Stock Name: K1
Company Name: K-ONE TECHNOLOGY BHD
Company Name: K-ONE TECHNOLOGY BHD
| Research House: ZJ | Price Call: HOLD | Target Price: 0.36 |
November 25, 2011
1QFY12 - Results Update
Stock Name: GDEX
Company Name: GD EXPRESS CARRIER BHD
Company Name: GD EXPRESS CARRIER BHD
| Research House: NETRESEARCH | Price Call: BUY | Target Price: 1.20 |
HLIB Research 25 November 2011 (Gent M'sia; Genting; TM; Sunway; DRB; MISC; Ann Joo)
Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Stock Name: GENTING
Company Name: GENTING BHD
Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Stock Name: SUNWAY
Company Name: SUNWAY BERHAD
Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD
Stock Name: MISC
Company Name: MISC BHD
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Company Name: GENTING MALAYSIA BERHAD
| Research House: HLG | Price Call: HOLD | Target Price: 4.07 |
Stock Name: GENTING
Company Name: GENTING BHD
| Research House: HLG | Price Call: HOLD | Target Price: 11.19 |
Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
| Research House: HLG | Price Call: HOLD | Target Price: 4.54 |
Stock Name: SUNWAY
Company Name: SUNWAY BERHAD
| Research House: HLG | Price Call: BUY | Target Price: 3.12 |
Stock Name: DRBHCOM
Company Name: DRB-HICOM BHD
| Research House: HLG | Price Call: BUY | Target Price: 2.90 |
Stock Name: MISC
Company Name: MISC BHD
| Research House: HLG | Price Call: SELL | Target Price: 5.57 |
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
| Research House: HLG | Price Call: SELL | Target Price: 1.34 |
Genting Malaysia (HOLD)
GenUK Shows Improvement on 3QFY11
'''' GenM's 3QFY11 results came in line with expectation, with total net profit of RM347.1m, accounting for accounting for 73.8% of HLIB's estimate and 72.3% of consensus full year estimates.
'''' The Group recorded increase of 10.7% and 3.2% in net profit QoQ and YoY respectively, mainly contributed by overall higher volume of business and hold percentage in RWG, improvement on GenUK's operations and a construction profit generated from progressive development ofvideo lottery facility at RWNY.
'''' Management opined that the excellent performance of RWNY for the first few weeks after its opening could be due to novelty effect. However, performance might ramp up after the full opening of 4,525 of VLTs and 475 ETGs by end-2011.
'''' GenM announced that Genting Casinos UK Ltd had entered in a S&P agreement to acquire Fox Poker Club Ltd for RM38.5m. No detailed information was given on this purchase as management says it is still in an early stage.
'''' Maintain target price of RM4.07 based on SOP valuation. Given its recent surge in share price and potential upside of less than 10%, downgrade to HOLD.
''
Genting Berhad (HOLD)
3QFY11 Beats Expectation
'''' GenT's 3QFY11 results came above our expectation but in line with consensus, with total net profit of RM597.2m, accounting for 80.1% of HLIB's estimate and 74.6% of consensus full year estimates.
'''' The group recorded net profit increase of 43% for 9MFY11 to RM3,730.2m, contributed by leisure & hospitality, power and plantation division
'''' RWG and RWS achieved better performance in the current quarter mainly attributed to the favourable win percentage and overall higher volume of business.
'''' Power division's revenue increased mainly due to better dispatch and higher 2011 tariff rate in Meizhou Wan power plant and higher energy charge in Kuala Langat plant. However, EBITDA is lower due to the higher coal prices of RMB651/tonne for 9MFY11 (9MFY10: RMB597/tonne).
'''' GenP's 3Q net profit rose 40.8% yoy mainly due to margin expansion from higher output and palm product prices.
'''' TP raised by 2% to RM11.19 based on SOP valuation, to reflect the higher target price on Genting Plantation. Maintain Hold.
''
TM (HOLD)
3Q11 Results: In Line
'''' 9MFY11 reported core net profit of RM502.6m came in within our expectation, accounting for 76.4 % of our full-year forecast and 87.9% of consensus.
'''' 3QFY11: Revenue RM2,321.7m (+6% yoy, +4% qoq), EBITDA RM812.5m (+1% yoy, +8% qoq) and PATAMI RM137.3m (+8% yoy, +2% qoq).
'''' Internet: Registered strong revenue growth with +26.3% yoy and +6.4% qoq as the main driver behind TM's growth.
'''' As of 21 Nov, TM's UniFi has passed 1.096m premises covering 77 exchanges and activated more than 202k subscribers, representing 18.4% take up rate. HSBB's blended ARPU as at 30 Sept is RM184.
'''' TM is not too concern over other fixed telco players as their reachability is not as wide and not too aggressive. TM has no plan to enforce the download capping in the near term and view this as their strong value proposition over other competitors.
'''' TM also observes that Streamyx users are upgrading to the lowest package of UniFi and is positive to TM as UniFi commands a higher ARPU.
'''' Due to the recent price rally, we downgrade our call to HOLD with unchanged target price of RM4.54 (based on DDM, WACC of 6.4%, TG 0.1%). The stock is likely to continue attract investors due to its defensive nature amidst strong swings in global equity market.
''
Sunway (BUY)
A much improved quarter
'''' Sunway's 3Q core earnings of RM94m grew by 22% from the previous quarter, bringing its 9M11 core earnings to RM226m or 17.5 sen/share (QoQ: +22%), making up 75% and 73% of ours and street's estimates respectively.
'''' The strong 3Q performance was due to improved earnings margin whereby core PBT margins expanded from 5.1% in the previous quarter to 6.3%. Earnings were also lifted by strong contribution from the Singapore and Australia property developments.
'''' During the quarter Sunway, achieved new property sales of RM454m compared to RM481m in 2Q and RM403m in 1Q, bringing YTD new property sales to RM1,3bn. Majority of new sales were from Singapore, Velocity, Vivaldi and South Quay. Meanwhile, the Raya festive season and summer holidays affected the construction division which saw a sharp slowdown in construction activities based in the Middle East.
'''' Maintain BUY call in view of deep values with TP of RM3.12 based on SOP valuation.
''
DRB (BUY)
Facing Another Bump
'''' Below expectations ' 2Q12 results were behind both HLIB's number and consensus. Reported 2QFY3/12 core earning of RM129.6m, taking 1H12 to RM219.8m, achieving 45.1% of HLIB estimates and 46.2% of consensus.
'''' The impact of Japanese crisis on DRB automotive division remained visible in 2Q12, as supply constraint only started to ease off in July. Yet, DRB faced another crisis when Thailand was heavily flooded. DRB's 34% owned Honda Malaysia shut down its Melaka assembly plant since 25 Oct, and there is still no clear timeline for the plant to resume operations.
'''' Volkswagen CKD assembly remained on track with the recent production roll out of the CKD Passat 1.8 in Pekan plant. Initially, DRB will assemble 5,000 units of VW p.a. and gradually ramped up to 50,000 units p.a. by 2018.
'''' Maiden contribution of ~RM9m from POS Malaysia in 2Q12. POS remained as an important catalyst to drive the Group's earning growth going forward, with synergistic opportunities with Muamalat, Uni.Asia and KLAS.
'''' Maintain BUY with revised TP of RM2.90.
''
MISC (SELL)
Its Time to Remove Bad Seed
'''' In line ' Reported 2Q FY12/11 core earning of RM25m, taking 6M FY12/11 core earning to RM156.6m, 55.3% of HLIB's number. We expect stronger 3Q FY12/11 due to seasonally higher petroleum charter rate.
'''' Continued losses incurred in Petroleum, Chemical and Liner divisions, impacted by low charter rates and high bunker costs.
'''' Expect continued challenging business environment for Petroleum, Chemical and Liner divisions due to overcapacity situations, while MMHE and Offshore divisions to benefit from the booming oil and gas industry.
'''' Exit Liner business by mid-2012. Expect one-of-loss provisions of US$400m (~RM1.2bn) in 3Q FY12/11 (non-cash items). Included also US$30m (~RM90m) cash for the miscellaneous items such as employee compensation and winding-up expenses.
'''' Positive on the exit strategy, as MISC will reduce cash burn, and able to focus resources into developing other core divisions i.e. LNG and Offshores, as well as turnaround its Petroleum tanker division. We estimated the Liner's book value at RM915m, assuming 50% (16 units owned, 16 in-charters) of the provision is for asset impairments, Liner's book value will deteriorate to ~RM300m!.
'''' Maintain SELL with higher TP of RM5.57.
''
Ann Joo (SELL)
3Q11 hit by provisions
'''' Stripping out exceptional items, 9M11 core net profit of RM102.4m came in within our expectation, accounting for 86.3% of our full-year forecast (as we expect 4Q performance to remain uninspiring). Against the market consensus, the results came in below expectations, at 75.2% of the full-year estimates.
'''' Management has turned cautious on the sector's near-term outlook, as the global economic uncertainties (arising from the Eurozone debt crisis) and monetary tightening measures by the Chinese government will affect demand and prices for steel products internationally. Given its less-than-optimistic view on the sector's near-term outlook, management indicated that it will not embark on aggressive inventory replenishing activities in the near term.
'''' Management indicated that its mini blast furnace has achieved capacity utilization of 60-65%, and the blast furnace expenses will not be recognised in 2011's income statement, as it is still running at pre-operating level.
'''' 2012-13 net profit forecasts cut by 15.1-32.6% largely to reflect lower sales volume (in anticipation of lower export volume) and lower selling price assumptions.
'''' Following the downward revision in our net profit forecasts, our TP for Ann Joo is cut by 26.5% from RM1.83 to RM1.34 based on 9x revised 2012 FD EPS of 14.9 sen.
Perdana Petroleum (Hold): Weaker 3Q, lowering expectations
Stock Name: PERDANA
Company Name: PERDANA PETROLEUM BERHAD
Cut target price to RM0.70. Results were poor, leading us to cut 2011-13 forecasts and lower our target price to RM0.70 as we lower our P/BV target to 0.7x (-30%), which reflects trough valuations. Perdana remains a Hold. There is no immediate re-rating catalyst, with several issues to address (i.e. disposing its old vessels, low utilization, Petra Energy).
Maybank research (25 November 2011)
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Company Name: PERDANA PETROLEUM BERHAD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 0.70 |
Cut target price to RM0.70. Results were poor, leading us to cut 2011-13 forecasts and lower our target price to RM0.70 as we lower our P/BV target to 0.7x (-30%), which reflects trough valuations. Perdana remains a Hold. There is no immediate re-rating catalyst, with several issues to address (i.e. disposing its old vessels, low utilization, Petra Energy).
Maybank research (25 November 2011)
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Ann Joo Resources (Sell): Beginning of cyclical downturn
Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD
Below expectations. 9M11 core net profit of RM94m (-18% YoY) was 56% of our full-year forecast and 67% of consensus. We are turning negative on AJR: (i) sequential quarterly earnings is likely to slow on weaker export sales and margins; and (ii) we believe the global steel market is at the beginning of a contraction mode given the negative global economic outlook. We cut our 2011-13 EPS forecasts by 27-59% and downgrade Ann Joo to Sell. TP is now RM1.30 (from RM3.30) as we apply trough-cycle P/BV valuation of 0.6x (from 11x 2012 PER).
Maybank research (25 November 2011)
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Company Name: ANN JOO RESOURCES BHD
| Research House: MAYBANK | Price Call: SELL | Target Price: 1.30 |
Below expectations. 9M11 core net profit of RM94m (-18% YoY) was 56% of our full-year forecast and 67% of consensus. We are turning negative on AJR: (i) sequential quarterly earnings is likely to slow on weaker export sales and margins; and (ii) we believe the global steel market is at the beginning of a contraction mode given the negative global economic outlook. We cut our 2011-13 EPS forecasts by 27-59% and downgrade Ann Joo to Sell. TP is now RM1.30 (from RM3.30) as we apply trough-cycle P/BV valuation of 0.6x (from 11x 2012 PER).
Maybank research (25 November 2011)
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AEON Co. (Buy): Strong 3Q, expect a stronger 4Q
Stock Name: AEON
Company Name: AEON CO. (M) BHD
In line, strong QoQ growth. 3Q11 net profit of RM49m (+6% YoY,+69% QoQ) was within our expectations. QoQ earnings jumped withthe reopening of Jusco 1 Utama and Hari Raya effect. 9M11 recurringnet profit of RM113m has made up 63% of our full-year forecast and68% of consensus. Maintain Buy and TP of RM7.90 (14x 2012 PER).
Maybank research (25 November 2011)
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Company Name: AEON CO. (M) BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 7.90 |
In line, strong QoQ growth. 3Q11 net profit of RM49m (+6% YoY,+69% QoQ) was within our expectations. QoQ earnings jumped withthe reopening of Jusco 1 Utama and Hari Raya effect. 9M11 recurringnet profit of RM113m has made up 63% of our full-year forecast and68% of consensus. Maintain Buy and TP of RM7.90 (14x 2012 PER).
Maybank research (25 November 2011)
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Padiberas Nasional (Hold) 3Q11: Disappoints
Stock Name: BERNAS
Company Name: PADIBERAS NASIONAL BHD
Inability to raise prices crimped profits. RM147.4m (+5.2% YoY) 9M11 core net income was below our expectation and makes up 65% of our full year forecast. ASP has remained largely stagnant as Bernas is unable to push higher prices due to regulatory constraints. The delay could be due to the forthcoming GE13. This may drag for another two quarters. We reduce our earnings forecasts and downgrade the stock to Hold with a new target price of RM3.40 (-13%) based on DDM.
Maybank research (25 November 2011)
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Company Name: PADIBERAS NASIONAL BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 3.40 |
Inability to raise prices crimped profits. RM147.4m (+5.2% YoY) 9M11 core net income was below our expectation and makes up 65% of our full year forecast. ASP has remained largely stagnant as Bernas is unable to push higher prices due to regulatory constraints. The delay could be due to the forthcoming GE13. This may drag for another two quarters. We reduce our earnings forecasts and downgrade the stock to Hold with a new target price of RM3.40 (-13%) based on DDM.
Maybank research (25 November 2011)
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Sunway (Hold): A margin-led quarter
Stock Name: SUNWAY
Company Name: SUNWAY BERHAD
In line. Sunway's RM226m 9M11 core net profit accounted for 72-80% of our full-year estimates and consensus. The formalization of Bank Negara's prudent lending guidelines removes the uncertainties in the market pertaining to policy risk. We hence raise our TP to RM2.28 on a reduced 40% discount (50% previously) to RNAV. Maintain Hold.
Maybank research (25 November 2011)
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Company Name: SUNWAY BERHAD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 2.28 |
In line. Sunway's RM226m 9M11 core net profit accounted for 72-80% of our full-year estimates and consensus. The formalization of Bank Negara's prudent lending guidelines removes the uncertainties in the market pertaining to policy risk. We hence raise our TP to RM2.28 on a reduced 40% discount (50% previously) to RNAV. Maintain Hold.
Maybank research (25 November 2011)
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MSM Malaysia Holdings (Hold): 3Q11: Still below
Stock Name: MSM
Company Name: MSM MALAYSIA HOLDINGS BERHAD
Raw sugar price volatility crimps profits. RM189.5m 9M11 core net profit (-8.0% YoY) was below ours and consensus, as it makes up 62% and 68% of full year forecasts. These are disappointing results and underscores that MSM's raw sugar procurement strategies were not as full-proof as we initially thought. Furthermore, the interim DPS of 8sen suggests that the management will commit to the minimum 50% payout ratio. We lowered our earnings forecasts but maintain the stock at a Hold with a lower target price of RM4.10/share based on DDM.
Maybank research (25 November 2011)
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Company Name: MSM MALAYSIA HOLDINGS BERHAD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 4.10 |
Raw sugar price volatility crimps profits. RM189.5m 9M11 core net profit (-8.0% YoY) was below ours and consensus, as it makes up 62% and 68% of full year forecasts. These are disappointing results and underscores that MSM's raw sugar procurement strategies were not as full-proof as we initially thought. Furthermore, the interim DPS of 8sen suggests that the management will commit to the minimum 50% payout ratio. We lowered our earnings forecasts but maintain the stock at a Hold with a lower target price of RM4.10/share based on DDM.
Maybank research (25 November 2011)
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UEM Land (Hold): Hit by lower land sales
Stock Name: UEMLAND
Company Name: UEM LAND HOLDINGS BHD
Below expectations. UEML's 9M11 net profit made up just 60% of our 2011 estimate. 9M11 locked-in sales were however strong at RM1.6b or 79% of its 2011 target. We lower our 2011 net profit forecast by 4%. UEML is one of the high beta stocks in the property sector, and near term news-flow on government land wins may lift share price. We raise our TP to RM2.02 on a lower 40% discount (50% previously) to RNAV. The formalization of Bank Negara's prudent lending guidelines removes uncertainties surrounding policy risk. Maintain Hold.
Maybank research (25 November 2011)
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Company Name: UEM LAND HOLDINGS BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 2.02 |
Below expectations. UEML's 9M11 net profit made up just 60% of our 2011 estimate. 9M11 locked-in sales were however strong at RM1.6b or 79% of its 2011 target. We lower our 2011 net profit forecast by 4%. UEML is one of the high beta stocks in the property sector, and near term news-flow on government land wins may lift share price. We raise our TP to RM2.02 on a lower 40% discount (50% previously) to RNAV. The formalization of Bank Negara's prudent lending guidelines removes uncertainties surrounding policy risk. Maintain Hold.
Maybank research (25 November 2011)
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Genting Malaysia (Hold): A relatively good hand
Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
No surprises. Genting Malaysia's (GENM) 9M11 results were within expectations. Its most recent acquisition of Fox Poker Club Limited for GBP7.8m is not expected to contribute materially going forward. We leave our earnings estimates unchanged but tweak our DCF based TP higher by 5 sen to RM3.88. Maintain Hold call.
Maybank research (25 November 2011)
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Company Name: GENTING MALAYSIA BERHAD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 3.88 |
No surprises. Genting Malaysia's (GENM) 9M11 results were within expectations. Its most recent acquisition of Fox Poker Club Limited for GBP7.8m is not expected to contribute materially going forward. We leave our earnings estimates unchanged but tweak our DCF based TP higher by 5 sen to RM3.88. Maintain Hold call.
Maybank research (25 November 2011)
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Telekom Malaysia (Buy): Unifi-nity and beyond
Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
TM's 3Q11 results were above expectations at the core level, led by strong broadband-related contributions. We have raised our 2011-12 forecasts by 11% and 15% respectively, as we factored in the Axiata share sale gain as well as higher Internet contributions over the next two years. In addition, we have lowered our beta assumption from 0.9x to 0.86x, in line with recent lower volatility for dividend stocks. This raises our DCF-derived valuation target from RM4.60 to RM4.84. BUY.
Maybank research (25 November 2011)
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Company Name: TELEKOM MALAYSIA BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 4.84 |
TM's 3Q11 results were above expectations at the core level, led by strong broadband-related contributions. We have raised our 2011-12 forecasts by 11% and 15% respectively, as we factored in the Axiata share sale gain as well as higher Internet contributions over the next two years. In addition, we have lowered our beta assumption from 0.9x to 0.86x, in line with recent lower volatility for dividend stocks. This raises our DCF-derived valuation target from RM4.60 to RM4.84. BUY.
Maybank research (25 November 2011)
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MISC (Sell): Prospects remain extremely challenging
Stock Name: MISC
Company Name: MISC BHD
Petroleum prospect is a growing concern. We cut 2011-12 forecasts by 16-21% post weaker-than-expected 2Q results. While the move toexit container business is commercially positive and will stem losses from 2H12, prospects for the petroleum division will be very challengingover the next 24 months. Reiterate Sell with a lower TP of RM5.70, based on higher 20% discount (15% previously) to our SOP valuations.
Maybank research (25 November 2011)
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Company Name: MISC BHD
| Research House: MAYBANK | Price Call: SELL | Target Price: 5.70 |
Petroleum prospect is a growing concern. We cut 2011-12 forecasts by 16-21% post weaker-than-expected 2Q results. While the move toexit container business is commercially positive and will stem losses from 2H12, prospects for the petroleum division will be very challengingover the next 24 months. Reiterate Sell with a lower TP of RM5.70, based on higher 20% discount (15% previously) to our SOP valuations.
Maybank research (25 November 2011)
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Genting (Hold): Humdrum 3Q11
Stock Name: GENTING
Company Name: GENTING BHD
No surprises. Genting's 9M11 results were in line. 3Q11 core earnings were rather flattish YoY and QoQ due to forex translation losses on USD denominated debt. 4Q11 earnings are expected to be the strongest due to ramping VIP volumes at Resorts World Sentosa (RWS). Maintain Hold but tweak RNAV/sh based TP lower by 1% to RM10.14. We believe Genting is fairly valued.
Maybank research (25 November 2011)
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Company Name: GENTING BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 10.14 |
No surprises. Genting's 9M11 results were in line. 3Q11 core earnings were rather flattish YoY and QoQ due to forex translation losses on USD denominated debt. 4Q11 earnings are expected to be the strongest due to ramping VIP volumes at Resorts World Sentosa (RWS). Maintain Hold but tweak RNAV/sh based TP lower by 1% to RM10.14. We believe Genting is fairly valued.
Maybank research (25 November 2011)
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CIMB Research cuts MSM's earnings, keeps Neutral call
Stock Name: MSM
Company Name: MSM MALAYSIA HOLDINGS BERHAD
KUALA LUMPUR (Nov 25): CIMB Equities Research said MSM Malaysia Holdings Bhd's strong export sales could not fully cover the drop in sales volume for the more profitable domestic sugar business.
In its report issued on Friday, the research house said this resulted in weaker 3Q11 earnings. However, the eight sen dividend did not disappoint.
'The 9M11 net profit was below expectations as it was only 63% of our full-year forecast and 67% of consensus earnings.
'We cut our FY11-13 earnings and target price (based on 12.6x target market P/E) after we roll it over to end-12. Maintain NEUTRAL rating,' it said.
CIMB Research reduced the target price from RM5.82 to RM5.
Company Name: MSM MALAYSIA HOLDINGS BERHAD
| Research House: CIMB | Price Call: HOLD | Target Price: 5.00 |
KUALA LUMPUR (Nov 25): CIMB Equities Research said MSM Malaysia Holdings Bhd's strong export sales could not fully cover the drop in sales volume for the more profitable domestic sugar business.
In its report issued on Friday, the research house said this resulted in weaker 3Q11 earnings. However, the eight sen dividend did not disappoint.
'The 9M11 net profit was below expectations as it was only 63% of our full-year forecast and 67% of consensus earnings.
'We cut our FY11-13 earnings and target price (based on 12.6x target market P/E) after we roll it over to end-12. Maintain NEUTRAL rating,' it said.
CIMB Research reduced the target price from RM5.82 to RM5.
UOB Kay Hian Research: UMW's Hold call and RM6.90 target price under review
Stock Name: UMW
Company Name: UMW HOLDINGS BHD
KUALA LUMPUR (Nov 25): UOB Kay Hian Research Malaysia said its Hold call and RM6.90 target price for UMW HOLDINGS BHD [] is under review pending an analysts briefing on Friday afternoon.
It said on Friday UMW's 9M11 core net profit of RM510 million is in line with its 2011 estimate, on an annualised basis.
UMW made a total of RM58 million in provisions, mainly for impairment of overseas investments. For 3Q11, core net profit of RM194 million improved 19% on-quarter, driven by the recovery of the automobile division.
UOB Kay Hian Research said the operating profits in 3Q11 for UMW's motor division jumped 41% on-quarter to RM371 million on the back of a 17% jump in revenue to RM2.6 billion.
The automobile industry was hit in 2Q11 by the earthquake/tsunami in Japan in end-March 2011. Subsequently, recovery in supply of automobile parts in 3Q11 enabled manufacturers to deliver their vehicles. Together with a weaker US dollar vs the ringgit, UMW's automobile division managed to record a strong 14% operating margin in 3Q11 vs 12% in 2Q11.
However, UMW's O&G division remained flat with pretax loss of RM22 million in 3Q11 (vs RM23 million in 2Q11) on the back of RM295 million in revenue (+3% on-quarter).
UOB Kay Hian Research said aside from a seasonally low 4Q11 ahead, the Malaysian automobile industry is hit once again this year. This time by the floods in Thailand, which restricted the supply of automobile parts and CBU vehicles.
'Using UMW's 2Q11 performance, when the group recorded core net profit of RM162 million, as a gauge for UMW's potential 4Q11, its 2011 net profit could come in slightly below'' forecast core net profit of RM707 million.
The research house said UMW still has RM52 million worth of overseas investments in its books (NBV). Assuming UMW provides about RM25 million each quarter (as it did in 3Q11), there could be only another two quarters of provisions left, until 1Q12.
'HOLD call and RM6.90 target price (11x 2012F PE) are under review, pending an analyst briefing this afternoon. We foresee little catalyst in this stock in view of weak vehicle sales next year. Global economic uncertainty, and potential credit tightening (that is, financing for car buyers) will cast a shadow over this cyclical sector.
'Further, there is little prospect of UMW's O&G division turning around in the near term as long as WSP faces stiff domestic competition (in China) following countervailing duties imposed by the US on steel imported from China,' it said.
Company Name: UMW HOLDINGS BHD
| Research House: UOB | Price Call: HOLD | Target Price: 6.90 |
KUALA LUMPUR (Nov 25): UOB Kay Hian Research Malaysia said its Hold call and RM6.90 target price for UMW HOLDINGS BHD [] is under review pending an analysts briefing on Friday afternoon.
It said on Friday UMW's 9M11 core net profit of RM510 million is in line with its 2011 estimate, on an annualised basis.
UMW made a total of RM58 million in provisions, mainly for impairment of overseas investments. For 3Q11, core net profit of RM194 million improved 19% on-quarter, driven by the recovery of the automobile division.
UOB Kay Hian Research said the operating profits in 3Q11 for UMW's motor division jumped 41% on-quarter to RM371 million on the back of a 17% jump in revenue to RM2.6 billion.
The automobile industry was hit in 2Q11 by the earthquake/tsunami in Japan in end-March 2011. Subsequently, recovery in supply of automobile parts in 3Q11 enabled manufacturers to deliver their vehicles. Together with a weaker US dollar vs the ringgit, UMW's automobile division managed to record a strong 14% operating margin in 3Q11 vs 12% in 2Q11.
However, UMW's O&G division remained flat with pretax loss of RM22 million in 3Q11 (vs RM23 million in 2Q11) on the back of RM295 million in revenue (+3% on-quarter).
UOB Kay Hian Research said aside from a seasonally low 4Q11 ahead, the Malaysian automobile industry is hit once again this year. This time by the floods in Thailand, which restricted the supply of automobile parts and CBU vehicles.
'Using UMW's 2Q11 performance, when the group recorded core net profit of RM162 million, as a gauge for UMW's potential 4Q11, its 2011 net profit could come in slightly below'' forecast core net profit of RM707 million.
The research house said UMW still has RM52 million worth of overseas investments in its books (NBV). Assuming UMW provides about RM25 million each quarter (as it did in 3Q11), there could be only another two quarters of provisions left, until 1Q12.
'HOLD call and RM6.90 target price (11x 2012F PE) are under review, pending an analyst briefing this afternoon. We foresee little catalyst in this stock in view of weak vehicle sales next year. Global economic uncertainty, and potential credit tightening (that is, financing for car buyers) will cast a shadow over this cyclical sector.
'Further, there is little prospect of UMW's O&G division turning around in the near term as long as WSP faces stiff domestic competition (in China) following countervailing duties imposed by the US on steel imported from China,' it said.
Below expectations
Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Company Name: TELEKOM MALAYSIA BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 3.70 |
Within expectations
Stock Name: GENTING
Company Name: GENTING BHD
Company Name: GENTING BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 9.83 |
RWNYC in play
Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD
Company Name: GENTING MALAYSIA BERHAD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 3.42 |
Another bad year
Stock Name: PERDANA
Company Name: PERDANA PETROLEUM BERHAD
Company Name: PERDANA PETROLEUM BERHAD
| Research House: ECMLIBRA | Price Call: SELL | Target Price: 0.47 |
Vehicle sales saved the day!
Stock Name: UMW
Company Name: UMW HOLDINGS BHD
Company Name: UMW HOLDINGS BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 7.00 |
HDBSVR cuts MISC target price to RM6.60 from RM7.60
Stock Name: MISC
Company Name: MISC BHD
KUALA LUMPUR (Nov 25): Hwang DBS Vickers Research has reduced its sum-of-parts based target price for MISC BHD [] to RM6.60 from RM7.60 previously.
It said on Friday that although MISC has exited one of its loss-making businesses, it remained concerned about the weak outlook for crude tanker shipping.
'However, downside should be limited by stable income from its LNG shipping and offshore divisions,' it said.
HDBSVR said the 2Q9M11 core net profit of RM151 million (+31% on-quarter) takes earnings this year to RM267 million, or 68% of its full period forecast. It said MISC's earnings were driven by its offshore & heavy engineering division (+18% on-quarter).
But its petroleum division continued to suffer with spot rates for VLCC and Aframax vessels falling 13.7% and 15.2% on-quarter, respectively. Its 48% exposure to spot rates also stifled the division's performance.
MISC decided to exit the liner business after incurring RM2.8 billion losses over the past three financial years.
'Containership timecharter rates continued to drop by another 19% QoQ, and are unlikely to improve in the near term due to tonnage oversupply. FY11 earnings had been downgraded as MISC will be hit by a one-off RM1.1 billion provision relating to the cessation of its liner business.
'However, FY12F and FY13F earnings will surge 64% and 76%, respectively, because of its move to cut losses at the liner division,' said HDBSVR.
Company Name: MISC BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 6.60 |
KUALA LUMPUR (Nov 25): Hwang DBS Vickers Research has reduced its sum-of-parts based target price for MISC BHD [] to RM6.60 from RM7.60 previously.
It said on Friday that although MISC has exited one of its loss-making businesses, it remained concerned about the weak outlook for crude tanker shipping.
'However, downside should be limited by stable income from its LNG shipping and offshore divisions,' it said.
HDBSVR said the 2Q9M11 core net profit of RM151 million (+31% on-quarter) takes earnings this year to RM267 million, or 68% of its full period forecast. It said MISC's earnings were driven by its offshore & heavy engineering division (+18% on-quarter).
But its petroleum division continued to suffer with spot rates for VLCC and Aframax vessels falling 13.7% and 15.2% on-quarter, respectively. Its 48% exposure to spot rates also stifled the division's performance.
MISC decided to exit the liner business after incurring RM2.8 billion losses over the past three financial years.
'Containership timecharter rates continued to drop by another 19% QoQ, and are unlikely to improve in the near term due to tonnage oversupply. FY11 earnings had been downgraded as MISC will be hit by a one-off RM1.1 billion provision relating to the cessation of its liner business.
'However, FY12F and FY13F earnings will surge 64% and 76%, respectively, because of its move to cut losses at the liner division,' said HDBSVR.
November 24, 2011
3QFY11 - Results Update
Stock Name: GRANFLO
Company Name: GRAND-FLO SOLUTION BHD
Company Name: GRAND-FLO SOLUTION BHD
| Research House: NETRESEARCH | Price Call: BUY | Target Price: 0.50 |
3Q/FY11 results. Below expectations. Revise to Sell Call.
Stock Name: HANDAL
Company Name: HANDAL RESOURCES BERHAD
Company Name: HANDAL RESOURCES BERHAD
| Research House: MERCURY | Price Call: SELL | Target Price: 0.37 |
Impressive 3QFY11 results for Petronas Chemicals
Stock Name: PCHEM
Company Name: PETRONAS CHEMICALS GROUP BHD
Petronas Chemicals Group Bhd
(Nov 23, RM5.93)
Maintain buy at RM5.94 with target price of RM8.15: Profit after tax and minority interest (Patami) for 9MFY11 of RM2,818 million (+40.3% year-on-year [y-o-y]) was 74% of our full year forecast (within expectation) and 78% of consensus (ahead). These are impressive results driven by high utilisation rates, strong product margins and relatively stable input cost. PetChem will continue to leverage the current high chemical prices and should obtain strong results in 4QFY11. We maintain our 'buy' call with a target target price of RM8.15 based on 13.5 times 2012 price-earnings ratio in line with peers' historical mean PER.
Patami of RM1,149 million for 3QFY11 (+128.9% y-o-y, +31.5% quarter-on-quarter) was higher than our expectation of RM1,018 million. The main driver was an average utilisation rate of 84% (against our 83% assumption) which helped boost volumes by 3% y-o-y. Product prices were also significantly higher by an average of 49% y-o-y (against our 54% assumption).
Earnings before interest tax, depreciation and amortisation (Ebitda) margin for 3QFY11 was at 40.9%, a 15-percentage point (ppt) improvement y-o-y. Equally impressive, 3QFY11's Patami margin of 24.8% was 8.9 ppt higher y-o-y. To add further credibility to these already strong numbers, the tax rate in 3QFY11 was at a full rate of 25.2% against 18.8% for the same period last year. PetChem has utilised all of its tax benefits. As a sweetener, an interim single-tier dividend per share of eight sen was announced, the stock will go ex this Dec 9.
There has been a slew of downgrades on PetChem recently as many North Asian petrochemical players have been underperforming. Consensus fails to see the distinction between PetChem, which uses gas as its feedstock, and its North Asian counterparts which use naphtha.
Naphtha is significantly more volatile and expensive whereas gas is cheap and stable. If anything, PetChem is benefiting immensely under the current environment as the high naphtha cost supports high product prices in order for producers to break even.
We are confident PetChem will be able to meet our 2011 forecast. Utilisation should stay above 80% in 4QFY11 as there are minimal scheduled maintenance shutdowns during the period and product prices continue to stay strong. We will update on the impact of the ethylene plant closure in Kerteh post an analyst call yesterday. ' Maybank IB Research, Nov 23
This article appeared in The Edge Financial Daily, November 24, 2011.
Company Name: PETRONAS CHEMICALS GROUP BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 8.15 |
Petronas Chemicals Group Bhd
(Nov 23, RM5.93)
Maintain buy at RM5.94 with target price of RM8.15: Profit after tax and minority interest (Patami) for 9MFY11 of RM2,818 million (+40.3% year-on-year [y-o-y]) was 74% of our full year forecast (within expectation) and 78% of consensus (ahead). These are impressive results driven by high utilisation rates, strong product margins and relatively stable input cost. PetChem will continue to leverage the current high chemical prices and should obtain strong results in 4QFY11. We maintain our 'buy' call with a target target price of RM8.15 based on 13.5 times 2012 price-earnings ratio in line with peers' historical mean PER.
Patami of RM1,149 million for 3QFY11 (+128.9% y-o-y, +31.5% quarter-on-quarter) was higher than our expectation of RM1,018 million. The main driver was an average utilisation rate of 84% (against our 83% assumption) which helped boost volumes by 3% y-o-y. Product prices were also significantly higher by an average of 49% y-o-y (against our 54% assumption).
Earnings before interest tax, depreciation and amortisation (Ebitda) margin for 3QFY11 was at 40.9%, a 15-percentage point (ppt) improvement y-o-y. Equally impressive, 3QFY11's Patami margin of 24.8% was 8.9 ppt higher y-o-y. To add further credibility to these already strong numbers, the tax rate in 3QFY11 was at a full rate of 25.2% against 18.8% for the same period last year. PetChem has utilised all of its tax benefits. As a sweetener, an interim single-tier dividend per share of eight sen was announced, the stock will go ex this Dec 9.
There has been a slew of downgrades on PetChem recently as many North Asian petrochemical players have been underperforming. Consensus fails to see the distinction between PetChem, which uses gas as its feedstock, and its North Asian counterparts which use naphtha.
Naphtha is significantly more volatile and expensive whereas gas is cheap and stable. If anything, PetChem is benefiting immensely under the current environment as the high naphtha cost supports high product prices in order for producers to break even.
We are confident PetChem will be able to meet our 2011 forecast. Utilisation should stay above 80% in 4QFY11 as there are minimal scheduled maintenance shutdowns during the period and product prices continue to stay strong. We will update on the impact of the ethylene plant closure in Kerteh post an analyst call yesterday. ' Maybank IB Research, Nov 23
This article appeared in The Edge Financial Daily, November 24, 2011.
United Malayan Land 3QFY11 Results - Robust Sales And Landbanking Efforts
Stock Name: UMLAND
Company Name: UNITED MALAYAN LAND BHD
Company Name: UNITED MALAYAN LAND BHD
| Research House: CIMB | Price Call: BUY | Target Price: 2.02 |
Within Expectations
Stock Name: IRIS
Company Name: IRIS CORPORATION BHD
Company Name: IRIS CORPORATION BHD
| Research House: TA | Price Call: SELL | Target Price: 0.17 |
3Q saw Substantial Increase in Interest Cost
Stock Name: LEADER
Company Name: LEADER UNIVERSAL HOLDINGS BHD
Company Name: LEADER UNIVERSAL HOLDINGS BHD
| Research House: TA | Price Call: HOLD | Target Price: 1.10 |
Results within Expectations
Stock Name: PERISAI
Company Name: PERISAI PETROLEUM TEKNOLOGI
Company Name: PERISAI PETROLEUM TEKNOLOGI
| Research House: TA | Price Call: BUY | Target Price: 1.09 |
3QFY11 Results Report
Stock Name: TALIWRK
Company Name: TALIWORKS CORPORATION BHD
Company Name: TALIWORKS CORPORATION BHD
| Research House: NETRESEARCH | Price Call: BUY | Target Price: 1.35 |
Within expectations
Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
Company Name: KUALA LUMPUR KEPONG BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 21.75 |
Impressive growth momentum
Stock Name: PARKSON
Company Name: PARKSON HOLDINGS BHD
Company Name: PARKSON HOLDINGS BHD
| Research House: ECMLIBRA | Price Call: BUY | Target Price: 6.40 |
Within expectations
Stock Name: STAR
Company Name: STAR PUBLICATIONS (M) BHD
Company Name: STAR PUBLICATIONS (M) BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 3.43 |
CIMB Research has technical sell on IOI Corp at RM4.92
Stock Name: IOICORP
Company Name: IOI CORPORATION BHD
KUALA LUMPUR (Nov 24): CIMB Equities Research has a technical sell on IOI Corporation at RM4.92 at which it is trading at a FY13 price-to-earnings of 15.4 times and price-to-book value of 2.7 times.
The research house said on Thursday that despite the recent rebound, IOI failed to push above the 61.8% Fibonacci Retracement level. This shows that the bears are strong here.
Coincidently, the 200-day SMA (now at RM5.20) is just around the corner and this will put a lid on the bulls.
'Technical landscape is deteriorating. MACD signal line has staged a negative crossover while RSI is also below the 50 pts mark.
'Use any rebound to unload on strength as near term gains are likely capped at RM5.08-RM5.20. Once the 50-day SMA fails to hold, expect prices to fall towards RM4.66 and RM4.30. Put a buy stop at RM5.24, just in case,' it said.
Company Name: IOI CORPORATION BHD
| Research House: CIMB | Price Call: SELL | Target Price: 4.92 |
KUALA LUMPUR (Nov 24): CIMB Equities Research has a technical sell on IOI Corporation at RM4.92 at which it is trading at a FY13 price-to-earnings of 15.4 times and price-to-book value of 2.7 times.
The research house said on Thursday that despite the recent rebound, IOI failed to push above the 61.8% Fibonacci Retracement level. This shows that the bears are strong here.
Coincidently, the 200-day SMA (now at RM5.20) is just around the corner and this will put a lid on the bulls.
'Technical landscape is deteriorating. MACD signal line has staged a negative crossover while RSI is also below the 50 pts mark.
'Use any rebound to unload on strength as near term gains are likely capped at RM5.08-RM5.20. Once the 50-day SMA fails to hold, expect prices to fall towards RM4.66 and RM4.30. Put a buy stop at RM5.24, just in case,' it said.
MIDF Research upgrades Parkson to Buy, raises TP to RM6.42
Stock Name: PARKSON
Company Name: PARKSON HOLDINGS BHD
KUALA LUMPUR (Nov 24): MIDF Research has upgraded PARKSON HOLDINGS BHD [] (PHB) to Buy from Neutral with a higher target price of RM6.42 (from RM4.82).
The research house said on Thursday that it was adjusting its sum-of-parts valuation to include the recent listing of Parkson Asia (PA) as well as stake dilution in PA to 67.6%.
'We also ascribed a higher PER12 for its China operation of 18.7x (previous 13.4x) and PRA (Malaysia, Indonesia and Vietnam) operations of 13.7x based on its peers average multiple (refer table D and E).
'We like PHB given its exposure to regional retail sector as well as its on track network expansion plan,' it said.
Company Name: PARKSON HOLDINGS BHD
| Research House: MIDF | Price Call: BUY | Target Price: 6.42 |
KUALA LUMPUR (Nov 24): MIDF Research has upgraded PARKSON HOLDINGS BHD [] (PHB) to Buy from Neutral with a higher target price of RM6.42 (from RM4.82).
The research house said on Thursday that it was adjusting its sum-of-parts valuation to include the recent listing of Parkson Asia (PA) as well as stake dilution in PA to 67.6%.
'We also ascribed a higher PER12 for its China operation of 18.7x (previous 13.4x) and PRA (Malaysia, Indonesia and Vietnam) operations of 13.7x based on its peers average multiple (refer table D and E).
'We like PHB given its exposure to regional retail sector as well as its on track network expansion plan,' it said.
CIMB Research has technical sell on MRCB at RM1.90
Stock Name: MRCB
Company Name: MALAYSIAN RESOURCES CORP
KUALA LUMPUR (Nov 24): CIMB Equities Research has a technical sell on MALAYSIAN RESOURCES CORP []oration Bhd (MRCB)at RM1.90 at which it is trading at a FY13 price-to-earnings of 14.6 times and price-to-book value of 2.0 times.
The research house said on Thursday that the rebound from its September's low may have exhausted. Prices hit a snag near the 200-day SMA, suggesting that this is a level of significance.
'If we are right, the candles should fall below its 50-day SMA over the next few days before heading towards RM1.77 and RM1.59 next,' it said.
CIMB Research said the MACD histogram bars have slipped into the negative territory, suggesting that selling pressure is picking up. RSI is also below the 50pts mark.
'Aggressive traders may opt to lock in some profits now while others should consider switching into selling mode when prices fall below RM1.88 (its 50-day SMA). Only a swing above RM2.00 would prompt us to review our call,' it said.
Company Name: MALAYSIAN RESOURCES CORP
| Research House: CIMB | Price Call: SELL | Target Price: 1.90 |
KUALA LUMPUR (Nov 24): CIMB Equities Research has a technical sell on MALAYSIAN RESOURCES CORP []oration Bhd (MRCB)at RM1.90 at which it is trading at a FY13 price-to-earnings of 14.6 times and price-to-book value of 2.0 times.
The research house said on Thursday that the rebound from its September's low may have exhausted. Prices hit a snag near the 200-day SMA, suggesting that this is a level of significance.
'If we are right, the candles should fall below its 50-day SMA over the next few days before heading towards RM1.77 and RM1.59 next,' it said.
CIMB Research said the MACD histogram bars have slipped into the negative territory, suggesting that selling pressure is picking up. RSI is also below the 50pts mark.
'Aggressive traders may opt to lock in some profits now while others should consider switching into selling mode when prices fall below RM1.88 (its 50-day SMA). Only a swing above RM2.00 would prompt us to review our call,' it said.
CIMB Research has technical buy on Favelle Favco at RM1.23
Stock Name: FAVCO
Company Name: FAVELLE FAVCO BHD
KUALA LUMPUR (Nov 24): CIMB Equities Research has a technical buy on Favelle Favco at RM1.23 at a price-to-book value of 0.8 times.
The research house said on Thursday that the rebound from its September's low is holding up well. It added the prices are consolidating in a triangle pattern, suggesting that there is still room to the upside.
"If the candles can continue to remain above its 200-day SMA (now at RM1.19, there is a good chance that the stock may re-rate towards the next resistance levels at RM1.32 and RM1.40.
'Technical landscape remains compelling, reinforcing our short term bullish view on the stock. MACD signal line is still hovering in the positive territory while RSI has also hooked upward," it said.
CIMB Research said that risk takers may start to nibble now while others should for a push above RM1.26 before going long. Always put a stop at below RM1.15 to limit downside risks.
Company Name: FAVELLE FAVCO BHD
| Research House: CIMB | Price Call: BUY | Target Price: 1.23 |
KUALA LUMPUR (Nov 24): CIMB Equities Research has a technical buy on Favelle Favco at RM1.23 at a price-to-book value of 0.8 times.
The research house said on Thursday that the rebound from its September's low is holding up well. It added the prices are consolidating in a triangle pattern, suggesting that there is still room to the upside.
"If the candles can continue to remain above its 200-day SMA (now at RM1.19, there is a good chance that the stock may re-rate towards the next resistance levels at RM1.32 and RM1.40.
'Technical landscape remains compelling, reinforcing our short term bullish view on the stock. MACD signal line is still hovering in the positive territory while RSI has also hooked upward," it said.
CIMB Research said that risk takers may start to nibble now while others should for a push above RM1.26 before going long. Always put a stop at below RM1.15 to limit downside risks.
RHB Research lowers Wah Seong to Underperform from Market Perform
Stock Name: WASEONG
Company Name: WAH SEONG CORPORATION BHD
KUALA LUMPUR (Nov 24): RHB Research Institute has reduced its FY12-13 revenue estimates for Wah Seong Corp Bhd by -10.2% and -10.0% respectively as it factors in lower wins going forward.
'This results in our net earnings estimates falling by 17.1% and 16.7% respectively,' it said on Thursday.
RHB Research said its new fair value estimate is RM1.49 a share based on unchanged 11 times FY12 PER.
'We are cognisant of the potential volume of domestic contracts that will be rolled-out by Petronas within the next five years but the exact timeline and the quantum of these contracts are still uncertain. Downgrade to Underperform,' it said.
The research house said that Bredero-Shaw received a letter of intent from Mitsui & Co for the pipe-coating contract, estimated to be worth US$400 million (RM1.2 billion), on the Ichthys Gas Field Development project.
'We understand that the main reason Wah Seong lost out on this project was that its plant is currently too busy to facilitate the pipe-coating schedule that was required.
'Management is confident that it will still be able replenish its contracts from the domestic pipeline replacement projects ahead. There would likely be minimal competition from Bredero-Shaw which now has its hands full with the two large Australian contracts (Wheatstone and Ichthys) won recently,' it said.
Company Name: WAH SEONG CORPORATION BHD
| Research House: RHB | Price Call: SELL | Target Price: 1.49 |
KUALA LUMPUR (Nov 24): RHB Research Institute has reduced its FY12-13 revenue estimates for Wah Seong Corp Bhd by -10.2% and -10.0% respectively as it factors in lower wins going forward.
'This results in our net earnings estimates falling by 17.1% and 16.7% respectively,' it said on Thursday.
RHB Research said its new fair value estimate is RM1.49 a share based on unchanged 11 times FY12 PER.
'We are cognisant of the potential volume of domestic contracts that will be rolled-out by Petronas within the next five years but the exact timeline and the quantum of these contracts are still uncertain. Downgrade to Underperform,' it said.
The research house said that Bredero-Shaw received a letter of intent from Mitsui & Co for the pipe-coating contract, estimated to be worth US$400 million (RM1.2 billion), on the Ichthys Gas Field Development project.
'We understand that the main reason Wah Seong lost out on this project was that its plant is currently too busy to facilitate the pipe-coating schedule that was required.
'Management is confident that it will still be able replenish its contracts from the domestic pipeline replacement projects ahead. There would likely be minimal competition from Bredero-Shaw which now has its hands full with the two large Australian contracts (Wheatstone and Ichthys) won recently,' it said.
Maybank Research maintains Sell on Genting Plantations, TP RM6.70
Stock Name: GENP
Company Name: GENTING PLANTATIONS BERHAD
KUALA LUMPUR (Nov 24): Maybank Investment Bank Research said Genting PLANTATION []s' nine-months net profit of RM348 million (+64% on-year) accounts for 83% and 78% of its and consensus full year forecast.
It said on Thursday the results positively surprised on stronger-than-expected fresh fruit bunches (FFB) production.
'We raise 2011 net profit forecast by 3%, 2012-13 by 11%. Despite the stellar results, we maintain Genting Plantations as a Sell on relatively rich valuation at 17.3x 2013 PER. Our TP is raised to RM6.70 (+10%) following the earnings revision, based on unchanged 14.5x 2013 PER,' it said.
Maybank Research said Genting Plantation's earnings from the plantation segment appeared to have peaked in 2Q11 with 3Q11 EBITDA declining by 19.7% on-quarter (+37% on-year) due to sluggish crude palm oil (CPO) average selling price (ASP) of RM3,097 a tonne (-8% on-quarter,+ 17% on-year) that offset the marginally higher FFB production (+0.9% on-quarter, +14% on-year). Meanwhile, property contributed a minor RM2.7 million in 3Q11 (-7% on-quarter, +5% on-year).
The research house said the nine-month plantation EBITDA surged 61% on-year driven by higher CPO ASP of RM3,340 (+29% on-year) and robust fresh fruit bunches (FFB) production (+13% on-year), attributable to stronger-than-expected FFB yields from its Peninsular Malaysia estates.
'Hence, we raise our 2011-13 FFB production forecast by 2.7-4.5%, positively impacting our 2011-2013 net profit forecasts by 3%-11%. We expect FFB production to trend down in 4Q11 after its seasonal peak in 3Q11,' it said.
Company Name: GENTING PLANTATIONS BERHAD
| Research House: MAYBANK | Price Call: SELL | Target Price: 6.70 |
KUALA LUMPUR (Nov 24): Maybank Investment Bank Research said Genting PLANTATION []s' nine-months net profit of RM348 million (+64% on-year) accounts for 83% and 78% of its and consensus full year forecast.
It said on Thursday the results positively surprised on stronger-than-expected fresh fruit bunches (FFB) production.
'We raise 2011 net profit forecast by 3%, 2012-13 by 11%. Despite the stellar results, we maintain Genting Plantations as a Sell on relatively rich valuation at 17.3x 2013 PER. Our TP is raised to RM6.70 (+10%) following the earnings revision, based on unchanged 14.5x 2013 PER,' it said.
Maybank Research said Genting Plantation's earnings from the plantation segment appeared to have peaked in 2Q11 with 3Q11 EBITDA declining by 19.7% on-quarter (+37% on-year) due to sluggish crude palm oil (CPO) average selling price (ASP) of RM3,097 a tonne (-8% on-quarter,+ 17% on-year) that offset the marginally higher FFB production (+0.9% on-quarter, +14% on-year). Meanwhile, property contributed a minor RM2.7 million in 3Q11 (-7% on-quarter, +5% on-year).
The research house said the nine-month plantation EBITDA surged 61% on-year driven by higher CPO ASP of RM3,340 (+29% on-year) and robust fresh fruit bunches (FFB) production (+13% on-year), attributable to stronger-than-expected FFB yields from its Peninsular Malaysia estates.
'Hence, we raise our 2011-13 FFB production forecast by 2.7-4.5%, positively impacting our 2011-2013 net profit forecasts by 3%-11%. We expect FFB production to trend down in 4Q11 after its seasonal peak in 3Q11,' it said.
Genting Plantations (Sell): Strong production boost in 3Q
Outperformed. GENP's 9M11 net profit of RM348m (+64% YoY) accounts for 83% and 78% of our and consensus full year forecast. The results positively surprised on stronger-than-expected FFB production. We raise 2011 net profit forecast by 3%, 2012-13 by 11%. Despite the stellar results, we maintain GENP as a Sell on relatively rich valuation at 17.3x 2013 PER. Our TP is raised to RM6.70 (+10%) following the earnings revision, based on unchanged 14.5x 2013 PER.
Maybank research (24 November 2011)
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Kuala Lumpur Kepong (Sell): Boosted by huge disposal gain
Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
Within expectations, minus one-offs. 4QFY11 net profit of RM460m (+6% QoQ, +48% YoY) was boosted by disposal gain of RM201m (mitigated by RM61m fair valuation loss) following the disposal of a 50%-associate. Stripping away one-offs, 4Q core net profit of RM321m (-24% QoQ, +37% YoY) was within expectations. FY11 core net profit of RM1,368m (+46% YoY) hit a new peak but we expect a weaker global demand next year to drive CPO ASP lower to RM2,600/t. Maintain Sell on KLK given its relatively expensive valuation at 18.4x FY13. Our TP of RM18.70, based on 16x FY13 PER, is unchanged.
Maybank research (24 November 2011)
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Company Name: KUALA LUMPUR KEPONG BHD
| Research House: MAYBANK | Price Call: SELL | Target Price: 18.70 |
Within expectations, minus one-offs. 4QFY11 net profit of RM460m (+6% QoQ, +48% YoY) was boosted by disposal gain of RM201m (mitigated by RM61m fair valuation loss) following the disposal of a 50%-associate. Stripping away one-offs, 4Q core net profit of RM321m (-24% QoQ, +37% YoY) was within expectations. FY11 core net profit of RM1,368m (+46% YoY) hit a new peak but we expect a weaker global demand next year to drive CPO ASP lower to RM2,600/t. Maintain Sell on KLK given its relatively expensive valuation at 18.4x FY13. Our TP of RM18.70, based on 16x FY13 PER, is unchanged.
Maybank research (24 November 2011)
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Multi-Purpose Holdings (Buy): The taxman cometh in 3Q11
Stock Name: MPHB
Company Name: MULTI-PURPOSE HOLDINGS BHD
Still a Buy. Multi-Purpose Holdings' (MPHB) 9M11 results were below expectations but this was largely due to a higher than expected tax rate of 24% (versus our expectation of 20%). Going forward, its operations are expected to remain stable. We still like MPHB (RM3.64 target price) for its cheap valuations (<10x PERs) and potential for special dividends and stronger recurring dividends post the disposal of non-core assets.
Maybank research (24 November 2011)
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Company Name: MULTI-PURPOSE HOLDINGS BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 3.64 |
Still a Buy. Multi-Purpose Holdings' (MPHB) 9M11 results were below expectations but this was largely due to a higher than expected tax rate of 24% (versus our expectation of 20%). Going forward, its operations are expected to remain stable. We still like MPHB (RM3.64 target price) for its cheap valuations (<10x PERs) and potential for special dividends and stronger recurring dividends post the disposal of non-core assets.
Maybank research (24 November 2011)
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Star Publications (Hold): Uneventful 3Q11
Stock Name: STAR
Company Name: STAR PUBLICATIONS (M) BHD
Stable outlook. Star recorded 9M11 results that were largely within expectations. 4Q11 net profit is likely to be flattish YoY at c.RM50m - although average newsprint prices have appreciated to < USD700/MT, adex revenue is still growing YoY, albeit, at mid single digits in percentage terms. In the mean time, dividend yields of 6% should help support its share price. Maintain Hold call and DCF-based RM3.37 TP.
Maybank research (24 November 2011)
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Company Name: STAR PUBLICATIONS (M) BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 3.37 |
Stable outlook. Star recorded 9M11 results that were largely within expectations. 4Q11 net profit is likely to be flattish YoY at c.RM50m - although average newsprint prices have appreciated to < USD700/MT, adex revenue is still growing YoY, albeit, at mid single digits in percentage terms. In the mean time, dividend yields of 6% should help support its share price. Maintain Hold call and DCF-based RM3.37 TP.
Maybank research (24 November 2011)
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Notion VTEC (Hold): Weak outlook due to Thai flood
Stock Name: NOTION
Company Name: NOTION VTEC BHD
Results in line. FY11 core net profit of RM40m (+7% YoY) was 100% of our full-year forecast and 98% of consensus. Though NVB is trading close to its trough valuation and the negative impact of the Thai flood is receeding, we think poor near-term earnings will cap share price upside. Yesterday, NVB announced a potential RM5m cost provision for FY12. We maintain our earnings estimates pending an analyst briefing today. No change to our Hold call and TP of RM1.50.
Maybank research (24 November 2011)
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Company Name: NOTION VTEC BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 1.50 |
Results in line. FY11 core net profit of RM40m (+7% YoY) was 100% of our full-year forecast and 98% of consensus. Though NVB is trading close to its trough valuation and the negative impact of the Thai flood is receeding, we think poor near-term earnings will cap share price upside. Yesterday, NVB announced a potential RM5m cost provision for FY12. We maintain our earnings estimates pending an analyst briefing today. No change to our Hold call and TP of RM1.50.
Maybank research (24 November 2011)
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Petronas Chemicals (Buy): Entering into a transition phase
Stock Name: PETGAS
Company Name: PETRONAS GAS BHD
Follow up from the conference call. 4Q11 will be slightly lower than 3Q11 due to lower product prices of 10%-15% and some plants endure minor production disruptions. Thankfully, the weakening RM against USD will provide good margins and help PCHEM deliver record 12M 2011 profits of RM3.8b PATAMI (our estimate). We lower 2012-13 earnings forecasts by 7% p.a.. We rollover our valuation period to 2013 and apply a 12x multiple (from 13.5x), deriving a lower TP of RM7.50 (-8%). We believe this is fitting given market's risk adverse stance. BUY.
Maybank research (24 November 2011)
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Company Name: PETRONAS GAS BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 7.50 |
Follow up from the conference call. 4Q11 will be slightly lower than 3Q11 due to lower product prices of 10%-15% and some plants endure minor production disruptions. Thankfully, the weakening RM against USD will provide good margins and help PCHEM deliver record 12M 2011 profits of RM3.8b PATAMI (our estimate). We lower 2012-13 earnings forecasts by 7% p.a.. We rollover our valuation period to 2013 and apply a 12x multiple (from 13.5x), deriving a lower TP of RM7.50 (-8%). We believe this is fitting given market's risk adverse stance. BUY.
Maybank research (24 November 2011)
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HLIB Research 24 November 2011 (KLK; GenP; POS; UM Land; Notion Vtec; Economics; Traders Brief)
Stock Name: NOTION
Company Name: NOTION VTEC BHD
Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
Stock Name: GENP
Company Name: GENTING PLANTATIONS BERHAD
Stock Name: POS
Company Name: POS MALAYSIA BHD
Stock Name: UMLAND
Company Name: UNITED MALAYAN LAND BHD
Company Name: NOTION VTEC BHD
| Research House: HLG | Price Call: HOLD | Target Price: 2.58 |
Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
| Research House: HLG | Price Call: SELL | Target Price: 18.79 |
Stock Name: GENP
Company Name: GENTING PLANTATIONS BERHAD
| Research House: HLG | Price Call: HOLD | Target Price: 7.61 |
Stock Name: POS
Company Name: POS MALAYSIA BHD
| Research House: HLG | Price Call: BUY | Target Price: 3.80 |
Stock Name: UMLAND
Company Name: UNITED MALAYAN LAND BHD
| Research House: HLG | Price Call: BUY | Target Price: 1.61 |
Kuala Lumpur Kepong (SELL)
FY11: Slightly below our expectation
'''' FY09/11 core net profit of RM1,371.3m came in slightly below our expectation, at 94.1% of our full-year forecast. Against the market consensus, the results came in within expectations at 95.4% of the consensus estimates.
'''' Deviations were lower-than-expected EBIT margin at both the manufacturing and retailing divisions that more than offset lower-than-expected effective tax rate.''
'''' Declared a final NDPS of 70sen.
'''' FY09/12-13 net profit forecasts cut by 0.3% to RM1,429.3m and RM1,443.1m largely to reflect lower EBIT margin at the manufacturing division.''''
'''' TP was also lowered by 0.3% from RM18.85 to RM18.79 based on revised 14x CY2012 EPS of 134.2 sen. Downgraded from Hold to Sell as share price has run ahead of fundamentals.'' ''
''
Genting Plantations (HOLD)
9M11: Beats our expectation
'''' FY09/11 core net profit of RM1,371.3m came in slightly below our expectation, at 94.1% of our full-year forecast. Against the market consensus, the results came in within expectations at 95.4% of the consensus estimates.
'''' Genp has yet to lock in any forward sales, as it feels that supply constraint will sustain the current high CPO prices 595.7over the near term.
'''' FFB output growth guidance for 2011 is raised to 12%. For 2012, management guided for an output growth of 8%, underpinned by higher output from its Indonesian oil palm.
'''' Management is guiding for a 12% increase in 2012's production cost to RM1,150/tonne, on higher fertilizer and labour costs.
'''' Genp planted 1,015ha in 3Q11 (or 2,800ha in 9M11), and management is targeting to plant another 1,500-1,700ha in 4Q. Beyond 2011, planting target would normalize back to 10,000-15,000ha per annum.
'''' Premium Outlets is scheduled to open to the public on 2 Dec 2011.
'''' Management is targeting to launch 530 units of properties in 2012 with a total GDV of RM230m.
'''' For the full-year, management is guiding for a capex of slightly below RM300m.
'''' 2011-13 net profit forecasts raised by 7-13%to reflect: (1) Higher FFB output assumption; and (2) Earnings contribution from Premium Outlets from 2012 onwards.
'''' TP raised by 13.1% to RM7.61 (based on 13x 2012 revised EPS of 58.5 sen), to reflect higher net profit forecast.'' ''
''
Pos Malaysia (BUY)
9M11: Below our expectation
'''' 9M11 core net profit of RM97.9m (+49.4) came in below our expectation, accounted for only 68.3% of our full-year forecast. Against consensus, the results came in within expectations, at 73.2% of the consensus estimates.''
'''' ''Key deviations were: (1) Lower-than-expected other operating income; and (2) Higher-than-expected effective tax rate.''
'''' ''Earnings forecasts and TP (RM3.80 based on unchanged 13x 2012 EPS of 29.3 sen) are maintained for now, pending further update with management in the coming results briefing. ''
''
UMLand (BUY)
Making good progress
'''' 9M net profit rose 51% yoy to RM52m, in-line with our full-year estimate, due to improved performance from both the niche and township divisions.'' A 2.5 sen gross dividend was declared.''
'''' We are pleased to see them making good progress with the projects.'' Puteri Harbour's GDV has been bumped up from RM188m to RM209m, whilst their efforts to remodel Bandar Seri Alam is progressing well.''
'''' Launches have been slow this year ' only 30% of their initial RM522m target, but management have been diligently executing their game plan and we expect them to launch more aggressively next year.''
'''' FY12-13 earnings raised by 1-2% to reflect Puteri Harbour's increased GDV.'' Our TP remains at RM1.61 (65% discount to RNAV). BUY
''
Notion VTec (HOLD)
FY11 Results, Thai Flood Assessment
'''' FY11 reported net profit of RM40.1m came in below our expectation, accounting for 90% of our full-year forecast and 87% of consensus.
'''' 4QFY11: Revenue RM62m (+16.9% yoy, +1.8% qoq), EBITDA RM21.8m (+41.7% yoy, -13.0% qoq) and PATAMI RM12.5m (+54.8% yoy, +23.4% qoq).
'''' FY11: Revenue RM236.8m (+4.4% yoy), EBITDA RM92.3m (+16.7% yoy) with EBITDA margin of 39% and PATAMI RM46.8m (+24.8% yoy).
'''' HDD revenue declined 9% yoy and is offset by camera revenue which increased 19% yoy, while industrial/automotive revenue remained stagnant.
'''' Along with 4QFY11 results, the company also shared the expected financial impact of Thailand flood:
'''' To reflect lower earnings forecast, our target price is revised downward by 42.2% to RM1.49 from RM2.58 previously based on NPV of FCF based on WACC of 12.7% and terminal growth of 10%.
''
October Inflation Report
'''' The CPI growth remained stable at 3.4% yoy in October 2011, slightly higher than the consensus estimate of 3.3%, as surge in food prices (+5.7% yoy; Sep: +5.0% yoy) offset moderation in non-food prices (+2.4% yoy; Sep: +2.7% yoy).''
'''' The moderation in prices of non-food category was caused by the lapse of cigarette excise duty hike (22 sen per stick from 19 sen per stick) effected a year ago.
'''' The uptick in services inflation (+3.1% yoy; Sep: +3.0% yoy) suggests that there is still risk of subsequent rounds of inflationary pressure.
'''' We maintain our inflation forecast of 3.2% for 2011 and 3.0% for 2012. However, there is now more upside risk to our projection given the uncertainty on food supply chain and its impact on prices.
'''' The stronger-than-expected 3Q GDP growth further reinforced our view that BNM will hold the OPR steady until end-2012.
'''' Real return to savings has been running negative since April 2011, representing another constraint for BNM to switch unreservedly to growth promotion mode.
''
KLCI: The odds favour the bears
'''' Given the failure to defend the 30-d SMA (1357) and lower Bollinger band (1435) as well as bearish technical readings, KLCI is slated to head south towards the next support at 1420 (38,2% FR) and the 1400 psychological barrier. Immediate resistance levels are 1357, 1468 (mid Bollinger band) and 1480 (100-d SMA).
''
DJIA: Downside bias despite oversold slow Stochastics
'''' Following the breakdown of major supports near mid Bollinger band (11896), 100-d SMA (11636) and 11344 (50% FR), the next supports are 11222 (61.8% FR), 11k psychological level and 10847 (76.4% FR). Overall, downside risk to violate the 11k support has increased despite an oversold slow Stochastics reading. Immediate resistance levels are 11636-11896 levels.
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