July 13, 2012

United Malayan Land - Update - Unconditional offer at RM2.50

Stock Name: UMLAND
Research House: CIMBPrice Call: HOLDTarget Price: 2.50

OSK trims MSC fair value, maintains 'buy' call

Declining tin prices have raised concerns over Malaysia Smelting Corporation Bhd's (MSC) earnings. This said OSK Research, might force it to slash about 55.1 per cent of the company's financial year 2012 earnings.

The research house has also cut its financial year 2012 tin price
estimate to US$20,000 per tonne (US$1 = RM3.18).

"We had earlier warned investors of a potential earnings downgrade as tin prices fell on renewed concerns over Europe's growing sovereign debt crisis.

"On top of the tin price revision, we also incorporated higher mining costs at PT Koba Tin, as the sharp plunge in prices may have caught the company's management off-guard.

"As the shift from a higher cost mining pit to one of lower cost spurred by falling tin prices may take time and affect the company more severely, we are prompted to slash our 2012 earnings forecast for MSC drastically by 55.1 per cent to RM39.5 million," the firm said in a research note today.

OSK Research said however, despite the negative macro impact, MSC made efforts to expand its tin business in first half of the current financial year, including an extension on Rahman Hydraulic Tin's (RHT) mining concession, striking a strategic agreement with an influential Indon partner to extend PT Koba's Contract of Works (CoW), and establishing a presence in Africa.

For the financial year ended Dec 31, 2011, MSC, an integrated producer of tin metal and tin-based products, registered a core net profit of RM85.6 million on the back of RM3.098 billion, in revenue.

The research house is also trimming MSC's fair value to RM5.50 following the earnings revision, but yet maintained its "buy" call. -- Bernama

HwangDBS maintains 'buy' call on Parkson

HwangDBS Vickers Research Sdn Bhd has tweaked up Parkson Holdings Bhd's 2012-2014 financial earnings by between one
per cent and five per cent.

The research house said it favoured the retailer, as it was a proxy to the rise of consumer spending, tapping on the huge long-term growth potential in China and South East Asia.

From a valuation perspective, Parkson Holdings' one-year forward rolling price earnings ratio has dropped 11.4 times, below its mean of 14.4 times, however, still higher than its record low of 6.3 times.

"Its share price would be RM5.91 if it reverts to its historical mean, and could fall to RM2.59 at trough price earnings ratio.

"More interestingly, the stock is now trading close to its historical low price-to-book-value multiple, implying relatively limited downside to RM3.73, compared with the upside potential, to RM6.81," it said in a research note today.

HwangDBS Vickers maintained its "buy" call on Parkson Holdings with an upgraded target price of RM5.40, from the previous RM5.30, which implied a total potential return of 19.1 per cent. -- Bernama

The Lucky 5!

Stock Name: IJM
Research House: TAPrice Call: SELLTarget Price: 5.25

1st Major KVMRT Package to East Malaysia Contractor

Stock Name: NAIM
Research House: TAPrice Call: BUYTarget Price: 2.26

Order Book Replenishment Exceeded RM1b

Stock Name: WCT
Company Name: WCT BHD
Research House: TAPrice Call: BUYTarget Price: 3.52

RHB ups Petronas Gas' fair value

Stock Name: PETGAS
Research House: RHBPrice Call: BUYTarget Price: 18.95

RHB Research raised Petronas Gas Bhd's fair value to RM18.95 per share from RM18.33 on a better outlook with the latter's new liquefied natural gas (LNG) regasification plant in Malacca state due to come on stream in August-September.

"The new LNG plant will provide Petronas Gas with a new revenue stream, such as regasification fees, while also providing increased volumes for its gas transmission business," the research house said in a note on Friday.

Maintaining a "market perform" on the counter, RHB said it believed Petronas Gas' prospects going forward remain stable, underpinned by recurring income from its processing and transmission businesses, while the addition of new assets would provide incremental recurring earnings for the company.

Petronas Gas ended the morning session 0.33 percent lower at RM17.94 per share, compared to the Malaysia's benchmark stock index's 0.04 percent rise. -- Reuters

Kenanga raises Censof's target price

Kenanga Research raised Censof Holdings Bhd's target price to 74 sen a share from 61 sen, citing better prospects for the financial management software provider.

"The implementation of Malaysia's government service tax may provide another strong catalyst to the company given that Censof has an edge in providing financial management solutions," the research house said in a note on Friday.

Maintaining an "outperform" rating on Censof, Kenanga raised its financial year ending Dec 31, 2013 earnings estimate by 21 percent to 21.8 million ringgit after realigning the projects completion timeframe and its margins assumption.

Censof ended the morning session 4 percent lower at 48 sen, underperforming the broader index's 0.04 percent rise. -- Reuters

July 12, 2012

Kenanga cuts MISC to 'market perform'

Kenanga Research cut its call on Malaysian shipper MISC Bhd to "market perform" from "outperform' due to weak tanker charter rates, high bunker costs and overcapacity that allows for limited upside on shareholder returns.

"Despite the recent run-up in MISC's share price, we remain cautious on the company's prospect as we believe it will continue to be plagued by several factors that are now affecting the shipping industry," Kenanga said in a note on Thursday.

Kenanga, however, raised its target price and financial earnings forecasts after adjusting the ringgit to US dollar exchange rate.

MISC's target price was increased to RM4.76 per share from RM4.44.

Kenanga also increased MISC's financial year earnings forecast for 2012 to RM1.0 billion.

As of 9.39 am, MISC shares gained 0.6 percent against the Malaysian benchmark stock index's 0.2 percent rise. -- Reuters

July 10, 2012

OSK maintains 'buy' call on LPI Capital

OSK Research has trimmed its earnings forecast for LPI Capital by 5.2 per cent for the financial year 2012 and 4.4 per
cent for financial year 2013, on assumption of a higher claims ratio.

"We believe that our earnings revision is justified since the group has not factored in any losses from the Malaysian Motor Insurance Pool, as well as the weaker than expected earnings in the first quarter financial year 2012," it said in its research note here today.

OSK Research said LPI Capital's first half financial year 2012 annualised earnings accounted for only 40.9 per cent of its full-year forecast due to higher than expected claims in the first quarter.

"Despite to its impressive revenue growth, we believe that its second half financial year 2012 claims ration would not exceed our estimate," it added.

The research house has maintained a "buy" call on LPI Capital with a fair value of RM15.60. "Our valuations are justifiable as the group has been consistently chalking up earnings growth and paying dividends to its shareholders," it said. -- Bernama

TA Securities cuts KSL to 'hold'

Stock Name: KSL
Research House: TAPrice Call: HOLDTarget Price: 1.56

TA Securities downgraded property developer KSL Holdings Berhad to "hold" from "buy" and lowered its target price to RM1.56 from RM1.78 based on weak sales forecasts and lagging development projects.

TA said in a note to clients that the delayed approval for KSL's inner city project, Jalan Madge, and changes in target launch date for the upcoming property phases in Bandar Bestari in the port city of Klang have raised investor concerns.

Shares in KSL Holdings climbed 0.72 percent to RM1.39, outperforming the broader market's 0.2 percent rise. -- Bloomberg