February 10, 2012

HLIB Research 10 February 2012 (MRCB; Econs; Traders Brief)

Stock Name: MRCB
Research House: HLGPrice Call: BUYTarget Price: 2.50


KL Sentral to support growth

'''' Following yesterday's briefing, we walked away reassured that the company's fundamentals are still strong underpinned by the maturing KL Sentral development.

'''' VOs as much as RM20m should be recognised by FY12, hence an earnings boost for the construction division. However, the division is expected to post EBIT margins of 3-4% going forward as opposed to 7-9% achieved previously. This is due to the intense bidding for the RM1.4bn LRT Ampang Line Package B project. Overall, outstanding order book remains strong at ~RM2.2bn, translating to 3.3x FY11 construction/environmental revenue.

'''' Lot G offices, Aloft Hotel, QSentral (70% take-up) and Sentral Residences (50% take-up/bookings) will continue to drive the property division's earnings. Overall, unbilled property sales stood at ~RM1.68bn, translating to 3.5x FY11 property revenue.

'''' We estimate that FY12 earnings will be impacted by higher financing charges arising from the EDL highway. Hence, we slash our FY12 forecast, while introducing FY14 earnings estimates. That said, it should not impact our valuations as MRCB is valued based on SOP method.

'''' We maintain our BUY call on MRCB for the unique qualities of KL Sentral to support earnings growth, but with a lower TP of RM2.50.



Performance of IPI (Dec 2011)

'''' IPI growth picked up to 3.0% yoy in Dec (Nov:'' +2.4% yoy), higher than consensus estimate of +1.7%, driven by improvement in electricity and mining segment.

'''' E&E production declined further by 7.4% yoy (Nov: -2.8%) driven by weakness in all product segments, with severe output drop in printed circuit board segment.

'''' Contraction in mining output narrowed to only -0.8% yoy in Dec, reducing its drag on the overall IPI performance.

'''' Maintain our full year 2011 GDP estimate at 5.1%, factoring in 4Q estimate of 5.0%. Also maintain our 2012 GDP growth forecast at 4.5% as we expect resilient domestic demand to cushion the softer industrial sector.

'''' We expect BNM to hold the OPR steady at 3.00% until end-2012 given the resilient economic growth with sticky inflation.


Softening in December Export Growth

'''' Export growth moderated further to 6.1% yoy in Dec (Nov: +8.0% yoy), the slowest since June 2011, while import growth bucked the trend, picking up for the second consecutive month to 10.4% yoy (Nov: +8.4% yoy).''

'''' Trade surplus narrowed to RM8.3bn (Nov: RM9.5bn), as import growth significantly outpaced export expansion.

'''' Contribution of palm oil diminished drastically, with export growth slowing sharply to 8.4% yoy in Dec, a sharp slowdown compared to an average growth of 43.2% during Jan-Oct 2011.

'''' Further pick-up in import growth with intermediate imports rising by 7.7% yoy suggests that manufactured exports could remain stable in the coming months.

'''' We expect January's export growth to show temporary contraction due to festivity and seasonality.

'''' MITI announced its official export growth forecast of 5-6% for 2012. Our export growth projection is slightly lower at 4.5%, which is in line our overall GDP outlook.

'''' Maintain our 2012 GDP growth forecast at 4.5% as we expect resilient domestic demand to cushion the softer industrial sector.


KLCI: Momentum to remain strong to retest 1570-1580 zones''''''

'''' Despite surging 3.9% from YTD low of 1509 (6 Jan) to 1565 yesterday, technical indicators are bullish and overall market momentum (with the rotational plays on bigcaps, 2nd & lower liners and penny stocks) remains positive to climb higher towards the resistance targets at 1570-1580 territory.

'''' In our view, any profit taking activities are likely to be well-absorbed near supports at 1551 (upper Bollinger band) and 1531 (10-d SMA).''


Dow Jones: Dow ekes out 7 pts gain in a choppy trade''''''

'''' Overall, after surging from Oct 11's low at 10404, investors were cautious after months of continuous gains as the market is approaching an overbought position amid rising RSI.

'''' However, we are encouraged by the continuous improvement in US economic news which show that the country is not as handicapped to what's going on in Europe as in the past.'' In our view, any pullback will attract investors who missed the rally, limiting the decline near supports of 10-d SMA (12695) and 20-d SMA (12582).

Malaysia Airline System: Maintain Hold - 4Q11: Brace for a hard landing

Stock Name: MAS
Research House: MAYBANKPrice Call: HOLDTarget Price: 1.55

Yields, fuel and slow motivation. 4Q11 is expected to be severely loss-making due to the impact of a 38% higher fuel price YoY and a weak yield environment. We have been monitoring MAS' fares and notice that it is lower than those of competitors by a wide margin. We maintain our Hold call with a target price of RM1.55, pegged to 6.6x 2012 adjusted EV/EBITDAR - on par with Asia Pacific airline peers.

Maybank Research 10 Feb 2012

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Sunway REIT: Maintain Buy - Growing its asset size inorganically

Stock Name: SUNREIT
Research House: MAYBANKPrice Call: BUYTarget Price: 1.38

Above expectations; TP raised. SunREIT's reported 1HFY12 realised net profit of RM95m (+14.3% YoY) was slightly above our expectations but within consensus estimates. The earnings variance was attributed to better-than-expected performance from Sunway Putra Place (SPP). 2Q DPU declared of 2.0sen also beat our estimates. We adjust our FY12-14 earnings forecasts by -2% to +2%. Our new DCF-based target price is RM1.38, translating into a 13% total return.

Maybank Research 10 Feb 2012

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Bursa Malaysia: Maintain Hold - No surprises in 2011 final results

Stock Name: BURSA
Research House: MAYBANKPrice Call: HOLDTarget Price: 7.00

Maintain Hold. RM146m 2011 net profit (+29% YoY) made up 98% of our and 101% of consensus estimates. We marginally tweak forecasts, expecting a slower 11% growth in 2012 profit with continuous volatility to support equity and derivative trading activities. We lift our sum-of-parts based target price by 7% to RM7.00, pegging Bursa at 20x 2012 PER (18x previously) which is at a 20% discount to our target for SGX SP plus excess cash (94sen/sh). We expect Bursa to retain its 95% net profit payout translating into a 3.8% net yield for 2012.

Maybank Research 10 Feb 2012

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MRCB - Highlights from analyst briefing

Stock Name: MRCB
Research House: HWANGDBSPrice Call: BUYTarget Price: 3.10

Malaysian Resources Corp; Buy; RM2.19
Price Target: RM3.10; MRC MK

4Q11 included provision for variation orders (VOs) for some construction projects amounting to RM20m. MRCB believe there is strong grounds for claim and a potential write back in 2012 is possible. We understand construction margins for FY11 would be 4% excluding VOs instead of the 1.9% reported.

2012 bottomline growth could be impacted by:- i) higher tax rate as it has utilised most of its tax losses; ii) higher minority interest from Lot D and Lot B; and iii) start up losses and higher interest cost for Eastern Dispersal Link (EDL). However, pretax profit growth should still be decent. We are currently looking at RM107m net profit for FY12F (+38% growth) which is below consensus of RM118m. However, we may look to revise our numbers pending more clarity for EDL and when its KPIs are disclosed in March.

EDL may start tolling in May pending cabinet approval. Based on this, the expected budgeted loss is RM30m to RM40m for FY12F but will be profitable in FY13F assuming traffic volume remains consistent at 70,000 to 80,000 vehicles per day. There will also be higher interest cost as MRCB will unlikely be able to capitalise interest cost going forward (RM7.5m per month) as the project has been completed.

MRCB is still exploring launching a REIT but thinks if it happens in 2012 it will be via injecting its properties into an existing REIT. Lot E has achieved 70% tenancy with average rental rates of RM8.50 psf for office and RM5.50psf for retail. Lot 348 will be delayed up to a maximum of 6 months (realistically one month) but potential LADs may be absorbed by budgeted savings of RM38m from the construction.

With construction flows remaining strong, MRCB has targets to bag at least RM1bn worth of new works in FY12F. It will continue to bid for MRT elevated works, LRT extensions, River of Life projects and environmental projects. On the RM1.3bn LRT contract clinched in 2011, RM450m will be done internally while for the balance MRCB has option to either earn a project fee of 1-2% or participate in the tenders.

Margin guidance for civil works is 3-4%. We maintain our Buy rating and SOP-derived TP of RM3.10. Key catalysts include:- i) potential participation in the RRIM due to its strong parentage; ii) more construction wins; iii) approval for Penang Sentral in 2012 and receiving an official approval for another similar type of project in another state.

Source: HwangDBS Research 10 Feb 2012

BURSA - Sustainable momentum is key

Stock Name: BURSA
Research House: HWANGDBSPrice Call: SELLTarget Price: 6.00

Bursa Malaysia; Fully Valued; RM7.52
Price target: RM6.00 (Prev RM5.20); BURSA MK

FY11 net profit of RM146m was in line. Declared 13 sen final DPS; 95% payout for FY11. Maintain Fully Valued; raised TP to RM6.00.

Source: HwangDBS Research 10 Feb 2012

OSK upgrades CIMB to 'buy'

Stock Name: CIMB
Research House: OSKPrice Call: BUYTarget Price: 8.05

OSK Research Sdn Bhd is more optimistic on the outlook of CIMB Group Holdings Bhd although its share price has lagged both the market and its peers over the past months.

In a research note today, OSK said there was scope for CIMB's earnings to beat relatively conservative consensus earnings growth forecast of 4 per cent for financial year 2012.

OSK said CIMB was scheduled to release its fourth quarter 2011 (4Q11) results where earnings were expected to reflect a 8 per cent year-on-year (yoy) growth but a 5 per cent quarter-on-quarter decline owing to an upward normalisation in 4Q11 loan loss provisioning.

"This is a rather commendable performance, taking into account the fact that the 4Q10's non-interest income included the recognition of the lumpy investment banking fee income arising from the Petronas Chemicals' initial public offering.

"On a pre-provision operating line, we expect a high single-digit yoy growth from stronger foreign exchange income flows and stabilisation in the net interest margins," it said.

OSK has upgraded CIMB shares to a 'buy' with a higher fair value of RM8.05 from RM7.62 previously.

CIMB shares on Bursa Malaysia rose three sen to RM7.23 as at 10.48am today. -- Bernama

Bursa shares rise on bullish ratings

Stock Name: BURSA
Research House: CREDIT SUISSEPrice Call: HOLDTarget Price: 7.50

Bursa Malaysia Bhd, the nation's stock and derivatives exchange operator, rose to a six-month high after brokerages including Credit Suisse Group AG raised their share-price estimates to reflect better growth prospects.

The stock gained as much as 2.7 per cent to RM7.72 in Kuala Lumpur trading, the highest intraday level since July 29.

It traded at RM7.60 at 11.51 am local time. Fourth- quarter net income rose 5.2 per cent to RM31.3 million (US$10.3 million), bolstered by higher trading revenue on the derivatives market, it said in a statement yesterday.

"Bursa's earnings are highly leveraged to improving market activity, with January 2012 volumes boding well," Arjan van Veen, an analyst at Credit Suisse, wrote in a report today.

"Bursa has capacity to lift pricing as well as utilize the current excess capital on its balance sheet."

He raised his price estimate to RM7.50 from RM6.94 and kept his "neutral" rating.

The average daily trading volume on the Southeast Asian nation's stock exchange jumped 20 per cent to 1.8 billion shares in the past three months compared with the same period a year earlier, according to data compiled by Bloomberg.

Trading volume surged to 4.4 billion shares at the close on Feb 8, the highest since February 2007. Derivatives trading also surged, led by palm oil futures.

CIMB Group Holdings Bhd increased its price estimate for Bursa to RM7.65 from RM7.18, while Kenanga Investment Bank Bhd raised its target price to RM8 from RM7.40, they said in separate reports today.

Chan Ken Yew, an analyst at Kenanga, increased his 2012 earnings estimates by 5.3 per cent and 13 per cent for 2013.

The stock exchange operator's 2012 profit may be similar to last year's "if not better," Bursa Chief Executive Officer Tajuddin Atan told reporters in Kuala Lumpur yesterday.

The bourse is open to strategic alliances to boost market access and improve efficiency, he said, without giving details.

Shares of Bursa have gained 13 per cent this year, outpacing a 2.1 per cent increase in the benchmark FTSE Bursa Malaysia KLCI Index. - Bloomberg

February 9, 2012

WCT - Bags RM300m MITI contract

Stock Name: WCT
Company Name: WCT BHD
Research House: HWANGDBSPrice Call: BUYTarget Price: 3.70

WCT; Buy; RM2.58
Price target: RM3.70; WCT MK

WCT announced it has won a RM300.5m contract for the construction of a Ministry of International Trade & Industry (MITI) building by Putrajaya Management. The scope of works includes the design and build of GBI Gold rating 31-sotrey office, tower, a 2-storey car park and a 3-storey podium with completion in February 2015.

This is an important win for WCT after a long lull in 2011 (order wins of RM187m). This contract win represents 15% of our FY12F new win assumption of RM2bn. We expect margins to be c.5% but may trend higher given WCT's reputation of being cost competitive. Total tenderbook now stands at RM5bn, which is still skewed towards the Middle East. We maintain our Buy rating and SOP-derived TP of RM3.70.

Source: HwangDBS Equity Research 9 Feb 2012

Boustead Holdings - Gearing up for a bumper year

Stock Name: BSTEAD
Research House: HWANGDBSPrice Call: BUYTarget Price: 7.30

Boustead Holdings; Buy; RM5.48
Price target: RM7.30 (Prev RM6.60); BOUS MK

Bumper year in 2012, upside for plantations. Works at Cochrane have started, 75-80% committed tenancies. Buy, raising TP to RM7.30.

Source: HwangDBS Equity Research

MRCB - 4Q anchored by property

Stock Name: MRCB
Research House: HWANGDBSPrice Call: BUYTarget Price: 3.10

Result Snapshot
Malaysian Resources Corp; Buy; RM2.24
Price target: RM3.10; MRC MK

Making amends in 4Q ' earnings driven by property. Next key catalysts ' RRIM auction and MRT awards. Maintain Buy call and SOP-derived RM3.10 TP.

Source: HwangDBS Equity Research 9 Feb 2012

HLIB Research 9 Feb 2012 (WCT; MRCB; JCY; Traders Brief)

Stock Name: WCT
Company Name: WCT BHD
Research House: HLGPrice Call: BUYTarget Price: 2.98

Stock Name: MRCB
Research House: HLGPrice Call: BUYTarget Price: 2.64

Stock Name: JCY
Research House: HLGPrice Call: HOLDTarget Price: 1.33


The first for FY2012

'''' WCT has been awarded a contract to design and construction the new Ministry of International Trade & Industry (MITI) HQ at Jalan Khidmat Usaha by Putrajaya Management S/B for RM300.5m. Works are expected to be completed in Feb 2015.

'''' After a barren spell last year, WCT has finally clinched a meaningful project. We understand that the new MITI HQ was supposed to be awarded last year, and has finally come to fruitation. Overall, WCT's outstanding order book has been lifted to ~RM2.7bn, translating to ~1.7x FY10's construction revenue and ~1.3x order book-to-market cap ratio.

'''' Maintain BUY call with TP of RM2.98 based on 14x average FY11 and FY12 earnings.



FY11 lifted by KL Sentral developments

'''' Reported FY11 earnings grew by 15% to RM77.5m (5.59 sen/share). However, after adjusting for EI of RM5.29m, core earnings came in at RM77.2m (5.21 sen/share), missing our estimates slightly by 6% but off consensus' mark by 16%. Nonetheless, FY11's core earnings growth was still decent at 7%, lifted by strong performance in the property division.

'''' 4Q marks the second consecutive quarterly EBIT losses for the construction division. We understand that the losses occurred due VOs which is pending approval. Hence, once the VOs are approved, there should be lumpy earnings recognition for the division going forward. We are not overly concerned as it is a timing issue in profit recognition. On the other hand, the property division saw tremendous growth, underpinned by the maturing KL Sentral developments.

'''' Forecasts under review pending analyst briefing. Maintain BUY call with TP of RM2.64 based on SOP valuation.


JCY International (HOLD)

1QFY12 Results

'''' 1QFY12 core net profit of RM164.9m exceeded our expectations, accounting for 42% of our full-year forecast and 71.6% of street's estimates.

'''' JCY registered a revenue of RM599 (+27.4% yoy, +27.1% qoq), EBITDA of RM190.6m (+434.7% yoy, +362.7% qoq), PAT of RM162.5m (+2,063% yoy, +514.4% qoq)

'''' JCY's performance was 8.3% better than profit guidance issued in January, attributable to increase in orders, higher ASP, effective product mix, favorable exchange rate and continuous cost management.

'''' JCY managed to capture 25% of HDD component market after the Thai flood as it saw orders from Seagate almost doubled. As a result, JCY achieve better economy of scale and scope (product mix) while achieving above 80% utilization rate.

'''' The firm acknowledged the challenges in acquiring talent and human resources and may be a bane to its growth.

'''' We have revised our profit forecast marginally after revising our cost models. As a result, FY12 and FY13 EPS are revised by +12.3% and -3.2% respectively.

'''' Following the revision in earnings forecasts, target price has been raised to RM1.33 from RM1.26


KLCI: To retest 1570 zones after the 1550 breakout

'''' Renewed buying interest on index-linked stocks after recent consolidation and persistent active retail participation on lower liners, ACE and penny stocks are expected to sustain KLCI rally in the short term, in anticipation of positive progress on Greece debt talk, acceleration in ETP projects rollout, continuous funds inflows and stronger global manufacturing data.

'''' Immediate supports are 1542 (upper Bollinger band) and 1530 (31 Dec 11) whilst resistances are the upper channel near 1570-1580 zones.

AMMB: To retest 200-d SMA

'''' ''Currently, the momentum and trend indicators are on the mend and AMMB is consolidating upwards along the uptrend line formed since Sep 11 low. Following the triangle breakout, AMMB could test higher ground over the next few sessions with immediate resistance at RM6.15 (200-d SMA).

'''' A more bullish outlook would only appear if share price manages to close consistently above the 200-d SMA. The next upside targets are RM6.23 (50% FR) and RM6.46 (38.2% FR).

'''' ''Immediate supports are RM5.86 (100-d SMA), RM5.82 (mid Bollinger band) and RM5.71 (lower Bollinger band). Cut loss below RM5.71.''

RHBInvest Research Highlights 09th February 2012

Stock Name: WCT
Company Name: WCT BHD
Research House: RHBPrice Call: HOLDTarget Price: 1.97

09th February 2012
Malaysia Equities
Top Story
Gamuda ' A Tale Of Two Rail Projects                                                                   Market Perform
Visit Note
-          Apr 2012 remains the most critical for Gamuda as it is when the RM7-8bn tunnelling package of the Sg Buloh ' Kajang (SBK) Line of the Klang Valley MRT project is expected to be awarded.
-          We believe there is more than half a chance that MMC-Gamuda JV will emerge the winner given its tremendous edge over its rivals by virtue of its right to match the lowest bid under a "Swiss challenge", sweetened by a 7.5% "price preference".
Corporate Highlights
MBSB ' 1Q12 Headline Income Indicators In For A Rebound?                                   Market Perform
Company visit
-          Management attributed the 22% qoq drop in 4Q11 pre-tax profit to: 1) higher funding cost from loan securitisation; 2) lower processing fee from slower PF-i disbursements; and 3) higher loan impairment allowances due to higher collective allowances for PF-i. Management said that 4Q11 gross loans were flattish qoq mainly due to slower PF-i disbursements during the quarter as MBSB had already met the full-year disbursement target in early-4Q11.
Dialog ' Tie-Up With Atlas Global Oil And Gas Services                                                Outperform
News Update
-          Yesterday, Dialog entered into a shareholders agreement with Atlas Global Oil and Gas Services (ATG) to establish a 55:45 JV to market, promote and supply seismic technology and services.
WCT ' Lands RM301m MITI Building Job                                                                Market Perform
News Update
-          WCT has secured construction contract for the new 31-storey headquarters of the Ministry of International Trade & Industry in KL for RM300.5m.
-          This is the first key contract WCT has secured so far in FY12/12, boosting its outstanding construction orderbook by 10% to RM3.3bn. Assuming an EBIT margin of 7-8%, the contract will fetch RM21-24m EBIT over the construction period ending Feb 2015.
-          Forecasts are maintained as we have already assumed WCT to secure RM1.5bn worth of new contracts in FY12/12. Maintain Market Perform.  Fair value is RM1.97.
-          Related story: WCT Company Update ' FY12/11 New Contract Wins Fall Short Of RM2bn Target (9 Jan 2012)
Pavilion REIT ' Off To A Good Start                                                                             Outperform
Results / Briefing Note
-          4Q11 net profit was in line with expectations. A DPU of 0.44 sen was declared for FY11.
MRCB ' FY12/11 Core Net Profit Grows 7%                                                                 Trading Buy
Results Note
-          FY12/11 core net profit of RM72.2m (excluding RM5.3m writeback of impairment in 2Q) came in within our forecast but missed the market consensus by 14%.
Regional Equities
Genting Singapore : Potential To Gain Market Share In 4Q11, But '                      Market Perform
Company Update
-          In 4Q, Marina Bay Sands (MBS) recorded weaker casino volumes, as rolling chip (VIP) volumes fell 35.6% qoq, while mass volumes fell 4.5% qoq and slot volumes fell 1.7% qoq. Bottomline growth was stronger vis-''-vis topline growth, as VIP win rate rose significantly to 3.34% (from 2.69% in 3Q11), above theoretical levels of 2.7-3%.

Gamuda: Maintain Buy - PDP finalised? Lowest for tunnel works?

Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: MAYBANKPrice Call: BUYTarget Price: 4.10

Almost there for the SBK MRT line.
Press reports that MMC-Gamuda JV has finalised the details of its PDP job scope and fee, as well as being the lowest bidder for the SBK MRT tunnelling works are positive news that we have anticipated since we lifted Gamuda as one of our top buys for 2012. Share price has outperformed with a 15% gain YTD. We maintain our RM4.10 RNAV-based TP which has incorporated a 50sen contribution from the MRT for now, pending finalisation of details.

Maybank Research 9 Feb 2012

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MRCB a 'buy', say research houses

Stock Name: MRCB
Research House: MIDFPrice Call: BUYTarget Price: 2.41

Stock Name: MRCB
Research House: OSKPrice Call: BUYTarget Price: 2.50

MIDF Research has maintained a "buy" recommendation on Malaysian Resources Corp Bhd (MRCB) with an unchanged target price of RM2.41, as it may benefit from the slew of expected contract awards this year.

The research house said the construction sector has regained its momentum since early this year, supported by positive news flow and job awards to contractors.

"We expect MRCB's construction division to recover this year," it said in a research note today, adding, the company had a healthy outstanding order book of RM2.5 billion.

MRCB's external revenue from the construction division was lower by 10.2 per cent year-on-year for financial year 2011, as the company was focused largely on in-house construction works.

MIDF Research said MRCB might top up its construction order book by RM1.5 billion in the current financial year.

It is also expecting MRCB's construction margin to recover this year given lower building material prices, particularly steel bars, which is relatively cheaper as compared to last year.

Steel bars are now trading at RM2,150-RM2,300 per metric tonne, which is five-six per cent lower than the average price in 2011.

Meanwhile, OSK Research has recommended a "buy" on MRCB at an unchanged fair value of RM2.50, as construction of the light rail transit (LRT) extension is expected to fully start this year.

"We expect the construction division to post a better performance as it was awarded a major contract for the LRT extension," it said.

At 12pm, MRCB's shares declined four sen to RM2.20. -- Bernama

OSK keeps "buy" call on MBSB at RM2.70

Stock Name: MBSB
Research House: OSKPrice Call: BUYTarget Price: 2.70

OSK Research is maintaining a "buy" recommendation on Malaysia Building Society Bhd (MBSB) with a fair value of RM2.70, in line with the company efforts to grow its loans book aggressively
while keeping its asset quality intact.

In a note today, the research house said MBSB was channeling greater efforts into generating more fee-based income via bancassurance and other products.

The company, which has been innovative in bundling its products, also planned to roll out another bundled product, it said.

OSK Research said it continued to like MBSB's diversification and
innovativeness in growing its business moving forward.

It said other key rerating catalysts of the stock were higher-than-expected loans growth, a further upgrade in civil servants' salaries, continuous improvement in asset quality, and a sustainable dividend policy.

At mid-day break, MBSB's share fell two sen to RM2.11. -- BERNAMA

OSK: "Buy" call on QL Resources stays

Stock Name: QL
Research House: OSKPrice Call: BUYTarget Price: 3.62

OSK Research has maintained a "buy" call for QL Resources Bhd with the fair value unchanged at RM3.62, backed by the company's solid earnings track record and an on-track expansion in Vietnam and Indonesia.

In a statement today, OSK Research said QL Resources is the biggest surimi producer in Malaysia with a 50 per cent market share.

It also said that the company plans to add another new production line for Surimi and fishmeal operations in Indonesia.

"Based on this plan, starting from financial year 2013, the company will boost its production capacity to 10,000 tonnes per annum from the present 5,0000.

"The company has also expanded its integrated livestock farming by venturing into Vietnam and Indonesia," the research firm added.

"As for its palm oil division, a new crude palm oil mill in Indonesia was completed early this year, with a palm pellet plant slated for completion by the second half 2012," the research firm said.

OSK Research said the company has planted 10,000 hectares of its oil palm estates in Indonesia and is expected to complete planting on 15,000 hectares by financial year 2014.-- BERNAMA

WCT: Maintain Buy - Sizeable job win, finally

Stock Name: WCT
Company Name: WCT BHD
Research House: MAYBANKPrice Call: BUYTarget Price: 2.75

Good start for the year. A RM300.5m job win has lifted WCT's order book by 11% to RM2.97b, we estimate. This provides some comfort on near-term earnings visibility after very small job wins in the whole of 2011. We maintain our earnings forecasts having imputed job win assumptions for 2012. No change to our sum-of-parts target price pegged to 13x 2012 earnings plus 20sen value increment from KLIA2 retail concession. The stock remains a Buy.

Maybank Research 9 Feb 2012

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Multi-Purpose Holdings: Maintain Buy - No smoke without fire

Stock Name: MPHB
Research House: MAYBANKPrice Call: BUYTarget Price: 3.54

More asset disposals to come? We understand that TheEdge report on Plaza Magnum (PM) potentially being sold is not without basis. Also, Multi-Purpose Holdings' (MPHB) 33% stake in Philippines Racing Club could be sold, and part of the proceeds may be distributed as special dividends. MPHB may also pay higher recurring dividends in 2012 after degearing. Earnings estimates trimmed by 6%-7% on higher tax rates. Maintain Buy with a lower RM3.54 SOP based TP (-3%).

Maybank Research 9 Feb 2012

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Media Prima: Maintain Sell - Cost cutting helps 2011 but risks remain

Stock Name: MEDIA
Research House: MAYBANKPrice Call: SELLTarget Price: 2.25

Still cautious. FY11 core earnings may exceed expectations due to TV direct cost rationalisation in light of poor adex sentiment and easing newsprint prices. We tweak our FY11 earnings estimate upwards by 6% but leave our FY12 and FY13 earnings estimates relatively unchanged, as the impact of mediocre adex growth going forward will be offset by higher content costs. Maintain Sell.

Maybank Research 9 Feb 2012

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CIMB Group Holdings: Maintain Sell - Bidding for RBS' Asian equities biz?

Stock Name: CIMB
Research House: MAYBANKPrice Call: SELLTarget Price: 6.80

Little impact. We see little impetus for CIMB to acquire RBS' Asian equities and advisory businesses but even if it did, pricing is likely to be decent enough, with little impact to CIMB's financials. We maintain our Sell call on CIMB with an unchanged RM6.80 target price (1.8x 2012 P/BV, ROE: 15.1%).

Maybank Research 9 Feb 2012

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Malaysia Airports Holdings: Maintain Buy - 4Q11: Expect a strong result

Stock Name: AIRPORT
Research House: MAYBANKPrice Call: BUYTarget Price: 7.10

Maintain Buy. MAHB will release its 4Q11 results in the third week of February. 4Q is seasonally the strongest quarter for the year. Based on the operating statistics published, we expect a core net profit (less forex translation and all other non-cash items) of RM139.8m (+35.5% YoY, +6.6% QoQ). Maintain Buy, with a slightly higher DCF-based TP of RM7.10, after imputing a higher passenger growth forecast of 6.7% in 2012 (previously 5%) and contributions from MAHB's 30%-owned KLIA2 integrated complex (KLIA2 IC) concession beginning 2013.

Maybank Research 9 Feb 2012

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Pavilion REIT: Maintain Hold - Strong showing for 2011

Stock Name: PAVREIT
Research House: MAYBANKPrice Call: HOLDTarget Price: 1.10

A good set of results. PavREIT's RM12.4m core net profit over 7-31 Dec 2011 (listed on 8 Dec 2011) was 13% above our and its own IPO forecasts. Management is confident of beating its own RM167m 2012 net profit forecast, especially with the reconfiguration of the existing TANGS space into a high street fashion precinct, thereby attracting higher rentals psf. We tweak our 2012-13 net profit forecasts by +1% but maintain our RM1.10 DCF-based TP. We maintain our Hold recommendation, as total return is less than 15%.

Maybank Research 9 Feb 2012

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Malaysia Construction - PDP agreement details revealed

Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: HWANGDBSPrice Call: BUYTarget Price: 4.50

Stock Name: MMCCORP
Research House: HWANGDBSPrice Call: BUYTarget Price: 3.70

According to the media, the MMC-Gamuda JV has finalised the details with MRT Co on the scope of work and fees for its role as the Project Delivery Partner (PDP) for the MRT project. The fees are expected to be  a lucrative 6% of the total project cost excluding tunneling (c. RM8bn excluding land cost) and 5% reimbursement for costs incurred so far for approvals, technical designs and Environmental Impact Analysis (EIA). This will be progressively recognised over the duration of the project until mid-2017.

The total PDP fees works out to be RM480m assuming a project cost of RM8bn and 6% fees but will be RM900m if including the tunneling portion (c. RM7bn). This works out to be RM0.12/share for Gamuda  and RM0.08/share for MMC. This has yet to be factored into our SOP but we have taken some assumptions in terms of the civil works for the MRT. Recall, the MMC-Gamuda JV is also bidding for the tunneling portion.

Hence, in the unlikely event it is not awarded the project it is able to reap PDP fees for the entire project  cost (c. RM15bn). The scope of works for the PDP include acting as a turnkey contractor where it will be responsible for the engineering designs and technical specifications. It also has to deliver the MRT project within the cost and time frame and be responsible for all other contractors in terms of quality, safety and timeliness.

We continue to like MMC-Gamuda's chances for the tunneling works given i) tunneling experience dating back to 2001 with 4 projects currently; ii) government's interest to keep project domestic driven given  strong multiplier effect on the economy; iii) the project will be awarded via a Swiss Challenge; and iv) MRT is funded by the government and hence foreign contractors may not have an advantage in terms of the funding card.

The award is expected in April 2012. We maintain our Buy ratings on Gamuda (TP RM4.50) and MMC  Corp (TP RM3.70).

Source: HwangDBS Equity Research 9 Feb 2012

February 8, 2012

Harvesting more palm fruits

Stock Name: TAANN
Research House: MIDFPrice Call: BUYTarget Price: 6.98

Valuation still attractive

Stock Name: WASEONG
Research House: MIDFPrice Call: BUYTarget Price: 2.48

Challenging times ahead

Stock Name: F&N
Research House: MIDFPrice Call: SELLTarget Price: 14.00

Slow growth of plantation landbank

Stock Name: SIME
Company Name: SIME DARBY BHD
Research House: ECMLIBRAPrice Call: HOLDTarget Price: 9.82

HLIB Research 8 February 2012 (Construction; GenM; Traders Brief)

Stock Name: GAMUDA
Company Name: GAMUDA BHD
Research House: HLGPrice Call: BUYTarget Price: 4.41

Stock Name: MRCB
Research House: HLGPrice Call: BUYTarget Price: 2.64

Stock Name: SUNWAY
Research House: HLGPrice Call: BUYTarget Price: 3.12

Stock Name: MUDAJYA
Research House: HLGPrice Call: BUYTarget Price: 4.61

Stock Name: GENM
Research House: HLGPrice Call: HOLDTarget Price: 4.07

Construction (OVERWEIGHT)

Relook into Gamuda and MRCB's valuation

'''' YTD, KLCON Index is up +9.8% vis-''-vis the KLCI's +0.5%. We believe that the strong outperformance is due to improved newsflow for the sector and return of risk appetite from investors.

'''' Gamuda and MRCB have seen their existing TP of RM3.81 and RM2.22 breached respectively. Hence, this report relooks into both companies' valuation as to where it may potentially touch if things materialise as planned.

'''' We upgrade Gamuda's TP by 16% to RM4.41 from RM3.81 and MRCB's TP by 19% to RM2.64 from RM2.22 to take advantage of the current buoyant sentiment in the construction sector, which tends to result in share prices overshooting. However, we caution that our newly assigned TP will be revised downwards if things do not pan out as planned.

'''' We MAINTAIN our OVERWEIGHT stance on the sector as we believe that more ETP projects should materialise this year to mitigate slowing economic growth.

'''' Top Picks in order of preference:

Sunway (TP: RM3.12)

Gamuda (TP: RM4.41)

Mudajaya (TP: RM4.61)

MRCB (TP: RM2.64)


Genting Malaysia (HOLD)

Destination Resort Bill Stalled

'' According to Reuters, the legislation that would allow three new resort-style casinos in Florida has been withdrawn before a House subcommittee could hold their vote. The bill has failed to pass at least one committee; hence the measure is dead for 2012.

'' This has turned out to be a disappointment for GenM. However, GenM's RWM remains positive with its mission to build a destination resort in Florida and will continue to work with the legislature and community to bring this mission into reality.

'' If the legislation is not approved, GenM will still continue with the US$3.8bn development, spreading it across 10-15 years. With this, GenM will incure approximately US$253-380m additional capex p.a., which should not be an issue given its net cash of RM2.2-4.8bn and free cash flow of RM0.8-1.8bn in FY11-13.

'' No changes made to our forecast. Maintain HOLD with TP of RM4.07.


KLCI: To retest 1550 zones after the 1530 breakout

'''' As KLCI continued to stay decisively above the major SMAs support levels, it is poised to unfold a follow-through rebound. Following last week's rally that partially filled the large gap of 1,529-1,546 pts, the index may continue its ascending trend today to retest immediate resistance target at 1550.

'''' Immediate supports are Immediate supports are 1530 (31 Dec 11), 10-d SMA (1523) and 1520 (mid Bollinger band).


RCECAP: More technical rebound ahead

'''' Technically, RCECAP short to medium term outlooks are positive as daily, weekly and monthly charts (FIG#3, 4 & 5) are strengthening. The strong breakout of the neckline resistance near RM0.52 will spur greater upside towards RM0.55-0.58 targets. Post RM0.58, more formidable resistance is RM0.62 (76.4% FR). Immediate supports are situ RM0.48 (30-d SMA), RM0.47 (100-d SMA) and RM0.46 (daily lower Bollinger band).

'''' Cut loss below RM0.46.''

RHBInvest Research Highlights 08th February 2012

Stock Name: UNISEM
Company Name: UNISEM (M) BHD
Research House: RHBPrice Call: HOLDTarget Price: 1.53

Stock Name: MPI
Research House: RHBPrice Call: HOLDTarget Price: 3.47

08th February 2012
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