RHBInvest Research Highlights 06th January 2012

Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD

Research House: RHB

Price Call: BUY

Target Price: 5.85

Stock Name: DIGI
Company Name: DIGI.COM BHD

Research House: RHB

Price Call: BUY

Target Price: 4.10

Stock Name: MAXIS
Company Name: MAXIS BERHAD

Research House: RHB

Price Call: BUY

Target Price: 5.90

06th January 2012

 

Top Story

Telecom ' Still some bright spots left                                                                           Overweight Sector Update -          We expect mobile operators to sustain their revenue growth momentum in 2012 thanks to rising non-voice revenue contributions, while TM should benefit from strong UniFi momentum.  -          Competition should remain stable, despite the impending entrance of a new player, Puncak Semangat. So far, new entrants yet to gain significant market share from the incumbents. -          TM's fair value is raised to RM5.85 on account of lower required net yield assumption. TM remains our top pick for its capital management potential and domestic-centric qualities. Fair values for DiGi and Maxis are raised to RM4.10 and RM5.90 respectively on lower WACC. -          Related story: Telecom Sector Update ' 3QCY11 report card (9 Dec 2011)

Sector Update

Banking ' Headwinds yet to ease                                                                              Underweight Sector Update -          We are maintaining our Underweight stance on the sector amid prospects of weaker economic conditions ahead. Three main factors that underpin our bearish sector view are as below. -          Historically, the sector has not performed well during an economic downturn as banks are often viewed as a proxy to the economy. -          For 2012, we project aggregate sector net profit growth to slow to 4.5%, from 10.6% for 2011 but we do not discount further downside risks to our forecasts.   Property ' M+S progressing'                                                                                           Neutral Sector Update -          The recent meeting between the PMs of Malaysia and Singapore touched on the development status of the Marina South and Ophir-Rochor projects in Singapore, as well as the Resort Wellness and Urban Wellness projects at Medini. Capitaland has been appointed to join the team of key consultants and architects for the Urban Wellness project at Medini North. -          What is new is that an underground border link is currently under consideration. We believe plans are preliminary with lots of uncertainties. Both governments will have to consent on many terms, including location, funding and EIA. All these will take some time. -          The impact of this news is rather neutral, but it nonetheless continues to signal the warm relationship between the governments of the two countries. Maintain Neutral. -          Related story : Property Sector Update ' Bad news priced in but outlook remains challenging (5th Jan 2012)

Corporate Highlights

Genting Malaysia ' Obtains letter of intent for convention centre/hotel complex in NY      Outperform News Update -          Genting Malaysia's New York unit has entered into a non-binding letter of intent with the New York State Urban Development Corporation to consider the development of a US$4bn integrated complex including a 3.8m sq ft convention and exhibition centre with up to 3,000 hotel rooms and an expansion of Resorts World Casino New York City on a property next to its Aqueduct Racetrack with a view to enter into a binding MOU on or before 30 Nov.