RHB Cap (BUY)
ROE KPI Intact But Face NIM Pressure
'''' 2QFY11 results slightly below HLIB (due to lower NIM) and consensus expectations.
'''' Interim dividend of 8 sen (17% payout), all under DRP.
'''' Encouraging results except continued NIM erosion (higher funding cost ' though unlikely to decline significantly, still pressurize by intense competition for deposits) and jump in provision for several SMEs (unlikely to recur).
'''' Loans and deposits growth continued to be ahead of industry average while credit charge to stay within 50-60bps.
'''' Although ROE slightly behind, FY11 KPI of 15.2-15.8% unchanged amidst downward pressure from NIM.
'''' Liquidity position is healthy and has no US$ funding issue while IB pipeline remains decent.'' However, near term pressure on MTM and potential risk to big ticket items and IB deal delay towards 4Q.''
'''' EASY now contributes 2.3% of pre-provision profit with low gross impaired loan ratio of 0.8%.
'''' Acquisition of Mestika unlikely this year, pending clear rule on Indonesia foreign shareholding limit.
'''' Asset quality improved despite higher net impaired loans formation while capital ratio also improved.
'''' FY11-13 forecasts cut by 4.7-5% to account for lower NIM, consequently, target price cut to RM10.20 from RM10.96 based on Gordon Growth.
''
IJM Corp (BUY)
Improved 1Q results
'''' 1Q12 PATAMI came in at RM115m, translating to an EPS of 8.51 sen/share. Earnings made up ~24% and ~23% of ours and streets' estimates respectively.
'''' On a QoQ and YoY basis, 1Q12 core earnings jumped by 11% and 34% respectively against the back of improved performances in nearly all division, especially the plantation division which was lifted by bumper harvest and improved earnings margin. ~65% of IJM's PBT during the quarter came from the property and plantation division.
'''' The construction PBT margins remained uninspiring at 2.8% during the quarter after improving to ~3.5% last financial year. However, it was the second consecutive quarter of construction revenue growth, indicating that construction activities may have recovered and margins may improve further going forward. Outstanding order book stands at
RM3.7bn, translating to ~2.8x FY11's construction revenue.
'''' Upgraded to BUY in view of slightly >10% upside from our target price of RM6.61 based on SOP valuation.
''
Genting Plantations (BUY)
1H11: Beat expectations
'''' 1H11 net profit of RM234.2m beat expectations, accounted for 53.6-56.8% of our and consensus full-year estimates.
'''' The RM200/month increment for plantation workers will raise Genp's production cost by RM5m per annum.
'''' Given the strong FFB output growth recorded, management raised FFB growth guidance for 2011 from 5-7% to 8-9%.
'''' Genp has planted only 1,537ha of oil palm in Indonesia in 1H11, due mainly to social and land issues. Management is confident that it would be able to accelerate its planting programme to 3,000-4,000ha in 2H, making up to ~5,000ha in 2011.
'''' Management guided a lower capex of RM300m in 2011 (vs. RM360m that it previously guided).
'''' 2011-13 net profit forecasts raised by 2.7-3.8%, largely to reflect: (1) Higher FFB output growth assumption; and (2) Higher production costs.
'''' TP raised by 2.9% to RM8.80 based on 17x revised 2012 EPS of 51.8 sen. Upgrade from Hold to Buy.
''
Time DotCom (BUY)
1H11: Beats our expectation
'''' 1H11 net profit beat our expectation, accounted for 67.9% of our full-year forecast.
'''' Earnings forecasts and TP of R0.95 (based on SOP) maintained for now, pending further details on today's conference call.
''
UMLand (BUY)
Earnings in-line
'''' Net profit rose 18% yoy, while 1H net profit rose 89% yoy to RM24m, or 46% of our estimate.''
'''' We regard this as in-line with our expectation, due to seasonality.''
'''' The RM189m Puteri Harbour condo was slated for 3Q launch, but has been pushed back to 4Q as building approval is still pending.''
'''' We continue to like UMLand for their undemanding valuations and earnings growth story.'' UMLand continues to trade at 70% discount to RNAV and single-digit P/E, providing investors with an opportunity to accumulate before earnings re-rating takes place in 2012, which we estimate to be circa 30%.
'''' The bonus issue shares from the 1 for 4 bonus issue will be listed today, and we adjust our price target from RM2.87 to RM2.30 accordingly. Maintain BUY.
''
TM (Hold)
'''' 1H11 core net profit of RM344.6m (+32%) came in within expectations, accounted for 48% of our forecast. Against consensus, the results came in above expectations, at 62.6% of full-year estimates.''
'''' TP remains unchanged at RM4.20 (based on DDM, WACC of 6.3%, TG 0%). Downgrade from Buy to Hold as the recent share price run-up has capped potential capital upside on the stock.
''
IOI Corporation (Hold)
FY11: Below expectations
'''' FY06/11 core net profit of RM1,996.7m came in below expectations, at 90-92.4% of our and consensus full-year estimates.
'''' FY06/12-13 net profit forecasts cut by 2.8-2.9% to reflect lower EBIT margin assumptions at both the property development and manufacturing divisions.''
'''' SOP-derived TP cut by 3.7% to RM5.27 following the downward adjustments to our earnings forecasts.'' ''
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FBM KLCI - Unresolved uncertainties and long holidays to cap rebound
'''' We remain vigilant and would like to caution investors about potential downward correction if Bernanke speech this Friday fails to live up to market expectations as well as long holidays ahead next week. Immediate resistance levels remain near 1,500-1,530 whilst supports are around 1456-1466 pts.
''
Stock to watch - MASTEEL: Limited downside amid strong 1H11 results and oversold positions''
'''' Signs of bottoming up in weekly & daily slow Stochastics indicators coupled with its strong 1H11 results bode well for a possible technical rebound towards RM1.14 (30-d SMA) and 1.22 (200-d SMA) in the medium term. Supports are RM0.92-1.00. Cut loss below RM0.92.
