTAS CORPORATION BHD
Company Name: KWANTAS CORPORATION BHD
| Research House: TA | Price Call: SELL | Target Price: 1.84 |
2Q11 results review
Stock Name: OSK
Company Name: OSK HOLDINGS BHD
Company Name: OSK HOLDINGS BHD
| Research House: NETRESEARCH | Price Call: BUY | Target Price: 1.60 |
Cahya Mata Sarawak 2QFY11 above expectations: Stronger building blocks
Stock Name: CMSB
Company Name: CAHYA MATA SARAWAK BHD
Company Name: CAHYA MATA SARAWAK BHD
| Research House: CIMB | Price Call: HOLD | Target Price: 2.26 |
RHBInvest Research Highlights 29th August 2011
Stock Name: PETGAS
Company Name: PETRONAS GAS BHD
Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
Stock Name: PBBANK
Company Name: PUBLIC BANK BHD
Stock Name: AFFIN
Company Name: AFFIN HOLDINGS BHD
Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD
Company Name: PETRONAS GAS BHD
| Research House: RHB | Price Call: BUY | Target Price: 14.47 |
Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
| Research House: RHB | Price Call: HOLD | Target Price: 7.49 |
Stock Name: PBBANK
Company Name: PUBLIC BANK BHD
| Research House: RHB | Price Call: HOLD | Target Price: 11.89 |
Stock Name: AFFIN
Company Name: AFFIN HOLDINGS BHD
| Research House: RHB | Price Call: SELL | Target Price: 2.77 |
Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD
| Research House: RHB | Price Call: SELL | Target Price: 6.15 |
29th August 2011
Top Story: Banking ' History suggests potential sector derating ahead Neutral (down from OW)
Sector Update
Maybank: Fair value and call downgraded to RM8.85 Market Perform (down from OP)
CIMB: Fair value at RM7.49 (from RM8.80) Market Perform
Public Bank: Fair value and call downgraded to RM14.10 Market Perform (down from OP)
HL Bank: Fair value at RM11.89 (from RM12.50) Market Perform
AMMB: Fair value and call downgraded to RM6.15 Underperform (down from OP)
AFG: Fair value at RM3.38 (from RM3.60) Market Perform
Affin: Fair value and call downgraded to RM2.77 Underperform (down from MP)
Macro View
Money Supply: Broad monetary aggregate and loan growth eased in July
Economic Highlights (published 26 Aug 2011)
'' The broader money supply, M3, eased to 11.6% yoy in July, off the 30-month high of +12.4% in Jun but higher than +11.5% in May, indicating that economic activities are cooling but remained resilient.
Sector Call
Banking: Jul '11 system data ' Loan growth and leading indicators softened Neutral
Sector update
'' Jul '11 system-wide loan growth eased further to 12.9% yoy, as compared to +13.5% yoy in Jun '11 following lower disbursements during the month (vs. Jun).
Oil & Gas: Petronas 1QFY12/11 results Overweight
Sector Update
Dialog: Fair value at RM3.90 Outperform
P Gas: Fair value at RM14.47 Outperform
RH Petrogas: Fair value at $1.36 Outperform
Dayang: Fair value at RM2.33 Outperform
Petra Perdana: Fair value at RM1.15 Outperform
Wah Seong: Fair value at RM2.66 Outperform
Petronas Chemicals: Fair value and call downgraded to RM6.37 Market Perform (down from OP)
Kencana: Fair value at RM2.99 Market Perform
SapuraCrest: Fair value at RM4.56 Market Perform
KNM: Fair value at RM0.93 Underperform
MMHE: Fair value at RM5.62 Underperform
Corporate Highlights
Carlsberg: Premium segment growing stronger Outperform
Briefing Note
'' Carlsberg's range of premium and super premium beers, which include Hoegaarden, Corona and Asahi, among others, grew by ~44% yoy in the 1HFY11. We understand that the strong growth resulted in Carlsberg's premium brands gaining approximately 4.9%-pts in market in share in the premium beer segment, which accounts for approximately 20% of the total beer market Malaysia .
CI Holdings: Disposal of Permanis by November Trading Buy
Briefing Note
'' During the analysts' briefing on Friday, CI Holdings' (CIH) management highlighted that they are targeting to complete the disposal of Permanis to Asahi in 2QFY06/11. The deal is currently pending the approval from Bursa for CIH's circular to shareholders, MITI, and others. Management expects to hold the EGM concurrently with the AGM in late Oct, would be the final hurdle before Permanis is sold.
Kencana: Expanding its drilling fleet Market Perform
News Update
'' Kencana announced that its subsidiary Kencana Marine Drilling will build two tender assisted drilling rigs (TADRs) at a cost of US$145m (RM435m) each. We are not surprised by this as we mentioned in a previous note that Kencana will resume the expansion of its drilling rig division within the year as it expects many opportunities to emerge for offshore drilling in 2014.
Corporate Results
PetChem: Down on lower production and methane gas supply Market Perform (down from OP)
1QFY11 Results / Briefing Note
'' 3MFY12/11 net profit of RM737m came below expectations accounting for 20.3% of our (RM3.6bn) and 16.8% of consensus estimates (RM4.4bn). Overall, net earnings were down on a qoq basis due lower utilisation and methane gas supply limitation.
Ann Joo: 2QFY12/11 net profit declines by 23% qoq Underperform
2QFY11 Results / Briefing Note
'' 1HFY12/11 net profit came in within our expectations. 2QFY12/11 net profit declined by 23% mainly due to higher raw material cost amid relatively stable steel prices.
Masterskill skids on CIMB downgrade
KUALA LUMPUR: Masterskill Education Group Bhd (MEGB) shares fell on Monday, Aug 29 to a fresh 52-week low after its disappointing financial results saw CIMB Equities Research downgrading the stock from Outperform to Neutral, reducing its target price and also slashing its earnings per share (EPS) forecast.
At 11.45am, Masterskill lost 20 sen to RM1.33 with 5.48 million shares done.
Its second quarter results fell 48% to RM11.57 million from RM22,430 a year ago while its revenue declined 14.7% to RM65.78 million from RM77.11 million. For the first half, its earnings declined by 30.4% to RM34.16 million from RM49.11 million.
CIMB Reseach said Masterskill's annualised 1H11 core net profit was a letdown, coming in at 43% below its forecast and 40% below consensus because of poor student numbers and a 10.8 percentage points shortfall in EBITDA margin due to surprisingly high operating costs.
'The 44% year-on-year plunge in net student intake was a negative surprise and should be equally weak in 2H. In the medium term, student intake prospects are unexciting and margins will be under pressure,' it said.
CIMB Research also slashed its FY11-FY13 EPS forecasts by 43%-45% and dividends per share (DPS) forecasts by 53%-54%.
The research house also said it had cut the target price from RM3.48 to RM1.71 as it raised its discount to the 14.5 times market P/E from 30% to 40%, which lowered its target CY12 price-to-earnings from 10.2 times to 8.7 times.
'Our rating is downgraded from Outperform to NEUTRAL. The stock's sole attraction is its dividend yield of 5%-7%,' it said
Kulim edges up on solid 2Q results
Stock Name: KULIM
Company Name: KULIM (M) BHD
KUALA LUMPUR: KULIM (M) BHD [] shares advanced on Monday, Aug 29 after its net profit for 2Q ended June 30, 2011 surged nine-fold to RM146.29 million from RM14.66 million a year earlier, driven by mainly by higher revenue and profits from its PLANTATION [] division.
At 10.50am, Kulim added two sen to RM3.70 with 356,100 shares traded.
Revenue rose 32.4% to RM1.80 billion from RM1.36 billion, with higher contribution from all segments.
For the six months ended June 30, Kulim's net profit surged to RM273.39 million from RM76.55 million in 2010, on the back of a 33.3% jump in revenue to RM3.46 billion from RM2.59 billion.
MIDF Research in note Aug 29 said it had revised upwards its FY11 earnings forecast for Kulim while maintaining its FY12 numbers.
'We are maintaining our Neutral recommendation for Kulim with our target price maintained at RM3.35 using 10x PER based on FY12 EPS.
Company Name: KULIM (M) BHD
| Research House: MIDF | Price Call: HOLD | Target Price: 3.35 |
KUALA LUMPUR: KULIM (M) BHD [] shares advanced on Monday, Aug 29 after its net profit for 2Q ended June 30, 2011 surged nine-fold to RM146.29 million from RM14.66 million a year earlier, driven by mainly by higher revenue and profits from its PLANTATION [] division.
At 10.50am, Kulim added two sen to RM3.70 with 356,100 shares traded.
Revenue rose 32.4% to RM1.80 billion from RM1.36 billion, with higher contribution from all segments.
For the six months ended June 30, Kulim's net profit surged to RM273.39 million from RM76.55 million in 2010, on the back of a 33.3% jump in revenue to RM3.46 billion from RM2.59 billion.
MIDF Research in note Aug 29 said it had revised upwards its FY11 earnings forecast for Kulim while maintaining its FY12 numbers.
'We are maintaining our Neutral recommendation for Kulim with our target price maintained at RM3.35 using 10x PER based on FY12 EPS.
Petronas Chemicals active, up in early trade
Stock Name: PCHEM
Company Name: PETRONAS CHEMICALS GROUP BHD
KUALA LUMPUR: Petronas Chemicals Group Bhd shares rose in active trade on Monday, Aug 29 on some mild bargain hunting after the heavy selldown last week and despite that its earnings were below analysts' expectations.
At 9.20am, PetGas was up eight sen to RM6.11 with 1.12 million shares traded.
PetChem posted net profit RM737 million on the back revenue RM3.35 billion for the period ended June 30, 2011, due mainly to strong prices seen across most petrochemical products, partially offset by a stronger ringgit versus the US dollar. Earnings per share were nine sen and net assets per share was RM2.54.
Last Friday, Aug 26,'' PetChem said during the quarter, there was methane gas supply limitation for the fertiliser and methanol segment, which affected the production of fertiliser, methanol and ammonia.
Maybank Investment Bank Research said on Monday PetGas' 2Q11 result was negatively impacted by maintenance shutdowns that crimped product volumes substantially. It said the shutdown was a mandatory four-year cycle whereby the process catalyst is changed.
A nationwide natural gas curtailment had also impacted production rates of the fertiliser and MTBE division, it said.
'Management asserts that all the heavy maintenance work is complete for the year, and 2H's utilisation rates should be back to its normal more than 90% levels. Maintain Buy, with an unchanged TP of RM8.15 based on 13.5 times 2012 price-to-earnings ratio (PER),' it said.
Meanwhile, CIMB Equities Research said it was maintaining its Outperform on PetChem but reduced its target price from RM9.70 to RM7.90.
The research house explained it continued to rate PChem an Outperform as it could be catalysed by the recovery of utilisation and margins from 1H11's depressed levels.
Company Name: PETRONAS CHEMICALS GROUP BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 8.15 |
KUALA LUMPUR: Petronas Chemicals Group Bhd shares rose in active trade on Monday, Aug 29 on some mild bargain hunting after the heavy selldown last week and despite that its earnings were below analysts' expectations.
At 9.20am, PetGas was up eight sen to RM6.11 with 1.12 million shares traded.
PetChem posted net profit RM737 million on the back revenue RM3.35 billion for the period ended June 30, 2011, due mainly to strong prices seen across most petrochemical products, partially offset by a stronger ringgit versus the US dollar. Earnings per share were nine sen and net assets per share was RM2.54.
Last Friday, Aug 26,'' PetChem said during the quarter, there was methane gas supply limitation for the fertiliser and methanol segment, which affected the production of fertiliser, methanol and ammonia.
Maybank Investment Bank Research said on Monday PetGas' 2Q11 result was negatively impacted by maintenance shutdowns that crimped product volumes substantially. It said the shutdown was a mandatory four-year cycle whereby the process catalyst is changed.
A nationwide natural gas curtailment had also impacted production rates of the fertiliser and MTBE division, it said.
'Management asserts that all the heavy maintenance work is complete for the year, and 2H's utilisation rates should be back to its normal more than 90% levels. Maintain Buy, with an unchanged TP of RM8.15 based on 13.5 times 2012 price-to-earnings ratio (PER),' it said.
Meanwhile, CIMB Equities Research said it was maintaining its Outperform on PetChem but reduced its target price from RM9.70 to RM7.90.
The research house explained it continued to rate PChem an Outperform as it could be catalysed by the recovery of utilisation and margins from 1H11's depressed levels.
CIMB Research maintains Underperform on Hong Leong Bank
Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD
KUALA LUMPUR: CIMB Research is maintaining its Underperform on Hong Leong Bank as the banking group missed its FY6/11 forecast by 6% and was 8% short of consensus estimates.
The research house said on Monday, Aug 29 this was mainly because of lower-than-expected net interest margin and one-off merger costs.
However, the gross DPS of 24 sen (15 sen final) was within expectations, being on par with last year's.
'We tweak our FY12-13 EPS up by about 1%, which has minimal impact on our target price of RM13.80, based on a 10% premium over DDM value.
'Although we are positive on its prospects after its takeover of EON Bank, the integration exercise poses short-term earnings risks in the form of management distraction and possible attrition of key managers/customers,' it said.
CIMB Research said this could catalyse a de-rating. Other downside triggers that underlie its Underperform recommendation were its above-sector valuations and the 8%-13% EPS dilution from the rights issue. It added that it preferred Maybank.
Company Name: HONG LEONG BANK BHD
| Research House: CIMB | Price Call: SELL | Target Price: 13.80 |
KUALA LUMPUR: CIMB Research is maintaining its Underperform on Hong Leong Bank as the banking group missed its FY6/11 forecast by 6% and was 8% short of consensus estimates.
The research house said on Monday, Aug 29 this was mainly because of lower-than-expected net interest margin and one-off merger costs.
However, the gross DPS of 24 sen (15 sen final) was within expectations, being on par with last year's.
'We tweak our FY12-13 EPS up by about 1%, which has minimal impact on our target price of RM13.80, based on a 10% premium over DDM value.
'Although we are positive on its prospects after its takeover of EON Bank, the integration exercise poses short-term earnings risks in the form of management distraction and possible attrition of key managers/customers,' it said.
CIMB Research said this could catalyse a de-rating. Other downside triggers that underlie its Underperform recommendation were its above-sector valuations and the 8%-13% EPS dilution from the rights issue. It added that it preferred Maybank.
CIMB Research downgrades Proton to Underperform
Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
KUALA LUMPUR: CIMB Equities Research has downgraded PROTON HOLDINGS BHD [] to an Underperform and reduced its target price from RM3.65 to RM3.25.
'Proton's 1QFY3/12 results were a huge disappointment as core net profit accounted for only 3% of our and consensus full-year forecast,' the research house said on Monday, Aug 29.
CIMB Research said Group Lotus was to blame as higher expenses were incurred under its five-year turnaround plan. No dividends were declared for the quarter, as expected.
'We are slashing our FY12-14 earnings by 35%-60% to reflect higher losses from Lotus. We are also widening the discount we tag to Proton's historical P/NTA of 0.5 times from 10% to 20% to reflect the heightened risk that Lotus's turnaround exercise poses to Proton's earnings.
'This pushes down our target price from RM3.65 to RM3.25. We downgrade Proton from Neutral to Underperform as this result could trigger a de-rating. Other catalysts are 1) weaker domestic earnings, and 2) liberalisation of the auto sector,' it said.
The research house said it liked Tan Chong, which it had an Outperform, for auto exposure.
Company Name: PROTON HOLDINGS BHD
| Research House: CIMB | Price Call: SELL | Target Price: 3.25 |
KUALA LUMPUR: CIMB Equities Research has downgraded PROTON HOLDINGS BHD [] to an Underperform and reduced its target price from RM3.65 to RM3.25.
'Proton's 1QFY3/12 results were a huge disappointment as core net profit accounted for only 3% of our and consensus full-year forecast,' the research house said on Monday, Aug 29.
CIMB Research said Group Lotus was to blame as higher expenses were incurred under its five-year turnaround plan. No dividends were declared for the quarter, as expected.
'We are slashing our FY12-14 earnings by 35%-60% to reflect higher losses from Lotus. We are also widening the discount we tag to Proton's historical P/NTA of 0.5 times from 10% to 20% to reflect the heightened risk that Lotus's turnaround exercise poses to Proton's earnings.
'This pushes down our target price from RM3.65 to RM3.25. We downgrade Proton from Neutral to Underperform as this result could trigger a de-rating. Other catalysts are 1) weaker domestic earnings, and 2) liberalisation of the auto sector,' it said.
The research house said it liked Tan Chong, which it had an Outperform, for auto exposure.
Proton dips on dismal 1Q earnings
Stock Name: PROTON
Company Name: PROTON HOLDINGS BHD
KUALA LUMPUR: PROTON HOLDINGS BHD [] shares declined on Monday, Aug 29 after its net profit fell sharply by 94.6% to RM4.55 million in the first quarter ended June 30, 2011 from RM84.68 million a year ago largely due to the higher expenses incurred by Lotus Group International Bhd.
At 9.10am, Proton fell nine sen to RM2.19.
It said on Friday, Aug 26 that revenue fell 2.9% to RM2.23 billion from RM2.29 billion while earning per share were 0.8 sen compared with 15.4 sen.
Proton said its operating expenses were RM2.29 billion, higher than its revenue of RM2.23 billion in the first quarter. A year ago, its operating expenses were RM2.22 billion.
Maybank IB Research in a note Aug 29 said Proton's 1QFY12 earnings only made up 4% of its ''initial full-year forecast and 2% of consensus, as the Lotus project drained earnings and cash.
'We have cut FY12-13 forecasts by 90% as we reckon reviving Lotus will gravely hurt its earnings and balance sheet over the next few years.
'As such we have downgraded Proton to a Sell and cut our target price to RM2.64 (-22%) as we lower our target P/B to 0.3x, from 0.5x previously,' it said.
Company Name: PROTON HOLDINGS BHD
| Research House: MAYBANK | Price Call: SELL | Target Price: 2.64 |
KUALA LUMPUR: PROTON HOLDINGS BHD [] shares declined on Monday, Aug 29 after its net profit fell sharply by 94.6% to RM4.55 million in the first quarter ended June 30, 2011 from RM84.68 million a year ago largely due to the higher expenses incurred by Lotus Group International Bhd.
At 9.10am, Proton fell nine sen to RM2.19.
It said on Friday, Aug 26 that revenue fell 2.9% to RM2.23 billion from RM2.29 billion while earning per share were 0.8 sen compared with 15.4 sen.
Proton said its operating expenses were RM2.29 billion, higher than its revenue of RM2.23 billion in the first quarter. A year ago, its operating expenses were RM2.22 billion.
Maybank IB Research in a note Aug 29 said Proton's 1QFY12 earnings only made up 4% of its ''initial full-year forecast and 2% of consensus, as the Lotus project drained earnings and cash.
'We have cut FY12-13 forecasts by 90% as we reckon reviving Lotus will gravely hurt its earnings and balance sheet over the next few years.
'As such we have downgraded Proton to a Sell and cut our target price to RM2.64 (-22%) as we lower our target P/B to 0.3x, from 0.5x previously,' it said.
CIMB Research downgrades Masterskill to Neutral, slashes EPS
Stock Name: MEGB
Company Name: MASTERSKILL EDUCATION GROUP
KUALA LUMPUR: CIMB Equities Research has downgraded Masterskill Education Group Bhd (MEGB) from Outperform to Neutral, reducing its target price and also slashing its earnings per share (EPS) forecast.
It said on Monday, Aug 29 Masterskill's annualised 1H11 core net profit was a letdown, coming in at 43% below its forecast and 40% below consensus because of poor student numbers and a 10.8 percentage points shortfall in EBITDA margin due to surprisingly high operating costs.
'The 44% year-on-year plunge in net student intake was a negative surprise and should be equally weak in 2H. In the medium term, student intake prospects are unexciting and margins will be under pressure,' it said.
CIMB Research also slashed its FY11-FY13 EPS forecasts by 43%-45% and dividends per share (DPS) forecasts by 53%-54%.
The research house also said it had cut the target price from RM3.48 to RM1.71 as it raised its discount to the 14.5 times market P/E from 30% to 40%, which lowered its target CY12 price-to-earnings from 10.2 times to 8.7 times.
'Our rating is downgraded from Outperform to NEUTRAL. The stock's sole attraction is its dividend yield of 5%-7%,' it said.
Company Name: MASTERSKILL EDUCATION GROUP
| Research House: CIMB | Price Call: HOLD | Target Price: 1.71 |
KUALA LUMPUR: CIMB Equities Research has downgraded Masterskill Education Group Bhd (MEGB) from Outperform to Neutral, reducing its target price and also slashing its earnings per share (EPS) forecast.
It said on Monday, Aug 29 Masterskill's annualised 1H11 core net profit was a letdown, coming in at 43% below its forecast and 40% below consensus because of poor student numbers and a 10.8 percentage points shortfall in EBITDA margin due to surprisingly high operating costs.
'The 44% year-on-year plunge in net student intake was a negative surprise and should be equally weak in 2H. In the medium term, student intake prospects are unexciting and margins will be under pressure,' it said.
CIMB Research also slashed its FY11-FY13 EPS forecasts by 43%-45% and dividends per share (DPS) forecasts by 53%-54%.
The research house also said it had cut the target price from RM3.48 to RM1.71 as it raised its discount to the 14.5 times market P/E from 30% to 40%, which lowered its target CY12 price-to-earnings from 10.2 times to 8.7 times.
'Our rating is downgraded from Outperform to NEUTRAL. The stock's sole attraction is its dividend yield of 5%-7%,' it said.
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