Stock Name: GDEX
Company Name: GD EXPRESS CARRIER BHD
Company Name: GD EXPRESS CARRIER BHD
| Research House: NETRESEARCH | Price Call: HOLD | Target Price: 1.15 |
February 17, 2012
HwangDBS raises target price on Hartalega
HwangDBS Vickers Research has raised its target price for Hartalega Holdings Bhd, the largest producer of nitrile gloves
in Malaysia, to RM7.70 from RM6.50 previously, on better growth visibility despite margin pressure.
However, it downgraded its recommendation to "hold" from "buy" due to limited upside for the share price. Hartalega fell eight sen to close at RM7.74 in the morning session today.
The research house said the next re-rating catalyst for the stock would be its new Factory 6, which would lift capacity by four billion pieces to 13 billion pieces per annum.
It said Hartalega's earnings growth in the next financial year is limited and would largely be driven by costs and operating efficiencies as it is now operating close to full capacity.
The first production line at Factory 6, which will have a total of 10 lines, is expected to be commissioned by end-2012. Hartalega is looking to raise the efficiency bar and targets a production of 40,000 pieces of gloves per hour per line compared to 35,000 pieces per hour for Factory 5, and the industry average
of 18,000 to 23,000 pieces.
The research house conservatively kept its earnings per share growth forecast for the company for financial years ending (FYE) March 31, 2012 and 2013 at 6-8 per cent as the full impact of Factory 6 will only be visible from FYE 2014 onwards," it added.
Hartalega will release its results for the third quarter of FYE 2012 on Feb 22. HwangDBS Vickers estimated Hartalega to show a flat net profit quarter-on-quarter (second quarter profit at RM46 million).
It also expected the glove manufacturer to meet its full year earnings estimate of a net profit of RM203 million and revenue of RM910 million for FYE 2012. -- Bernama
Carving a New Path
Stock Name: YTLPOWR
Company Name: YTL POWER INTERNATIONAL BHD
Company Name: YTL POWER INTERNATIONAL BHD
| Research House: TA | Price Call: BUY | Target Price: 2.12 |
CIMB To Buy RBS Australia's Equity Operations
Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
Company Name: CIMB GROUP HOLDINGS BERHAD
| Research House: TA | Price Call: HOLD | Target Price: 7.70 |
Numbers Spot-on
Stock Name: BAT
Company Name: BRITISH AMERICAN TOBACCO (M)
Company Name: BRITISH AMERICAN TOBACCO (M)
| Research House: OSK | Price Call: HOLD | Target Price: 52.47 |
In Good Hands
Stock Name: PADINI
Company Name: PADINI HOLDINGS BHD
Company Name: PADINI HOLDINGS BHD
| Research House: OSK | Price Call: BUY | Target Price: 1.80 |
Gas price clarity soon?
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Company Name: TENAGA NASIONAL BHD
| Research House: AMMB | Price Call: BUY | Target Price: 6.95 |
Expect better momentum ahead
Stock Name: HLBANK
Company Name: HONG LEONG BANK BHD
Company Name: HONG LEONG BANK BHD
| Research House: AMMB | Price Call: BUY | Target Price: 13.00 |
HwangDBS maintains 'hold' call on BAT
British American Tobacco (Malaysia) Sdn Bhd's (BAT) lower profit after tax of RM180.6 million for the fourth quarter of last year was within expectations, says HwangDBS Vickers Research.
HwangDBS, in a research note here today, said the fourth quarter's profit after tax was reduced by 1.1 per cent, on a year-on year (y-o-y) basis, with shipment volume at 0.7 per cent higher to 2.04 billion sticks y-o-y.
It noted that for the financial year ended 2011, the company's y-o-y profit after tax declined by 1.6 per cent to RM719.6 million on the back of a 4.1 per cent y-o-y increase in the company's revenue.
Moving forward, the research firm said 2012 would be a challenging year for BAT as the illicit trade was firm at 36.1 per cent last year against 36.3 per cent in 2010 and its market size had shrunk by 3.2 per cent in 2011.
Meanwhile, HwangDBS has maintained a "hold" call for the company with a target price of RM46.60 based on BAT's announcement for its fourth interim dividend of 66 sen per share. -- Bernama
WCT: Maintain Buy - News flow to turn positive
Stock Name: WCT
Company Name: WCT BHD
Maintain Buy with a raised target price. 4Q 2011 results, due on 23 Feb, should at least meet our expectation for a full-year (2011) net profit of RM154m (+9% YoY). We also retain our 2012 forecast for a 9% growth in net profit, supported by strong property sales in 2011. With up to RM5b in its tender book, 2012 could turn out to be a more positive year for WCT in terms of job wins. We lift our SOP-based TP after pegging to stock to a higher 15x PER (+1SD above mean; previously 13x) on expectations of more news flow turning positive.
Maybank Research 17 Feb 2012
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Company Name: WCT BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 3.15 |
Maintain Buy with a raised target price. 4Q 2011 results, due on 23 Feb, should at least meet our expectation for a full-year (2011) net profit of RM154m (+9% YoY). We also retain our 2012 forecast for a 9% growth in net profit, supported by strong property sales in 2011. With up to RM5b in its tender book, 2012 could turn out to be a more positive year for WCT in terms of job wins. We lift our SOP-based TP after pegging to stock to a higher 15x PER (+1SD above mean; previously 13x) on expectations of more news flow turning positive.
Maybank Research 17 Feb 2012
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MMHE: Maintain Hold - A blip in earnings?
Stock Name: MHB
Company Name: MALAYSIA MARINE AND HEAVY ENG
Weakness ahead? MMHE's upcoming 3QFY11 results could miss our and consensus expectations, and there could be a knee-jerk reaction on its share price. While order visibility for 2012 is strong, it is unlikely to attract much interest vis-a-vis Kencana, for its ability to grow and capture new orders will be constrained by bottlenecks at its site. For this reason, MMHE remains a Hold with a RM5.70 TP (20x 2013 EPS).
Maybank Research 17 Feb 2012
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Company Name: MALAYSIA MARINE AND HEAVY ENG
| Research House: MAYBANK | Price Call: HOLD | Target Price: 5.70 |
Weakness ahead? MMHE's upcoming 3QFY11 results could miss our and consensus expectations, and there could be a knee-jerk reaction on its share price. While order visibility for 2012 is strong, it is unlikely to attract much interest vis-a-vis Kencana, for its ability to grow and capture new orders will be constrained by bottlenecks at its site. For this reason, MMHE remains a Hold with a RM5.70 TP (20x 2013 EPS).
Maybank Research 17 Feb 2012
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KPJ Healthcare: Downgrade to Hold - Time to take a breather
Stock Name: KPJ
Company Name: KPJ HEALTHCARE BHD
Near to fair level, downgrade to Hold. Since we initiated coverage on KPJ Healthcare on 30 November 2011, the stock has surged by 19.9% to its current share price of RM5.01, outperforming the KLCI by 12.5%. The stock price is currently near our target price of RM5.10. We downgrade our recommendation to Hold as we believe that stock valuation is reaching a fair level. With global economic conditions likely to remain uncertain at least in 1H12, now may be a good time for conservative investors to consider taking some profits off the table.
Maybank Research 17 Feb 2012
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Company Name: KPJ HEALTHCARE BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 5.10 |
Near to fair level, downgrade to Hold. Since we initiated coverage on KPJ Healthcare on 30 November 2011, the stock has surged by 19.9% to its current share price of RM5.01, outperforming the KLCI by 12.5%. The stock price is currently near our target price of RM5.10. We downgrade our recommendation to Hold as we believe that stock valuation is reaching a fair level. With global economic conditions likely to remain uncertain at least in 1H12, now may be a good time for conservative investors to consider taking some profits off the table.
Maybank Research 17 Feb 2012
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BAT: Maintain Hold - The comeback
Stock Name: BAT
Company Name: BRITISH AMERICAN TOBACCO (M)
Fairly reflected. BAT outperformed the industry in 2011, after eight years of market share contraction. However, we think BAT's strong fundamentals are fairly reflected in its share price, with the stock trading at 19.2x 2012 PER, +1SD above mean. Maintain Hold at a marginally higher TP of RM50.40 (+6.1%) after reviewing our DCF parameters.
Maybank Research 17 Feb 2012
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Company Name: BRITISH AMERICAN TOBACCO (M)
| Research House: MAYBANK | Price Call: HOLD | Target Price: 50.40 |
Fairly reflected. BAT outperformed the industry in 2011, after eight years of market share contraction. However, we think BAT's strong fundamentals are fairly reflected in its share price, with the stock trading at 19.2x 2012 PER, +1SD above mean. Maintain Hold at a marginally higher TP of RM50.40 (+6.1%) after reviewing our DCF parameters.
Maybank Research 17 Feb 2012
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Rubber Value Chain - Time to restock
Stock Name: HARTA
Company Name: HARTALEGA HOLDINGS BHD
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
2H12 restocking will benefit processors and logistics players alike. Our top BUY is Goodpack. Margin recovery for glove-makers is already priced-in; accumulate Top Glove on weakness. Lower natural rubber price forecasts will have limited impact earnings. Stick with volume plays. Risks: European debt crisis, volatile crude oil prices, government intervention.
Hartalega Holdings; Hold; RM7.92Price Target: RM7.70; HART MK
Taking a breather
TP raised to RM7.70 pegged to 13x CY12 EPS led by better growth visibility. Lower latex prices to have marginal impact on EPS as latex glove segment is small (10%); expect flat 3Q12, margins still under pressure. Downgrade to Hold on limited share price upside.
Top Glove Corporation; Hold; RM5.00
Price Target: RM4.80; TOPG MKValuation setback
Cut latex price assumptions by 8% and raised FY12-14F EPS by 2-3%. FY12 will be a recovery year with lower latex costs and better sales mix. Raised TP to RM4.80 pegged to 15.5x CY12 EPS; expectations of margin recovery and stronger earnings have been priced in; Maintain Hold.
Kossan Rubber Industries; Hold; RM3.44
Price Target: RM3.30; KRI MKPositives priced in
Cut latex price assumptions by 8% and raised FY13/14 EPS by 2-3%; FY11 earnings intact. Expect flat earnings in 4Q1. Raised TP to RM3.30 pegged to 9x CY12 EPS; Maintain Hold as positives have been priced in.
Source: HwangDBS Research 17 Feb 2012
Company Name: HARTALEGA HOLDINGS BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 7.70 |
Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 4.80 |
Stock Name: KOSSAN
Company Name: KOSSAN RUBBER INDUSTRIES BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 3.30 |
2H12 restocking will benefit processors and logistics players alike. Our top BUY is Goodpack. Margin recovery for glove-makers is already priced-in; accumulate Top Glove on weakness. Lower natural rubber price forecasts will have limited impact earnings. Stick with volume plays. Risks: European debt crisis, volatile crude oil prices, government intervention.
Hartalega Holdings; Hold; RM7.92Price Target: RM7.70; HART MK
Taking a breather
TP raised to RM7.70 pegged to 13x CY12 EPS led by better growth visibility. Lower latex prices to have marginal impact on EPS as latex glove segment is small (10%); expect flat 3Q12, margins still under pressure. Downgrade to Hold on limited share price upside.
Top Glove Corporation; Hold; RM5.00
Price Target: RM4.80; TOPG MKValuation setback
Cut latex price assumptions by 8% and raised FY12-14F EPS by 2-3%. FY12 will be a recovery year with lower latex costs and better sales mix. Raised TP to RM4.80 pegged to 15.5x CY12 EPS; expectations of margin recovery and stronger earnings have been priced in; Maintain Hold.
Kossan Rubber Industries; Hold; RM3.44
Price Target: RM3.30; KRI MKPositives priced in
Cut latex price assumptions by 8% and raised FY13/14 EPS by 2-3%; FY11 earnings intact. Expect flat earnings in 4Q1. Raised TP to RM3.30 pegged to 9x CY12 EPS; Maintain Hold as positives have been priced in.
Source: HwangDBS Research 17 Feb 2012
WINGTAI - Sizing up
Stock Name: WINGTM
Company Name: WING TAI MALAYSIA BERHAD
Wing Tai Malaysia; Fully Valued; RM1.68
Price Target: RM1.50; WING MK
2Q12 results above expectation, raise FY12-13F earnings by 16-17%. Looking for bigger parcels of land in Klang Valley. Maintain Fully Valued and RM1.50 TP.
Source: HwangDBS Research 17 Feb 2012
Company Name: WING TAI MALAYSIA BERHAD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 1.50 |
Wing Tai Malaysia; Fully Valued; RM1.68
Price Target: RM1.50; WING MK
2Q12 results above expectation, raise FY12-13F earnings by 16-17%. Looking for bigger parcels of land in Klang Valley. Maintain Fully Valued and RM1.50 TP.
Source: HwangDBS Research 17 Feb 2012
BAT - Flat earnings, but good dividends
Stock Name: BAT
Company Name: BRITISH AMERICAN TOBACCO (M)
British American Tobacco; Hold; RM52.30
Price Target: RM46.60; ROTH MK
4Q11 earnings were within expectation; declares 4th interim dividend of 66sen per share. Challenging FY12 outlook due to high illicit trade and shrinking market size. Maintain Hold for yields.
Source: HwangDBS Research 17 Feb 2012
Company Name: BRITISH AMERICAN TOBACCO (M)
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 46.60 |
British American Tobacco; Hold; RM52.30
Price Target: RM46.60; ROTH MK
4Q11 earnings were within expectation; declares 4th interim dividend of 66sen per share. Challenging FY12 outlook due to high illicit trade and shrinking market size. Maintain Hold for yields.
Source: HwangDBS Research 17 Feb 2012
HLIB Research 17 Feb 2012 (Power; Maxis; TWS Plant; Traders Brief)
Stock Name: YTLPOWR
Company Name: YTL POWER INTERNATIONAL BHD
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
Stock Name: MAXIS
Company Name: MAXIS BERHAD
Company Name: YTL POWER INTERNATIONAL BHD
| Research House: HLG | Price Call: BUY | Target Price: 2.23 |
Stock Name: TENAGA
Company Name: TENAGA NASIONAL BHD
| Research House: HLG | Price Call: HOLD | Target Price: 6.50 |
Stock Name: MAXIS
Company Name: MAXIS BERHAD
| Research House: HLG | Price Call: HOLD | Target Price: 5.54 |
Power (Neutral)
Remain Burdened by Gas Issue
'''' Expect Malaysia Power demand to increase by 4.0% in 2012, underpinned by 4.5% GDP growth.
'''' Tenaga is expected to continue burdened (~RM3.3bn) by high alternative fuel cost, until Melaka regassification facility commences by Aug-Sept 2012.
'''' Unclear fuel cost pass-through mechanism (as tariff revision schedule remain uncertain while final decision on the rat still within government's hand) continue to drag Tenaga.
'''' No more PPA renegotiation (direct negotiation), where all new PPAs will be awarded through tendering system, will'' give advantage to Tenaga and disadvantage to YTL Power.
'''' We are maintaining our Neutral rating on the overall power sector, given Tenaga's larger market captialization vis-a-vis YTL Power. Maintain Buy on YTL Power with lower TP of RM2.23 and Hold on Tenaga with higher TP of RM6.50.
''
Maxis (HOLD)
Sukuk and Broadband Tax Incentive
'''' In a filing to Bursa Malaysia, Maxis proposed to establish an Unrated Islamic MTN Programme with an aggregate value of up to RM2.45bn and tenure of 30 years from the date of first issue of the sukuk.
'''' First issuance of the sukuk is for RM2.45bn with maturity of 10 years for refinancing (RM1.45bn), CAPEX / working capital and other general purposes (RM1bn).
'''' Similar to DiGi, Maxis also announced that it enjoys last mile broadband tax incentive of total RM320m.
'''' Comments: The consolidated gearing will increase from 0.63x to 0.75x on proforma basis, based on 2010 audited accounts.
'''' The tax benefit is perceived to be positive to Maxis relieving NGBB's front-loaded high CAPEX and cost. After some channel checking, Maxis NGBB business is not "flying" as Maxis has only managed to secure about 4,000 subscribers to date.
'''' Tax incentive of RM97m for 9M11 translates into 23% effective tax rate (vs assumed tax rate of 26%) and directly boost earnings for FY11. We have assumed 23% for FY12 and FY13 as well.
'''' Tax credit in respect of prior years is assumed to further reduce tax by RM44.6m for FY12-FY16.
'''' Updated forecast with above mentioned assumptions. As a result, EPS for FY11 to FY13 are revised upward by 8.8%, 4.1% and 1.2% respectively.
'''' We upgraded our DD-derived TP by 2.8% to RM5.54 from RM5.39 with WACC of 7.5% and TG of 0%.
''
Tradewinds Plantation (Buy; TP: RM5.04)
Disposes stake in rubber trading house
'''' TWS Plant disposed its 45% stake in R1 International Pte Ltd via Mardec (a wholly-owned subsidiary) for US$25.9m (RM79.1m).
'''' TWS Plant expects RM38m gain from this disposal.
'''' Positive, as the disposal releases Mardec from its existing contractual obligations to trade exclusively through R1, and allows Mardec to unlock its value of its investment in R1.'' We note that the disposal is in line with TWS Plant's strategy in Mardec, i.e. to improve its plant' utilization rate and procurement efficiency.''
'''' TP maintained at RM5.04 (based on 11x 2012 FD core EPS of 45.8 sen). Despite the potential total return of only 9.3%, we are keeping our BUY recommendation on the stock for now.
''
KLCI: Crucial 1550 level''
'''' Overnight Dow's rally is expected to lift our market to stay above the crucial 1550 psychological support This level is crucial for sustainability as a close below would likely confirm a reversal and send the index back towards lower supports near 14-d SMA (1542), mid Bollinger band (1535) and 30-d SMA or uptrend line at 1529.
'''' Immediate resistance levels are situated at 7-d SMA (1560), 15 Feb's high of 1567 and upper Bollinger band (1574).
''
OLDTOWN: More upside if 30-d SMA resistance is broken''''''
'''' The pullback from 52-wk high of RM1.40 (July 2011) appears to be at its tail end, as prices have been consolidating above the 50% FR (RM1.14), supported by its oversold slow Stochastics. Further strong support can be found near 38.2% FR (RM1.08) and RM1.00 (23.6% FR).
'''' Buyers may start to nibble as hourly chart indicators are showing signs of bottoming up. A strong breakout above 30-d SMA (RM1.26) will spur greater upside towards RM1.32 (upper Bollinger band) and RM1.40. Significant resistance is 123.6% FR at RM1.52. Cut loss below RM1.13.
February 16, 2012
Sapura Kencana Petroleum Bhd: Maintain Buy - Co-owns FPSO Berantai
Stock Name: SAPCRES
Company Name: SAPURACREST PETROLEUM BHD
Positive asset expansion. We are positive on SapCrest-Kencana's 49% investment in FPSO Berantai. The FPSO, to be deployed to the field by 2Q12, should contribute about 5% or RM40m p.a. (with a 7-year visibility) to the combined entity's 2013 net profit. Maintain Buy on SapCrest and Kencana, with target prices of RM5.60 and RM3.66 respectively, which are unchanged for now. Incorporating the Berantai FPSO contribution would lift these TPs by a further 6% and 5% respectively.
Maybank Research 16 Feb 2012
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Company Name: SAPURACREST PETROLEUM BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 5.60 |
Positive asset expansion. We are positive on SapCrest-Kencana's 49% investment in FPSO Berantai. The FPSO, to be deployed to the field by 2Q12, should contribute about 5% or RM40m p.a. (with a 7-year visibility) to the combined entity's 2013 net profit. Maintain Buy on SapCrest and Kencana, with target prices of RM5.60 and RM3.66 respectively, which are unchanged for now. Incorporating the Berantai FPSO contribution would lift these TPs by a further 6% and 5% respectively.
Maybank Research 16 Feb 2012
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AmanahRaya REIT: Maintain Buy - Results in line
Stock Name: ARREIT
Company Name: AMANAHRAYA REITS
Maintain Buy. AAREIT's RM42.5m 2011 core net profit (+2.7% YoY) came in as expected. 2011 DPU of 7.2sen was also in line (7.8% yield; 97% payout). Positive earnings surprises could come from the potential sale of Wisma UEP while RM200m new assets target for 2012 would enlarge the earnings base. We fine-tune our earnings forecasts by +1.4-1.6% post actual 2011 results announcement. Our DCF-based target price remains intact at RM0.95.
Maybank Research 16 Feb 2012
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Company Name: AMANAHRAYA REITS
| Research House: MAYBANK | Price Call: BUY | Target Price: 0.95 |
Maintain Buy. AAREIT's RM42.5m 2011 core net profit (+2.7% YoY) came in as expected. 2011 DPU of 7.2sen was also in line (7.8% yield; 97% payout). Positive earnings surprises could come from the potential sale of Wisma UEP while RM200m new assets target for 2012 would enlarge the earnings base. We fine-tune our earnings forecasts by +1.4-1.6% post actual 2011 results announcement. Our DCF-based target price remains intact at RM0.95.
Maybank Research 16 Feb 2012
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CIMB Group Holdings: Maintain Buy - More upbeat this year
Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
Sell maintained. That management spent last year building liquidity and embarking on a cost efficiency drive is a positive, as is Dato' Sri Nazir's closer involvement in CIMB Niaga. Management is also more upbeat this year, which could lead to a little more growth traction. Strong fundamentals notwithstanding, our Sell call is largely premised on expectations of CIMB's valuations narrowing against that of its conventional banking counterparts (avg 1.8x P/BV for 2012), while its still-high foreign shareholding remains a drag, in our view. Our RM6.80 target price (1.8x 2012 P/BV, ROE: 15.1%) is maintained.
Maybank Research 16 Feb 2012
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Company Name: CIMB GROUP HOLDINGS BERHAD
| Research House: MAYBANK | Price Call: SELL | Target Price: 6.80 |
Sell maintained. That management spent last year building liquidity and embarking on a cost efficiency drive is a positive, as is Dato' Sri Nazir's closer involvement in CIMB Niaga. Management is also more upbeat this year, which could lead to a little more growth traction. Strong fundamentals notwithstanding, our Sell call is largely premised on expectations of CIMB's valuations narrowing against that of its conventional banking counterparts (avg 1.8x P/BV for 2012), while its still-high foreign shareholding remains a drag, in our view. Our RM6.80 target price (1.8x 2012 P/BV, ROE: 15.1%) is maintained.
Maybank Research 16 Feb 2012
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MSM Malaysia Holdings: Maintain Hold - 4Q11 will be better than 3Q11
Stock Name: MSM
Company Name: MSM MALAYSIA HOLDINGS BERHAD
Maintain Hold. MSM is expected to release its 4Q11 results in the fourth week of February. 4Q11 is a seasonally strong quarter due to the year-end school holidays and Christmas. Furthermore, MSM will reap the benefit of softening raw sugar prices in the quarter. We however estimate a mismatch in the new locked-in cost of raw sugar versus the new government subsidy. Maintain Hold, as we put our DDM-based target price of RM4.10/share under review pending clarifications.
Maybank Research 16 Feb 2012
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Company Name: MSM MALAYSIA HOLDINGS BERHAD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 4.10 |
Maintain Hold. MSM is expected to release its 4Q11 results in the fourth week of February. 4Q11 is a seasonally strong quarter due to the year-end school holidays and Christmas. Furthermore, MSM will reap the benefit of softening raw sugar prices in the quarter. We however estimate a mismatch in the new locked-in cost of raw sugar versus the new government subsidy. Maintain Hold, as we put our DDM-based target price of RM4.10/share under review pending clarifications.
Maybank Research 16 Feb 2012
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Buys land in Central Kalimantan
Stock Name: CBIP
Company Name: CB INDUSTRIAL PRODUCT HOLDING
Company Name: CB INDUSTRIAL PRODUCT HOLDING
| Research House: AMMB | Price Call: BUY | Target Price: 5.00 |
February 15, 2012
MAYBANK - Sustainable high dividends
Maybank; Buy; RM8.50
Price Target: RM10.60; MAY MK
Expect higher dividend payout, as the bank takes advantage of tax credit up to CY13. Domestic engines buzzing; regional growth cranking up. Maintain Buy rating and RM10.60 TP; top pick for Malaysian banks.
Source: HwangDBS Research 15 Feb 2012
DAYANG - Clinched RM125m contract from Talisman
Stock Name: DAYANG
Company Name: DAYANG ENTERPRISE HOLDINGS BHD
Dayang Enterprise; Buy; RM1.95
Price Target: RM2.70; DEHB MK
Dayang announced that it has clinched a new contract from Talisman Malaysia Limited (Talisman) for topside maintenance services expected to be worth RM125m for a primary period of 3 years with 2 extension options of 1 year each.
The contract does not come as a surprise to us as we have mentioned previously that it was bidding for maintenance jobs from Talisman. We view its latest contract positively, boosting its outstanding order book to c.RM1.5bn which is more than enough to last for the next 3 years. Including the RM85m contract extension from Shell awarded in Jan12, Dayang has already secured RM210m worth of new contracts which bode well for its prospects going forward.
We reiterate our Buy call for Dayang with RM2.70 TP, based on 15x FY12 EPS, implying 42% upside potential. We continue to favour Dayang's chances of clinching more contracts going forward as we expect the company to ride on the robust O&G activity in Malaysia by leveraging on its niche expertise in the hook-up commissioning and maintenance services.
Source: HwangDBS Research 15 Feb 2012
Company Name: DAYANG ENTERPRISE HOLDINGS BHD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 2.70 |
Dayang Enterprise; Buy; RM1.95
Price Target: RM2.70; DEHB MK
Dayang announced that it has clinched a new contract from Talisman Malaysia Limited (Talisman) for topside maintenance services expected to be worth RM125m for a primary period of 3 years with 2 extension options of 1 year each.
The contract does not come as a surprise to us as we have mentioned previously that it was bidding for maintenance jobs from Talisman. We view its latest contract positively, boosting its outstanding order book to c.RM1.5bn which is more than enough to last for the next 3 years. Including the RM85m contract extension from Shell awarded in Jan12, Dayang has already secured RM210m worth of new contracts which bode well for its prospects going forward.
We reiterate our Buy call for Dayang with RM2.70 TP, based on 15x FY12 EPS, implying 42% upside potential. We continue to favour Dayang's chances of clinching more contracts going forward as we expect the company to ride on the robust O&G activity in Malaysia by leveraging on its niche expertise in the hook-up commissioning and maintenance services.
Source: HwangDBS Research 15 Feb 2012
AMMB - Slower quarter
Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD
AMMB Holdings; Hold; RM6.11
Price Target: RM5.80; AMM MK
3QFY12 net profit of RM357m takes 9MFY12 profit to RM1,168m (78% of FY12F profit); in line. Loans
grew 2% q-o-q; CASA grew 21% but total deposit only inched up 1%; NIM improved. Management still
cautious of a weaker 4QFY12. Maintain Hold and RM5.80 TP.
Source: HwangDBS Research 15 Feb 2012
Company Name: AMMB HOLDINGS BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 5.80 |
AMMB Holdings; Hold; RM6.11
Price Target: RM5.80; AMM MK
3QFY12 net profit of RM357m takes 9MFY12 profit to RM1,168m (78% of FY12F profit); in line. Loans
grew 2% q-o-q; CASA grew 21% but total deposit only inched up 1%; NIM improved. Management still
cautious of a weaker 4QFY12. Maintain Hold and RM5.80 TP.
Source: HwangDBS Research 15 Feb 2012
DIALOG - Steady recurring income
Stock Name: DIALOG
Company Name: DIALOG GROUP BHD
Dialog Group; Buy; RM2.44
Price Target: RM2.95; DLG MK
2QFY12/1HFY12 earnings within our expectations, but below consensus'. Supported by robust Malaysian operations. Maintain Buy with RM2.95 TP (21% upside).
Source: HwangDBS Research 15 Feb 2012
Company Name: DIALOG GROUP BHD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 2.95 |
Dialog Group; Buy; RM2.44
Price Target: RM2.95; DLG MK
2QFY12/1HFY12 earnings within our expectations, but below consensus'. Supported by robust Malaysian operations. Maintain Buy with RM2.95 TP (21% upside).
Source: HwangDBS Research 15 Feb 2012
HwangDBS keeps 'buy' call on Maybank
Stock Name: MAYBANK
Company Name: MALAYAN BANKING BHD
HwangDBS Vickers has raised its dividend expectations on Malayan Banking Bhd (Maybank) to 70 per cent from 60 per cent as it expects the bank to utilise its existing S108 tax credits before it expires.
In a note here today, the research house said the RM1.95 billion tax credit which expires in 2013, implied that Maybank could pay a dividend of up to RM7.8 billion without incurring an additional tax.
It said, the bank's growth in Singapore and Indonesia remained strong, recording last year a year-on-year (y-o-y) loan growth of 44.6 per cent and 28.8 per cent respectively, which is seen to be stronger than Malaysia's 18.6 per cent.
In addition, HwangDBS noted that Singapore and Indonesia contributed 14 per cent and six per cent respectively to Maybank's pre-tax profit.
Maybank has an advantage of leveraging on deposits franchise for transactional banking, given its high current and savings account base, which has a share of 36 per cent of the total deposits, it said.
"It is less susceptible to capital market weakness as over 50 per cent of its non-interest income is recurring, mainly from transaction banking activities," added HwangDBS.
Maybank remains its top pick for defensive qualities and highest dividend yields in the sector.
Meanwhile, the research firm has maintained a "buy" call on the bank with a RM10.60 target price. -- Bernama
Company Name: MALAYAN BANKING BHD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 10.60 |
HwangDBS Vickers has raised its dividend expectations on Malayan Banking Bhd (Maybank) to 70 per cent from 60 per cent as it expects the bank to utilise its existing S108 tax credits before it expires.
In a note here today, the research house said the RM1.95 billion tax credit which expires in 2013, implied that Maybank could pay a dividend of up to RM7.8 billion without incurring an additional tax.
It said, the bank's growth in Singapore and Indonesia remained strong, recording last year a year-on-year (y-o-y) loan growth of 44.6 per cent and 28.8 per cent respectively, which is seen to be stronger than Malaysia's 18.6 per cent.
In addition, HwangDBS noted that Singapore and Indonesia contributed 14 per cent and six per cent respectively to Maybank's pre-tax profit.
Maybank has an advantage of leveraging on deposits franchise for transactional banking, given its high current and savings account base, which has a share of 36 per cent of the total deposits, it said.
"It is less susceptible to capital market weakness as over 50 per cent of its non-interest income is recurring, mainly from transaction banking activities," added HwangDBS.
Maybank remains its top pick for defensive qualities and highest dividend yields in the sector.
Meanwhile, the research firm has maintained a "buy" call on the bank with a RM10.60 target price. -- Bernama
AMMB Holdings: Maintain Hold - Guidance turns cautious
Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD
Within expectations. While 9MFY12 net profit of RM1.17b (+14% YoY) was 79% of our full-year forecast and 77% of consensus, 4Q is typically a weaker quarter. Management is cautious ahead and has trimmed growth and ROE guidance. Our earnings are nevertheless raised by 3-10% for FY12-14 but with little to excite for now, our Hold call is maintained along with our TP of RM6.30 (2012 P/BV of 1.6x, 14.2% ROE).
Maybank Research 15 Feb 2012
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Company Name: AMMB HOLDINGS BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 6.30 |
Within expectations. While 9MFY12 net profit of RM1.17b (+14% YoY) was 79% of our full-year forecast and 77% of consensus, 4Q is typically a weaker quarter. Management is cautious ahead and has trimmed growth and ROE guidance. Our earnings are nevertheless raised by 3-10% for FY12-14 but with little to excite for now, our Hold call is maintained along with our TP of RM6.30 (2012 P/BV of 1.6x, 14.2% ROE).
Maybank Research 15 Feb 2012
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Dialog Group: Maintain Buy - No surprises; growth prospects intact
Stock Name: DIALOG
Company Name: DIALOG GROUP BHD
Maintain Buy. Interim results are tracking expectations, with 1H accounting for 41% of our FY12 forecast. Looking ahead, its potential participation in the upcoming marginal field projects will be newsflow positive, while the expansion of its tank terminal operations will sustain earnings growth in the long term. Dialog offers a fine exposure to a respectable business model, focused management, attractive earnings growth with an increasing proportion of recurring income and a steady progressive dividend. Our Sum-Of-Parts TP is unchanged at RM3.05.
Maybank Research 15 Feb 2012
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Company Name: DIALOG GROUP BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 3.05 |
Maintain Buy. Interim results are tracking expectations, with 1H accounting for 41% of our FY12 forecast. Looking ahead, its potential participation in the upcoming marginal field projects will be newsflow positive, while the expansion of its tank terminal operations will sustain earnings growth in the long term. Dialog offers a fine exposure to a respectable business model, focused management, attractive earnings growth with an increasing proportion of recurring income and a steady progressive dividend. Our Sum-Of-Parts TP is unchanged at RM3.05.
Maybank Research 15 Feb 2012
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HLIB Research 15 Feb 2012 (Banking; AMMB; Traders Brief)
Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD
Company Name: AMMB HOLDINGS BHD
| Research House: HLG | Price Call: HOLD | Target Price: 6.45 |
Banking (OVERWEIGHT)
Indonesia ' No Ownership Cap / Aabar To Sell RHB Cap?
'''' News #1 ' Indonesia will not implement a planned regulation to limit ownership in domestic banks.
'''' News #2 - Aabar (owns 25% in RHB Cap) is exploring the sale of its stake with Sumitomo Mitsui Banking Carp.''
'''' News #1 would improve sentiment on both CIMB and Maybank, especially the former.''
'''' However, there are no fundamental changes as Indonesia's original plan is difficult and will need time to implement.'' Thus, no changes to our forecasts for CIMB and Maybank as we have not factored in any changes in stakes.
'''' It will clear the path for RHB Cap and Affin to re-commence their proposed acquisitions. The impact will be more positive for RHB Cap as it will help to achieve its aspiration of 5-10% international earnings contributions.
'''' News #2 likely to re-ignite merger speculation in RHB Cap as Aabar is unlikely to part with its stake below its entry cost of RM10.80.
'''' Maintain Overweight.
'''' While the latest news has no fundamental impact, we believe they could ignite trading interest in banks given that the sector has generally been lagging behind the market.'' ''We are not changing our top picks of Maybank and AFG.'' However, we believe that re-emergence of trading interest will be focus on CIMB and RHB Cap.
''
AMMB Holdings (HOLD)
Lower FY13-14 KPIs ' Pressure On Top Line
'''' 9MFY12 results in line with HLIB and consensus.''
'''' 3QFY12 results were characterized by continued improvement in NIM and lower loan loss provision.'' The latter help sustain yoy profit growth.''''
'''' FY12 KPIs was maintained.''
'''' However, FY13-14 net profit growth and ROE KPIs were lowered as global economic downturn will exert pressure on revenue growth rather than deterioration in asset quality.
'''' It maintains that asset quality (which continued to improve) will be intact.'' Internal stress tests show it is able to absorb the potential extreme trauma.
'''' Capital ratios well positioned for BNM's guidelines on BASEL III, no impact on dividend policy of 40-50% payout.''
'''' Despite new lending guidelines, it is confident of own position and has not seen material impact at the moment.
'''' Despite new lending guidelines, it is confident of own position and has not seen material impact at the moment.
'''' Maintain Hold.
'''' Target price unchanged at RM6.45 based on Gordon Growth (ROE of 13.7% and WACC of 10.5%).
''
KLCI: More sideways consolidation''
'''' We remain cautiously optimistic of KLCI resuming its uptrend after a mild profit taking consolidation as hourly chart is showing signs of bottoming up (FIG#2).
'''' If the KLCI is able to sustain its posture above last week's high of 1565 pts for the next 2-3 days amid heavy deliveries following last week's average daily volume of 3.7bn shares, then the index is likely to retest our envisaged resistance targets near 1570-1580. Supports are 1561 (5-d SMA), 1550 and 1544 (10-d SMA).
AFG: Getting oversold''''''
'''' We advocate buy on weakness as the daily chart momentum and trend indicators are getting oversold (FIG#4) whilst the hourly chart indicators are showing signs of bottoming up (FIG#5). Hence, after a brief profit taking consolidation, AFG could test higher grounds to RM3.88 (mid Bollinger band) and RM3.99 (upper Bollinger band).
'''' A more bullish outlook would only appear if AFG manages to close consistently above the Immediate supports are mid Bollinger band. The next upside targets is RM4.05. ''RM3.66 (38.2% FR) and RM3.54 (50% FR). Cut loss below RM3.54.
''
3QFY12: In line
Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD
Company Name: AMMB HOLDINGS BHD
| Research House: ECMLIBRA | Price Call: HOLD | Target Price: 5.70 |
Steady earnings growth to gain momentum
Stock Name: DIALOG
Company Name: DIALOG GROUP BHD
Company Name: DIALOG GROUP BHD
| Research House: AMMB | Price Call: BUY | Target Price: 2.85 |
RCE Capital: Maintain Hold - Results within; proposes bonus & rights
Stock Name: RCECAP
Company Name: RCE CAPITAL BHD
Maintain Hold and target price. 9MFY12 results were in line with core net profit down 13% YoY as net loans contracted 18% YoY due to the ceasation of KOWAJA lending activities for 6+ months. A 1-for-2 bonus and 2-for-5 rights issue of new RCPS will raise shares liquidity and give RCE the capacity to grow. Nonetheless, the operating environment remains tough with net loans continuing to retrace 2% QoQ despite the resumption of KOWAJA lending activities since Jun 2011. Our target price continues to peg the stock to 0.8x historical P/B.
Maybank Research 15 Feb 2012
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Company Name: RCE CAPITAL BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 0.45 |
Maintain Hold and target price. 9MFY12 results were in line with core net profit down 13% YoY as net loans contracted 18% YoY due to the ceasation of KOWAJA lending activities for 6+ months. A 1-for-2 bonus and 2-for-5 rights issue of new RCPS will raise shares liquidity and give RCE the capacity to grow. Nonetheless, the operating environment remains tough with net loans continuing to retrace 2% QoQ despite the resumption of KOWAJA lending activities since Jun 2011. Our target price continues to peg the stock to 0.8x historical P/B.
Maybank Research 15 Feb 2012
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Wins Talisman Contract
Stock Name: DAYANG
Company Name: DAYANG ENTERPRISE HOLDINGS BHD
Company Name: DAYANG ENTERPRISE HOLDINGS BHD
| Research House: OSK | Price Call: BUY | Target Price: 2.70 |
February 14, 2012
GENP - Solid cash cow
Stock Name: GENP
Company Name: GENTING PLANTATIONS BERHAD
Genting Plantations; Buy; RM9.51
Price Target: RM11.00; GENP MK
FY12F-13F profit raised by 11% ' 16% on revised CPO prices, FX rates, Success of Iskandar Malaysia should boost value of its 5,500 acre land bank in Kulai. Reiterate Buy, SOP-derived TP raised to RM11.00 (16% upside potential)
Source: HwangDBS Research 14 Feb 2012
Company Name: GENTING PLANTATIONS BERHAD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 11.00 |
Genting Plantations; Buy; RM9.51
Price Target: RM11.00; GENP MK
FY12F-13F profit raised by 11% ' 16% on revised CPO prices, FX rates, Success of Iskandar Malaysia should boost value of its 5,500 acre land bank in Kulai. Reiterate Buy, SOP-derived TP raised to RM11.00 (16% upside potential)
Source: HwangDBS Research 14 Feb 2012
IJMPLNT - Demanding valuation
Stock Name: IJMPLNT
Company Name: IJM PLANTATIONS BHD
IJM Plantations; Hold; RM3.33
Price Target: RM3.10; IJMP MK
3QFY12 earnings to be supported by strong CPO prices. FY12F-14F earnings raised by 2-18% on CPO price and FX rate revisions. Lacking near-term catalyst. Hold rating maintained; TP revised to RM3.10 on lower ERP assumption
Source: HwangDBS Research 14 Feb 2012
Company Name: IJM PLANTATIONS BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 3.10 |
IJM Plantations; Hold; RM3.33
Price Target: RM3.10; IJMP MK
3QFY12 earnings to be supported by strong CPO prices. FY12F-14F earnings raised by 2-18% on CPO price and FX rate revisions. Lacking near-term catalyst. Hold rating maintained; TP revised to RM3.10 on lower ERP assumption
Source: HwangDBS Research 14 Feb 2012
KLK - Limited land for new plantings
Stock Name: KLK
Company Name: KUALA LUMPUR KEPONG BHD
KL Kepong; Hold; RM25.48
Price Target: RM24.00; KLK MK
1QFY12 core earnings to increase 19% QoQ. FY12-14F earnings raised by 3-7% after changes to CPO price, FX rate and segmental profit. Maintain Hold, TP revised to RM24.00, imputing lower ERP in DCF valuation
Source: HwangDBS Research 14 Feb 2012
Company Name: KUALA LUMPUR KEPONG BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 24.00 |
KL Kepong; Hold; RM25.48
Price Target: RM24.00; KLK MK
1QFY12 core earnings to increase 19% QoQ. FY12-14F earnings raised by 3-7% after changes to CPO price, FX rate and segmental profit. Maintain Hold, TP revised to RM24.00, imputing lower ERP in DCF valuation
Source: HwangDBS Research 14 Feb 2012
IOICORP - No near term catalysts
Stock Name: IOICORP
Company Name: IOI CORPORATION BHD
IOI Corporation; Hold; RM5.47
Price Target: RM5.50; IOI MK
FY12F-14F earnings revised by -5% to +4% to account for revised CPO prices and FX rates. We expect 2QFY12 NPAT to come in at RM450- 460m; up 74-78% QoQ on smaller FX losses. Indonesia expansion slowed in FY11; expect more aggressive 10k ha planting in FY12F. Lacklustre Singapore property sales and weak refining margins; Hold for dividends
Source - HwangDBS Research 14 Feb 2012
Company Name: IOI CORPORATION BHD
| Research House: HWANGDBS | Price Call: HOLD | Target Price: 5.50 |
IOI Corporation; Hold; RM5.47
Price Target: RM5.50; IOI MK
FY12F-14F earnings revised by -5% to +4% to account for revised CPO prices and FX rates. We expect 2QFY12 NPAT to come in at RM450- 460m; up 74-78% QoQ on smaller FX losses. Indonesia expansion slowed in FY11; expect more aggressive 10k ha planting in FY12F. Lacklustre Singapore property sales and weak refining margins; Hold for dividends
Source - HwangDBS Research 14 Feb 2012
SIME - Still undervalued
Stock Name: SIME
Company Name: SIME DARBY BHD
Sime Darby; Buy; RM9.67
Price Target: RM11.25; SIME MK
FY12F-14F earnings raised by 4-6% after accounting for revised CPO prices and FX rates. 2QFY12 NPAT expected at RM1.0bn, down 6% QoQ on weaker plantation and motor contributions. Efforts to boost plantation productivity may yield more upside than expected. Reiterate Buy call for 19% return; some catalysts have not been priced in
Source: HwangDBS Research 14 Feb 2012
Company Name: SIME DARBY BHD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 11.25 |
Sime Darby; Buy; RM9.67
Price Target: RM11.25; SIME MK
FY12F-14F earnings raised by 4-6% after accounting for revised CPO prices and FX rates. 2QFY12 NPAT expected at RM1.0bn, down 6% QoQ on weaker plantation and motor contributions. Efforts to boost plantation productivity may yield more upside than expected. Reiterate Buy call for 19% return; some catalysts have not been priced in
Source: HwangDBS Research 14 Feb 2012
TSH - Highest growth profile
Stock Name: TSH
Company Name: TSH RESOURCES BHD
TSH Resources; Buy; RM2.23
Price Target: RM2.55; TSH MK
Aggressive expansion in Indonesia to resume; maturing estates to drive FFB output growth. Raised FY12/13F earnings by 10/11% after revising CPO price and FX rate. Maintain Buy with higher TP of RM2.55
Source: HwangDBS Research 14 Feb 2012
Company Name: TSH RESOURCES BHD
| Research House: HWANGDBS | Price Call: BUY | Target Price: 2.55 |
TSH Resources; Buy; RM2.23
Price Target: RM2.55; TSH MK
Aggressive expansion in Indonesia to resume; maturing estates to drive FFB output growth. Raised FY12/13F earnings by 10/11% after revising CPO price and FX rate. Maintain Buy with higher TP of RM2.55
Source: HwangDBS Research 14 Feb 2012
OSK keeps 'buy' call on Prestariang
Stock Name: PRESBHD
Company Name: PRESTARIANG BERHAD
Prestariang Bhd's (Prestariang) profit after tax for the fourth quarter of the financial year ended Dec 31, 2011 is expected to be within OSK Research Sdn Bhd's estimate of between RM10-RM11 million.
OSK Research in a research note here today said the results are likely to be driven by its information and communications technology training and certification division which usually experiences a peak in the second half of the year.
It said moving into 2012, the Prestariang management is aiming for an internal profit after tax of RM40 million for the new year and the research firm believes the target is achievable.
"We believe that the target, which implies a 19 per cent growth year-on-year is achievable, leveraging on the broader implementation of its in-house developed solutions, which typically yield better margins," it added.
OSK Research said the company is also working towards smoothening out its future earnings by focusing more on non-time sensitive contracts during the off-peak quarters to mitigate the seasonality impact.
The research house expects a more normalised and predictable earnings cycle going forward.
Meanwhile, it has maintained a "buy" call with a higher fair value of RM1.38 on the company as it feels increasingly upbeat on the prospects, riding on the growing adoption of its self-developed solutions. -- Bernama
Company Name: PRESTARIANG BERHAD
| Research House: OSK | Price Call: BUY | Target Price: 1.38 |
Prestariang Bhd's (Prestariang) profit after tax for the fourth quarter of the financial year ended Dec 31, 2011 is expected to be within OSK Research Sdn Bhd's estimate of between RM10-RM11 million.
OSK Research in a research note here today said the results are likely to be driven by its information and communications technology training and certification division which usually experiences a peak in the second half of the year.
It said moving into 2012, the Prestariang management is aiming for an internal profit after tax of RM40 million for the new year and the research firm believes the target is achievable.
"We believe that the target, which implies a 19 per cent growth year-on-year is achievable, leveraging on the broader implementation of its in-house developed solutions, which typically yield better margins," it added.
OSK Research said the company is also working towards smoothening out its future earnings by focusing more on non-time sensitive contracts during the off-peak quarters to mitigate the seasonality impact.
The research house expects a more normalised and predictable earnings cycle going forward.
Meanwhile, it has maintained a "buy" call with a higher fair value of RM1.38 on the company as it feels increasingly upbeat on the prospects, riding on the growing adoption of its self-developed solutions. -- Bernama
HLIB Research 14 February 2012 (Tech; HSL; Traders Brief)
Stock Name: NOTION
Company Name: NOTION VTEC BHD
Stock Name: HSL
Company Name: HOCK SENG LEE BHD
Company Name: NOTION VTEC BHD
| Research House: HLG | Price Call: HOLD | Target Price: 2.03 |
Stock Name: HSL
Company Name: HOCK SENG LEE BHD
| Research House: HLG | Price Call: BUY | Target Price: 2.30 |
Technology: HDDs (Neutral)
Growth Neutralized
'''' Seagate was fortunate that all its factories in Thailand were fully operational and remain largely unscathed. Seagate's HDD shipment had surpassed WD in 2Q12.
'''' In the consumer market, weak demand in personal computers (PC) drags down the demand for HDD. According to preliminary results by Gartner, worldwide PC shipments totalled 92.2m units in 4Q11, a 1.4% decline qoq, muting the boost of holiday season sales.
'''' This negative outlook is partly due to the market preference of tablets, such as iPads substituting PC due to convenience and handy. In the recent CES in Las Vegas, we saw that PC makers begin to embrace ultrabook, thin laptop computers built with new Intel low-power chip and solid-state drive (SSD) instead of HDD.
'''' As for the enterprise market, HDD demand is forecasted to undergo growth in tandem with global spending on IT. Gartner predicted global IT spending would rise 3.7% in 2012 while Forrester Research expects 5.5% growth.
'''' SSD has set a solid footprint in HDD's space and raised doubts on HDD's future as the long term storage solution. While SSD remains considerably more costly, the flash-based storage devices are coming down in prices much faster compared to HDD. SSD is making a small scale in-road into the market in the form of hybrid hard drive (HHD), which is the combination of HDD and SSD.
'''' Despite expectations of modest demand growth, other negatives (input cost, FOREX and replacement by SSD) are likely to weight down share price performance.
'''' Notion (HOLD, TP: RM2.03) is our top pick for the sector due to its unique position, having diversified away from HDDs to the higher-margin Camera business.
''
HSL (BUY)
Kick starting 2012 with a road project
'''' HSL has secured a RM82.2m sub-contract from PN Construction S/B for a road project from Balingian to Jalan Persekutan, Sibu/Bintulu. The project is slated for completion in 1Q2014.
'''' By assuming a PAT margin of ~13%, the latest road project translates to ~1.9 sen/share for the company. Overall, we estimate that HSL has ~RM1.1bn in outstanding order book, translating to ~2.4x FY2010's construction revenue and ~1.1x order book-market cap ratio.
'''' Maintain BUY as we expect further exciting developments coming from the company. Our TP has been upgraded by 10% from RM2.09 to RM2.30 as we roll over our P/E multiple of 12x to average FY12 and FY13 earnings.
''
KLCI: Consolidation before trending higher again
'''' We remain cautiously optimistic of KLCI resuming its uptrend after a mild profit taking consolidation.
'''' If the index swing past last week's high of 1565 pts, then the index is likely to edge closer towards the our envisaged resistance targets near 1570-1580.
'''' Support levels are 1550, 1556 (5-d SMA) and 1540 (10-d SMA).
''
CANONE: Building its base
'''' At RM1.81, CANONE is trading at implied 6x P/E on adjusted EPS of 30.3sen (FIG#5). The pullback from RM2.24 appears to be at its tail end, as prices have been consolidating above the 61.8% FR, supported by its extremely oversold slow Stochastics. Further strong support can be found around RM1.68 (lower Bollinger band).
'''' Buyers may start to nibble when price approaches the RM1.70-1.80 territory to ride the technical rebound wave. Technical rebound targets are RM1.95 (76.4% FR), RM2.00 psychological barrier and RM2.24. Significant resistance is RM2.53 (123.6% FR). Cut loss below RM1.68 as it will fall back to refill the RM1.37-1.59 gap on 6 Jan.
Kencana Petroleum: Maintain Buy - Going the extra yard
Stock Name: KENCANA
Company Name: KENCANA PETROLEUM BHD
Maintain Buy with a RM3.66 target price. Kencana remains our top conviction Buy in the sector for 2012. Kencana, on a stand-alone basis, is a stock with strong earnings visibility and offers the best exposure to PETRONAS' domestic capex programme in fabrication, drilling and marginal field/enhanced oil recovery (EOR) projects. We believe SapCrest-Kencana Petroleum (Newco) is highly likely to be featured in the KLCI-FBM 30 come the next revision in Jun 2012, a positive in our view, in drawing higher interest and ratings. Our marginally revised target price of RM3.66 offers an 15% upside from current levels.
Maybank Research 14 Feb 2012
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Company Name: KENCANA PETROLEUM BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 3.66 |
Maintain Buy with a RM3.66 target price. Kencana remains our top conviction Buy in the sector for 2012. Kencana, on a stand-alone basis, is a stock with strong earnings visibility and offers the best exposure to PETRONAS' domestic capex programme in fabrication, drilling and marginal field/enhanced oil recovery (EOR) projects. We believe SapCrest-Kencana Petroleum (Newco) is highly likely to be featured in the KLCI-FBM 30 come the next revision in Jun 2012, a positive in our view, in drawing higher interest and ratings. Our marginally revised target price of RM3.66 offers an 15% upside from current levels.
Maybank Research 14 Feb 2012
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Hock Seng Lee: Maintain Buy - First Valentine ' of the year
Stock Name: HSL
Company Name: HOCK SENG LEE BHD
Maintain Buy. Newsflow is improving and HSL's first job win for 2012 - a RM82.2m road construction sub-contract - has lifted its outstanding order book to RM1.08b (+8%). The stock still offers value at 9.7x 2012 earnings despite the share price having outperformed, up 30% year-to-date. We believe there is still upside potential for the stock, on the back of a pick-up in infrastructure construction activities in Sarawak this year. Maintain Buy with an unchanged RM2.10 target price.
Maybank Research 14 Feb 2012
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Company Name: HOCK SENG LEE BHD
| Research House: MAYBANK | Price Call: BUY | Target Price: 2.10 |
Maintain Buy. Newsflow is improving and HSL's first job win for 2012 - a RM82.2m road construction sub-contract - has lifted its outstanding order book to RM1.08b (+8%). The stock still offers value at 9.7x 2012 earnings despite the share price having outperformed, up 30% year-to-date. We believe there is still upside potential for the stock, on the back of a pick-up in infrastructure construction activities in Sarawak this year. Maintain Buy with an unchanged RM2.10 target price.
Maybank Research 14 Feb 2012
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RHBInvest Research Highlights 14th February 2012
Stock Name: MAYBANK
Company Name: MALAYAN BANKING BHD
Stock Name: HEKTAR
Company Name: HEKTAR REITS
Company Name: MALAYAN BANKING BHD
| Research House: RHB | Price Call: BUY | Target Price: 9.47 |
Stock Name: HEKTAR
Company Name: HEKTAR REITS
| Research House: RHB | Price Call: BUY | Target Price: 1.61 |
14th February 2012
| Malaysia Equities |
| Top Story |
| Maybank ' Expecting A Weaker Quarter, But All In The Price Outperform Results Preview - Maybank will be announcing its 2QFP12/11 results (for the 6 months financial period to Dec 2011 as the FYE was changed from Jun to Dec) results sometime during the week beginning 20 Feb. Our net profit forecast of RM2.56bn (+19.1% yoy) for the 6-month period implies that 2Q net profit would be down marginally qoq (-0.7% qoq) but up by around 13.5% yoy. - Fair value of RM9.47 and Outperform call maintained. |
| Corporate Highlights |
| HSL ' Lands RM82.2m Road Project In Sarawak Target Outperform News Update (published 13 Feb 2012) - HSL has secured a RM82.2m subcontract for the construction of a new road linking Balingian to Jalan Persekutuan in Sibu/Bintulu, Sarawak . - Forecasts maintained as we have already assumed HSL to secure RM600m worth of new jobs in FY12. We are putting fair value of RM1.59 under review with an upward bias. Maintain Outperform. Hektar REIT ' Achieves A Record DPU of 10.5 sen for FY11 Outperform Results Note - Hektar's 4QFY11 realised net profit (-3.6% yoy; +3.5% qoq) came within our and consensus estimates. Gross revenue grew 0.9% yoy and qoq due to the marginal improvement in rental contribution from its assets as well as an increase in car park income. - No changes to our earnings forecasts. Maintain Outperform with fair value of RM1.61. |
Aiming For Slight Deceleration
Stock Name: AMMB
Company Name: AMMB HOLDINGS BHD
Company Name: AMMB HOLDINGS BHD
| Research House: OSK | Price Call: HOLD | Target Price: 6.20 |
Another Record Year in The Making
Stock Name: MEDIAC
Company Name: MEDIA CHINESE INTERNATIONAL LT
Company Name: MEDIA CHINESE INTERNATIONAL LT
| Research House: OSK | Price Call: BUY | Target Price: 1.47 |
Acquires RM22m Land
Stock Name: SEG
Company Name: SEG INTERNATIONAL BHD
Company Name: SEG INTERNATIONAL BHD
| Research House: OSK | Price Call: BUY | Target Price: 2.16 |
February 13, 2012
HLIB Research 13 Feb 2012 (Plantations; Gamuda; CSC Steel, Traders Brief)
Stock Name: GAMUDA
Company Name: GAMUDA BHD
Stock Name: CSCSTEL
Company Name: CSC STEEL HOLDINGS BERHAD
Company Name: GAMUDA BHD
| Research House: HLG | Price Call: BUY | Target Price: 4.41 |
Stock Name: CSCSTEL
Company Name: CSC STEEL HOLDINGS BERHAD
| Research House: HLG | Price Call: HOLD | Target Price: 1.54 |
Plantation (Neutral)
Palm oil inventory declines in Jan 12
'''' Palm oil inventory in Jan 12 declined by 2.5% mom to 2.01m tonnes, mainly on the back of a 13.9% mom decline in production (Peninsular: -13.9%; East Malaysia: -13.8%) and 195.5% increase in domestic consumption, which more than offset a 13.2% decline in exports.
'''' Exports declined by 13.2% to 1.38m tonnes, led by a 31.2%, 31.9% and 20.5% mom decline from China, Pakistan and India.
'''' On a yoy basis, palm oil inventory rose by 41.5% to 2.01m tonnes mainly on: (1) Higher beginning inventory; (2) A 21.7% increase in production; and (3) A 36.5% decline in domestic consumption, which altogether more than offset a 13.4% increase in exports.
'''' While La Nina event will likely sustain near-term palm oil prices at above RM3,100/tonne, we are keeping our average CPO price assumption of RM3,000/tonne for 2012-13.
'''' Maintain our Neutral stance on the sector, top pick is Tradewinds Plantation.''
''
Gamuda (BUY)
Formalising PDP terms
'''' MMC-Gamuda JV has executed the PDP agreement with MRT Corp for the MRT Project-Sungai Buloh-Kajang line.
'''' The total fee for MMC-Gamuda works out to be 11.3% based on the aggregate of all the awarded work contracts, whereby 5.3% (~RM1.1bn) is fixed to cover the PDP overhead, while 6% (excluding the value of the underground portion should the PDP wins it) is the performance fee should the project be delivered within 15% of the total agreed target cost of the MRT project.
'''' Assuming that the MRT elevated portion works out to be RM10bn, the PDP role translates to ~11 sen/share for Gamuda (after adjusting for its 50% stake).
'''' Maintain our BUY call on Gamuda with a TP of RM4.41.
''
CSC Steel (Hold)
4Q performance improves operationally
'''' Below expectations. 2011 net profit of RM29.6m (-57.3%) came in below expectations at 84.3% of our forecast and 78.2% of the consensus.''
'''' Variance against our forecast due mainly to lower-than-expected margin stemming from lower-than-expected sales volume vis-''-vis our forecast despite achieving sales growth.
'''' FY12-13 net profit forecasts cut by 14.3% and 12.3% to RM47.7m and RM50.1m respectively, to reflect lower EBIT margins arising from lower selling price assumptions.''
'''' TP raised from RM1.03 to RM1.54 as we rationalize our valuation method for CSC Steel (as P/E alone is no longer suitable given CSC Steel's strong balance sheet, which allows CSC Steel to declare commendable dividends despite its weak earnings performance). Our TP for CSC Steel is now based on: (1) 7x 2013 EPS of 13.2 sen; and (2) 61.4 sen net cash as at 31 Dec 2011.''''
'''' Upgraded from Sell to Hold following the rationalisation in our valuation method.
''
KLCI: Mild profit taking expected this week
'''' Despite the emergence of a Doji candle last Friday, coupled with the overbought daily and weekly slow Stochastics indicators, positive daily and weekly RSI and MACDs are suggesting current KLCI could resume after a mild profit taking correction.
'''' Immediate resistance is 1570-1580 levels, followed by historical peak at 1597. Weekly support levels are 1550, 1541 (7-d SMA) and 1535 (10-d SMA).
ETITECH: Upside bias amid a positive breakout
'''' Technically, ETITECH broke out of its triangle pattern last Friday and is now charging towards the RM0.20 (61.8% FR) and RM0.23 (50% FR). A push above RM0.23 would be medium term positive as it also signals the return of the bulls towards RM0.26 (38.2%FR), RM0.29 (23.8% FR) and RM0.345 (18 Jan 11's day high).''
'''' Technical landscape is improving, reflected by rising momentum, trend and +DMI. Supports are RM0.165 (200-d SMA) and RM0.155 (lower Bollinger band). Cut loss below RM0.155
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