RHBInvest Research Highlights 13th January 2012

Stock Name: CSCSTEL
Company Name: CSC STEEL HOLDINGS BERHAD

Research House: RHB

Price Call: BUY

Target Price: 1.41

Stock Name: MEDIAC
Company Name: MEDIA CHINESE INTERNATIONAL LT

Research House: RHB

Price Call: SELL

Target Price: 1.00

Stock Name: SAPCRES
Company Name: SAPURACREST PETROLEUM BHD

Research House: RHB

Price Call: BUY

Target Price: 4.50

13th January 2012

 

Top Story

CSC Steel ' Profitability remains a challenge, '                                                                    Trading Buy (Upgraded) Visit Note -          We estimate CSC Steel is likely to record a net loss of RM10-15m in the upcoming 4Q11 results due to narrowing margins as well as a write-down in inventory value. -          CSC Steel has a huge cash reserve of RM213.5m, or about 56sen/share (as at 30 Sep 2011). At RM1.41, it would only cost the controlling shareholder about RM295m to buy out all minority shareholders, and this amount could be substantially funded with CSC Steel's cash reserve.

Sector Update

Media ' Expect adex growth to moderate in 2012                                                                                                                          Underweight Sector Update -          As the pace of overall adex growth continues to moderate due to weak global economic conditions, we reiterate a slowdown in adex growth to 3.6% in 2012 from 9% projected for 2011.  -          Elections in 2012 will have a positive though not significant impact on adex. -          Due to its recent share price appreciation, we downgrade MCIL to Underperform, while maintaining a fair value of RM1.00. Maintain Underweight on the sector due to lack of catalysts. -          Related story : Media Sector Update ' Nov Sees Weakest Adex Growth So Far (22 Dec 2011)

 

Corporate Highlights

SapuraCrest ' New subsea construction contract                                                                                                                       Outperform News Update -          Yesterday, the company announced that it had entered into a contract with IHC Offshore and Marine B.V. for the construction of two 550-tonne-pipelay-support-vessels (PLSV) at an undisclosed fixed lump sum. The two vessels are expected to be completed and delivered by May and Aug of 2014 respectively and will be utilised specifically for the Petrobras contract, which it won in Nov-11. Maintain fair value of RM4.50/share and Outperform call on stock. -          Related story: News Update - Buying Two New Pipelay Barges (23 Sep 2011) & News Update- Taking Home A Brazilian Win (2 Nov 2011)