December 2, 2011

3QFY11 results weaker-than-expected

Stock Name: CBSA
Company Name: CBSA BERHAD
Research House: ZJPrice Call: HOLDTarget Price: 0.36

TSH falls after 1-for-1 bonus, OSK Research FV RM2.21

Stock Name: TSH
Research House: OSKPrice Call: BUYTarget Price: 2.21

KUALA LUMPUR (Dec 2): Shares of TSH RESOURCES BHD [] fell to a low of RM1.90 on Friday after its bonus shares, which were issued on a one-for-one basis, went ex.

At 12.08pm, it was down eight sen to RM1.91. There were 513,100 shares done at prices ranging from RM1.90 to RM2.01.

OSK Research said that following its calendar year 2012 crude palm oil (CPO) price assumption upgrade to RM3,000 per tonne, it was raising its FY12 earnings forecast for TSH by 10.4% and revising upwards its fair value to RM2.21.

'The company possesses one of the youngest tree age profiles among planters under our coverage, but its valuations are starting to appear a little rich following its recent strong price appreciation. Still a BUY at the moment with a potential 10.8% upside,' it said.


HLIB Research 2 Dec 2011 (GenT; Axiata; Affin; Traders Brief)

Stock Name: GENP
Research House: HLGPrice Call: HOLDTarget Price: 7.61

Stock Name: AXIATA
Research House: HLGPrice Call: HOLDTarget Price: 4.92

Stock Name: AFFIN
Research House: HLGPrice Call: HOLDTarget Price: 2.62

Genting Plantations (Hold; TP: RM7.61)

Site visit: Johor Premium Outlets

'''' We visited Johor Premium Outlets (JPO, a 50:50 JV project between Genting Plant and Simon Group) and we walked away feeling positive on Genting Plant's latest venture.

'''' We believe JPO will likely attract shoppers consistently, particularly from residents within the Johor state as well as visitors from Singapore, given its location that already has a captive shoppers of 8.3m and ample car park space (3,000 car park spaces and 30 bus bays for tour groups).

'''' Potential revenue and earnings contribution from JPO aside, we believe the opening of JPO, coupled with the new highway interchange will also boost property demand and prices in that area.

'''' We are maintaining our 2011-2013 net profit forecasts, as this has already been reflected in our forecasts (we have already expected JPO to contribute ~RM11m net profit to Genting Plantations from 2012 onwards, based on ROE of 15%).

'''' Maintain TP at RM7.61 (based on unchanged 13x 2012 EPS of 58.5 sen) and our Hold recommendation on the stock, as the recent share price run-up has capped potential upside on the stock.


Axiata (HOLD)

3Q11 Results Briefing

'' Axiata recorded a strong subscriber growth of 26% yoy reaching 186.9m customers despite softening key markets. Revenue growth continues to be driven by significant increase in data particularly at XL and Celcom with YTD growth of 50% and 29% respectively.

'' Celcom subscriber base declined to 11.4m (2.7m postpaid and 8.7m prepaid) due to rationalization of multi-SIM user and we think this is the reason that ARPUs are elevated (postpaid +RM3 to RM95 while prepaid +RM1 to RM37). Meanwhile, MoU broke its down trend and came in higher +6% qoq at 210mins thanks to the festive season in 3Q. Wireless broadband contributed RM197m with +6% qoq on the back of 924k subscribers. Smartphone penetration is 15%.

'' XL successfully gained momentum and acquisition through new offerings with 12% subscribers increase qoq reaching 43.4m. Prepaid ARPU stagnated at IDR31k while postpaid plunged to IDR171k or declined -17% qoq even though 3Q should have the benefit of festive season. XL explained that lower outgoing MoU is due to shifting in subscribers' behavior from voice to SMS and data usage. Smartphone penetration is 11%.

'''' Updated with latest guidance on higher CAPEX and depreciation along with tweaking lower our assumptions of subscriber base and ARPU. Our FY11-FY13 EPS are revised lower by -9.0% to -10.7%.

'''' We keep our HOLD call as we cut out target price by 9% to RM4.92 from RM5.44. We opine that the robust growth story may have come to an end especially for Celcom and XL who are the main contributors as market matures and competition intensifies.


Affin Holdings (HOLD)

Not In The "Market" For M&A

'''' Management target 2012 loans growth of 9-10% due to risk pricing, conserving capital and protecting asset quality ahead of Basel III and to protect NIM.'' This is slightly ahead of our more conservative assumption of 7%.

'''' Strong capital position (Tier-1 capital are purely equity) and can comfortably meet Basel III requirements.

'''' Although it is the second smallest bank management believes that there is no urgency to undertake M&A or additional strategic partner given that collaboration with BEA is progressing well albeit at slow pace.''

'''' However, we believe it will still attract M&A interest as its asset size is less than half of the next biggest bank.

'''' Maintain Hold with unchanged target price of RM2.62 based on Gordon Growth with both ROE of 9.2% and WACC of 11.4%.


KLCI: More sideways trading after surging 54 pts in 3 days

'''' On the backdrop of a 3-day 54 pts jump and a gravestone Doji formation yesterday, KLCI is likely to encounter more profit taking activities ahead but any selling pressures are likely to be well-absorbed as technical indicators remain positive. Short term resistance remains at 200-d SMA or 1504 pts whilst supports are situated at 100-d SMA (1474) pts) and 1463 (mid Bollinger band).

MASTEL: Poised for triangle breakout

'''' Signs of bottoming up in the trend and momentum coupled with the ADX readings bode well for more rebound towards RM1.16-RM1.24 levels. Major supports are RM1.04 (lower Bollinger band) and RM1.00 psychological level. Cut loss below RM0.98.'' For cheaper exposure, investors can consider MASTEL-WA.

Tenaga Nasional (Buy): Fuel cost sharing mechanism worth RM2b

Stock Name: TENAGA
Research House: MAYBANKPrice Call: BUYTarget Price: 6.90

Coming together; upgrade to Buy. Tenaga received confirmation for a fuel sharing mechanism with the government and PETRONAS. Each party will equally split the additional cost incurred of RM3.1b for burning pricey oil and distillates which means Tenaga will get a RM2b cheque soon. The investment proposition for Tenaga has improved; a tariff revision is very much in the bag. We upgrade the stock to BUY based on higher earnings outlook and better balance sheet health, with a new target price of RM6.90 (+17%) pegged to 13x FY12 PER.

Maybank research (2 December 2011)

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DiGi.Com (Hold): Take the money and run

Stock Name: DIGI
Company Name: DIGI.COM BHD
Research House: MAYBANKPrice Call: HOLDTarget Price: 3.46

Switch to Telekom. We are downgrading our call on DiGi.Com to a Hold following a very successful Buy call in October. Since then, the stock has surged by some 16% and outperformed the KLCI by 15%. Given a lack of further catalysts other than the stock split that occurred post-upgrade, and the fact that recent results by all the telcos suggest the Malaysia telco market is now in the grind phase as they combat declining voice revenue and slowing data growth, we would prefer to take the money first. Switch to Telekom Malaysia. Our EV-based TP of RM3.46 is maintained.

Maybank research (2 December 2011)

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Genting Plantations (Sell): "Premium outlet" next door

Stock Name: GENP
Research House: MAYBANKPrice Call: SELLTarget Price: 6.70

New shopping experience. Johor Premium Outlet ("JPO"), the first premium outlet in the ASEAN region, started its pre-launch sales yesterday, featuring a combination of 69 brands and F&B outlets. However, we observe certain hiccups that can be overcome over time. We expect <5% impact on GENP's earnings from the JPO. Maintain Sell as GENP trades at relatively rich valuation of 17.5x 2013 PER. Our TP is unchanged at RM6.70, pegged at 14.5x 2013 PER.

Maybank research (2 December 2011)

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Sarawak Oil Palms (Buy): Still early to take profit

Stock Name: SOP
Research House: MAYBANKPrice Call: BUYTarget Price: 6.48

Still undervalued. Recent oil palm estates transactions in East Malaysia went for as high as RM80,580/ha, yet SOP commands approximately half that value despite recent share price run up (+13% since our initiation on 2 Aug). The scarcity of investable assets and undervaluation offer an interesting M&A angle, in our view. Share price should receive further lift driven by its irresistible 2011 single digit valuation and our projected 16% FFB output CAGR (2010-13). Reiterate Buy and RM6.48 TP (13x 2013 PER).

Maybank research (2 December 2011)

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CIMB Research maintains Hold on Tenaga, TP RM6.47

Stock Name: TENAGA
Research House: CIMBPrice Call: HOLDTarget Price: 6.47

KUALA LUMPUR (Dec 2): CIMB Equities Research said that investors should be cautious about the compensation for TENAGA NASIONAL BHD [] for the gas shortage as it was only an ad hoc payment.

It said on Friday that compensation for the gas shortage was good news as Tenaga's financial position has deteriorated substantially.

'But being an ad hoc payment rather than the proper cost pass-through mechanism that Tenaga needs, it leaves Tenaga vulnerable to future gas supply shocks.

"We maintain HOLD and our target price of RM6.47, based on 1.1 times price-to-book value,' said CIMB Research.

Tenaga up on Petronas, government plan to share fuel cost burden

Stock Name: TENAGA
Research House: MIDFPrice Call: BUYTarget Price: 6.70

KUALA LUMPUR (Dec 2):'' TENAGA NASIONAL BHD [] shares rose in early trade on Friday after the utility company ''received a letter from the government on that provides a fuel cost sharing mechanism to address the utility's increased cost due to the gas shortage.

At 9.05am, Tenaga was up 12 sen to RM5.80 with 339,800 shares done.

Tenaga said on Dec 1 that the letter provided that Tenaga, Petronas and the government would each equally share the differential cost incurred by Tenaga due to dispatching on alternative fuels and also imports, from Jan 1, 2010 until Oct 31, 2011 amounting to approximately RM3.07 billion.

MIDF Research in a note Dec 2 said it viewed this development as positive for Tenaga with compensation of an estimated RM2.0 billion or 36.6 sen per share between the government and Petronas as well as all future costs related to any gas curtailment.

The research house said that with the fuel cost sharing mechanism in place, Tenaga was now eased from the burden of high fuel costs.

MIDF Research said it therefore had adjusted upwards its FY12f earnings by 10% to account for the fuel compensation.

'Based on our post FY12f earnings adjustment, we are revising our target price to RM6.70 (previously RM6.00) based on DCF valuation with WACC maintain at 8.8%.

'Hence, we upgrade our recommendation from Neutral to Buy,' it said.

RHB Research maintains underperform on Affin, FV RM2.05

Stock Name: AFFIN
Research House: RHBPrice Call: SELLTarget Price: 2.05

KUALA LUMPUR (Dec 2): RHB Research Institute is maintaining its fair value of RM2.05 and Underperform call on AFFIN HOLDINGS BHD [].

It said on Friday that Affin's management guided for loan growth of 13% to 14% this year, in line with its annualised loan growth of 12.9%.

'For 2012, focus is on preserving asset quality and capital and as such, loan growth is expected to slow down further to 9%-10%,' it said.

RHB Research said that the net interest margins (NIM) remain under pressure due to competition on both lending and deposit gathering, but Affin's management thinks 3Q11 NIM could have reached bottom. Management hopes to hold NIMs stable ahead.

'While recoveries were strong in 3Q, this was helped by recoveries from some large corporate accounts. Going forward, such recovery levels are unlikely to be sustainable,' the research house said.

RHB Research maintains Outperform on Petronas Gas, FV RM14.50

Stock Name: PETGAS
Research House: RHBPrice Call: BUYTarget Price: 14.50

KUALA LUMPUR (Dec 2): RHB Research is maintaining its Outperform on Petronas Gas with a fair value of RM14.50 following Petronas' consideration of a third LNG regasification plant in Lumut, Perak.

News reports on Friday said the third plant, if built, would address the shortage of gas supply to the power sector and industrial users in Peninsular Malaysia.

RHB Research said this proposal would be long-term positive for Petronas Gas as it ensures that the LNG business segment will continue to expand beyond the first LNG regasification plant in Melaka that is expected to come onstream July to August 2012.

Under the proposal, Petronas Gas is will manage the distribution via its pipelines. At present, Petronas Gas is not involved in the second plant in Sabah.

Affin Research maintains Reduce on Axiata, lowers TP to RM4.39

Stock Name: AXIATA
Research House: AFFINPrice Call: SELLTarget Price: 4.39

KUALA LUMPUR (Dec 2): Affin Investment Bank Research is maintaining its Reduce recommendation on Axiata and lowered the target price to RM4.39.

It said on Friday it had revised lower its sum-of-parts derived target price to RM4.39 because of the earnings downgrade (higher capex, lowered Celcom sub assumptions), and maintain our Reduce rating on the stock.

'In our view, stock lacks any re-rating catalyst and is pricey at 16 times FY12 EPS, considering that dividend yields are merely 2%.

'Moreover, our forecast implies a core net profit decline of 3.3% in FY11, but rising to +5.2% on-year in FY12, although not compelling enough to warrant this as a growth stock. At our target price, stock trades at a more compelling 14 times FY12 EPS,' Affin Research said.

December 1, 2011

HLIB Research 1 Dec 2011 (Banking/ SP Setia/ Maxis/ Axiata/ Econs/ Traders Brief) (Part 2/2)

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: HLGPrice Call: HOLDTarget Price: 3.90

Stock Name: MAXIS
Company Name: MAXIS BERHAD
Research House: HLGPrice Call: HOLDTarget Price: 5.39

Stock Name: AXIATA
Research House: HLGPrice Call: HOLDTarget Price: 5.44

Banking (Overweight)

Oct Bank Stats ' Early Weakness In Cards?

'''''''''''''''''''''''''' Loans growth slowed to 13.1% after large business repayments while household sustained.''

'''''''''''''''''''''''''' Both leading indicators higher mom with single-digit yoy growth while approval rate above 50%.''''

'''''''''''''''''''''''''' This will sustain loans growth, albeit at slower rate.'' Maintain 2011 and 2012 loans growth at 12% and 9% respectively.''

'''''''''''''''''''''''''' LD ratio implies excess liquidity ample at RM262bn.

'''''''''''''''''''''''''' Lending rate slightly lower.'' Pressure on NIM to continue but expects loans growth to mitigate the impact.''

'''''''''''''''''''''''''' Asset quality improved mitigating major earnings risk.'' Deterioration in credit cards for three consecutive months but segment loans only 3.2% of total with better asset quality vs. industry average.

'''''''''''''''''''''''''' To continue monitor if trend in cards persist and spill over to other segments.

'''''''''''''''''''''''''' We reiterate that asset quality will hold up well given healthy household balance sheet and the 2012 Budget "goodies".

'''''''''''''''''''''''''' Capital ratios improved, will continue support growth, M&A and more active capital management.

'''''''''''''''''''''''''' Maintain Overweight.'' Top picks are Maybank and AFG.


SP Setia (Hold)

Stepping up their presence in Singapore

'''''''''''''''''''''''''' SP Setia has successfully tendered for 4.62 acres of leasehold land at Chestnut Avenue for ~S$900 psf.'' We view this as a good price; based on our survey, comparable land parcels in Singapore have been fetching as much as S$2,100 psf.

'''''''''''''''''''''''''' This is a brown field development; SP Setia to demolish existing buildings and develop eco-themed apartments with GDV of ~S$465m (RM1.1bn), over 3-5 years.''

'''''''''''''''''''''''''' Launch date TBA, but we think 2012 is unlikely as management will be focused on KL Eco City, Setia Alam / Eco Park, Setia Sky Residences and Fulton Lane in Melbourne.

'''''''''''''''''''''''''' Maintain earnings forecast, pending further details on the project. Maintain our TP of RM3.90 (which is the offer price).


Maxis (Hold)

3Q11 Results: In Line

'''''''''''''''''''''''''' Maxis' 9M11 core net profit of RM2,019m came within our expectations although it accounts for 81% of our full-year forecast but only accounted for 68% of consensus estimates.

'''''''''''''''''''''''''' Results are in line as we expect moderate 4Q given that festive seasons were spread between 3Q and 4Q, cost increase (Home fibre broadband rollout and marketing) and higher amortization of handset subsidy. Hence, pressure on EBITDA margin.

'''''''''''''''''''''''''' 3Q11: Maxis registered a revenue of RM2,244m (+4% qoq, +1.3% yoy), EBITDA of RM1,123m (+1.5% qoq, -1.3% yoy), PAT of RM538m (-2.5% qoq, -10.5% yoy).

'''''''''''''''''''''''''' 9M11: Maxis recorded a revenue of RM6,535m (-0.4% yoy), EBITDA of RM3,319m (+2.2% yoy), reported PAT of RM1,630m (-3.3% yoy).

'''''''''''''''''''''''''' Declared a third interim single tier tax exempt dividend of 8.0 sen per share. Maxis hopes to maintain dividends similar to FY10 level of 40 sen.

'''''''''''''''''''''''''' Our DDM-derived TP of RM5.39 remains unchanged.


Axiata (Hold)

3Q11 Results: Below Expectations

'''''''''''''''''''''''''' Although Axiata's revenue is within street's estimate, 9M11 core net profit of RM1,838m came in below expectations, accounting for 66% of our full-year forecast and 67% of consensus.

'''''''''''''''''''''''''' 3Q11: Axiata registered a revenue of RM4,194.5m (+7% yoy, +4% qoq), EBITDA of RM1,868.5m (+1% yoy, +7% qoq), PAT of RM679.1m (-9% yoy, -11% qoq).

'''''''''''''''''''''''''' 9M11: Axiata recorded a revenue of RM12,183.6m (+5% yoy), EBITDA of RM5,303.5m (-1% yoy), PAT of RM2,085.3m (-11% yoy).

'''''''''''''''''''''''''' Celcom revenue grew 6.8% yoy driven by 15.1% increase in broadband subscribers and 6.5% increase in revenue generating base customers.

'''''''''''''''''''''''''' XL revenue grew 7.6% yoy in tandem with the increase in subscriber base of 6.7% compared to 3Q10.

'''''''''''''''''''''''''' Robi revenue grew 13.3% yoy mainly from higher prepaid and postpaid revenue which increased by 21.2% and 12% respectively.

'''''''''''''''''''''''''' Dialog revenue grew 10.3% yoy mainly from higher prepaid and global revenue, which increased by 21.7% and 4.8% respectively.

'''''''''''''''''''''''''' We downgrade our call to HOLD despite higher revised SOP target price of RM5.44 from RM5.41 (to factor in high Idea share price).


Highlights of BNM Statistics (Oct 2011)

  • M1 growth picked up to 16.6% yoy (Sep: +13.3% yoy). M3 growth eased marginally to 11.2% yoy (Sep: +12.2% yoy) despite increase in BNM reserves (Oct: +US$3.8bn).''
  • The surge in M1 growth suggests that GDP growth could remain robust after the higher-than-expected 3Q growth.'' We expect GDP growth of 5.0% in 4Q on the back of resilient domestic demand. We maintain our GDP growth forecast of 5.1% for 2011 and 4.5% for 2012.
  • We see BNM holding the OPR steady at 3.00% until end-2012. We expect BNM to focus on growth agenda given the recent external developments while inflation is on moderation trend, albeit at an elevated level.
  • Indicators for liquidity eased in October after the spike in September arising from massive equity selldown.


KLCI: Turning more bullish if the 200-d SMA is violated

'''''''''''''''''''''''''' Amid the overnight surge on Dow and European markets, we have turned more positive on near term KLCI outlook. Today, FBM KLCI will likely to retest the Oct 31's high of 1493 and the long anticipated 200-d SMA barrier (now at 1503), in the wake of the breakout of mid Bollinger band (1462 pts) and more positive technical readings. Further resistance is 23.6% FR or 1530. However, the 200-day SMA barrier may be tough to crack.


CENBOND: Strong support near RM0.73-0.76

'''''''''''''''''''''''''' CENBOND is trading at historical 6.5 FY11 P/E. Excluding netcash/share of 23sen (equivalent to 29% share price), it is only trading at 4.5x P/E. The pullback from 52-wk high of RM0.85 (Oct 28) to yesterday's low of RM0.76 has reached the 38.2% FR level and we believe a temporary base has been formed.

'''''''''''''''''''''''''' Upside resistance levels are RM0.85-0.91 whilst supports are RM0.71-0.76. Cut loss'' below RM0.71.

Axiata (Hold): More challenges than opportunities

Within expectations, HOLD. 3Q11 results reflected a challenging outlook within the region, with subdued revenue growth, margin pressure, weak regional currencies and higher capex commitments posing obstacles to short term growth. With 9M11 results comprising 74% of our full year forecasts, we make no change to our estimates. Maintain HOLD on Axiata.

Maybank research (1 December 2011)

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Maxis (Hold): Yield the saving grace

Stock Name: MAXIS
Company Name: MAXIS BERHAD
Research House: MAYBANKPrice Call: HOLDTarget Price: 5.40

Below expectations. Results were below expectations, with 9M11 net profit accounting for only 69% of our full year forecast. Although EBITDA margin still led the industry at 50%, it has slipped further. We expect <49% in 2012 on higher home broadband start-up costs and cut our 2011-2012 by 7% and 13% respectively. DCF-based fair value is lowered to RM5.40 but Maxis is a HOLD for the dividend yield of 7.3%.

Maybank research (1 December 2011)

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AmanahRaya REIT (Buy): No suprises

Stock Name: ARREIT
Research House: MAYBANKPrice Call: BUYTarget Price: 0.95

Maintain Buy. AAREIT's 9M11 net profit of RM32.2m (+2% YoY) was 76% of our full-year earnings forecast (in line). YTD DPU of 5.3 sen was also in line to meet our 2011 DPU forecast of 7.0 sen. We continue to like AAREIT for its long term lease agreements with 42.7% (2012) and 35.2% (2013) by NLA up for rental review with the existing tenants. We maintain our Buy call and DCF-based TP of RM0.95.

Maybank research (1 December 2011)

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Tanjung Offshore (Buy): Steady but small earnings

Stock Name: TGOFFS
Research House: MAYBANKPrice Call: BUYTarget Price: 0.98

Secures a 5-year contract extension for maintenance works. This job, worth RM43m spread over 5 years, is operationally positive but small in value and hence, is financially neutral. No change to our forecasts. Ekuinas' potential corporate exercise involving TOFF could be a catalyst. Reiterate Buy with an unchanged RM0.98, based on 0.8x book.

Maybank research (1 December 2011)

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OSK maintains "neutral " call on AZRB

Stock Name: AZRB
Research House: OSKPrice Call: HOLDTarget Price: 0.62

OSK Research Sdn Bhd has maintained its "neutral" call on Ahmad Zaki Resources Bhd (AZRB) following the company's lower
nine-months financial year 2011 earnings of RM9.1 million.

In a research note today, OSK Research said AZRB's lower earnings was way below its expectations.

"The disappointment was mainly due to the low margin jobs being recognised for the three quarter financial year 2011 and a higher effective tax rate," it said.

Nevertheless, OSK Research noted that AZRB has a strong order book to help drive revenue in financial year 2012.

The research firm remain cautious on AZRB's execution and hence, its "neutral" rating. -- Bernama

Risk-reward highly favourable at this point of time

Stock Name: TENAGA
Research House: ECMLIBRAPrice Call: BUYTarget Price: 7.96

3QFY11: Below expectations

Stock Name: AXIATA
Research House: ECMLIBRAPrice Call: BUYTarget Price: 5.76

3QFY11: Marginally below expectations

Stock Name: MAXIS
Company Name: MAXIS BERHAD
Research House: ECMLIBRAPrice Call: HOLDTarget Price: 5.47

Higher Demand For Generic Drugs

Stock Name: YSPSAH
Research House: TAPrice Call: BUYTarget Price: 1.11

3QFY11 Results Report

Stock Name: TECNIC
Research House: NETRESEARCHPrice Call: BUYTarget Price: 4.90

3QFY11 Results Report

Stock Name: SALCON
Company Name: SALCON BHD
Research House: NETRESEARCHPrice Call: BUYTarget Price: 0.75

1Q/FY12 results were within expectations. Maintain Buy Call.

Stock Name: FREIGHT
Research House: MERCURYPrice Call: BUYTarget Price: 1.45

OSK keeps 'buy' call on MMC Corp

Stock Name: MMCCORP
Research House: OSKPrice Call: BUYTarget Price: 3.65

OSK Research is maintaining a "buy" call for MMC Corp Bhd at a fair value of RM3.65, as the company's performance was within expectations and largely driven by an absence in provisions and reversal of profits, although the numbers still fell below consensus expectations.

In a statement today, OSK Research said it was raising the forecast due to a change in the way MMC reports its numbers, which led the research firm to tweak up its transport margin forecast.

"We are revising upward our financial year 2011 forecast by 6.9 per cent and that for financial year 2012 by 2.2 per cent on an upward revision in transport and infrastructure margins," it said.

Meanwhile, OSK Research said the delay in Gas Malaysia's initial public offering (IPO) is not a serious one, although it cautioned that MMC would need such catalysts to unlock value and drive up its share price.

It anticipated that it would be difficult for Gas Malaysia to get its Gas Supply Agreement signed with Petronas until year-end.

"However, we are not too disappointed with MMC's announcement that Gas Malaysia IPO's would be pushed back, most likely to the first quarter 2012," OSK Research said.

"We feel there is no harm done from this slight delay as market conditions may stabilise moving into the second quarter 2012," it added. -- Bernama

RHB Research maintains market perform on Axiata, fair value RM5.35

Stock Name: AXIATA
Research House: RHBPrice Call: BUYTarget Price: 5.35

KUALA LUMPUR (Dec 1): RHB Research Institute is maintaining its market perform call on Axiata Group Bhd with an unchanged sum-of-parts fair value of RM5.35.

It said on Thursday that it sees limited upside to Axiata's regional growth prospects, which continue to moderate, while simultaneously facing lingering regulatory (India and Bangladesh) and currency (appreciating ringgit) risks.

The research house said Axiata's 9MFY11 core net profit of RM1.95 billion (+3.7% on-year) accounted for only 69% and 71% of its and consensus full-year estimates respectively.

RHB Research said the key variances were a stronger ringgit (lower translated figures to Axiata) and pressure on earnings before interest, tax, depreciation and amortisation (EBITDA) margin.

It added that quarter-on-quarter, group revenue rose 3.6% due to higher contribution from all main subsidiaries, in particular, Celcom (+3% on-quarter) and XL (+5% on-quarter in Indonesian rupiah terms).

The 3Q EBITDA grew at a slower pace of 2.9% due to cost pressures at Celcom (higher interconnect charges due to surge in usage) and XL (higher labour cost from severance payments).

'Pending Axiata's teleconference call later in the morning, we have kept our earnings forecasts unchanged.

'We expect to learn more details about its latest MVNO pact with Philippines-based PLDT Global Corp to offer mobile prepaid services to Filipino workers in Malaysia, but contributions from MVNOs currently remain minimal at 5% of overall revenue,' it said.


Faber dips in early trade after 3Q losses, MIDF downgrade

Stock Name: FABER
Research House: MIDFPrice Call: HOLDTarget Price: 1.52

KUALA LUMPUR (Dec 1): FABER GROUP BHD [] shares fell on Thursday after it posted net losses of RM26.87 million in the third quarter ended Sept 30, 2011 compared with net profit of RM29.01 million a year ago.

At 9.20am, Faber fell two sen to RM1.48 with 94,700 shares traded.

Faber said on Nov 30 that the losses were mainly due to the recognition of costs amounting to RM44.5 million for works completed for the projects in the United Arab Emirates (UAE) where the corresponding revenue was not recognised as it could not be measured reliably.

MIDF Research downgraded Faber to Neutral from Buy'' and lowered its target price to RM1.52 from RM3 previously and said it was excluding the net cash portion of RM168 million in its valuation as the research house expects Faber to fork out more cash going forward given the fact that its total trade payables surged 75% quarter-on-quarter to RM526 million.

'As such, we are downgrading our recommendation on Faber to Neutral (from BUY). Our target price implies a PER12 of 8x, which is lower than its historical average since 2007 of 10x.

'We believe the discount is fair factoring in the potential of further impairment and likelihood of Faber losing its concession in Sabah (Faber could be relegated to be a sub-contractor where profit margin will be lower),' it said on Dec 1.

MIDF Research said Faber was going through a period of transition with respect to its domestic concession and its Middle East aspirations.

'We would be looking for more certainty before making any recommendation upgrade,' it said.

RHB Research maintains trading buy on MRCB, fair value RM2.55

Stock Name: MRCB
Research House: RHBPrice Call: TRADING BUYTarget Price: 2.55

KUALA LUMPUR (Dec 1): RHB Research Institute is maintaining its trading buy call on MALAYSIAN RESOURCES CORP []oration Bhd (MRCB)with a fair value of RM2.55.

It said on Thursday that MRCB had secured the Perai River estuary rehabilitation (Phase 3) project worth RM40.3 million.

'The latest job has boosted its YTD new contracts secured to RM1.64 billion and outstanding CONSTRUCTION [] orderbook marginally from RM2.68 billion to RM2.72 billion,' it said.

RHB Research said assuming an earnings before interest and tax (EBIT) margin of 10%, the contract will fetch RM4 million EBIT over the contract period.

'Forecasts maintained as we have already assumed MRCB to secure RM2 billion worth of new jobs in FY11. Fair value is RM2.55.'' Maintain Trading Buy,' it said.

1QFY12 Results Review

Stock Name: OGAWA
Research House: NETRESEARCHPrice Call: BUYTarget Price: 0.47

November 30, 2011

Runaway Share Price Unjustified

Stock Name: JCY
Research House: OSKPrice Call: SELLTarget Price: 0.41

Oleochemical Still in The Red

Stock Name: KWANTAS
Research House: TAPrice Call: SELLTarget Price: 1.84

Outlook challenging on global economic uncertainties. Downgrade to SELL.

Stock Name: SEALINK
Research House: ASIA ANALYTICAPrice Call: SELLTarget Price: 0.00

3QFY11 - another sturdy set of results. Maintain Buy.

Stock Name: UNIMECH
Research House: ZJPrice Call: BUYTarget Price: 1.25

3QFY11 within expectations. Outlook remains positive.

Stock Name: KIMLUN
Research House: ZJPrice Call: BUYTarget Price: 1.84

2Q/FY12 revenue within expectations but remains in Net Loss position. Revise to Sell Call.

Stock Name: DATAPRP
Research House: MERCURYPrice Call: SELLTarget Price: 0.23

HLIB Research 30 Nov 2011 (MAHB; TdC; RHB Cap; LICB; TRC; Vitrox; KSL; Traders Brief) (Part 3/3)

Stock Name: AIRPORT
Research House: HLGPrice Call: BUYTarget Price: 6.80

Stock Name: RHBCAP
Research House: HLGPrice Call: HOLDTarget Price: 7.00

Stock Name: LIONIND
Research House: HLGPrice Call: SELLTarget Price: 1.01

Stock Name: TRC
Research House: HLGPrice Call: BUYTarget Price: 0.69

Stock Name: VITROX
Research House: HLGPrice Call: HOLDTarget Price: 0.95

Stock Name: KSL
Research House: HLGPrice Call: BUYTarget Price: 2.16


Look for Longer Term Prospect

'''' MAHB revealed KLIA2 final detailed layout costing RM3.6-3.9bn, more than the initial provisions of RM2bn. There are several major upgrades, capacity of 45m passenger p.a. By bringing forward capex will save MAHB RM766m.

'''' MAHB expects to recoup ~RM175m savings from building materials sales tax for KLIA2 development, which will effectively reduce its overall development cost of RM3.9bn.

'''' MAHB also expects to develop more JVs or commercial lots. MAHB had projected additional revenue of RM2.5-3.0bn and the project IRR improved to ~11% from previous 8% over the concessionaire term.

'''' The final commencement date of KLIA2 is targeted by April 2013 and MAHB expects the KLIA2 to be profitable within first year of operation, where passenger numbers is projected to hit 20m.

'''' Target price reduced to RM6.80 (RM7.00) as dilution impact more than offset the cost savings and additional revenue.



3Q11 Analyst Briefing

'''' We felt positive after TdC shared key takeaways and post-acquisition outlook during the briefing.

'''' TdC put strong emphasis in profitability over revenue growth and committed to deliver shareholders' return more than the dilution resulted from the acquisition. As a result, TdC has walked away from DiGi-Celcom's node fiberisation bid which demanded extremely low price. Currently, DiGi and Celcom are laying their own fibre.

'''' Wholesale data segment is expected to undergo strong growth momentum which more than sufficient to neutralize the decline in voice revenue. TdC is expecting the growth will outpace and offset price erosion of 15%-30% annually.

'''' Current EBITDA margin of 32% is expected to be sustainable thanks to economy of scale.

'''' All corporate exercise proposals (including financing) are on track and expected to complete by February 2012. TdC is looking at about 20% growth post-merger.

'''' Comments: DiGi-Celcom self-fiberisation requires long lead time and not cost effective, especially to support LTE deployments. Thus, we see opportunity for TdC to benefit in near future.

'''' Reiterate our Buy call with unchanged SOP target price of RM0.85 imputed with our DiGi target price (instead of market price, which would add 4 sen).


RHB Capital (HOLD)

Likely Miss ROE KPI But Already Factored In

'''' 3QFY11 results in line with HLIB and consensus.

'''' Despite strong loans growth (ahead of industry), 3Q weaker qoq due to derivative MTM loss, impairment loss and erosion in NIM but partly offset by low provisions.

'''' Management indicated that FY11 results are likely to miss its ROE KPI.'' However, this is in line with our expectations.''

'''' Derivative MTM loss (would reverse upon maturity) to remain unchanged unless changes to interest rate and yield curve.

'''' 4Q results likely to mirror 3Q - absence of derivatives MTM and impairment losses as well as NIM near bottom to offset expected higher credit charge on strong loans growth.

'''' Asset quality improved and capital ratios robust.

'''' Internal stress test indicated that it can meet Basel III requirements at the group level, subject to BNM guideline.

'''' It is hopeful of completing the Mestika and OSK M&As within six-month times.'' It is targeting for a win-win deal with OSK by end 2011 with completion another 3-4 months later.

'''' Maintain HOLD and target price of RM7.00.


Lion Industries (SEL)

1QFY06/12: Below expectations

'''' 1QFY06/12 net profit of RM27.6m (qoq: -38.6%) came in below expectations, at 20.4% and 18.8% of our and consensus full-year forecasts respectively.

'''' Key deviations were: (1) Lower-than-expected sales volume at the steel manufacturing division; and (2) Higher-than-expected effective tax rate of 58.0% vs. 25.0% we assumed, mainly due to certain expenses not deductible for tax purposes.

'''' FY06/12-14 net profit forecasts cut by 18.6-34.7% to RM88.4m, RM110.7m and RM129.0m respectively, largely to account for lower sales volume, lower average selling price assumption, as well as higher effective tax rate assumption in FY06/12.''

'''' SOP-derived TP lowered by 26.8% from RM1.38 to RM1.01 (unchanged 20% discount) to reflect: (1) The downward adjustment in our net profit forecasts; and (2) The latest share prices of its listed subsidiaries and associate.


TRC Synergy (BUY)

3Q still being weighed down by LRT delays

'''' 9MFY11 PATAMI dipped by -14% to RM11m (2.36 sen/share), making up only 55% and 47% of HLIB and consensus expectations respectively.

'''' Earnings missed expectations due to slower than an expected progress for the LRT project while existing construction orders are either at the tail end or still at the initial stages to have meaningful contribution. We believe that it is a timing issue in profit recognition as earnings will pick up once the new orders fully takeoff.

'''' Overall, total outstanding order book remains sizable at ~RM1.43bn, translating to ~3.8x FY10's revenue and ~5.1x order book-to-market cap ratio.

'''' We maintain a BUY call on TRC but with a reduced TP of RM0.69 due to lower earnings forecast to reflect delays in construction activities.


ViTrox Corp (HOLD)

Evident Slowdown in 3Q11

'''' 3Q11: ViTrox registered a revenue of RM18.1m (-28.0% yoy, -33.3% qoq), EBITDA of RM4.1m (-57.5% yoy, -50.3 qoq), PAT of RM6.36m (-30.7% yoy, -26.8% qoq).

'''' Lower revenue mainly due to reduction in sales from MVS and ECS in line with the global slowdown in semiconductor industry. However, there is increase in sales from ABI due to high demand for advanced X-ray inspection system from new customers in the US market.

'''' 9M11: ViTrox reported a revenue of RM66.9m (+4.2% yoy), EBITDA of RM19.2m (-22.1% yoy), PAT of RM21.5m (-8.4% yoy). Marginally higher sales driven by stronger demand from ABI thanks to continuous acceptance of AOI and AXI from customer worldwide. Lower EBITDA due to higher sales from lower margin products (ABI) and lower sales from higher margin products (MVS and ECS).

'''' ViTrox is expecting to secure first service contract soon from a Chinese customer which will positively contribute to the top line as recurring revenue.

'''' Comments: Continuous investment in R&D during current difficult outlook is crucial for ViTrox to sustain competitive edge, understanding that talent is scarce.

'''' Successful product diversification and not solely dependent on MVS only.

'''' Our target price is cut to RM0.95 (from RM1.17 previously) based on DCF with a WACC of 13.8% and TG of 0%. This gives ViTrox an implied PER of 7.6x for FY11.



KSL City in full swing; time to look ahead

'''' 3Q net profit rose 3.3% qoq and 92.8% yoy to RM30.0m.''

'''' 9M net profit was RM72.0m, in-line with HLIB and street estimates.

'''' Phase 1 of their flagship RM2.5bn project Klang has launched in Q4; this project is expected to be KSL's main earnings driver from 2012 onwards.

'''' We maintain our positive outlook on KSL; no change to our earnings forecast and price target of RM2.16 (based on 30% discount to RNAV), implying 56% upside.'' Maintain BUY.


KLCI: Choppy trend ahead

'''' We doubt this downtrend could reverse any time soon as KLCI struggles to crack above the immediate resistance zones at mid Bollinger band (now at 1464) and 100-d SMA (1476) levels. If the last week's low 1424 (Nov 23) is taken out, we expect the next down leg towards the 1400 psychological level and probably retesting the 76.4% FR support at 1378 pts.

OSK: Momentum building up

'''' Technically, short term outlook has turned better after holding well above the mid Bollinger band (now at RM1.74), 10-d SMA (RM1.76) and 50% FR (RM1.72) supports, underpinned by improving technical readings of its daily and monthly charts. Upside targets are situated at RM1.96 (monthly upper Bollinger band) and around RM2.10 (downtrend line since 1999). Immediate supports are RM1.72, RM1.68 (38.2% FR) and RM1.65 (50-d SMA). Cut loss below RM1.65.