January 27, 2012

Boustead is a 'Buy', says HwangDBS

Stock Name: BSTEAD
Research House: HWANGDBSPrice Call: BUYTarget Price: 6.60

KUALA LUMPUR: HWANGDBS Vickers Research Sdn Bhd has recommended a "buy" for Boustead Holdings Bhd due to its strong growth prospects, driven by all its core divisions.

The research firm said it had raised its ex-bonus target price to RM6.60 after including contribution from a new hotel, rolling over valuation base to financial year 2012 forecast and its new target price for Affin Holdings based on 1.1 times financial year 2012 forecast book value.

"This values Boustead at 12 times the financial year 2012 forecast price earnings and two times price over net tangible assets," it said in its research note today.

Boustead closed trading today at RM5.42, down one sen from RM5.43 yesterday.

According to HWANGDBS, the company had been stoking investor interest over the past two years with a more solid earnings delivery, formal 70 per cent dividend payout policy and a slew of acquisitions in Pharmaniaga Bhd and MHS Aviation.

"Its market capitalisation has visibly increased by almost double to RM5.6 billion, and it has beaten internal key performance indicators for return on equity and dividend per share," the research firm said.

However, HWANGDBS Vickers said Boustead was still undervalued.
"It is trading at 10 times financial year 2012 price earnings and 1.2 times price per net tangible assets currently, despite offering 19 per cent earnings per share compound average growth rate and an attractive 7.6 per cent yield," it added.

It also said Boustead's core divisions businesses were currently on solid ground.

Boustead naval shipyard contract of RM9 billion for six patrol vessels will keep its heavy industries unit busy until 2021.

The RM9 billion contract will provide long-term earnings visibility to BHIC and is set to reap substantial profits from this single largest contract awarded in Malaysia, given its leading roles in weaponry, combat system, vessel design, naval electronics.

"BHIC may also be given a maintenance contract for this batch of vessels, as for the first generation vessels. Strong patronage by the Royal Malaysian Navy will continue to ensure its order book is replenished regularly," the research firm said.

Boustead will also benefit from the rising crude palm oil (CPO) prices as it has about 74,000 hectares of matured estates. Every RM100 per metric tonne increase in the CPO price would raise financial 2012 forecast net profit by three per cent.

The research firm said Boustead's disposal of its 95 per cent stake in the Indonesian plantation business to PT Agro Investma Gemilang for US$38 million, was a good move, as the 8,000 hectares of planted area has been dragging down the group's blended fresh fruit bunches yield. - Bernama

January 26, 2012

OSK maintains 'buy' call on Axiata

Stock Name: AXIATA
Research House: OSKPrice Call: BUYTarget Price: 5.60

OSK Research has maintained a "buy" call on Axiata Group based on its sum-of-parts (SOP) derived value of RM5.60 following strong revenue growth in the company's Idea Cellular.

In a research note today, OSK said Idea's strong results reaffirmed its view on the improved revenue and earnings perspective for the company, despite the rising tariffs due to the massive price-war in 2009-2010.

It noted that Idea continued to benefit from the 20 per cent power tariff hike levied by the Indian government earlier this year for the sustenance of state distribution utilities.

Idea recorded a strong nine per cent quarter-on-quarter growth in revenue to RM3.3 billion for the third quarter on the back of seasonally higher minutes of usage and improved subscribers growth of 6.2 per cent.

Axiata's Indian associate contributes less than 10 per cent to its net earnings and five per cent to OSK's SOP valuation on the stock.

The research house said Axiata remained as an inexpensive regional mobile exposure and therefore was its top regional telecoms pick. -- BERNAMA

4QFY11 results within expectations - maintain Buy

Stock Name: ZHULIAN
Research House: ZJPrice Call: BUYTarget Price: 2.40

January 25, 2012

OSK keeps "buy" call on Genting

Stock Name: GENTING
Company Name: GENTING BHD
Research House: OSKPrice Call: BUYTarget Price: 13.36

OSK Research Sdn Bhd maintains a "buy" call for Genting Bhd stock at RM13.36 fair value following the selling of North West Natuna and Anambas oil blocks in Indonesia to Awe Ltd of Australia.

The research house said they were not surprised by the latest disposal as the group has been assessing opportunities to dispose its power and oil and gas businesses in Malaysia, China, Indonesia and India.

"The oil and gas business is expected to require heavy capital expenditure as and when some of its product-sharing contracts exploration blocks in Indonesia become commercially viable.

"We believe the group is unlikely to commit to the heavy funding needs of the oil and gas exploration business after all it is a non-core business.

"Given its growing global gaming presence, we believe the valuation disparity with its global peers should narrow over time," said OSK in a statement today. -- BERNAMA

To kick off the reporting season

Stock Name: PBBANK
Research House: MAYBANKPrice Call: HOLDTarget Price: 14.60

RM500mil federal fund for Samalaju Port

Stock Name: BIPORT
Research House: AMMBPrice Call: BUYTarget Price: 8.33

Higher offer from PNB

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: MIDFPrice Call: HOLDTarget Price: 3.95

Poised on earnings inflection point

Stock Name: BHIC
Research House: AMMBPrice Call: BUYTarget Price: 4.90

Let's move on

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: AMMBPrice Call: HOLDTarget Price: 3.95

"Hold" call on SP Setia stays

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: HLGPrice Call: HOLDTarget Price: 3.95

Hong Leong Investment Bank Research has maintained a "hold" call on SP Setia Bhd with a revised target price of RM3.95 from RM3.90 previously.

The research division of Hong Leong Investment Bank Bhd (HLIB) said the higher target price followed the move by SP Setia CEO Tan Sri Liew Kee Sin and Permodalan Nasional Bhd (PNB) to revise their offer for shares in the company to RM3.95 a piece.

"We understand that the joint offer was arrived at following six to eight weeks of intense discussions between Liew and PNB.

"Also, PNB intends to maintain the listed status of SP Setia and its public spread," it said in a research note today.

It said the the most important part of the offer was a three-year management agreement for Liew to have a free hand in running SP Setia.

"We welcome this news as it removes uncertainty over the future of SP Setia, particularly with regards to Liew's involvement.

"With the entry of PNB, we believe SP Setia will stand a better chance than ever of obtaining a substantial allocation of Rubber Research Institute (RRI) land in Sungai Buloh," HLIB Research said. -- BERNAMA