August 3, 2012

HwangDBS keeps 'hold' rating on MHB

Shares of Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) fell 5.4 per cent after its second quarter result fared below expectations.

At 4.30 pm, MHB's share declined 29 sen to RM5.09 with 1.2 million lots traded, while the price hovered between RM5.02 and RM5.29.

"The result is due to poor earnings visibility due to a slow order book replenishment," HwangDBS Vickers said in a research note today.

MHB's pre-tax profit for the second quarter ended June 30, 2012 fell to RM60.5 million from RM96.4 million in the same quarter last year.

Revenue, however, rose to RM965.712 million from RM957.798 million previously.

HwangDBS Vickers has maintained its "hold" rating on MHB with a new target price of RM4.90 from RM4.75.

In contrast, Maybank IB Research maintained a "buy" call on the shares with a target price of RM5.70.

The research house said it expects MHB's earnings from the new Kababangan and Shell F14/29 projects to kick-in progressively.
The company is also currently bidding for 15 projects worth a combined value of RM5.0 billion.

"We believe that MHB is a frontrunner for three fabrication projects worth a total of RM1.4 billion, which will likely be awarded in the second half of this year," Maybank IB Research said. -- Bernama

2QFY12 Results Report

Stock Name: NHFATT
Research House: NETRESEARCHPrice Call: BUYTarget Price: 2.80

Update Report

Stock Name: TRIUMPL
Research House: NETRESEARCHPrice Call: BUYTarget Price: 1.30

An Integrated Media Player

Stock Name: STAR
Research House: TAPrice Call: SELLTarget Price: 3.29

Weak 1H12 but Orderbook is Growing

Stock Name: MHB
Research House: TAPrice Call: HOLDTarget Price: 5.86

Genting Plant Q2 profit seen flat

Stock Name: GENP
Research House: MAYBANKPrice Call: HOLDTarget Price: 9.10

Genting Plantation Bhd's (GENP) net profit for the second quarter ended June 30, 2012 is expected to be flat quarter-on-quarter at RM80 million-RM90 million, says Maybank Investment Bank (Maybank IB).

In a research note today, the bank said the expected flattish results followed disappointing fresh fruit bunches (FFB) output and stable spot of crude palm oil average selling price.

"As a result, the first-half results would amount to just about 35 per cent of our previous financial year 2012 (FY12) net profit forecast.

"Ahead of its results release, we cut our FY12 net profit estimate by 12 per cent to reflect no growth in FFB production for 2012," it said.

Maybank IB said production has entered a seasonally stronger period and the bank expected earnings to play significant catch-up in second half of 2012.

"GENP has said unlike in the past four years whereby the first- and second-half production ratio averaged 45:55 per cent, the ratio in 2012 will be unique at around 40-42 per cent:58-60 per cent," it said.

The bank said the contributions from the property sector would be small but growing as the company continued to enjoy robust sales for its Johor properties in second quarter of this year with positive spillover effect from its Johor Premium Outlet.

Maybank IB has maintained its 'hold' call on the company with an unchanged target price of RM9.10. -- Bernama

Pos Malaysia a 'buy': HwangDBS

HwangDBS Vickers Research initiated coverage of Pos Malaysia and Services Holdings Bhd with a "buy" rating and a target price of RM4.60, citing its attractive valuations.

"Valuation for Pos is cheap, based on its forward financial year ending March 31, 2014 (FY14) price-to-earnings ratio (PER) of 9 times (versus industry average of 11 times) while ex-cash FY14 PE stood at 5 times," the research house said in a note on Friday.

HwangDBS said Pos Malaysia has more room to reinvent and improve itself now with DRB-Hicom Bhd as its major shareholder, offering new services ranging from pawnbroking to shared banking services. DRB-HICOM holds 32.2 percent stake in Pos Malaysia.

By 10:19 am, shares of the company were up 1.72 percent at RM2.95 per share, outperforming the Malaysia's benchmark stock index's 0.03 percent rise. -- Reuters

MIDF cuts Malaysia Marine to 'hold'

Stock Name: MHB
Research House: MIDFPrice Call: HOLDTarget Price: 5.06

MIDF Research cut its rating on Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) to "hold" from "buy" after the firm announced disappointing second-quarter earnings.

MMHE's earnings declined 28 percent quarter-on-quarter and 29 percent year-on-year, while its first-half earnings accounted for only 38.7 percent of the market's full-year earnings forecasts.

"We believe that at this point in time, MMHE's market price has run ahead of its valuation," MIDF said in a research note on Friday.

The research house cut its earnings forecast for the financial years 2012 and 2013 by 12.8 percent and 11.4 percent, respectively, and reduced its order-book replenishment assumption to RM1.5 billion per annum.

MIDF also cut MMHE's target price to RM5.06 per share from RM5.97 previously. -- Reuters

MMHE - Still Below Expectation

Stock Name: MHB
Research House: BIMBPrice Call: TRADING SELLTarget Price: 4.90

Privatising SKP... Why Not!

Stock Name: SKPRES
Research House: TAPrice Call: BUYTarget Price: 0.54

August 2, 2012

HwangDBS raises LMC's earnings forecast

KUALA LUMPUR: HWANGDBS Vickers Research Sdn Bhd has raised Lafarge Malayan Cement Bhd (LMC)'s earnings forecast for the 2012-2014 financial years by 5-18 per cent, given the cement price hike, softening coal prices and stronger demand.

In a research note, HWANGDBS said the 6.25 per cent cement price hike was positive for LMC as the previous cement price hike in May 2011 did not fully compensate for the increase in energy and fuel costs.

"Competitors will likely follow suit as seen in the past as LMC is the market leader with a 40 per cent market share.

"However, we think competition will remain heated given existing spare capacity and with demand to pick up strongly," it said.

The research house also said the downtrend in Newcastle coal prices would positively benefit the market players.

In forecasting that coal prices were expected to average between US$102 and US$117 per metric tonne, it said:"Every one per cent decrease in coal price would boost 2013 forecast earnings by one per cent."

The company also forecast cement demand growth at five per cent in 2012 and six per cent in 2013-2014.

HWANGDBS Vickers Research has upgraded LMC to a 'hold' with a target price of RM8.65 pegged to 17 times financial year 2013 forecast earnings per share.-- BERNAMA

RHB lifts Axiata's fair value to RM6.60

Stock Name: AXIATA
Research House: RHBPrice Call: BUYTarget Price: 6.60

RHB Research raised Axiata Group Bhd's fair value to RM6.60 a share from RM5.90 after the mobile phone operator's majority unit XL Axiata's first-half earnings met expectations.

"We are positive ... XL's second quarter showed sequential earnings growth, which indicates that execution on data is making progress," the research house said in a note on Thursday.

Maintaining its "outperform" rating on Axiata, RHB said XL should be able to deliver on its 30 percent dividend payout policy despite spending heavily in capex, since it is able to borrow if necessary.

By 9:42am, shares of Axiata rose 0.51 percent to RM5.92 per share, while the broader index climbed 0.17 percent.-- REUTERS


Stock Name: REDTONE
Research House: NETRESEARCHPrice Call: BUYTarget Price: 0.43

Sale of loss-making subsidiary

Stock Name: NEXTNAT
Research House: TAPrice Call: SELLTarget Price: 0.10

August 1, 2012

2Q/FY12 results - revenue above expectations, EBIT now positive but NPATMI still negative. Maintain Sell Call.

Stock Name: YUNKONG
Research House: MERCURYPrice Call: SELLTarget Price: 0.32

RHB ups Daibochi's fair value

Stock Name: DAIBOCI
Research House: RHBPrice Call: HOLDTarget Price: 3.39

RHB Research raised Daibochi Plastic and Packaging Industry Bhd's fair value to RM3.39 per share from RM3.05 citing the packaging material maker's sustainable profit margin going forward among reasons.

"Despite the anticipation of rising raw material prices, we are comforted by Daibochi's higher-margin packaging and cost cutting measures to help sustain its margins," the research house said in a note on Wednesday.

Maintaining its 'market perform' on the stock, RHB said Daibochi's margins could remain sustainable at an earnings before interest and taxes of 11-12 percent helped by efficient waste management and better contribution from higher-margin products.

By 10:05am, the counter remained unchanged at RM3.29 per share, while the broader index rose 0.16 percent. -- Reuters

RHB raises Lafarge to 'outperform'

Stock Name: LMCEMNT
Research House: RHBPrice Call: BUYTarget Price: 9.05

RHB Research raised its call on Lafarge Malayan Cement Bhd to "outperform" from "market perform" on the back of rising domestic demand and higher cement selling prices.

"As the largest cement player in Malaysia with a lion market share of 40 percent, Lafarge is a good proxy to the massive public and oil and gas infrastructure spending," RHB said in a note on Wednesday.

"Rising domestic cement demand also allows Lafarge to unlock its earnings potential by changing its sales mix towards even more high-margin domestic sales vis-a-vis low-margin export sales," RHB added.

RHB raised Lafarge's fair value by 23 percent to RM9.05 per share from RM7.34 previously.

As of 9.49am, Lafarge's shares rose 2.5 percent against the Malaysian benchmark stock index's 0.15 percent rise. -- Reuters

Slow Growth Recorded

Stock Name: FIBON
Company Name: FIBON BERHAD
Research House: TAPrice Call: HOLDTarget Price: 0.45

July 31, 2012

OSK stays bullish on media sector

OSK Research Sdn Bhd remains bullish on the media sector this year due to a stream of major sporting events and the highly-anticipated general elections.

In a research note today, OSK said the coming Hari Raya Aidil Fitri festive season will spur the advertising expenditure (adex), especially for television.

It said adex grew by 20 per cent quarter-on-quarter and by a marginal two per cent year-on-year to RM2.1 billion, it said.

"We deem the increase within forecast, thanks to the adex-friendly EURO 2012 in June and the fact that advertisers had started to spend compared with the first quarter of this year," it said.

The research house said the general elections, expected to be held in the second half of this year, will also contribute to the positive stance.

"We see the sector benefiting from political campaigns in the run-up to the general elections, coupled with strong advertising and promotion spending from food and beverage, banking, insurance and telecommunication companies during the 2012 Olympics and Hari Raya," it said.

OSK has maintained its 'overweight' call on the media sector with its top picks -- Media Prima and Media Chinese International Ltd.

It liked Media Prima Bhd, being Malaysia's largest integrated media player and a free-to-air TV leader with strong media businesses led by Harian Metro and Berita Harian.

It recommended a 'buy' call on the stock at fair value (FV) of RM2.98. The research firm said it was less keen on Star Publications (M) Bhd.

It recommended a 'neutral' call on the stock at FV of RM3.46 as the paper faced a circulation decline.
OSK recommeded a 'buy' call on Media Chinese at FV of RM1.86.

"The company is recommended for its prudent cost controls and the huge underlying potential of its publications in view of the growing Chinese-literate population as well as the increasing importance of the language in the global arena," it said. -- Bernama

Looking Forward to Stronger 2H

Stock Name: SEG
Research House: TAPrice Call: BUYTarget Price: 2.52

Disposal of contract packaging business

Stock Name: KIANJOO
Research House: TAPrice Call: BUYTarget Price: 2.88

HSL likely to win jobs more than RM600m

KUALA LUMPUR: Sarawak-based infrastructure developer Hock Seng Lee Bhd (HSL) is most likely to win new jobs worth more than RM600 million this year, says Maybank Investment Bank (IB) Research.

It said HSL's active tendering continued with sizeable jobs worth up to RM1 billion to be awarded in the next six to nine months.

The company's job wins of RM472 million, year-to-date, have surpassed 2011's RM313 million, lifting outstanding order book to RM1.3 billion.

"This will underpin record earnings in financial year 2012, sustainable into financial year 2013," Maybank IB said in a research note.

It also said HSL's sizeable jobs secured, year-to-date, included the Balingian-Sibu-Bintulu Road (RM82 million) and Universiti Teknologi Mara, Mukah campus (RM291 million), which have lifted its order book to RM2.0 billion in contract value and RM1.3 billion in outstanding works.

"As the new jobs include sizeable marine engineering works components, we expect margins to be high, at least 15 per cent at the gross level.

"We tweak our margin assumptions for some of newer jobs, resulting in a seven per cent upgrade in our financial year 2012 to 2013 net profit forecasts," the research house said.

Meanwhile, Maybank IB also upgraded to a "buy" call on HSL's shares, with a raised target price of RM2.25 from RM2.10, previously. -- BERNAMA

OSK retains SEGi earnings forecast

KUALA LUMPUR: OSK Research Sdn Bhd, while retaining its forecast on SEG International (SEGi) Bhd's earnings of RM91.1 million for the current financial year and RM104.9 million for 2013, is anticipating a stronger performance for the second half of the year.

In a research note, it also projected a group net profit of RM114.2 million, for 2014, up 8.9 per cent, year-on-year, over the 2013 financial year forecast, as well as a dividend yield of 3.8 per cent per annum.

"Over the medium-term, the group's proposed acquisition of a 4.856 hectare piece of land in Bandar Setia Alam from SP Setia would help it penetrate the fast growing and better-yielding private pre-school, primary and secondary education segment.

"The tuition fee at the proposed international school, likely to welcome its first intake of students sometime early 2015, would range between RM40,000 and RM50,000 per annum," the research house added.

OSK Research said it expected the group to allocate between RM50 million and RM70 million in capital expenditure to accommodate around 4,000 to 5,000 students in the school.

SEGi's first half revenue was 15.8 per cent higher, year-on-year, at RM158 million, due to higher student enrolment, which we estimated at 29,000 as of June.

Earnings before interest and tax margin, however, dipped 32.9 per cent owing to higher distribution expenses, which jumped 17.5 per cent to RM16 million during the period under review.
"All in, SEGi's core earnings for the period under review improved 15.9 per cent to RM42 million," it added.

OSK Research maintained its "buy" call on the group, with a higher fair value of RM2.52 from RM2.19 previously. -- BERNAMA

'Ambang Sejati's BDRB takeover attractive'

KUALA LUMPUR: Ambang Sehati Sdn Bhd's plan to acquire the remaining shares of 81.5 per cent in Bandar Raya Developments Bhd (BRDB)looks attractive, says AmResearch.

In a note today AmResearch said the takeover deal which involves a total consideration of about RM1.2 billion, will provide a 21 per cent upside to its fair value of RM2.40 per share and 22 per cent discount to an estimated fully-diluted net asset value (NAV) of RM3.70 per share.

It also said BRDB has always been trading at a steep discount of between 40 per cent - 50 per cent of its NAV, even in the recent property market boom.

"This is not surprising as the group has not been aggressive in new launches.

"Although the group has been active in landbanking over the past one year or so, it remains to be seen whether BRDB would time the market right in churning out its products.

"Also, the delay in disposal of its investment properties at Bangsar Shopping Centre, CapSquare Retail Centre, Menara BRDB and Permas Jusco Mall, may continue to be a drag to the stock's performance," AmResearch added.

The research house also put a "hold" call on the company at the fair value of RM2.40. -- BERNAMA

MIDF sees higher margin for Lafarge Malayan

Stock Name: LMCEMNT
Research House: MIDFPrice Call: BUYTarget Price: 9.00

KUALA LUMPUR: MIDF Research expects Lafarge Malayan Cement Bhd's (LMC) margin to expand due to easing coal costs and higher selling price.

In a note today, MIDF said the new cement price hike, effective tomorrow, was the positive surprise as it expected the bulk cement price to increase only next year and by a marginal RM10 per metric tonne.

The cement price will be increased from RM16.75 and RM17.75 per 50kg bag while for bulk cement price it will increase RM20 per metric tonne or 6.3 per cent to RM340.

"Based on our analysis, for every RM10 metric tonne increase in bulk cement price, LMC's net profit forecast will increase by 15.1 per cent which translates into an increment of 7.4 sen to its earnings per share," it said.

Meanwhile, besides the hike in cement price, coal fuel cost which accounted for 25 per cent of total cost is now getting cheaper, it added.

The coal price is currently trading at US$83.3 per metric tonne, 32 per cent below its one-year peak of US$122.9 in September 2011.

"Based on our sensitivity analysis, for every US$10 per metric tonne decrease in coal prices, net profit would potentially increase by 8.5 per cent, and vice versa," MIDF said.

Hence the research firm is revising upwards the financial year 2013 earnings forecast by 15.1 per cent.

"Nonetheless we are leaving our financial year 2012 forecast unchanged as we believe the higher price and low coal costs would be offset by its low production following major shutdowns for scheduled maintenance between February and June this year," it added.

As the demand stays resilient, MIDF reiterated its cement demand growth projection of 8.0 per cent for this year given the numerous infrastructure projects under the 10th Malaysia Plan and Economic Transformation Programme that were already on-going.

"Hence, we are upgrading our LMC's recommendation to 'buy' with a higher target price of RM9.00," it added. -- BERNAMA

3QFY12 Results Report

Stock Name: BSLCORP
Research House: NETRESEARCHPrice Call: HOLDTarget Price: 0.28

Confidence Crisis to Dissipate Further

Stock Name: IRIS
Research House: TAPrice Call: BUYTarget Price: 0.31

RHB Research cuts SEGi's fair value

Stock Name: SEG
Research House: RHBPrice Call: BUYTarget Price: 2.20

RHB Research cut SEG International Bhd's (SEGi) fair value to RM2.20 per share from RM2.25 after the education firm's first-half earnings came in slightly below its expectations.

The research house cut its 2012-2014 earnings forecast on SEGi by 3.9-5.9 percent annually after revising its student growth and cost assumptions.

"Nonetheless, we believe that SEGi remains an attractive investment due to its long-term growth prospects," RHB said in a research note on Tuesday, maintaining its "outperform" rating on the stock.

By 9:38am, shares of SEGi remained unchanged at RM2.02. -- Reuters

July 30, 2012

A Good Start to FY13

Stock Name: PANTECH
Research House: TAPrice Call: BUYTarget Price: 0.82

Expecting a stronger 2H

Stock Name: AIRPORT
Research House: TAPrice Call: BUYTarget Price: 6.60

KLIA2 will boost air traffic, says MIDF

Stock Name: AIRPORT
Research House: MIDFPrice Call: BUYTarget Price: 6.72

KUALA LUMPUR: Opening of the new low-cost carrier terminal, KLIA2, next year is expected to significantly boost air traffic, says MIDF Research.

The research house said completion of KLIA2, which is currently ahead of schedule, would provide airport operator, Malaysia Airports Holdings Bhd (MAHB), the chance to seize the opportunity from the robust regional air traffic.

"Regional air traffic remains resilient and this is evident from the double- digit growth of total passenger movements -- Jakarta jumped 21.4 per cent year-on-year (Y-O-Y), Bangkok rose 14.1 per cent Y-O-Y and Changi was up 11.6 per cent Y-O-Y," it said in a statement.

MIDF Research said the boom in Asia's air travel also bodes well, mitigating the economic downturn in Europe.

The performance of the Kuala Lumpur International Airport, however, lagged regional peers in terms of total passenger movements, with 4.8 per cent growth, derailed by the 10 per cent capacity cut by Malaysia Airlines (MAS), but was partly offsetted by foreign airlines filling up the capacity gap, it said.

The new KLIA2 is expected to increase passenger numbers and landing aircraft as well as passenger service charge rate, it said.

The research house reiterated "buy" recommendation for MAHB, with an unchanged RM6.72 target price. -- BERNAMA

MIDF maintains 'buy' call on MRCB

Stock Name: MRCB
Research House: MIDFPrice Call: BUYTarget Price: 2.43

KUALA LUMPUR: MIDF Equity Research has maintained the "buy" call on Malaysian Resources Corp Bhd (MRCB).

The research house left its forecast unchanged pending an official announcement from MRCB on its acquisition of private developer, Nusa Gapurna Development Sdn Bhd (Nusa Gapurna).

"Our target price is maintained at RM2.43," the research house said in its research note on MRCB today.

As at midday, MRCB rose eight sen to RM1.81.

MIDF Equity Research said it is positive over the news on Nusa Gapurna as the company has a prime landbank profile in the Klang Valley with a gross development value estimated at between RM11-RM13 billion.

It also expressed a liking for MRCB as it expects the company to be the prime developer of the RM10 billion redevelopment of the Rubber Research Institute land set over 1,214 hectares in Sungai Buloh.

"MRCB is also reportedly the frontrunner to develop a prime 8.09-hectare land at Jalan Bangsar in Kuala Lumpur. "Its KL Sentral Development project is also progressing well.

"MRCB has a strong construction orderbook of RM1.4 billion that will last until 2014 and has been prequalified for some MRT1 project packages," it added. -- BERNAMA

RHB lowers MAHB to 'market perform'

Stock Name: AIRPORT
Research House: RHBPrice Call: HOLDTarget Price: 5.84

RHB Research downgraded shares of Malaysia Airports Holdings Bhd (MAHB) to 'market perform' from 'outperform', and cut its fair value to RM5.84 from RM6.41 after the airports operator's first-half earnings missed its expectations.

The research house lowered MAHB's financial year ending Dec 31, 2012 (FY2012) to FY2014 net profit forecasts by 2.3 per cent, 1.1 per cent and 1.8 per cent, citing the company's inability to contain rising operating costs.

By 9.39 am (0139 GMT), MAHB shares fell 0.18 per cent to RM5.56, underperforming the Malaysia's benchmark stock index's 0.04 per cent rise. -- Reuters

MIDF raises KPJ Healthcare to 'buy'

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

KUALA LUMPUR: MIDF Research raised its call on KPJ Healthcare Bhd to 'buy' on the back of a brighter outlook due to the firm's expansion plans and resilient growth in the country's private healthcare industry.

"Based on its proven track record, we are confident that the company's management will be able to sustain KPJ's growth momentum, maintaining its top line growth rate and preserving its profitability," MIDF said in a note today.

The research house said KPJ's share has seen strong positive momentum in the past few months, which could have been partly due to the spillover effect from IHH Healthcare Bhd's dual listing.

"With this catalyst, we expect KPJ to no longer trade at a discount to its peers, but should fetch the same valuation to its regional peers," MIDF added.

MIDF also raised its target price to RM6.98 per share from RM5.10 previously.

As of 0125 GMT, shares in KPJ gained 1.2 per cent against the Malaysian benchmark stock index's 0.17 per cent rise. -- Reuters