October 19, 2012

MMC downgraded to 'market perform'



Kenanga Research is neutral to slightly negative on the proposal by Malakoff Power Bhd, via Sterling Asia, to acquire Hicom Power Sdn Bhd for RM575 million.

HICOM Power, an operation and maintenance operator for Tanjung Bin's power plant, is a wholly-owned unit of DRB-HICOM Bhd.

Malakoff if a 51 per cent-owned sub subsidiary of MMC Bhd.

In a note today, Kenanga said it did not see any material impact (cost saving) from this acquisition to Tanjung Bin's operation and the financing of the acquisition will definitely increase MMC's net gearing.

"MMC will have to fork out about RM59 million for the equity portion, which will be easily funded by its current operating cash flow," it said.

Kenanga said the RM575 million price was based on HiCOM Power's discounted free cash flow for its recurring income in the next 20 years.

On outlook, Kenanga said it expected MMC to actively look for new assets as it has progressively reduced its stake in its subsidiaries like Gas Malaysia and Malakoff from their coming listings.

KTM Bhd could potentially be one of its new assets, it said.

Kenanga has maintained its target price for MMC at RM2.80.

It has, however, downgraded its recommendation from 'outperform' to 'market perform' due to limited upside to MMC's target price and the lack of immediate catalysts due to the election risk. -- BERNAMA

TM - Buying P1

Stock Name: TM
Company Name: TELEKOM MALAYSIA BHD
Research House: MIDFPrice Call: BUYTarget Price: 6.75



Still leading the industry in loan growth

Stock Name: PBBANK
Company Name: PUBLIC BANK BHD
Research House: MIDFPrice Call: BUYTarget Price: 16.10



Stepping up Iskandar Johor presence with Meridin

Stock Name: MAHSING
Company Name: MAH SING GROUP BHD
Research House: MIDFPrice Call: BUYTarget Price: 2.85



Enhancing assets to drive earnings

Stock Name: CMMT
Company Name: CAPITAMALLS MALAYSIA TRUST
Research House: MIDFPrice Call: HOLDTarget Price: 1.71



Higher non interest and fee income boosts CIMB Thai earnings

Stock Name: CIMB
Company Name: CIMB GROUP HOLDINGS BERHAD
Research House: MIDFPrice Call: HOLDTarget Price: 8.20



Exposure to Medini, Iskandar Malaysia

Stock Name: MAHSING
Company Name: MAH SING GROUP BHD
Research House: TAPrice Call: BUYTarget Price: 2.85



On Track to Deliver Double Digit Growth

Stock Name: HUAYANG
Company Name: HUA YANG BHD
Research House: TAPrice Call: BUYTarget Price: 2.10



Alliance raises Public Bank to 'neutral'

Stock Name: PBBANK
Company Name: PUBLIC BANK BHD
Research House: ALLIANCEPrice Call: HOLDTarget Price: 13.62



Alliance Research raised its call on the country's third-largest lender Public Bank Bhd to "neutral" from "sell", citing "defensive" operations and an attractive stock price following third-quarter results.

"We have recently upgraded our recommendation on Public Bank...in view of defensiveness of its operations and stock price, which are appealing during a period of uncertainty," Alliance said in a note on Friday.

Public Bank's 2012 third-quarter earnings rose 3.8 percent year-on-year to RM2.88 billion, helped by strong annualised domestic loan growth and reduced impaired loan ratio, the research house said.

The bank's dismal overall loan growth of 11.3 percent was weighed down by its China and Hong Kong operations, pointing towards an "ongoing difficult environment" in these markets, Alliance said.

Alliance pegged the lender's fair value at RM13.62 per share.

As of 10.15am, Public Bank's shares were up 0.14 percent at RM14.74 while the Malaysian benchmark stock index rose 0.19 percent. -- Reuters

October 18, 2012

Affin upgrades AMMB to 'add'

Stock Name: AMBANK
Company Name: AMMB HOLDINGS BHD
Research House: AFFINPrice Call: BUYTarget Price: 6.62



Affin raised its call on the country's fifth-largest bank AMMB Holdings Bhd to 'add' from 'reduce', citing a strong earnings outlook on the back of the lender's acquisitions of a general insurer and a credit card issuer.

In April, AMMB and Insurance Australia Group Ltd 's associate AmG Insurance Bhd bought Kurnia Insurance Bhd for RM1.55 billion (US$503.90 million). Three months later, AMMB proposed to acquire credit card issuer MBF Holdings Bhd and its units for 623.4 million ringgit.

"In our view, AMMB has mapped out sound operational strategies to maintain a steady earnings profile and ensure balance sheet mismatch risks are minimized," Affin said in a note on Thursday.

The research house lifted its target price on AMMB shares to RM6.62 from RM6.38 and raised its earnings estimate for the financial year 2013 by 4.2 percent and 2014 by 6.1 percent.

AMMB shares were up 0.16 per cent at RM6.34 while the Malaysian benchmark stock index rose 0.17 per cent. - REUTERS

T6 Rig extension

Stock Name: SKPETRO
Company Name: SAPURAKENCANA PETROLEUM BHD
Research House: MIDFPrice Call: BUYTarget Price: 3.01



Construction_More investment to SCORE_181012

Stock Name: NAIM
Company Name: NAIM HOLDINGS BHD
Research House: MIDFPrice Call: BUYTarget Price: 3.10



Stronger 2Q on Higher Sales & Lower Expenses

Stock Name: PANTECH
Company Name: PANTECH GROUP HOLDINGS BHD
Research House: TAPrice Call: BUYTarget Price: 0.82



Anticipates a stronger 2HFY13

Stock Name: HUAYANG
Company Name: HUA YANG BHD
Research House: TAPrice Call: BUYTarget Price: 2.10



9M FY12 Results Within Expectations

Stock Name: PBBANK
Company Name: PUBLIC BANK BHD
Research House: TAPrice Call: BUYTarget Price: 16.40



October 17, 2012

'AMMB repurchased arm, enhances earnings'



OSK Research Sdn Bhd expects AMMB Holdings Bhd's repurchase from Friends Life FPL Limit its 30 per cent stake in AmLife Insurance Bhd and AmFamily Takaful Bhd, to enhance its earnings by only
1.1 per cent.

In a statement today, the research house said life insurance business only contributed 2.5 per cent to the group's earnings.

OSK Research also believed that the exit of Friends Life would not cause a significant fallout in the group's life insurance business, with various key reengineering efforts and infrastructure enhancements already in place.

Yesterday, AMMB Holdings obtained Bank Negara Malaysia's approval to commence negotiations with Friends Life, a United Kingdom-listed life insurer and pension firm, to repurchase a 30 per cent equity interest in AmLife and AmFamily.

OSK Research noted the proposal was in line with its expectation given the capital and economic challenges faced by European insurance companies.

It has maintained a "neutral" call on AMMB Holdings with unchanged fair value of RM7.07 per share.

Meanwhile, Hong Leong Investment Bank said it is still premature to ascertain the financial impact towards AMMB Holdings as the parties have not signed any definitive agreement.

It kept a "hold" call on AMMB Holdings with an unchanged RM6.62 target price.

Friends Life had purchased a 30 per cent shareholding in AmLife for RM170 million in 2008, since then the AmLife Assurance fund's asset size has grown by nearly 62 per cent, averaging 15 per cent per annum.

The joint venture was subsequently extended to Family Takaful in December 2011, with a further investment by Friends Life of a 30 per cent stake in AmTakaful. -- Bernama

A Better FY13 Envisaged

Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Research House: TAPrice Call: BUYTarget Price: 6.55



HLIB places 'hold' call on Kossan Rubber



Hong Leong Investment Bank (HLIB) Research has placed a "hold" call with a target price of RM3.19 on Kossan Rubber Industries Bhd, the world's third largest glove maker in terms of
production capacity.

The research house said the rubber company's intention of maintain a balanced a 50:50 product mix of natural rubber and nitrile gloves, would allow it to shield itself from shifts in demand for either type of gloves.

"Balance product mix will allow Kossan to cater to both markets and mitigate risks from sudden price hikes in either nitrile or natural rubber latex," HLIB Research said in a research note.

The research firm also said other catalysts included Kossan's initiative on working towards fully automating and upgrading its older manufacturing processes, focusing on higher margin products and Kossan's plan to venture upstream by acquiring rubber plantation land.

However, HLIB Research said that the risk placed on the company was a spike in latex prices and the weaker greenback against ringgit.

"We believe Kossan has been a sector laggard due to its lack of
specialisation (of being a nitrile or natural rubber glove, or original brand manufacturing player)," the research house said. -- Bernama

HLIB maintains 'buy' call on Proton



DRB-HICOM Bhd is expected to extract synergies with the Proton group as the former has large exposure in the automotive components and parts segments.

In a note today, Hong Leong Investment Bank Research (HLIB Research) said DRB-HICOM's other units -- Bank Muamalat and Pos Malaysia -- would also provide support to Proton.

"We are confident that DRB-HICOM has already pre-planned the roadmap for Proton even before the acquisition in early this year or else it would not have launched several rounds of bids to acquire Proton," it said.

HLIB Research said DRB-HICOM would potentially take advantage of its strong ties with the Volkswagen Group (including Audi), Honda, Suzuki and Mercedes, to improve the national brand quality and perception of Proton.

"We concur with DRB-HICOM's initiative on Proton to tap into foreign expertise to produce high quality and well accepted cars and achieving the 'Asean Car' target.

"There is a need to rebrand Proton models and improve consumers' perceptions on the national marque, which is always second to Perodua," it said.

HLIB Research has maintained its 'buy' call on Proton with an unchanged target price of RM3.43. -- Bernama

Expansion in overdrive mode

Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Research House: MIDFPrice Call: BUYTarget Price: 5.79



Launches and previews continue to be encouraging

Stock Name: MAHSING
Company Name: MAH SING GROUP BHD
Research House: MIDFPrice Call: BUYTarget Price: 2.85



Higher velocity and daily average trading value for equities

Stock Name: BURSA
Company Name: BURSA MALAYSIA BHD
Research House: MIDFPrice Call: HOLDTarget Price: 7.00



AMMB - Increasing stake in Amlife and Amfamily

Stock Name: AMBANK
Company Name: AMMB HOLDINGS BHD
Research House: MIDFPrice Call: HOLDTarget Price: 6.60



Affin raises Top Glove's target price

Stock Name: TOPGLOV
Company Name: TOP GLOVE CORPORATION BHD
Research House: AFFINPrice Call: BUYTarget Price: 6.28



Affin Investment Bank raised its target price on Top Glove Corporation Bhd, the world's largest rubber glove maker by volume, to RM6.28 per share from RM6.20 on the back of resilient demand, which is likely to boost sales.

Affin said it is confident of Top Glove's plans for a healthy 10-15 per cent sales growth in the financial year 2013 following record high sales of RM 2.3 billion this year.

"We think this target is achievable due to the resilient demand for rubber gloves from the healthcare sector of both developed and emerging markets," Affin said in a note on Wednesday.

The research house raised its sales growth forecast for the financial years 2013 to 2015 by 1 to 3 per cent, adding that key risks include a sudden resurgence of latex prices if China's demand for rubber stages a strong recovery.

Affin kept its 'add' rating on the counter.

As of 10.2 am, Top Glove's shares rose 1.1 per cent against the Malaysian benchmark stock index's 0.1 rise. - Reuters