Lingkaran Trans Kota: Downgrade to Hold - Earnings above, dividends below

Stock Name: LITRAK
Company Name: LINGKARAN TRANS KOTA HOLDINGS

Research House: MAYBANK

Price Call: HOLD

Target Price: 4.20

Downgrade to Hold. LITRAK's RM102m 9MFY12 net profit (+25% YoY) was above our expectations, at 88% of our full-year forecast. We believe this was due to lower-than-expected amortisation for the LDP. We raise FY12-14 forecasts by 12-16% p.a.. However, this being an accounting upgrade with no impact on the cash flows, our RM4.20 DCF-based TP is unaffected. Having outperformed (+12% since Nov 2011) with just 4% upside potential, the stock is now a Hold.

Maybank Research 29 Feb 2012

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Ann Joo Resources: Maintain Sell - Risks from soft global steel outlook

Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD

Research House: MAYBANK

Price Call: SELL

Target Price: 1.30

Maintain Sell. 2011 core net profit of RM113m (+1% YoY) was 8% below our forecast but in line with consensus. Though we are positive on domestic ETP-led demand growth, we think margins will continue to be pressured by soft international ASPs. We have tweaked our 2012-13 EPS upward by 3-6% p.a. to incorporate better trading earnings ahead. Maintain Sell and TP of RM1.30 (0.6x trough-cycle P/BV).

Maybank Research 29 Feb 2012

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Eversendai Corporation: Maintain Buy - Strong order book to sustain growth

Stock Name: SENDAI
Company Name: EVERSENDAI CORPORATION BERHAD

Research House: MAYBANK

Price Call: BUY

Target Price: 2.17

Results in line, dividend surprise. Strong 4Q11 net profit of RM36m (+38% QoQ), brought full-year 2011 net profit to RM120m (+2% YoY), within expectations. A 1sen single tier DPS was a pleasant surprise. Eversendai outperformed local construction players due to the timely execution of jobs in overseas markets. Despite the global economic slowdown, we still see more jobs flowing from government-funded projects. Maintain Buy and TP of RM2.17 (12x 2012 PER).

Maybank Research 29 Feb 2012

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Hock Seng Lee: Maintain Buy - Hock Seng Lee

Stock Name: HSL
Company Name: HOCK SENG LEE BHD

Research House: MAYBANK

Price Call: BUY

Target Price: 2.10

Maintain Buy. Results were in line, with 2011 net profit of RM87m (+19% YoY) spot-on our forecast. Near-term earnings visibility is good, with its outstanding order book of RM1.1b while sizeable job wins would provider greater growth visibility. We maintain our earnings forecasts for now, which are still short of management's internal targets. We remain upbeat on potential sizeable job wins this year, which should re-rate the stock. Our target price is pegged to 12x current year earnings.

Maybank Research 29 Feb 2012

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RHB Capital: Maintain Sell - Focusing on cutting costs

Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD

Research House: MAYBANK

Price Call: SELL

Target Price: 7.20

Sell maintained. RHB Cap's 2011 results were within expectations, with net profit of RM1.5b up 6% YoY. Fundamentals are improving and management's focus will be on driving down operational and funding costs. Earnings risks nevertheless remain, with potential near-term EPS dilution from the acquisition of Bank Mestika, if the deal materialises. Our earnings forecasts are raised by 9-10% p.a. over FY12-14 and our TP is correspondingly lifted to RM7.20 on a higher 2012 P/BV target of 1.3x (1.2x previously), on a prospective 2012 ROE of 14.1%.

Maybank Research 29 Feb 2012

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BIMB Holdings: Maintain Buy - Decent end to the year

Stock Name: BIMB
Company Name: BIMB HOLDINGS BHD

Research House: MAYBANK

Price Call: BUY

Target Price: 2.40

Maintain Buy. BIMB's 2011 recurring net profit of RM188m (+20% YoY) was within our expectations, but above consensus by about 10%. We continue to like BIMB for exposure to 51%-owned Bank Islam which has been on a stable growth path since its restructuring in 2009, and an undervalued takaful operator, 65%-owned Syarikat Takaful (Takaful). On rolling forward valuations and applying a higher P/BV of 1.3x (from 1.2x) to Bank Islam on a higher expected 2012 ROE of 12%, and 1x P/BV for Takaful, our SOP-based TP is raised to RM2.40 (+17%).

Maybank Research 29 Feb 2012

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Genting: Maintain Hold - Another humdrum 4Q11

Stock Name: GENTING
Company Name: GENTING BHD

Research House: MAYBANK

Price Call: HOLD

Target Price: 10.50

Below expectations, but on taxes. All segments reported higher EBITDA YoY in 2011, except oil and gas. Higher than expected taxes brought 2011 core net profit growth to just 7%, below our expectations. Going forward, earnings growth will moderate on slowing VIP volume growth at Resorts World Genting (RWG) and Resorts World Sentosa (RWS). Maintain Hold, but raise TP to RM10.50 (+4%) as we roll forward our SOP-based valuation.

Maybank Research 29 Feb 2012

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Genting Malaysia: Maintain Hold - Earnings delivered, waiting on catalysts

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD

Research House: MAYBANK

Price Call: HOLD

Target Price: 4.00

Lacks near-term re-rating catalysts. Genting Malaysia's (GENM) 2011 earnings were well within expectations. Stable earnings growth from Resorts World Genting (RWG) was boosted by a full year of contribution from Genting UK (GENUK) and maiden contribution from Resorts World New York (RWNY). That said, GENM lacks near-term re-rating catalysts. Maintain Hold but raise TP to RM4.00.

Maybank Research 29 Feb 2012

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Not Out the Wood Yet

Stock Name: KWANTAS
Company Name: KWANTAS CORPORATION BHD

Research House: TA

Price Call: SELL

Target Price: 2.15

Steady Growth in FY11

Stock Name: LEADER
Company Name: LEADER UNIVERSAL HOLDINGS BHD

Research House: TA

Price Call: HOLD

Target Price: 1.10

Unfolding of Liquidity Risk

Stock Name: MELEWAR
Company Name: MELEWAR INDUSTRIAL GROUP BHD

Research House: TA

Price Call: SELL

Target Price: 0.39

LANDMARKS - More clarity on Treasure Bay

Stock Name: LANDMRK
Company Name: LANDMARKS BHD

Research House: HWANGDBS

Price Call: BUY

Target Price: 2.45

Landmarks; Buy; RM1.08
Price Target: RM2.45 (Prev RM3.55); LMK MK

4Q11's RM3.1m net loss was worse-than-expected, despite the year-end holiday season. More clarity given on its Treasure Bay development. Maintain Buy with revised RM2.45 TP pegged to 0.7x FY12F BV.

Source: HwangDBS Research 29 Feb 2012

Alam Maritim Resources: Maintain Hold - Earnings in line; look to 2012

Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD

Research House: MAYBANK

Price Call: HOLD

Target Price: 0.92

Results met expectations. Alam Maritim's 4Q11 and 2011 core earnings were in line. We are maintaining our earnings forecasts as we expect 2012 profits to be stronger on higher offshore supply vessel (OSV) utilisation and better offshore installation and construction (OIC) earnings. Nevertheless, Alam's net gearing (1x) coupled with its off-balance sheet obligations remain concerns. Alam remains a Hold with a raised target price of RM0.92 (+8%) as we roll forward valuations to 2013, on an unchanged PER target of 9x.

Maybank Research 29 Feb 2012

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KFC Holdings (Malaysia): Maintain Hold - Stable growth from Malaysian operations

Stock Name: KFC
Company Name: KFC HOLDINGS (M) BHD

Research House: MAYBANK

Price Call: HOLD

Target Price: 4.00

Net profit declined in 2011. Net profit of RM144m (-8% YoY) was in line with our estimates of RM147m but below consensus' RM157m. Total revenue grew 11% YoY, driven by healthy sales growth across all divisions. Our forecasts are maintained, as are our Hold call and TP of RM4.00, equivalent to the offer price by Massive Equity.

Maybank Research 29 Feb 2012

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Mah Sing Group: Maintain Hold - Slower sales growth ahead

Stock Name: MAHSING
Company Name: MAH SING GROUP BHD

Research House: MAYBANK

Price Call: HOLD

Target Price: 1.76

Maintain Hold. Mah Sing's 2011 results came in as expected. It is targeting slower YoY growth in property sales this year, to RM2.5b (from RM2.3b in 2011, +46% YoY), in view of a less sanguine property market outlook. We lower our 2012-13 earnings forecasts by 6-8% post actual 2011 results. Our TP is unchanged at RM1.76 (40% discount to RNAV). Likely surprises could come from RNAV-accretive land deals.

Maybank Research 29 Feb 2012

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Alam Maritim - 4QFY11 results - Cruising to profitability

Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD

Research House: CIMB

Price Call: BUY

Target Price: 1.20

Cahya Mata Sarawak - 4QFY11 RESULTS - Dividend surprise

Stock Name: CMSB
Company Name: CAHYA MATA SARAWAK BHD

Research House: CIMB

Price Call: HOLD

Target Price: 2.56

4QFY11 Results Update

Stock Name: SALCON
Company Name: SALCON BHD

Research House: NETRESEARCH

Price Call: BUY

Target Price: 0.75

4QFY11 results within expectations. Maintain Buy.

Stock Name: MAXWELL
Company Name: MAXWELL INT HOLDINGS BERHAD

Research House: ZJ

Price Call: BUY

Target Price: 0.58

RHB Capital - Resilience surprise on the upside HOLD

Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD

Research House: AMMB

Price Call: HOLD

Target Price: 8.20

We maintain RHB Capital Bhd (RHB Cap) at HOLD, with a higherfair value of RM8.20/share (vs. RM6.90 previously). This is pegged to a fairP/BV of 1.5x (1.3x previously), based on a higher ROE of 13.2% (12.2%previously) for FY12F. 

RHB Cap's 4QYF11 net earnings fell 7.4% QoQ (largely due tohigher loan loss provision). With this, FY11 net earnings came in at 4.1% belowour estimate and 3.0% below consensus forecast of RM1,548mil.

Gross loans growth was at 16.2% in FY11, ahead of its earliertarget of 15%. NIM was 2.57% in FY11 compared with 2.74% in FY10, with thecompression largely caused by a higher cost of funding due to its heavierreliance on the more expensive fixed deposit segment. Nevertheless, netinterest income managed to grow 4.3% overall in FY11. Non-interest incomeposted a commendable growth of 3.7% YoY, considering that there was anunrealised loss relating to its interest rate swap contracts, which came up toRM76mil in total in FY11, a lot less than originally anticipated. 

More importantly, the company has largely provided for its exposureto one particular CLO, which is positive and should remove one of the lingeringconcerns over RHB Cap. In addition, credit costs rose to 40bps in 4QFY11 (3QFY11:13bps), which was due partly to weaknesses in selected SME segments. 

Gross impaired loans were reduced by 3.2% QoQ, the fifth consecutivequarter of QoQ improvement, aided partly by good recoveries. Gross impairedloans ratio was thus reduced to 3.4% in 4QFY11 from 3.7% in 3QFY11. Loan losscover was relatively steady at 73.8% in 4QFY11 from 75.1% in 3QFY11. 

We consider its asset quality to have surprised on  the upside, and more importantly, we arefurther reassured that the company has not experienced any major deteriorationin asset quality over the past three months. Based on this, we have revisedupwards our earnings by 13% for FY12F. This is based on a lower credit costs assumptionof 61bps (vs. 80bps previously). The company indicated that credit costs willlikely be better than FY11's 36bps. 

The company also indicated that its planned acquisition of BankMestika is now scheduled for completion by mid-2012. We have not yet reflectedthis in our forecasts. The company's new ROE guidance for FY12F is 14%,including Bank Mestika. We maintain RHB Cap at HOLD.     

Source: AmeSecurities

Puncak Niaga - Turning to new ventures HOLD

Stock Name: PUNCAK
Company Name: PUNCAK NIAGA HOLDINGS BHD

Research House: AMMB

Price Call: HOLD

Target Price: 1.60

Maintain HOLD on Puncak Niaga Holdings with an unchangedfair value of RM1.60/share ' pegged to a 65% discount to its estimated break-up value. Puncak reported a 4QFY11net profit of RM9mil, bringing FY11 net loss to a lower amount of RM9mil vs. aRM72mil loss a year earlier. 

Puncak's results came in ahead of both ours, and the street expectationsof full-year losses to the tune of RM20mil and RM31mil, respectively. Thepositive variance, in our view, largely stemmed from a sizeable reversal in itsminority interest position, particularly in 4QFY11 (~RM31mil).  

FY11 results were impacted by the adoption of the IC Interpretation12, through retrospective changes to its P&L statement. However, againstlast year's RM72mil loss, this was a significant improvement due tocontributions from its new oil& gas businesses.

We have cut the group's FY12F-13F net profit forecasts by 35%and 19%, respectively, to input higher operating costs for its water divisionand notional interest cost on concession liabilities as a result of IC12. Thistruncates a scheduled tariff hike for SYABAS in 2012 that we continue to assumeand billings from ongoing works for its oil & gas division.

Puncak created some buzz when in 4Q10, it bought out the remaining40% interest in Global Offshore Malaysia and KGL Ltd for a combined US$59mil(~RM177mil). 

The new acquisitions are supposed to spearhead Puncak's forayinto the oil & gas sector. Apart from pipe-laying contracts, the group iseyeing a role in the development of marginal oil fields and brownfields. 

The group has in recent months also made overtures  to expand its scope into other venturesbeyond its water business in Selangor. These include: (i) The privatisation of IndahWater Konsortium (IWK) under a 1MDB-led consortium; and (ii) Scouting for solidwaste management contracts in Cambodia. 

But, our call on Puncak remains a HOLD. Prospects for Puncak'snon-water ventures remain fluid at this juncture against an evolving politicalbackdrop. 

 Its share price hassince retraced by 28% after scaling a high of RM1.89/share earlier this month,after market anticipation on a state-led takeover of water assets in Selangor eventuallyfizzled out. 

We would only turn more constructive on the stock when greaterclarity surfaced on the restructuring of Selangor's fragmented water industry.We do not envisage this  to happen beforethe 13th General Election.  

Source: AmeSeurities

Litrak - Turning heads HOLD

Stock Name: LITRAK
Company Name: LINGKARAN TRANS KOTA HOLDINGS

Research House: AMMB

Price Call: BUY

Target Price: 3.90

We maintain our BUY recommendation on Lingkaran Trans KotaHoldings (Litrak), with a higher fair value of RM3.90 (previously:RM3.77/share) ' pegged to an unchanged 15% discount of its revised DCF value(WACC: LDP -8.1%, SPRINT ' 8.6%).

The higher fair value encapsulates an 11% upgrade in FY12F netprofit forecast (FY13F: +9%, FY14F: +5%) following a stronger-than-expectedmargin trajectory for 9MFY11.

Litrak's 9MFY11 results came in ahead of expectations, accountingfor 80%-85% of both consensus and our full-year estimates. The main positivevariance, in our view, stemmed from better-than-expected EBIT margins (9MFY12:77% vs 75% a year earlier).

During the period, the group's bottomline surged 23% YoY arisingfrom the full-year impact of a scheduled toll rate revision from 1 January2011.

Sequentially, its earnings fell 2% QoQ to RM32mil. This was largelydue to a marginal increase in operating expenses incurred during the quarter.

Litrak declared a second interim dividend/share (DPS) of 7 senin 3QFY12, taking 9MFY12 DPS to 17 sen ' matching the payout last year. We haveassumed a total DPS of 18 sen for FY12, translating into a decent yield of 4%.

Litrak has been in the news recently, where the toll concessionaireis reportedly a take-over target of  PLUSExpressways along with SILK Holdings. 

But, we are unsure if Gamuda ' Litrak's major shareholder witha 45% stake ' would be willing to part ways with the urban toll operator. Thisbeing the case, Litrak has been a steady generator of Gamuda's cash flows overthe years.

Moreover, the continued uncertainties over toll rate hikesand associated risk of back-ended cash flows (i.e. extension of concessionperiod rather than outright cash payment as compensation for delays in tollhikes) is another drag.

Our HOLD rating is premised on its status as a core holding forinvestors seeking exposure to the toll concessions with the de-listing of PLUSand MTD Capital. This is backed by a decent yield offering of 4%-5%.

Source: AmeSecurities

KNM Group - Residual 4QFY11 provisions as expected SELL

Stock Name: KNM
Company Name: KNM GROUP BHD

Research House: AMMB

Price Call: SELL

Target Price: 0.75

We maintain SELL on KNM Group with an unchanged fair valueof RM0.75/share pegged to an FY12F PE of 10x ' a 30% discount to the oil &gas sector's 15x. 

We maintain FY12F-FY13F net profits for now with the expectationsthat KNM would start afresh on a clean slate next year on the back of new orderaccretions. Note that we are projecting an FY13F earnings decline of 9% due to theend of the recognition of the Borsig tax incentive. Hence, our FY12F-FY13Fearnings are currently 22%-53% below consensus.

We introduce FY14F earnings with a growth of 30% largely dueto a 5% increase in new order assumption and a 1ppt- improvement in fabricationmargin.

KNM's FY11 net profit loss of RM83mil was not a surprise, comingin within our and street expectations. The residual provisions for the group'sprojects were largely expected following the group's shocking 3QFY11 net lossof RM116mil.

OoQ, KNM's 4QFY11 pre-tax loss plunged to RM11mil from RM145milin 3QFY11, which had provisions that included RM80mil for cost overruns onvarious projects in Asia and Oceania and RM50mil for doubtful debt write-offs.We understand that KNM was still in the red due to additional provisions ofRM30mil in 4QFY11.

KNM has recently entered into an option agreement to acquirea 55-acre vacant land for the RM2.2bil Peterborough Renewable Energy Ltd (PREL)project. With the land ownership, we understand that KNM could possibly end upwith an 80% stake (with the balance held by UK-based sponsors) in thiswaste-to-energy concession if the group could secure external borrowings. Thismay be a negative development as this huge project will likely elevate thegroup's current net gearing level of 0.5x to 0.9x, unless other investorsdilute KNM's equity stake to an associate level. 

KNM's current order book stands at RM5.8bil, with new orderssecured up to RM1.8bil for this year and tendering up to RM18bil potentialorders. But as the order book includes (1) the RM2.2bil Peterborough RenewableEnergy Ltd (PREL) project, (2) RM908mil Lukoil contracts in Uzbekistan, and (3)the recently awarded US$200mil (RM638mil) waste-to-energy Sri Lankan EPCC jobfrom Octagon Consolidated, we note that over half of the group's order bookdoes not have clear visibility in commencement.

Normalising tax rates, KNM currently trades at a pricey FY12FPE of 30x, way above the oil & gas sector's. This is unjustified givenKNM's persistently poor quarterly earnings delivery.

Source: AmeSecurities

Hock Seng Lee - Results in line; cash and share dividend surprise on the upside BUY

Stock Name: HSL
Company Name: HOCK SENG LEE BHD

Research House: AMMB

Price Call: BUY

Target Price: 2.65

We maintain BUY on Hock Seng Lee (HSL), with an upward revisedsum-of-parts-derived fair value of RM2.65/share (vs. RM2.44/share previously),which includes a PE of 9x against its 3-year average forward earnings for itsconstruction division.

We have rolled forward our valuation years to FY12-FY14. HSL'snet profit of RM87mil for Y11 (+19% YoY) came in within expectations ' at amere 1ppt above our forecast and 1ppt below consensus. We introduce FY14F netprofit at RM137mil (+10% YoY).

No major surprises could be gleaned from the full-yearresults, except for a higher-than-expected dividend as well  as an earlier-than-expected distribution oftreasury shares. 

It proposed a final dividend of 1.8 sen/share and a special dividendof 0.6 sen/share, bringing the total for the full year to 3.6 sen/share, vs. 3sen/share (excluding treasury distribution) for FY10. We had expected dividendto be maintained at 3 sen/share.

With the latest dividend, the net payout ratio is maintainedat 17% as it was the previous year. We now assume a 17% net payout ratio forFY12F-FY14F, translating into an annual GDPS of between 4.4 sen and 5.6 sen, oryields of 2.7%-3.4% at the current price.

For the share dividend, it will distribute one treasuryshare for every 50 shares held (totalling nearly 11mil treasury shares) ' equivalentto 3.2 sen/share at RM1.60/share. This would be the second time in as manyyears that HSL is distributing its treasury shares, with the first in FY10 ofthe same ratio. After the latest distribution, over 24mil shares would remainin treasury. The share dividend's ex- and entitlement dates have been fixed for26 and 28 March 2012, respectively.

HSL maintained its growth momentum in 4QFY11, with a net profitof RM26mil (+21% YoY; +16% QoQ). Crucially, operating margin of theconstruction division was maintained at above 20% for 4QFY11 and the full year,while better margins also aided the property division in view of fewer launchesand sales. 

HSL currently has RM1.7-RM1.8bilbil worth of jobs in hand,of which RM1.1bil is outstanding ' with plenty more projects within Sarawak'sSCORE up for grabs. 

 It is activelyseeking opportunities in the power sector and it may soon secure a RM250mileducation facility in Mukah. The remaining phases (worth RM1.7bil) of theKuching central sewerage project are also up for grabs this year, with the RM452milphase one currently being carried out by HSL. HSL remains as one of the primaryproxies to the rapid  pace of developmenttaking shape in Sarawak. 

Source: AmeSecurities 

Alam Maritim - Dampened by JV write-off, offshore construction delay BUY

Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD

Research House: AMMB

Price Call: BUY

Target Price: 1.00

We reiterate our BUY rating on Alam Maritim Resources, withan unchanged fair value of RM1.00/share, pegged to an FY12F PE of 12x ' at a25% discount to the oil & gas sector's 16x. 

Alam's FY11 result was 54% below our earlier FY11F net profitof RM28mil and 64% of street's RM36mil. Thisstemmed largely from:

1) a RM15mil expense for capitalised interest on two 12,000 brakehorse power vessels, currently being built in China, which will be injectedinto the 50:50 joint venture (JV) with Tabung Haji (TH). The sale and leasebackagreement was signed in 4QFY11, while the vessels will be completed by the endof 2012.

2)  a RM5miladditional interest charge for the 50:50 JV for the Alam-Swiber derrick laybarge as the commencement of the RM230mil offshore installation construction(OIC) contracts in East Malaysia has been delayed from September last year toMarch-April this year.

Alam registered a 4QFY11 net loss of RM1mil vs. a net profitof RM13mil in 3QFY11, largely due to the Alam-TH JV one-off capitalisedinterest expense, delay in OIC construction work and 27% QoQ seasonal drop inmarine charter revenue. Although FY11 net profit came in way short ofexpectations, we expect a significant recovery in 1QFY12 as the group's vesselutilisation has remained firm at over 80%. Hence, we maintain FY12F-FY13F netprofits, based on vessel utilisation rates of 80%-90% and EBIT margins of 55%.We introduce FY14F net profit with  a growthof 7% based on a 5ppt- improvement in vessel utilisation rate.

We expect the turnaround in the OIC division to be  a strong re-rating catalyst as this divisionhad been a significant drag to earnings since 4QFY10. This recovery should besustainable as Alam is also aggressively bidding for more OIC jobs and could beawarded another sizeable contract early next year. Recall that Alam secured itsmaiden major OIC contract with Samsung worth US$18mil for Sabah Oil & GasTerminal (SOGT).

We also expect Alam to be awarded fresh charters for its idlingand spot-chartered vessels as utilisation in the sector has tightened. We notethat day rates have been slowly rising on tightening global vesselutilisation. 

As such, we maintain our view that the company'searnings recovery is intact with undemanding valuations of FY12F PE of 9x ' atthe lower end of its historical PE band. This is underpinned by improvingvessel utilisation rates with its recent charters, coupled with a likely turnaroundin its offshore construction division.


Source: AmeSecurities

Genting Malaysia - Maiden contribution from RWNY BUY

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD

Research House: AMMB

Price Call: BUY

Target Price: 4.30

Maintain BUY on Genting Malaysia Bhd (GenM), with an unchangedRNAV-based fair value of RM4.30/share. GenM's results were within consensusestimates and our expectations. 

We have tweaked GenM's FY12F to FY13F earnings forecasts forhousekeeping reasons and to account for lower daily wins per machine at'Resorts World New York'(RWNY). 

Our new assumption is a daily win of US$330/machine for FY12Fversus US$400/machine previously. Year-to-date, average daily win wasUS$347/machine.

GenM recorded a maiden contribution from RWNY in FY11. Excludingcost overruns, which contributed to a loss of RM17.3mil in 4QFY11,operationally RWNY recorded revenue of RM95.3mil and EBITDA of RM23.6mil fromtwo months of operations in FY11. This implies an EBITDA margin of 24.8%.

We understand that RWNY has stepped up its marketing effortsin New York and has implemented a bus programme running to, and from, Queensand Manhattan.

We also gather that there are seasonality trends to the averagedaily wins/machine. The average daily wins/machine tends to decline duringwinter and pick up during summer. 

As for the legalisation of a full-fledged casino licence in NewYork, we understand that the legislative process would take 2'' to three years.In Miami, the next seating for the approval of the casino bill would be inFY13F.

Revenue of GenM's casino operations in Malaysia rose 7% YoYto RM5.4bil in FY11, underpinned by improvements in win percentage. If luckfactor were to normalise, then revenue would have risen by only 4% YoY in FY11. 

Non-VIP players drove the increase in the volume of business.Volume of business from the non-VIP segment rose by a low double-digitpercentage YoY in FY11. This helped compensate for a single-digit percentagedecline in the volume of business from the VIP players.

In the UK, volume of business at the London casinos climbed22% YoY in FY11. Volume of business at the provincial casinos was flat YoY inFY11.   

Source: AmeSecurities

Ta Ann Holdings - FY11 within expectations; RM9.7mil plywood impairment not a surprise BUY

Stock Name: TAANN
Company Name: TA ANN HOLDINGS BHD

Research House: AMMB

Price Call: BUY

Target Price: 7.60

We maintain BUY on Ta Ann Holdings Bhd, with an unchanged fairvalue of RM7.60/share, based on a PE of 13x pegged to FY12F EPS of 58.5 sen.

Ta Ann's FY11 net profit of RM153mil (+104%) was within expectations,but for an impairment of RM9.7mil relating to its Tasmania veneer manufacturingoperations.

Excluding the impairment, core net profit amounted  to RM163mil vs. our estimate of RM162mil andconsensus' RM159mil.

It declared a second interim (single-tier) dividend of 10 sen/share,bringing the total for the full year to 20 sen/share.  (vs. 8 sen in FY10) ' representing a netpayout ratio of 40% and beating our forecast of a 15 sen/share estimate. 

We have accordingly adjusted upwards our forecast annual grossdividend to 20 sen/share from 15/share previously ' representing a net payoutof between 20% and 27%.

We understand that the RM9.7mil impairment was made with regardto its property, plant and equipment in Tasmania, given the continuing lossesof the operations there.

Including the impairment, the plywood division incurred aloss after tax of RM14mil (halved vs. loss of RM28.8mil in FY10). We deem theimpairment as prudent given the continuing losses ' short of closing down theloss-making unit. We do not rule out more impairment to come.

Notwithstanding that, we are maintaining our forecasts as wehad already assumed an FY11 pre-tax loss of RM5mil (excluding impairment) forthe plywood division, and further annual losses of between RM10mil and RM13milfor FY12FFY14F.

FY11 bottomline was driven by a significant growth in itsoil palm division, which posted an 87% rise in profit after tax to RM124mil(vs. FY10's RM66mil), as well as the logging division, which posted a 26% YoYrise in PAT to RM44mil.

Notably, fresh fruit production (FFB) sales volume rosenearly 50% 457,975 tonnes from 310,870 tonnes in FY10, while average CPO pricerose 23% to RM3,306/tonne from RM2,691/tonne in FY10.

We continue to like Ta Ann for its rapidly growing oil palm division.Additionally, log and plywood prices are currently holding above US$210/cu mand above US$600/cu m, respectively.

Source: AmeSecurities

Ann Joo Resources - Good finish to a difficult quarter BUY

Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD

Research House: AMMB

Price Call: BUY

Target Price: 2.74

We maintain our BUY recommendation on Ann Joo Resources, andtweak slightly upwards our fair value for the stock to RM2.74/share (unchangedtarget PE of 12x) to adjust for actual FY11 figures. 

Ann Joo reported a net profit of RM62mil for FY11. The headlineprofits doubled our forecast, but came in short of consensus (~62%). Thepositive surprise against our forecast largely came from a relatively goodfinish to the final quarter. 

Ann Joo managed to deliver a net profit of RM11mil  in 4QFY11 (our expectations: a loss of~RM20mil) despite a challenging operating environment and start-up costs incurredduring the launch of its blast furnace in October. This reflects management'stight control over its cost structure, particularly in the procurement of rawmaterials ' we believe.  

On a sequential basis, the group returned to the black againsta RM25mil loss in 3QFY11 that was mainly inflicted by inventorywrite-down/unrealised forex losses to the tune of RM60mil.  

Ann Joo declared a final dividend/share (DPS) of 3.5 sen, bringingFY11 DPS to 7.5 sen or a gross yield of ~1%. This was lower than our forecastof 10 sen.

Barring a sudden deterioration in the global macro picture, weproject a 127% YoY growth in FY12F net profit at RM140mil. 

We expect domestic steel demand to gather momentum movinginto 2H12 on a step-up in Malaysian infrastructure activities, particularlywith the imminent roll-out of the Sg.Buloh-Kajang MRT line.

On the other hand, prices of key inputs appear to have normalised.For instance, the average international scrap price had retracted to theUS$460/tonne level last month from US$503/tonne in September 2011.

We expect Ann Joo's net gearing level to have peak at 1.4x forFY11, improving to 1.1x and 0.9x, respectively, by FY12F-13F, following thesuccessful commissioning of its RM650mil hot metal plant last October. 

Ann Joo remains our top pick for traction to the steel sector.The stock trades at attractive forward FY12F-14F PEs of 7x-9x - below itssix-year average historical PE of 11x ' against a robust EPS CAGR of 35%. 

Source: AmeSecurities  

Kencana Petroleum - Secured RM74mil Tapis substructure job BUY

Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD

Research House: AMMB

Price Call: BUY

Target Price: 3.54

We maintain our BUY call on Kencana Petroleum (Kencana),with an unchanged fair value of RM3.54/share ' pegged to a CY12 PE of 22xagainst the merged Kencana-SapuraCrest's earnings. 

Kencana has secured its second contract this year, with aRM74mil job from ExxonMobil Exploration and Production Malaysia Inc tofabricate a Tapis R sub-structure for the Tapis ReDevelopment roject. Thisone-off contract, expected to be delivered in 2QCY13, involves the procurement,fabrication, testing, load-out and tie-down of sub-structures which includejacket, piles and related component which forms part of Tapis R centralprocessing platform, off the coast of Terengganu. 

Recall that Malaysia Marine & Heavy Engineering hasalready secured the main bulk of the Tapis enhanced oil recovery (EOR) projectwith a RM1.6bil contract to procure, fabricate, test, loadout, install andcommission an integrated offshore platform deck called Tapis R and twointerplatform deck in November last year. Hence, we do not expect furthercontracts from the Tapis EOR for Kencana, which clinched a RM101mil contractfrom Murphy to fabricate substructures, template & other services for thePatricia & Serendah platforms, SK309 field, off Bintulu just last week.

But we expect this small job to be just the start of thegroup's order book accretion, given Petronas' spending programme of RM300bilover the next five years, which includes enhanced oil recovery and marginalfield jobs. We understand that the group is expected to secure two well-headplatforms for the Bunga Dahlia and Teratai fields, connected to nine fields inBlocks PM301 and PM302 and in the Bergading contract area. Hence, whileKencana's total new orders secured to date since the start of FY12F amounts toRM1.2bil, we maintain FY12F-FY14F earnings based on annual new orders ofRM1.8bil-RM2bil.

We remain positive about Kencana's synergistic merger withSapuraCrest Petroleum, which may be completed in March-April this year. WhileKencana has been expanding its yard and commenced the construction of two newtender rigs, its merger partner has been penetrating new markets recently,notably Brazil. Recall that besides SapuraCrest's recent 50:50 JV with Seadrillto own, manage and operate three flexible pipe-lay support vessels, there couldbe a further injection of three semi-submersibles into the group's fleet. 

The stock currently trades at an attractive FY13F PE of 19x,below its 2007 peak of 22x.

Source: AmeSecurities

Benalec Holdings - To the fore in Johor BUY

Stock Name: BENALEC
Company Name: BENALEC HOLDINGS BERHAD

Research House: AMMB

Price Call: BUY

Target Price: 2.85

Maintain BUY on Benalec Holdings with an unchanged fair valueof RM2.85/share ' based on the sum-of-parts methodology. Benalec unveiled1HFY12 results which were largely in line with expectations ' accounting for 52%-53%of both consensus and our full-year estimates. 

Net profit jumped 18% YoY on:- (i) a RM33mil gain on land salesin Malacca that was booked in 2QFY12; and (ii) a significant 10.5ppt QoQ jumpin EBIT margin for its marine division (ex-land sales).    

Benalec's outstanding order book stands at approximately RM541mil(~2.7x FY11 construction revenue), providing earnings visibility for the nextfour years.

We continue to like Benalec for its exciting prospects as oneof the fast-emerging integrated marine engineering specialists in Malaysia andthe region. 

A key re-rating catalyst comes in the form of the group's excitingforay in Johor, where it had in November secured agreement-in-principledevelopment rights to 5,245 acres of prime seafront land in South Johor.

The group is working hard to obtain the necessary approvals,where its immediate focus will be on Tg.Piai ' located on the south west ofJohor and just 17km away from Singapore's vibrant petrochemical hub inJurong. 

To be sure, Benalec has also signed an MoU with Singapore-basedRotary engineering to co-develop an integrated petroleum storage facility on250 acres  of reclaimed land atTg.Piai. 

Poignantly, Benalec is set to gain from multiple new earningsstreams via marine-related works and associated recurring income from theownership of this proposed oil terminal. We have assumed land sales of ~300acres each for FY13F-14F. 

Valuations remain compelling at FY12F-14F PEs of 5x-9x againsta robust EPS CAGR of 22% and supported by decent yields of 4%-9% on a targetedpayout ratio of ~30%.

Near-term prospects would be driven by: (i) cyrstallisation ofa further agreement with the Johor government; (ii) conversion of a formal SPAwith Rotary; and (iii) Securing off-takers to its prime Johor landbank. 

In addition, the group is also actively bidding for more reclamationjobs beyond Malacca ' notably in Penang, Selangor and Singapore.  

Source: AmeSecurities 

KFC (FV RM4.00 - NEUTRAL) FY11 Results Review: Not so "Finger Lickin' Good"

Stock Name: KFC
Company Name: KFC HOLDINGS (M) BHD

Research House: OSK

Price Call: HOLD

Target Price: 4.00

KFC's  full yearearnings were below consensus but within our estimates. The stronger revenue(+11%) was attributed to better performance across all segments but its corenet profit fell 4.1% y-o-y due to higher operating expenses. EBIT margincontinue to shrink, dipping by 0.8% on costlier input and higher expansion expenditure.Maintain NEUTRAL, with our FV unchanged at RM4.00.

In line.  KFC's FY11 revenue jumped 11% y-o-y from RM2.5bn to RM2.8bn, largely contributedby higher revenue from its Malaysia and overseas operations. The opening of 24new restaurants, introduction of new products and effective marketing programs boostedrevenue at its Malaysian operations (+10.6%) while revenue from its overseas operationsimproved 14.9% y-o-y to RM449.4m from RM391m previously. Revenue in theintegrated poultry and ancillary segments grew by 10% and 2.9% respectivelywhile revenue at the education division soared 327% y-o-y. The FY11 PBT waslower than that in the previous year, during which  KFC recorded a net surplus of RM6.7m from revaluationof properties. Excluding the exceptional gain, the group's PBT was still flatat RM121.5m vs RM121.1m y-o-y given expenses from new openings and higher raw materialcosts. Despite the flat PBT, core net profit was lower by 4.1% y-o-y dueto  a higher tax rate. Q-o-q, the group'stop- and bottom-lines expanded by 9.9% and 13.4% respectively, spurred by theholiday and festive seasons.

Leaner margin.  EBIT margin slipped 0.8% from 8.7% to 7.9%,with the integrated poultry and education segments being the major drags. Thethinner margins from integrated poultry were mainly due to: i) the highercommodity prices in producing feed for broiler farming, ii) higher energy andstorage costs, and iii) higher cost to buy broilers from the open market tomeet the increasing demand from its Malaysian operation. The higher operatingexpenses incurred in setting up its new campuses in Johor and Selangor andhigher marketing cost to boost student intake also  played a part  in chipping off margins in the educationdivision.

Maintain  NEUTRAL. We remain cautious on KFC's prospects in light of a recent incidentcaught on  Youtube purportedly  depicting unruly behaviour among KFC employees.This  may dampen customer sentimentfor  the time being. Maintain NEUTRAL,with our FV at RM4.00, based on the takeover offer price.

Source: OSK188

Media Chinese Intn'l - Strong adex spending BUY

Stock Name: MEDIAC
Company Name: MEDIA CHINESE INTERNATIONAL LT

Research House: AMMB

Price Call: BUY

Target Price: 1.37

We reiterate our BUY recommendation on Media Chinese InternationalLtd (MCIL), with a higher DCF-based fair value of RM1.37/share versusRM1.30/share previously.

MCIL's 9MFY12 earnings of RM155mil outperformed our full-yearforecast by 4%. Annualised earnings were at 24% above consensus. 

We revise upwards our earnings estimates for FY12FFY13F by25%, owing to stronger-than-expected adex volume moving forward.

MCIL's 3Q net profit rose 32% QoQ to RM63.1mil, despite a slightdrop in turnover by 4.4%. The improved performance was largely attributed torobust sales contributed  by acceleratedadex spending and cost containment efforts.

So far, 3Q has been the strongest quarter with a 34.9% QoQjump in pre-tax profit. Publishing and printing performed well, increasing by8.7%. Advertising growth was boosted by improvements in volume and rate,despite the economic uncertainty and advertising volatility in the local market. 

On a YoY basis, MCIL recorded a 6% rise in net profit for 9MFY12due to a higher turnover at 9%. This strong growth was mainly attributable toadvertising revenue from national advertising, property sector and luxuryproducts and tour revenue especially in the long-haul tours. 

We understand that publishing and printing in Hong Kong seta record for MCIL. Print advert is fully booked for CY12 for a magazine called'MING Watch' in Hong Kong and China. 'MING Watch' is a watch magazine featuringthe latest news on high-end watch trend.

Nevertheless, adex outlook in Malaysia remains healthy, withthe potential election in CY12 to bode well for the sector. Other regionalevents such as elections in the US, China, Taiwan, HK and the Olympics wouldalso support adex spending.

Management expects escalating costs due to inflation, especiallyfor newsprint price and staff costs. Newsprint price is expected to rise due toan increasing demand in 1HFY13F as many elections are taking place globally.

We like MCIL due to the group's monopolistic position withinthe Chinese language print segment in Malaysia (87% of market share) andsuperior pricing power for adrates ' the second highest industry wide.

Source: AmeSecurities

UEM Land (ULHB MK, TRADING BUY, FV: RM3.17, Close: RM2.22)

Stock Name: UEMLAND
Company Name: UEM LAND HOLDINGS BHD

Research House: OSK

Price Call: TRADING BUY

Target Price: 3.17

UEM Land's (ULHB) FY11 net profit came in well above our andconsensus expectations, making up 134% and 125% of the respective FY11forecasts. The outperformance was largely driven by higher-than-expectedrevenue and strong 4QFY11 net profit which accounted for about 46.6% of thefull-year profit. We are raising our FY12 net profit forecast by 30% andintroducing our FY13 forecast. We maintain our Trading Buy call on ULHB at anunchanged FV of RM3.17 based on a 10% discount to our RNAV valuation.

Beating our andstreet estimates. ULHB recorded a net profit of RM301.7m for FY11 whichcame in 34% and 25% above our and consensus full-year estimates respectively. Thebetter-than-expected results were largely due to robust revenue from property developmentand strategic land sales in 4QFY11. It had an exceptional 4QFY11, where quarterlynet profit alone accounted for a whopping 46.6% of the full-year earnings. For 4QFY11,property development recorded a 45% q-o-q growth in revenue, while raking in RM87mfrom strategic land sales to the Johor State Government vis-''-vis RM13.5m for 3Q.Notably, due to the consolidation of revenue from its acquisition of Sunrise,ULHB recorded a 261% y-o-y growth in revenue, though net profit was up by only55% y-o-y as property development, which now has a significantly biggercontribution, commands a lower margin relative to that of strategic land sales.

Unbilled sales atRM1.85bn. For FY11, ULHB recorded total property sales of RM2.2bn withunbilled sales standing at RM1.85bn as at end-FY11. Despite the weaker sentimentin the property market, it has maintained its sales target of RM3bn for FY12 withseveral new projects to be launched in the Klang Valley, Cyberjaya and Nusajayathis year.

Maintain Trading Buy.In light of the sterling FY11 results, we are raising our FY12 net profitforecast by 30% after revising up our revenue forecast  on the back of the strong unbilled sales andfuture launches. We also take this opportunity to introduce our FY13 forecast.We maintain our Trading Buy recommendation at an unchanged FV of RM3.17 basedon  a 10% discount  to our RNAVvaluation. As  its profitabilitycontinues to improve, ULHB's PER multiple will also continue to compress to amore reasonable level compared to its elevated historical PER multiples.

Source: OSK188 

RHB Capital (RHBC MK, BUY, FV: RM9.90, Close: RM7.80)

Stock Name: RHBCAP
Company Name: RHB CAPITAL BHD

Research House: OSK

Price Call: BUY

Target Price: 9.90

The group's FY11 results were largely in line with consensusand our full-year estimates. However, its 4Q11 sequential earnings were hit bylumpy exceptional provisions for its CLOs, thus raising q-o-q impairment losseson securities by 212%. Sequential pre-provision operating profit growth wascommendable at 15.6% q-o-q, driven by stronger trading income and Islamicbanking income. The stabilization in NIMs and absence of one-off lumpy CLOprovisions in FY12 provide a more promising profit growth outlook for FY12.Maintain FV of RM9.90 based on 1.76x FY12 P/BV, 14.1% ROE. Maintain BUY. 

In line. Thegroup's FY11 earnings were largely in line with our full-year forecast, with FY11earnings representing 95.1% of consensus and 96.1% of our full-year forecast. Theslight shortfall (-4% deviation from our earnings) was due to a lumpy spike inq-o-q impairment of its CLOs with an existing carrying value of RM87m securedagainst certain collaterals. FY11 earnings rose at a rather subdued 5.7% y-o-y,while preprovision operating profit posted a marginal contraction of 0.2%y-o-y.

Funding and staffcost  were key drags on FY11 performance.Key earnings dampeners included: (i) funding cost pressure from very aggressiveand expensive fixed deposit growth (+28% y-o-y) which pressured net interestmargins (NIMs), and this resulted in a rather lacklustre 4.2% net interestincome growth despite the robust 16.8% loan growth,  (ii) 23.5% increase in staff cost due to  the undertaking of  various staff retention and optimizationmeasures, and  (iii) RM65.8mmarked-to-market losses on interest rate derivative instruments to hedge itsfixed rate loans. Among the key earnings drivers were:  (i) promising growth traction on Islamicbanking operations (+31.5% y-o-y and +20.1% y-o-y), and (ii) 21.1% decline inloan loss provision which brought the fullyear credit cost down to 34bps vs50bps in FY10.

Positive  flip sides.  The aggressive deposit gathering strategy inFY11 resulted in  a 17bps compression ofNIMs. On the flip side, this has helped lower the group's loan-todepositratio  (LDR)  from 88.6% to a relatively comfortable 84.0%and thus, easing pressures on funding cost in FY12. With the group's optimalLDR set at just under 90%, the current 84% LDR provides a fair degree ofheadroom to slowdown its deposit growth relative to loans growth and thus,enabling it to sustain its  current  NIMs in FY12 compared to the steep NIMcompression in FY11.    

Source: OSK188

Genting Bhd - Overseas casino contribution overtake Malaysia's BUY

Stock Name: GENTING
Company Name: GENTING BHD

Research House: AMMB

Price Call: BUY

Target Price: 11.85

Affirm BUY on Genting Bhd with an unchanged RNAVbased fair valueof RM11.85/share. Genting's core net profit was within our expectations. Ifconsensus estimates had included exceptional items, then Genting Bhd's resultswould have also been in line with market expectations.

Genting Bhd's revenue expanded by 29% YoY to RM19.6bil inFY11 underpinned by strong contributions from the UK and Singapore. 

The group's EBITDA climbed 14% YoY to RM8bil in FY11 asearnings from Genting Singapore PLC rose 19% and profits from the UK improvedby 74%.

These two casino divisions more than compensated for a lossof RM66.9mil in the oil and gas division in FY11. 

Although there is no revenue from the oil and gas division, thedivision incurred a loss due to general and administrative expenses.

We understand that Genting Bhd would be implementing a developmentplan for the Kasuri Block. Capex for the oil and gas division is expected to beRM247mil in FY12F. 

Recall that the Kasuri PSC (production sharing contract) is theonly oil and gas asset left in Genting Bhd after the group sold two PSCs inIndonesia to AWE Ltd for RM121mil early this year. 

EBITDA of the power division rose 16% YoY to RM632mil, underpinnedby higher volume of production and tariff hike in China. 

We understand that Genting Bhd is still negotiating with TenagaNasional Bhd for a power purchase agreement for its Genting Sanyen power plant,which is due to expire in FY15F.

Genting Bhd has only declared a final gross DPS of 4.5 sen less25% tax. This brings total gross DPS to 8 sen less 25% tax for FY11. The grossDPS of 8 sen for FY11 (FY10: 7.8 sen) translates into a yield of only 0.8%.

We gather that FY11 dividend payments were meagre as thegroup is conserving cash for its expansive capex plan. Genting Group's capex isestimated at RM4.5bil for FY12F.

Source: AmeSecurities

KNM (FV RM0.80 - SELL) FY11 Results Review: In The Red, as Expected

Stock Name: KNM
Company Name: KNM GROUP BHD

Research House: OSK

Price Call: SELL

Target Price: 0.80

KNM's FY11 results were within our expectations as we hadearlier  anticipated a net loss of aboutRM70.0m. The loss was mainly attributed to intense competition, especially inthe mid to lower end process equipment range, provisions made for foreseeablelosses and credit impairment. Although the company has  a RM5bnstrong orderbook  and atenderbook  worth over RM17.0bn, we haveyet to see these figures translate into positive bottomline contribution. Assuch, we continue to hold a negative outlook on KNM. Maintain Sell.

Within estimates.KNM's FY11 results were below consensus but within our expectations, as we hadearlier projected the company will  makea net loss of  some RM70.0m. Although its4QFY11 revenue of RM579.8m was 30.2% higher  q-o-q  due to higher revenue recognition from itsexisting and new projects, it only managed to report a small net profit ofRM3.0m. This was due to the intense competition in the mid to lower end process equipment segment as well as provisionsmade for foreseeable losses.  Furtheraggravating the already weak FY11 numbers is the presence of  some credit impairment, which led to a netloss of RM83.4m compared with net profit of RM118.2m in FY10.

Business environmentcontinues to be challenging. Despite the recovery in crude oil price toabove USD100/barrel,  we believe thebusiness environment for process equipment manufacturers remains challengingdue to the intense competition, which may spark off a  price war in which the winners would be thecustomers.  Also, we think the recoveryin the global O&G industry is still slow and has yet to catch up with thepace in mid-2008  when oil price  soared to a record  USD147/barrel. As such, the oversupply of processequipment will continue to  preventprocess equipment manufacturers from reaping healthy product margins.

Maintain Sell.Our fair value for KNM remains  unchangedat RM0.80 based on  the existing PER of13x FY12 EPS. Although the company has a strong orderbook exceeding RM5.0bn andtenderbook  worth more than  RM17.0bn, we have yet to these numbers  translate into positive bottomlinecontribution. That said, we continue to hold a  negative view on KNM'soutlook going forward.

Source: OSK188 

ANNJOO (FV RM2.16 - NEUTRAL) FY11 Results Review: Sheltered by Provisions, Tax Incentive

Stock Name: ANNJOO
Company Name: ANN JOO RESOURCES BHD

Research House: OSK

Price Call: HOLD

Target Price: 2.16

Ann Joo's FY11 net profit of RM61.7m was spot on with ourestimates but below consensus. The recognition of tax incentives plusprovisions made for diminution in inventories in 3Q helped to compensate forthe meager steel making margins in 4Q. We see a  slow start for 2012 asactual work  on  various mega projects may take  time to kick start and the recovery in steel prices may be delayed. The long gestationfor its newly commissioned blast furnace (BF) and recent share price rally  may have partly priced in the potential surgein steel prices. Thus, we downgrade Ann Joo to a  NEUTRAL, with  our FV  kept  at RM2.16, derived from 0.98x FY12 BV, or-0.5 standard deviation of the stock's historical trading range.

Almost  on  thedot. Thanks to the recognition of tax incentives  which resulted  in a positive tax incomeof RM6.2m, Ann Joo's FY11 net profit came in at RM61.7m, almost spot on  with our projection but below street estimates.  The tax benefit aside, management's decision to make provisions fordiminution in inventory value amounting to RM37.9m in 3Q also  helped to compensate for the sharp erosion in  steel making margins in 4Q.This occured when the sharp plunge in the prices of iron ore, steel scrap andsteel  gave  rise to a negative mismatch  of lower selling prices and still-high raw materialcosts, as there is an inherent time lag before the latter starts to decline.

Near-term outlookchallenging. Although the award of mega projects is gaining pace, it maytake a while for actual works to begin and eventually stoke demand for steel.That said, steel prices have  been  lackluster and  disappoint our earlier expectations of a possible recovery in February. Thus weexpect a slow start for 2012. Also, we suspect Ann Joo may start to expense anyinterest costs incurred for  its  newly commissioned blast furnace (BF). Wealso expect  the company to only enjoylimited conversion cost savings as it relies on expensive importedmetallurgical coke. Meanwhile, management expects its new plant  to take another three months to achieve  efficiency as some ancillaryequipment is on the final stage of installation. On full installation, Ann Joomay be able to fully utilise the electricity and gas generated from the BF,plus inject cheaper PCI coal to meet part of its requirement for expensivecoke.

Downgrade to NEUTRAL.As the stock has put on some 14.4% since our last upgrade, we suspect that themarket may have priced in a potential surge in steel prices. We now anticipate  steel prices to rebound in March, with Chinaexpected to  crank up its constructionactivities as it enters the spring season. As Ann Joo's share price offers limitedupside to our  FV, we  are compelled to downgrade  it toNEUTRAL, with only a marginal tweak in our projection. We value the stock usinga book-based valuation, at -0.5 standard deviation of its historical tradingrange, which is one notch lower than the industry's, as we remain vigilant onthe potentially long gestation period for its BF. 

Source: OSK188 

PUNCAK (FV RM1.82 - TRADING BUY) FY11 Results Review: Breezing Through Choppy Waters

Stock Name: PUNCAK
Company Name: PUNCAK NIAGA HOLDINGS BHD

Research House: OSK

Price Call: TRADING BUY

Target Price: 1.82

Thanks to timely profit recognition at its constructiondivision, Puncak's core net profit of RM3.7m for FY11 beat our and street projections for a loss. Meanwhile, wereckon the scheduled 25% water tariff hike from 2012 may somewhat  help improve earnings, regardless of whetherofficial approval is granted. We are also upbeat on higher  revenue from its newly acquired Oil & Gas(O&G) unit and earnings from outstanding pipe laying projects. As the shareprice offers a decent upside to our FV of RM1.82,  we are prompted to upgrade Puncak back to a Trading BUY.

Marginally ahead ofexpectation.  Excluding thenon-operating income amounting to RM5.6m, Puncak reported a core net profit ofRM3.7m for FY11, which was ahead of our and consensus' projection of a loss.The revenue was 21.7% higher than our numbers, thanks mainly to higherconstruction revenue from  its  water pipe project and maiden contributionfrom  its newly acquired O&G subsidiary. However,  the group is allocating more capex and various annual charges directly to itsincome statement (P&L) to comply with accounting standard IC 12,  which continues to undermine Syarikat Bekalan Air Selangor SB  (Syabas)'s bottomline. That said,  the timely profit recognition  in its constructiondivision will help to cushion the negative impact.

25% tariff hike andO&G contribution? As provided under the concession agreement, 70%-ownedSyabas is scheduled to receive a 25% water tariff hike from 1 Jan 2012. We donot expect any hike to be implemented as the previously scheduled 30% hike for2009 is still under legal dispute with the Selangor State Government. However,we believe the group will again account for the estimated compensation for thenew water tariffs, which will artificially boost its bottomline. Meanwhile, wealso understand that its newly acquired Global Offshore (M) SB (GOM) hassecured a lucrative O&G pipe maintenance project worth some RM420m, whichwill keep the unit busy this year. This aside, Puncak is also bidding forvarious water projects, with margins for its water and O&G projects estimatedto be in the mid-teens.

Trading BUY. Weexpect Puncak's FY12 profit to hit RM172.4m, incorporating the tariff hikecompensation mentioned earlier, as well as contributions from its O&G andwater pipe-laying projects. Since our last downgrade on the stock, its shareprice accordingly fallen back. Against our original fair value of RM1.82, thestock now provides a decent potential upside of 31%. In light of these factors,we upgrade Puncak back to a Trading BUY. Our fair value is derived from 0.7xFY11 B/V, which was the benchmark used before adjustments for IC Interpretation12.

Source: OSK188

GENTING (FV RM12.30 - BUY) FY11 Results Review: Mild Headwinds

Stock Name: GENTING
Company Name: GENTING BHD

Research House: OSK

Price Call: BUY

Target Price: 12.30

The group's FY11 earnings  were in line with bothconsensus and our  full-year estimates,representing 98.9% and 99.9% of consensus and our full-year forecasts.Incorporating our recent fair value downgrade on Genting Singapore, we arerevising downwards our earnings and SOP fair value for Genting Bhd from RM13.36to RM12.30. Despite the recent earnings letdown from subsidiary Genting Singapore,we think that this has largely been priced into the group's relatively attractive13.1x FY12 PER  vs  its large-scale global casino peers' morethan 20x PER. Maintain BUY, at a SOP fair value of RM12.30.

In line. GentingBhd's FY11 core earnings were in line, representing 98.9% and 99.9% of consensusand our full-year forecasts respectively. Core earnings, EBITDA and revenue acceleratedby 12.4%, 13.5% and 28.9% y-o-y respectively in FY11, with Genting Singaporebeing the single largest contributor at 69.7% of absolute y-o-y EBITDA growth. Thegroup's q-o-q performance was more subdued, with EBITDA up  3.9% as the lower plantation earnings (-13%q-o-q) and construction cost overruns from Resorts World at New York partiallyoffset its gaming division's 4% sequential earnings growth, which was largelydriven by stronger luck factor at Genting Singapore.

Broad based y-o-ygrowth in most segments. The key drivers of FY11's y-o-y earnings growthwere: i) Genting Singapore: (+19% y-o-y and 4% q-o-q) on the back of a fullFY11 contribution vs 10.5 months' contribution in the previous correspondingperiod and a sequential recovery in win rates; ii) Genting Plantation: (+37%y-o-y but  -20% q-o-q) in tandem withstrong FFB production growth and higher average y-o-y CPO prices but lowerq-o-q, iii) Malaysian gaming op (+7% y-o-y), boosted by improved win rates and doubledigit growth in both mass and VIP gaming volume; and iv)  power division: (+16% y-o-y and +3%q-o-q),  as  more power was  dispatched from its Chinapower plant, and tariff adjustments. The oil and gas division continued toreport a loss of RM66.9m.

Leisure, gamingcontribute 85% of group EBITDA. Leisure and gaming remained the largestcontributor  of  group earnings, with expectations of moregrowth following the completion of Genting Singapore's Resorts World atSentosa's Western Zone by mid-2012 and a full-year maiden contribution fromGenting Malaysia's Resorts World New York racino in 2012. Given the group'sgross cash pile of RM13.2bn (with net cash of RM930m), expanding globalfootprint and hence branding, it is well placed to capitalize on casinoacquisitions or liberalization opportunities globally.

Source: OSK188

GENM (FV RM4.32 - BUY) FY11 Results Review: Mild Headwinds

Stock Name: GENM
Company Name: GENTING MALAYSIA BERHAD

Research House: OSK

Price Call: BUY

Target Price: 4.32

The group's full-year FY11 results were in line with ourestimates but marginally beat consensus numbers by 8%. Despite the recentsetback in Miami and depletion of the group's net cash balance to just RM343mas at Dec 2011, its free cash flow remains robust at RM1.2bn p.a, underpinningits capacity for future acquisitions. The maiden full-year contribution fromRWNY to earnings in FY12 is expected to drive group earnings by 19.6%. MaintainBUY, and  at  a fair value of RM4.32, backed by itsalluring 8.1x EV/EBITDA.

In line.Adjusting for various exceptional items, the group's FY11 core earnings were inline with our estimates, with its full-year core FY11 earnings representing102.1% of our full-year forecast but a larger 108% of consensus. EBITDA and netprofit expanded 15.1% and 11.2% respectively on better hold rates at itsdomestic VIP gaming business and  maidencontribution from its UK business. On a q-o-q comparison, EBITDA contracted1.9% q-o-q, largely owing to a RM40.9m construction loss from cost overruns fromthe development of Resort World at New York (RWNY) which it incurred in 4Q11. Excludingthe construction loss,  the group's  core operations reported a 5.7% q-o-q increasein EBITDA, driven by the higher business volume from Malaysia and a maiden RM23.6mcontribution from RWNY, which commenced operation on 28 Oct 2011. Meanwhile,casino  visitation  in UK stood at +5% in London and +9% atprovincial casinos.

Malaysian casino opresilient. Its Malaysian casino operation, which  comprises the bulk of group earnings (at 90%), reported 7% y-o-y and +6% y-o-ygrowth in revenue and earnings respectively, although  4Q11 revenue contracted1% q-o-q on the back of  a lower winpercentage. Foreign visitor growth was driven by Singapore and Indonesia, fromwhich visitation was higher by 6% and 8% respectively for the FY11 perioddespite fierce competition from the operation ramp-up by Singapore's integratedresorts. More importantly, hotel arrivals from Singapore were higher than thepre-Singapore IR levels as Genting Highlands' lower price points and coolmountain air continue to be a key draw for mass market visitation.  

Source: OSK188

LITRAK (FV RM4.72 - BUY) 9MFY12 Results Review: Solid Numbers on Improved SPRINT

Stock Name: LITRAK
Company Name: LINGKARAN TRANS KOTA HOLDINGS

Research House: OSK

Price Call: BUY

Target Price: 4.72

Litrak posted 9MFY12 earnings of RM102.1m (+24.6% y-o-y)which was above our expectations by meeting 80.7% of our full-year estimates,thanks mainly to lowerthan-expected losses at SPRINT. It declared a secondinterim DPS of 7.0 sen with its  9MFY12DPS now standing at 17.0 sen. Going forward, we expect Litrak's earnings to befairly resilient with the next toll hike for its Damansara link scheduled onlyin 2015. In view of the media speculation on a potential takeover offer by PLUSExpressways, we are removing our 10% discount attached to our previousvaluation and our SOP-derived FV now stands at RM4.72.

Above expectations.  Litrak's 9MFY12 revenue came in at RM269.9m(+14.8% y-o-y). YTD operating profit increased 15.0% y-o-y  toRM214.5m, with a marginal 20bps improvement in its EBIT margin to 79.6%. All inall, the core earnings of RM102.1m (+24.6% y-o-y) came in slightly above ourexpectations at 80.7% of our full-year estimates owing to lower losses incurredby its 50%-owned SPRINT. From a quarterly perspective, 3QFY12 results generallymarked some decent y-o-y improvement on the recognition of higher toll ratesbut the numbers were weaker sequentially owing to seasonal factors.

Decent yield. Thecompany took the opportunity to declare a second interim DPS of 7.0 sen withits 9MFY12 DPS now standing at 17.0 sen. This implies a healthy payout ratio of84.1% (vis-a-vis our previous assumption of 70%) based on its 9MFY12 earnings,which translates into a decent dividend yield of 4.2% YTD. We now expect its payoutratio to hover around 75%-80% (from 65%-70% previously)  as a result of its better cash flow management,and this implies an annualized DPS of 20-24 sen over the next three years. 

No hike expected.With the widely anticipated General Election likely to take place this year,we  do not foresee any toll hikes in thenear term with the  Government  likely to continue subsidizing motorists at RM0.50 on LDP toll rates. This ispositive for Litrak as it still receives the agreed rate of RM2.10, without suffering  a decline in traffic volumes associated witha toll hike.  The next scheduled tollhike takes place in 2015 for its Damansara link, which has almost reached itssaturation point with an average daily traffic of approximately 60k.

BUY.  We revisited our model and lowered our losses assumption on Litrak's 50%-ownedSPRINT operations given the encouraging progress made YTD. With that, our EPSforecasts for the next 3 years are revised upward by 6%-7%. In view of thecurrent media speculation on a potential takeover offer by PLUS Expressways, weare now removing our 10% discount attached to our previous valuation, inanticipation of more news flow in the coming months which could give a boost tothe share price. Hence, our SOP-derived FV now stands at RM4.72. Maintain BUY.

Source: OSK188 

ALAM (FV RM0.85 - NEUTRAL) FY11 Results Review: A Quarter to Forget

Stock Name: ALAM
Company Name: ALAM MARITIM RESOURCES BHD

Research House: OSK

Price Call: HOLD

Target Price: 0.85

Alam's FY11 results came in below expectations, largely  due to the lower contribution from its offshore support vessels as a result ofthe monsoon season, higher other operating expenses  and inferior contribution from its underwaterservices/offshore installation and construction. Nevertheless, we are expectingAlam's business prospects to improve in FY12 on the back of higher demand for vesselservices from marginal oilfield and brownfield services.  Maintain Neutral with an unchanged FV ofRM0.85 based on existing PER of 12x FY12 EPS.

Underperformance.The FY11 results were below consensus and our expectations making up 30% and50% of  the respective FY11 forecasts.Overall, the disappointment arose from lower ontribution from its offshoresupport vessels which were affected by the monsoon season, higher otheroperating expenses and lower contribution from its underwater services/offshoreinstallation and construction. All these factors  caused its 4QFY11 bottomline to sink into anet loss of RM0.7m, a significant drop from a net profit of RM13.4m in 3QFY11.Nevertheless, on a  y-o-y  comparison, the  full-year FY11 performance  turned out to bebetter, lifted by a stronger 2Q and 3Q, while its FY10 performance was affectedby the one-off Vastalux provision in 4QFY10.

Better prospectsexpected in FY12 onwards. Given that marginal oilfield and brownfield servicesshould start  to see heightenedactivities in FY12 onwards  consideringthe planned capex to be rolled out by Petronas and its PSC contractors, we areexpecting the demand for offshore support vessels to improve moving forward andthis would definitely benefit Alam's vessels from the standpoint of moreattractive charter rates and longerterm contracts.  We are expecting its utilization rate toprogressively improve and be consistent at 70%-80% compared to the situation inFY11, during which its utilization rate swung from 50% to 80% within weeks dueto the spot charter for some of its vessels.

Maintain Neutral.  Our fair value for Alam remains unchanged atRM0.85 based on existing PER of 12x FY12 EPS. Although we  are positive of the company's  future prospects,we are keeping our call and PE valuation unchanged for now until we see the positive  industry developments filter down to Alam's earnings. Hence,  we maintain  our Neutral call fornow.

Source: OSK188 

MEDIAC (FV RM1.54 - BUY) 9MFY12 Results Review: Commendable Set of Results

Stock Name: MEDIAC
Company Name: MEDIA CHINESE INTERNATIONAL LT

Research House: OSK

Price Call: BUY

Target Price: 1.54

Media Chinese (MCIL) recorded a record high 9MFY12 earningsof RM150m which were above both our and consensus estimates at 81% and 91%of  the full year forecasts respectively.We continue to like  its prospects goingforward and foresee 2012 to be another record breaking year for  the group. While there were no dividendsdeclared for this quarter, we believe that it will declare its dividend in 4Qconsidering its huge cash pile of RM384m as at Dec 2011.   Reiterate BUY with our FV upgraded to RM1.54from RM1.47 previously, based on an unchanged 13x CY12 PER.

The Best So Far.In line with our previous guidance in our report titled 'Another Record Year inThe Making' published 14 Feb 2012, MCIL posted its strongest YTD results ever withits 9MFY12 top and bottom line standing at RM1.15bn (+8% y-o-y) and RM150m (+11%y-o-y). It marked its best quarter ever in 3QFY12 with earnings coming in at RM61mthanks to better showing from its Hong Kong operations which improved 20% y-oyand 37% q-o-q to RM79m as well as sturdy contribution from its Malaysia corebusiness with growth  being driven by itscore print business, with advertising revenue chalked up10% y-o-y and 13% q-o-qgrowth. MCIL's travel segment also grew 18% y-o-y and 19% YTD with a strongsurge in demand for its long-haul tours to destinations such as Europe andAustralia owing to the year-end festive season and Christmas holidays. Marginsfor the group were sequentially higher q-o-q, with  an expansion of 600bps at  both PBT and EBIT level owing to management'sexcellent cost control efforts. 

Positive trend topersist. Moving into 4QFY12, we foresee that the group will continue to reporthealthy growth, on the back of aggressive advertising and promotion activities amonghypermarkets and fast-moving consumer good companies during the Chinese New Yearperiod in Jan 2012. We  expect thepositive trend to persist going into FY13 as management ramps up its efforts tobetter manage overhead and operating expenses. In addition, newsprintprices  ' which are currently hovering atUSD650-USD680/mt ' are likely to remain stable and upcoming major events, suchas the nation's impending General Election, the 2012 Olympics and Euro2012  sports tournaments will provide a boostto the sector's adex growth.

BUY. We continueto like MCIL  which remains as the topbuy within our media sector coverage. With earnings beating our and consensusestimates, we are upgrading our top and bottom line by 1%-5% for both FY12 andFY13. Hence, our FV is now upgraded to RM1.54 (from RM1.47 previously) based onan unchanged 13x CY12 PER. Though there were no declaration of dividends thisquarter, we believe the group will continue to reward its shareholders givenits mounting cash pile, which stood at RM384m as at Dec 2011. Thus, we continueto impute a payout ratio of 60% for FY12 and FY13, which translates into anappealing yield of 5.7% and 6.1%. Maintain BUY

Source: OSK188